Ikea program helps suppliers move to renewable energy

IKEA has recently launched a new program to accelerate its suppliers' transition to 100 percent renewable electricity globally, including its direct suppliers in China.

Almost two-thirds of the IKEA climate footprint is directly connected to the supply chain, including production at suppliers. The company is moving toward 100 percent renewable energy throughout the entire value chain.

"Together with our direct suppliers we will take the necessary steps and contribute to limit climate change to 1.5C. We have a long-term perspective and the financial strength to invest in activities and support our suppliers to have a positive impact on people and the planet. By working together, we can make renewable electricity both more affordable and accessible," said Henrik Elm, global supply manager for Inter IKEA Group.

The program enables nearly 1,600 direct suppliers to purchase 100 percent renewable electricity. IKEA will provide for local solutions, such as bundled framework agreements and Power Purchase Agreements, to purchase renewable electricity from the grid, thus enabling direct suppliers to consume 100 percent renewable electricity in their production.

This can cover the electricity demands of the supplier, which cannot be generated on-site, the group said. The program will be introduced this year for direct suppliers in Poland, China and India, which are its three largest purchasing countries, followed by a gradual global rollout. Achieving the objectives in mentioned countries will save 670,000 tons of CO2 emissions per year, equivalent to about 3 percent of the total climate footprint of the Ikea value chain. This program for direct suppliers can be combined with Ikea's previously announced offer to finance renewable energy generated on-site (electricity, heating & cooling) to achieve 100 percent renewable energy consumption in their operations.

All heating and about 15 percent of electricity consumption of suppliers can be addressed by on-site investments with installations of equipment like solar panels and boilers. This is achieved through 100 million Euros in financing of renewable energy introduced in Dec 2019. So far, 51 percent renewable energy consumption in Ikea stores, offices, warehouses, factories, and other operations has been implemented. The goal is to reach 100 percent renewable electricity in 2025 and by 2030 ensure all remaining energy, such as heating and cooling, is renewable as well.