October 23, 2012
Furniture Maker IKEA Invests In Renewables To Become Self-Sufficient By 2020
Lawrence LeBlond for redOrbit.com - Your Universe Online
As energy costs soar, many businesses are looking for ways to become more energy efficient. One company is looking to become completely self-sufficient by 2020, relying only on renewable resources to power its factories, stores and offices.
IKEA, the world´s largest home furnishings retailer, plans to invest as much as $2 billion in wind farms and solar parks to increase its reliance on renewables and steer away from volatile fossil fuels. The move should help the Swedish furniture maker get 70 percent of its energy from renewable resources by 2015, the company´s CSO (chief sustainability officer) said in a phone interview with Business Week´s Alex Morales.
IKEA said it also wants to limit sales by 2016 to energy-efficient products to meet the growing demand of customers who want more green options. IKEA said it will focus on green products such as induction cookers and LED light bulbs.
In embracing the renewable aspect, IKEA said it plans to install rooftop solar panels, develop wind farms, replace incandescent light bulbs with more efficient LEDs, and vowed to plant at least as many trees as it uses in the production of its furniture by 2020.
Howard said “each roof is a power station in the making,” referring to rooftop solar panels. The company has so far installed solar panels on 34 of its 38 US stores and distribution centers. The US has “fantastic sun ... as good as anywhere in the world,” added Howard.
Howard also noted that many regions in the US also have great wind potential and would like to incorporate such resources there as well. However, policy environment is kind of shaky at the moment in the US, he said, adding that production tax credits for the US wind industry are set to expire in December unless Congress renews them.
IKEA is not the only company with renewable goals, however. Wal-Mart set similar goals for its stores and distribution centers in the US. Although there is no set timeline for when it will become self-sufficient, it ranks first among US companies for solar power generation, according to a recent survey by the Solar Energy Industries Association (SEIA). Costco ranks second, followed by Kohl´s and then IKEA; Macy℠s ranks fifth.
“Efficiency makes sense and it makes more sense now than ever before,” Howard said.
Other companies are also joining in the fight to end reliance on fossil fuels. Sportswear maker Puma SE and PepsiCo are also expanding efforts to go green. As prices for wind turbines and solar panels have declined in recent years, moving to greener pastures is becoming extremely cost-effective, according to Bloomberg New Energy Finance.
“By producing as much renewable energy as we use through the system, we contribute to development in society and make ourselves even more competitive,” said IKEA CEO Mike Ohlsson. “This will be a great driver of innovation.”
He told Reuters he had no doubt the company´s “People & Planet Positive” strategy would save money both for IKEA and its clients, although he declined to estimate total savings.
Under this plan, IKEA plans to be 70 percent self-sufficient by 2015, and by 2020 it would produce as much renewable energy as it consumes.
IKEA already owns wind farms in six European countries and has more than 342,000 solar panels on its buildings, which already generate 27 percent of the company´s electricity.
Howard said the company is a little under half-way from its 2015 goal in terms of investments. The company would also halve its greenhouse gas emissions from its operations by 2015, from 2010 levels.
Joel Makower, executive editor of GreenBiz.com, which covers corporate sustainability efforts for Ikea's plans, told USA Today´s Wendy Koch it´s really good that “a company is trying to get its own house in order, but its house is more than its buildings.”
He added that more than 90 percent of the total energy that retailers use is embedded in the supply chain--the making of and delivering of parts and products. Renewable energy is no longer just about scoring points with the consumer. “It's about mitigating risks,” he said, referring to the uncertainties of energy prices and supplies.
Howard agreed. He said IKEA believes energy independence is “the right thing to do,” not only because it's concerned about climate change but also because it wants to protect itself against higher energy prices in the future. “Sustainability will decide the winners and losers in the business community,” he said.
Environmentalists are backing IKEA´s ambitious goals.
John Sauven, head of Greenpeace UK, said IKEA is at the “forefront of leading companies” trying to become self-sufficient in the face of environmental concerns.
The furniture maker´s plan is a roadmap to a “clean industrial revolution,” added Mark Kenber, head of the UK-based think-tank Climate Group. He urges that other businesses follow in IKEA´s footsteps.
IKEA noted that other environmental experts were also praising its renewable efforts, including the World Wildlife Fund.
What sets IKEA apart from other companies moving in similar directions, is the fact the furniture giant has freedom to act on its plans without investor lash-back. IKEA is owned by a private foundation and does not list on the stock market. What this means, said Ohlsson, is “our whole focus is customers throughout the chain and not stock exchange and owners.”