Sweden's IKEA AB is becoming a global leader in solar and wind development with a target of energy independence in 2020, part of the company's overall strategy to confront, and even profit from, looming environmental challenges.
The big-box retailer – which brought the world assemble-yourself furniture – is equipping its stores and distribution centres with solar panels and purchasing wind farms around the world to reduce its carbon footprint.
On Thursday, IKEA Canada announced the purchase of a 20-turbine wind farm near Pincher Creek, Alta., that should produce 161-gigawatt hours of electricity each year – more than double the company's current electricity consumption in Canada. The Alberta wind farm will sell its power into the provincial grid and is expected to be operational next fall.
"Sustainability has become a must-do for business," Steve Howard, IKEA's chief sustainability officer, said in a phone interview from Almhulth, Sweden. "It's got to be in everybody's home, it's got to be in every business, it's got to be at the heart of every business strategy."
IKEA already has 3,790 solar panels installed on the roofs of three stores in the Greater Toronto Area, a project done three years ago under Ontario's feed-in-tariff program to encourage renewable energy.
The company's green-energy push is part of a multilayered corporate sustainability plan that aims to reduce its own reliance on fossil fuels and cut costs; to work through its supply chain to improve social and environmental conditions; and to provide customers with a broad range of low-cost products that save energy, save water and reduce household waste.
IKEA said it is taking environmentalism from a premium-price niche or a marketing gimmick to a core business strategy, one that anticipates growing pressure on the global environment and resources as billions of people are expected to climb above the poverty line and become consumers in coming decades.
The company has committed €3-billion ($4.25-billion) to build out its renewable portfolio until 2015, when it will be generating enough electricity to equal to 70 per cent of its own consumption. Mr. Howard said it will likely require a similar investment to get the company to 100 per cent – or energy independence – by 2020.
IKEA either owns or is building 157 wind turbines worldwide; the Pincher Creek development is its first outside Europe.
Investments will pay for themselves in five to eight years and will provide a long-term stream of zero-emission energy as governments deal with climate change through some sort of emissions regulations or carbon levies that will drive up energy costs, Mr. Howard said.
"Solar panel and wind farms give you a decent payback," he said. "It is now a highly cost effective way of producing energy in many parts of the world, so they are solid financial investments."
The Swedish retailer is owned by a foundation established by its founder Ingvar Kamprad, and has capped its profits at 10 per cent of revenue. It has long been known as an environmental leader, said retail analyst Wendy Evans, president of Evans & Company Consultants Inc. in Toronto.
"It's in their DNA," she said. "So the purchase of wind farms and putting solar panels on roofs is just a logical extension for them."
In addition to its own use of renewable power and high-efficiency lighting, IKEA is expanding its line of green products. This fall, it began selling solar panels for home use in its British stores.
The retailer is also looking to drive down its costs and its own carbon footprint by improving the logistics as it moves goods from factory to distribution centre to store to customers' homes. And it is working with suppliers of wood and cotton on more sustainable forestry and agricultural practices.
Mr. Howard said all this can be done while still keeping prices in check. "Most people in the world still have thin wallets today," he said. "So we want to have beautiful, functional, affordable, sustainable home furnishings for people."