What Challenges Does IKEA Face While Fighting Climate Change?

 IKEA is a Swedish multinational company that designs and sells ready-to-assemble furniture, kitchen appliances, and home accessories, among other services. IKEA has been the world's largest furniture retailer since 2008 and has provided its services to millions of households across the globe. 

IKEA’s business depends primarily on furniture, but they have expanded over to various sectors such as food, design services, smart house appliances, among others. They stand out regarding their initiatives related to sustainability and green policies. 


Ever since Marcus Engman, head designer at IKEA, took over his role several years ago, he has led some great sustainability efforts for the company. He believes that high-quality design should be accessible to anyone, and it should come sustainably and ethically. 


IKEA’s progressive efforts to run a sustainable and ethical business dedicated to fighting climate change at a corporate level has been admired by many. Quality design does not stem simply from promoting a sophisticated aesthetic is what IKEA has been trying to achieve through this goal, especially after promising to reach net-zero emissions goal. But they have some significant hurdles to go through to achieve sustainability.


IKEA meeting their 2030 target while selling the same amount of furniture they've done is a difficult task. The materials will cost them a lot, and so will their efforts to deliver them with minimum emission. Every element of their business, from the materials it sources through product manufacturing and transport, needs a restructuring accordingly. Making products last longer, and giving old products second lives, is a central pillar of its climate ambitions. Ikea aims to become a “100% circular business” by 2030, and this will take a lot of their time and budget that may restrain them further.


This is a significant point that does not align with their business model. They will require a considerable investment to alter their particleboard production and recycled wood. In countries like China or India, the demand for particleboard is limited, and to increase production, IKEA will need to invest a lot of capital. Increasing the share of recycled wood is also a complicated issue for IKEA. They will need to adapt their board manufacturing plants to accept recycled wood, which requires a heavy investment. This does not match their goal of profit maximization. It will, however, have the potential to yield long-term benefits and still should be pursued.


With only a limited amount of sustainably grown wood available and a finite amount of land to produce more, it will become challenging to find materials after a point at the rate they manufacture. They need to ensure that they're getting wood from the right places, they are also starting to incorporate other, improved materials into their products. Rethinking its products more fundamentally, with the view that all Ikea products can themselves serve as raw materials in the future, is a step in the right direction. 


Sustainability efforts are something that IKEA has been pushing forward, and hopefully, with the correct climate data and business models, they can achieve it while paving the way for many other companies to come.
Location: India

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