IKEA 2024 Sustainability Report

Introduction to the Report

IKEA has been operating for over 80 years, continuously learning and adapting to global changes. Starting as a small business, it has grown into a global phenomenon. While much has changed, the core mission remains the same: to create a better everyday life for the many people. This report covers the financial year 2024, from September 1, 2023, to August 31, 2024, referencing GRI standards.

IKEA is committed to making a positive impact on people and the planet. With only one planet, significant steps are being taken across the company to reduce greenhouse gas emissions, minimize resource use and waste, and protect biodiversity and water. IKEA also aims to make it easier for customers to act sustainably, reinforcing its commitment to sustainability and the well-being of our shared home.

The company focuses on omnichannel innovation, seamlessly integrating physical and digital channels to reach more people. This approach allows IKEA to offer affordable products, services, and solutions that make healthy and sustainable living more accessible.

The strategy covers three main areas: helping people live healthy and sustainable lives, addressing climate, nature, and circularity, and promoting fair and equal treatment.

Letter from Leadership

The financial year 2024 was exciting yet challenging for IKEA. A primary goal was to make IKEA products more affordable for customers. Over €100 million was invested in price reductions, affecting a large portion of the product range in the Czech Republic, Hungary, and Slovakia.

IKEA's commitment to sustainability remains a top priority. Significant steps have been taken to advance sustainability efforts, guided by a clear and ambitious strategy to inspire and enable healthier and more sustainable living. This includes promoting circular business models, significantly reducing CO2 emissions across all operations, and contributing to a fairer, more inclusive, and equitable society.

People are at the center of everything IKEA does. The company has strengthened its commitment to supporting people and communities through impactful and lasting social initiatives, including financial and in-kind support, and active participation in important local causes. Employees have dedicated time to volunteering, driving positive social change, and supporting those in need, fostering meaningful connections and encouraging broad participation from both co-workers and customers.

As founder Ingvar Kamprad said, "The best is yet to come – the glorious future." The company believes it is on the right track to achieve these goals with its dedicated employees and partners.

Dave McCabe
Regional General Manager and Chief Sustainability Officer IKEA Czech Republic-Hungary-Slovakia

Tomáš Zeman
Country Sustainability Manager IKEA Czech Republic-Hungary-Slovakia

Our Sustainability Strategy

The IKEA Sustainability Strategy aims to inspire, mobilize, and guide IKEA's design, decision-making, and goals to drive the changes the company wants to see globally and within its business. Introduced in 2018, the strategy is reviewed annually. For FY24, the strategy was updated to reflect strengthened commitments and action plans, incorporating the latest insights and scientific findings.

The overall structure of the sustainability strategy, covering four main areas, remains the same, but the names and associated goals have been updated.

Key Changes in the Strategy:

• Transition from 'climate positive' to 'net zero and beyond' to better reflect the next phase of IKEA's climate journey, with strengthened climate targets aligned with the 1.5°C goal and the Science Based Targets initiative's net-zero standard.
• The name of the focus area 'Circularity and climate' was changed to 'Climate, nature and circularity' to better emphasize the indispensable role of nature. IKEA's business depends on natural resources, and nature has always been an integral part of IKEA's sustainability approach.
• Commitment to circularity has been updated to a gradual transition to circular business activities, rather than setting a fixed target for 2030. Similarly, the goal to 'strive to use only renewable or recycled materials by 2030' has been replaced with 'strive to use only renewable or recycled materials.' These changes reflect a growing understanding of circular practices and acknowledge the challenges in fully achieving the 2030 targets.
• The 'Healthy and sustainable living' goal has also been modified, continuing to inspire more people to transition to healthy and sustainable lifestyles in areas where IKEA has influence. Since the strategy's launch in 2018, progress towards enabling one billion people to live a better life within the planet's limits has not been measurable on an individual basis, as planetary boundaries are measured globally. The updated goal aligns with scientific findings and supports a more holistic approach, with a commitment to a product range that directly contributes to healthy and sustainable living in areas such as energy, water, waste, and food.

IKEA's business operations rely on natural resources and materials. Circular principles are integrated into business activities to reduce the environmental impact of resource use, aiming to use products and materials at their highest value for as long as possible.

Value Chain Impact: IKEA applies a 'value chain' approach, aiming to understand and manage its impact at each stage to realize its vision of creating a better everyday life for the many people. The greatest change can be achieved within IKEA's own operations. As a retail organization, IKEA's impact is primarily felt in the middle section of the value chain, but aspects of the upstream and downstream sides also affect IKEA. By prioritizing sustainable products, including plant-based foods, IKEA influences the materials used in production. Promoting circularity helps reduce product waste and shapes customer behavior in downstream operations.

More Circular Products, Services, and Solutions

Inter IKEA Group designs the IKEA range with the goal of using only recycled and renewable materials, significantly increasing the proportion of recycled materials in IKEA products. Wood is the most widely used material in the IKEA product range. In FY24, 16.2% of the wood used in IKEA products came from recycled sources (16.8% in FY23), compared to the target of one-third by 2030.

At Ingka Group, IKEA has the opportunity to promote circular activities and behaviors to millions of people visiting its stores, shopping centers, and websites. IKEA is developing services and solutions that enable customers to extend the lifespan of their products and expand the market for used IKEA products, which can reduce resource consumption by people buying fewer new products.

Reporting on Key Topics

IKEA aims to focus its work and reporting on topics that are most important to stakeholders, the business, and the planet. This involves regular double materiality assessments, incorporating stakeholder insights and research. The table below summarizes significant impacts, risks, and opportunities identified in each stage of the value chain.

Products and Services Used in Operations: IKEA aims to increase the use of circular practices in its procurement, using renewable, recycled, and recyclable materials wherever possible. Wood, cardboard, and paper packaging are key focus areas. IKEA's policy mandates that 100% of wood, cardboard, and paper used in business operations must come from recycled or Forest Stewardship Council® (FSC®) certified sources. Data collection for this will begin in FY25. IKEA is also exploring opportunities to increase resource efficiency and reduce reliance on new materials.

Climate, Nature, and Circularity

IKEA's vision is to create a better everyday life for the many people. Climate change is no longer a distant threat, as its effects are being felt directly. Rising temperatures lead to more frequent and intense heatwaves, impacting health and increasing the risk of heat-related illnesses. Poor air quality exacerbates respiratory diseases, and diseases spread rapidly due to environmental changes. Natural disasters like floods, storms, and sea-level rise force people to leave their homes. Food and water prices rise as droughts and extreme weather affect agriculture. Reduced crop yields threaten food supply, making daily necessities unaffordable for families and increasing their financial burdens.

Action is needed now to ensure the transition to a net-zero economy is fair and equitable for everyone. IKEA acknowledges its significant responsibility and the many opportunities to drive positive change impacting climate change.

IKEA's Strengthened Climate Program ('Net Zero and Beyond'):

• Reducing GHG emissions across the IKEA value chain in absolute terms: The primary goal is to halve IKEA's value chain emissions by FY30 (compared to FY16) and achieve net-zero emissions by FY50 at the latest. Net-zero will be achieved by reducing absolute emissions by at least 90% (compared to FY16). The remaining 10% of emissions will be neutralized through carbon removal and storage within the value chain.
• Removing and storing carbon from the atmosphere through forestry, agriculture, and products within the value chain: IKEA aims to reduce carbon emissions and sequester atmospheric carbon through its value chain, products, and responsible forestry and agricultural practices. The transition to a circular business model and efforts to extend the lifespan of IKEA products ensure that carbon is stored in products for longer. Goals are being set for reducing carbon emissions and storing carbon in forestry and agriculture.
• Beyond IKEA: This includes investments, advocacy, and initiatives that align with long-term visions for the future, connected to IKEA's value chain. IKEA will strive to promote broader emission reductions and support a just transition by collaborating with communities, policymakers, and other stakeholders. By sharing resources and expertise, IKEA aims to accelerate climate action and encourage increased use of renewable energy, electrification of industries, adoption of circular solutions, and protection of nature, all in line with the 1.5°C goal.

Energy Consumption

IKEA's climate footprint for FY24 is estimated at 21.3 million tonnes of CO2 equivalent (eq), a 5% decrease from FY23 and 28% lower than the base year FY16. This reduction is attributed to the continuous increase in renewable energy sources, focus on energy efficiency, efforts towards electrifying transport, and reduced production volumes.

Water and Energy Saving Solutions

Water and electricity are essential for modern life and homes. It is crucial to use them mindfully to manage electricity bills and avoid overburdening the environment. IKEA helps customers become more energy-efficient by offering innovative lighting solutions, home appliances, and tips for keeping homes warmer. The goal is to inspire people to live healthy and sustainable lives within the planet's limits and assist them in achieving this goal. IKEA believes every household has opportunities to contribute to sustainability, with water saving playing a key role.

The focus is on strategically important areas where IKEA has the greatest influence and opportunity to achieve positive impact:

• Improving water quality and availability in the value chain.
• Enabling reduced water consumption in homes.
• Taking a leading role and collaborating for a water-positive future.

IKEA's water footprint data shows a decrease in water consumption over the years. In FY24, water consumption was 43.48 thousand m³.

Water is used for drinking, cooking, cleaning, flushing toilets, and watering plants. In FY24, water usage in retail stores increased by 7% in the Czech Republic due to a 7% increase in store visitor numbers. In Hungary, water usage decreased by 2%, and in Slovakia, by 1% compared to the previous year.

Automated water meters are being installed for real-time monitoring, enabling faster leak detection, performance comparison between sites, and identification of water-saving opportunities. IKEA stores in Brno and Soroksár collect rainwater for irrigating green areas, reducing the use of potable water. The Bratislava IKEA uses groundwater for flushing all store toilets, saving 7,500 m³ of potable water in FY23.

Products for a Healthier Home: Sustainable living is about personal well-being and protecting the environment. IKEA offers simple and affordable solutions for customers to make their daily lives more environmentally friendly. Products are designed to be beautiful and affordable, improving quality of life and creating healthier home environments.

Sustainability is integral to IKEA's product development process. Many products are designed to help people consume less energy and water, generate less waste, and eat healthy, plant-based foods. Examples include HILLEBORG and MAJGULL blackout curtains made from recycled PET textile waste, PLATSA wardrobes with detailed online disassembly instructions, and the DÅNHULT sofa made from heat-bonded felt using post-consumer and recycled textile waste.

Solutions for Reducing Waste: Reducing and reusing waste is a critical environmental issue. IKEA aims to minimize and eventually eliminate waste. The company is committed to responsible resource use to maximize the value of products and materials. IKEA is gradually enabling the reuse, refurbishment, repair, resale, and recycling of all IKEA products. IKEA is committed to making furniture easily extendable in lifespan and giving it a second life. Alongside responsible products, circular services are offered.

Products and Services for Longer Furniture Lifespan: Customers can return, repair, or purchase display items at reduced prices. IKEA believes furniture that is no longer needed in one place can be useful elsewhere. IKEA Buyback Points purchase used IKEA furniture to give it a second life. Customers return good-condition used IKEA furniture and receive an IKEA gift card for up to half the original price. The furniture is assessed and offered for sale at the Buyback Point, providing quality furniture at affordable prices, reducing waste, and promoting sustainability. Products sold at Buyback Points come with a two-year warranty.

Second Life for Furniture: These products are also available online. Customers can view and reserve second-chance items for pickup at the store. All items offered for reuse are thoroughly inspected to ensure functionality and safety. In FY24, more items were resold than bought back, as some items were already in stock from the previous financial year.

Spare Parts: IKEA offers many furniture spare parts. Customers can request larger spare parts at their local IKEA store or through central customer service.

Children's Furniture Buy-back Guarantee: IKEA understands that circumstances change, especially with children's furniture. IKEA offers IKEA Family members an exclusive service to sell back IKEA children's furniture for a predetermined price, allowing another family to acquire it at a lower cost.

More Sustainable Food: Globally, IKEA served food to approximately 665 million people last year. By offering plant-based foods, IKEA encourages customers to choose plant-based, lower-carbon diets over meat. An increasing number of customers are choosing plant-based options, including plant-based balls, vegetarian balls, plant-based hot dogs, vegetarian hot dogs, plant-based soft serve, and new plant-based breaded nuggets introduced in FY24. The goal is for 50% of main courses offered in IKEA restaurants to be plant-based by 2025. To encourage the consumption of plant-based foods, IKEA ensures they are offered at the same or lower prices than meat-based alternatives.

The plant-based hot dog was launched in FY23 and contains rice protein, onion, apple, salt, pepper, and a smoky aroma, providing the characteristic taste and smell of a hot dog. It is as tasty as the original and offered at the same or a more favorable price.

In FY24, the number of plant-based hot dogs (vegan or plant-based) sold in the Czech Republic, Hungary, and Slovakia showed a trend towards increased plant-based options.

Fair and Equal Treatment

IKEA prioritizes people in everything it does, ensuring fair treatment for everyone and providing decent, safe, and meaningful work. By celebrating differences and fostering collaboration and inclusivity, IKEA aims to set an example for creating a fair and equitable society.

IKEA believes everyone deserves fair treatment and equal opportunities, regardless of origin or identity. Human rights, based on equality, are central to IKEA's values. The company continuously adapts to new challenges, assessing and meeting the needs of its communities. Contributions and changes aim to improve people's lives and promote a just and equitable society. Guided by IKEA values, people are supported in every action and decision. Regular performance and career assessments help employees advance in their careers and develop their skills. Investing in employees creates a positive and supportive work environment, benefiting everyone involved.

Ingka Group is committed to fair treatment and equal opportunities, creating a workplace where people from all backgrounds can reach their potential and feel supported and valued. As a purpose-driven company, IKEA aims to contribute to social equality.

By 2030, IKEA aims to lead in creating a just and equitable society that serves the interests of the majority. This is achieved by expanding IKEA inclusively, respecting and promoting diversity, and fostering fair and meaningful work throughout the value chain, enabling people to secure good lives for themselves and their families.

Inclusivity means engaging with the work of others and inviting others to participate in IKEA's work. IKEA is committed to:

• Creating and supporting fair and meaningful work throughout the value chain.
• Operating as an inclusive company.
• Promoting equality.

By advocating for equal rights and workplace benefits, IKEA strives to create an inclusive environment that reflects its commitment to equality and supports the well-being of all employees. IKEA is a member of the Equal Pay International Coalition (EPIC) and is committed to equal pay for women and men across Ingka Group.

The company provides a wide range of benefits to its employees, ensuring that part-time and full-time employees receive the same benefits, regardless of position or hours worked. Recognizing the importance of beneficial benefits for employee well-being and job satisfaction, IKEA offers a comprehensive benefits package. The goal is to provide equal terms for all employees regarding essential benefits. The My Rewards portal allows employees to view their benefits and discounts.

Parental Leave: Supporting employees at every stage of life is part of IKEA's commitment to their well-being. Parental leave is a key benefit reflecting the commitment to equality and family support. The report details parental leave benefits for FY24, showing how employees are supported during this important time.

Employee Numbers: In FY24, IKEA had 987 total employees in Hungary, with 980 permanent and 7 temporary. Of these, 668 were full-time and 319 were part-time.

Employee Turnover: In FY24, Hungary saw a turnover rate of 398 employees (197 female, 201 male). The retention rate for employees who returned after parental leave and were still employed after 12 months was 95% for females and 100% for males.

One IKEA Bonus Program: Ingka believes in collective achievement and recognizes contributions to business goals. The One IKEA Bonus program aims to drive business development and reward good performance, with payouts occurring annually if goals are met or exceeded.

Glossary and GRI Index

The report includes a glossary of terms related to sustainability and a GRI Index, which maps the report's content to the Global Reporting Initiative (GRI) Standards.