Ikea Invests EUR 1.5 billion Towards a Fossil-Free Future

Ingka Group, the largest IKEA retailer, is investing a total of EUR 1.5 billion to help boost its renewable energy programme and its phased shift away from the direct use of fossil fuels. 

IKEA is a global home furnishings retailer that sells affordable, well-designed products for the home. Ingka Group is the largest IKEA retailer and represents about 90% of IKEA retail sales. It is a strategic partner to develop and innovate the IKEA business and help define common IKEA strategies. 

The investment is earmarked for energy efficiency improvements and renewable heating and cooling technology. It will contribute towards Ikea’s target of reducing its climate footprint from its own operations by 85% by 2030. The Ingka Group have already committed EUR 7.5 billion investment in offsite renewable energy production and technologies. 

The EUR 1.5 billion investment into its own operations comes in addition to the EUR 7.5 billion commitment. At this point Ingka Group’s investment arm, Ingka investments has already invested and committed to over EUR 4 billion in off-site renewable energy making them a mid-sized renewable energy production company.

Jesper Brodin, CEO, Ingka Group said:

“Ending our reliance on fossil fuels is essential to tackling the climate crisis and halving global emissions by 2030. At IKEA, we started our journey in 2009 and have invested heavily in both on- and offsite renewable energy production to enable the transition. We have already reduced emissions across our IKEA stores by 60.4% since 2016 and 96% of our retail sites now use renewable electricity. The future of energy must be renewable, and this additional investment will enable us to reduce our carbon emissions, increase efficiency and lower costs in the long term. It’s also good for business – a win-win.” 

The extra investment illustrates the company’s commitment to decarbonise its operations and value chain. This investment will be used to speed up the ongoing work to retrofit IKEA units with energy efficiency upgrades and renewable heating and cooling. Work has already begun to retrofit 150 existing properties with all new units built for renewable heating and cooling. Ikea plans to use renewable heating and cooling by installing new, energy-efficient heating and cooling systems in their stores, replacing existing HVAC systems, and focusing on technologies like solar power, geothermal energy, and low-carbon refrigerants to achieve their goal of becoming climate positive by 2030. 

Karen Pflug, Chief Sustainability Officer, Ingka Group said:

“Transitioning to renewable heating and cooling is a vital enabler on our decarbonisation journey; however, it’s a complex and costly process. This investment means we can progress further and faster with our plans – and we know it will pay off in the long term.” 

Ikea stepped up its shift towards renewable electricity in production in 2024. The amount of renewable electricity used in the production of IKEA products rose from 71% to 75% in 2024. Ikea is going even further this year by launching a third wave of its renewable electricity programme to help suppliers gain access to more renewable energy sources.

To speed up this shift further, IKEA is upping the third wave of its renewable electricity programme to 14 additional markets including Bangladesh, Brazil, Bulgaria, Egypt, Hungary, Indonesia, Japan, Mexico, Netherlands, Pakistan, Slovenia, Spain, Thailand, and the United States. Originally launched in 2021 the programme assisted suppliers in purchasing renewable electricity from the grid especially markets with limited access. The programme has now been extended to cover 27 markets and more than 91% of CO2 emissions from electricity used in production. 

Two of the markets included in IKEA’s initial launch of its renewable electricity programme were China and India. Emissions from electricity usage at Chinese suppliers decreased by 87% and by 49% at Indian suppliers between 2020 and 2024. The programme has been highly successful with the current share of renewable electricity in production in China at 92% and at 69% in India. 

Further success has been seen in Vietnam where the share of renewable electricity used by IKEA’s suppliers increased by 40% between 2023 and 2024. By helping their suppliers in 14 more markets to access renewable electricity they are making significant progress to ensure that IKEA products are produced with considerably less impact on the planet. 

Production currently accounts for around 7% of the IKEA climate footprint with electricity consumption making up 36% of this. Making the transition to renewable electricity in production is vital to achieve net zero emissions across the IKEA value chain. 

IKEA is making significant progress in reducing its carbon emissions and has set out its goals for 2025. They are aiming to achieve 100% renewable electricity for their top 10 supplier countries by the end of this year. They are also aiming to achieve 100% renewable electricity for all IKEA operations by 2030 and to achieve zero-emission deliveries globally by the end of this year. 

Sriram Rajagopal, Head of Climate and Air Quality at Inter IKEA Group said:

“We are striving towards 100% renewable energy across the IKEA value chain. Electricity generation from fossil fuels is one of the largest sources of greenhouse gas (GHG) emissions globally. By collaborating with suppliers, we can make the shift towards using more renewable electricity easy, accessible, and affordable. This collaborative effort not only helps reduce our environmental impact but also empowers our suppliers to decarbonise their operations." 

IKEA has been working for many years now to reduce its carbon emissions. It has done this in several different ways as follows:

• Installing solar panels on-site at their stores, offices, warehouses, and factories.
• Purchasing renewable electricity from the grid.
• Financing on-site investments for suppliers to convert to renewable energy.
• Enabling suppliers to buy renewable electricity, particularly, in countries where access is difficult. 
• Negotiating PPE contracts for suppliers by bundling volumes, size, and scale. 

Ingka Group is fully committed to the Paris Agreement and is doing all it can to reduce greenhouse gas emissions and phase out fossil fuels. Ingka Group are already seeing the results of its efforts towards using 100% renewable electricity across its retail operations. Overall emissions have been reduced by 24.3% against a 30.9% increase in revenue. Heating and cooling are the largest drivers of emissions with Ingka’s own operations category. 

Jesper Brodin said:

“As businesses, we have an important role to play in phasing out fossil fuels, but we cannot do it alone. We welcome the COP28 pledges on renewable energy and energy efficiency and consensus on transitioning away from fossil fuels. Now, to move from pledges to impact, governments and businesses need to combine efforts and address obstacles, such as complex and inefficient policy, permitting and reporting frameworks. We have five years left to deliver to the Paris Agreement – with the right commitment and leadership we have it in our hands.”