Why IKEA is investing in sustainable mobility

Swedish home furnishing company IKEA isn’t just focusing on what’s happening inside your home anymore. The company is also thinking about what’s happening in the streets outside. That is, the company is pumping cash into a new sustainable mobility program.

For the company known for its delicious meatballs and DIY shelves, the investment isn’t actually that surprising. It’s about reaching customers — or more specifically, helping customers reach IKEA.

“The No. 1 reason that a consumer is not an IKEA customer is accessibility,” Angela Hultberg, head of sustainable transportation at IKEA, said last week on the virtual stage of GreenBiz Group’s clean economy conference, VERGE 20.

It’s about reaching customers — or more specifically, helping customers reach IKEA.

The furniture giant is starting with a sustainable mobility strategy in urban areas, which has several dimensions, Hultberg explained. Many of IKEA’s customers live in cities and don’t have access to large vehicles that would allow them to travel to IKEA and return to their homes with furniture. Meanwhile, the pandemic has accelerated a shift from brick-and-mortar business to e-commerce, but diesel delivery trucks bring air and noise pollution into these downtowns.

All the while, transportation emissions have risen around the world in the past few years to over 24 percent of global CO2 emissions.

“So we need to figure out — how can we get the customer to us in a convenient, affordable and sustainable way?” she added.

The company plans to make 100 percent of its last-mile deliveries be zero-emission by 2025. In addition, IKEA wants its operations in five cities around the world — Amsterdam, Los Angeles, New York, Paris and Shanghai, which already met the goal — to be zero-emission by the end of this year. Specifically, that includes shuttle buses, electric fleets and EV charging stations powered by 100 percent renewable electricity for customers.

IKEA climate commitments and cities

The furniture giant’s commitments have the potential to move markets: IKEA has 433 stores in 53 countries, and it hit 2019 global retail sales of about $45.5 billion.

The company has been reorienting towards a sustainability strategy that it’s calling “climate positive“: by 2030, the goal is to remove more greenhouse gases from the atmosphere than the entire IKEA value chain emits. IKEA has invested about $2 billion in total in clean energy — at the end of last year, it earmarked $220 million on green energy, reforestation and forest protection projects.

Its sustainable transportation focus is part of its long-term sustainability plan. Specifically, Hultberg said that the company is worried about being able to align with the climate goals of the communities where it does business.

Hultberg said that the company is worried about being able to align with the climate goals of the communities they’re in.

“We have goods we need to deliver to people — in a sustainable way,” she described. “As air pollution is on the rise, cities all over the world are looking to close city borders to fossil fuels. If we can’t deliver, that’s a huge problem.”

More than 100 cities around the world, ranging from San Francisco to London to Addis Abada, Ethiopia, have committed to create and implement inclusive climate action plans in line with keeping global temperature increases to 1.5 degrees Celsius through the C40 Cities initiative. These cities have committed to science-based targets to cut emissions in sectors that are some of the biggest urban emitters: buildings; transportation; and waste. That means low-carbon deliveries for businesses that want to operate in these locations.

“So it’s about futureproofing our business,” Hultberg said.

Sustainable mobility in cities will provide support for not only IKEA’s Millennial, urban-dwelling customers, but also for young, car-free employees.

“We know that young people don’t want to go on public transportation more than 30 minutes, and they don’t want to walk more than four blocks,” she said. “So that means that they want a job that is close to where they live so if you’re an employer and your workplaces are kind of remote, you risk losing out on talent. We can’t have that.”

Equity matters, too

Sustainable mobility commitments are important to Hultberg and IKEA as a whole because it’s not just an environmental issue, it’s also a social issue, she said.

“If you can’t afford a car and if you don’t have good and reliable public transportation, you can’t get to work,” Hultberg said. “Maybe you can’t even get a job because it’s just too far, and then you’re stuck in a very negative spiral of poverty. In many parts of the world public transportation isn’t safe, especially for women. So if you can’t get in a bus to go to school, or to get to work, then what?”

IKEA is known for its affordable furniture solutions. Making sure that those who turn to IKEA for the cheaper, stylish product are able to come shop there is critical for the company’s core business.

For example, the company is pushing its electric fleet partners to go electric, and investing in low-carbon fuel technologies. In addition, IKEA already has implemented free shuttles in New York City to help customers reach the store.

“Mobility is a prerequisite for business and really for everything in society,” she said.