Ikea packs its trucks and shipping containers as tightly as possible to avoid shipping air.
Photograph by Andrew Hetherington for Fortune
By Beth Kowitt
March 10, 2015

Ikea is retailer, a design shop, a manufacturer, and publisher—and now it’s also an energy company.

The furniture and furnishings giant will soon own and operate 314 wind turbines in nine countries and has installed 700,000 solar panels on its buildings, putting the company on track to be energy independent by 2020.

This isn’t just greenwashing. I visited the heart of Ikea in Älmhult, Sweden, for my story in the latest issue of the magazine, and sustainability came up in every conversation in a very genuine way. At the company’s factory in Älmhult, leftover scraps of wood are sold to the energy company EON to heat the community. Stores recycle the soft plastic film used in plastic packaging in its stores to make its Skrutt desk pads. Designers try to minimize the amount of foam in sofas, using the material only when necessary. Packaging that’s easy to recycle is a priority, as is minimizing the amount of air that gets shipped.

But despite all of these efforts, there’s an innate tension in Ikea’s business proposition: Is it possible for a company that has made a business out of selling stuff to be sustainable? Ikea, after all, uses about 1% of the world’s commercially logged wood.

When I posed that question to Steve Howard, Ikea’s chief sustainability officer, he told me that it had to be. “We are potentially at peak stuff in the west,” he adds. “That’s probably a good thing. But we’re a small share of that stuff. And as stuff becomes more sustainable we’re going to lead in sustainable stuff. There’s a huge growth market for sustainable stuff. This is a roller coaster of a mega-trend.”

Much of my story focuses on Ikea’s growth in new markets, but the company will have to convince customers that the brand isn’t synonymous with disposable consumerism if it wants to keep gaining share in places where it already has a strong foothold.

In the past, Ikea was more likely to embrace and market the idea of a throwaway culture. It encouraged people to dispose of their stuff with tag lines like “Chuck out the Chintz.” One of its most famous commercials, directed by Spike Jonze, told people they were crazy for feeling bad for a lamp that had been left for pickup on the sidewalk.

I asked Howard if this is an ad that Ikea would run today. “It might slip out. We’re a marvelously decentralized company,” he says. But, he adds, “we’ve been on this journey where we realize, we don’t like waste. We recognize across the business that there is an enormous society wide challenge on climate change. We don’t have capacity to mess about. The ‘don’t be sad throw it away thing’ would be completely incompatible with the Ikea of today.”

Ikea’s mandate is to serve “the many people” and “those with thin wallets,” so the company does not charge a premium for its green products. If it thinks it’s found the best solution to an environmental issue, it goes after it in a big way. Take LEDs. By September, the company will have phased out all other light bulbs in its stores. Ikea is starting to sell solar panels, which Howard believes will be commonplace by 2030. Some of the faucets the company retails mix in air with the water to achieve the same feel of wetness while using half the water.

Ikea is such a big company that seemingly small changes can have a big impact. “We sold enough [LEDs] last year to save the energy of a decent sized city,” Howard says. And consumers are buying into it. Sales from its products that let people live a more environmentally friendly life surpassed more than $1 billion in its fiscal 2014.

 

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