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Jun 10, 2023

CEO Jesper Brodin on How Ikea Is Prioritizing Sustainability

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The number of globally known brands to which consumers feel personally connected are surprisingly few. But say the word Ikea to someone almost anywhere in the world, and chances are good they’ll have their own Ikea story, whether it's furnishing a first post-college apartment, kids playing in the in-store ball pit or a near-divorce while assembling a cabinet. For me, it's the day my then-fiancé and I did so many rounds around the winding floors of the Newark, N.J., location that we spent all of breakfast, lunch and Swedish-meatballs dinner in the Ikea cafeteria. (We’re still married two decades, an Expedit toy cubby, Ektorp sectional and many Billy bookcases later, no doubt partly because TaskRabbit can now be hired to assemble.)

Under Jesper Brodin, the CEO of Ingka Group, the company behind the 80-year-old brand—known for furniture that is cost-efficient and aesthetically pleasing but not exactly meant to be handed down as heirlooms—has put sustainability front and center while seeing record revenues. TIME included Ikea on the inaugural TIME100 companies list in 2021, citing the strides it has taken toward its goal of being climate-positive—reducing more greenhouse gases than it produces—by 2030. One of Brodin's latest moves is, literally, going to the mattresses, via a new business that recycles them rather than having them pile up for incineration or worse. (Related trivia: The New Yorker and the New York Times have both cited the claim that 10% of Europe's babies are conceived on Ikea beds.)

Brodin and I caught up recently to discuss all of this and more.

This interview has been condensed and edited for clarity.

BRODIN: It gets to the heart of who we are. Ingvar Kamprad [the I.K. in Ikea] was 17 years old when he founded the company. He actually had to bring his father to the registry to sign up to start the company. Ingvar [was] coming from a quite frugal part of Sweden; low pricing was part of his childhood.

Still today, we are very loyal to the democratic design principles of Ikea. Some of our external board members tell us that in other companies, they celebrate when they raise the prices. We cry when we have to raise prices. Inviting customers to do part of the job [e.g., carrying out and assembling] is how we save money together.

Nobody briefed me about pandemics, economic chaos, supply-chain disruption, and geopolitical tensions and wars. It's been an incredibly humbling and very stressful period of course, which goes without saying for any of us out there today. How do you navigate through these times? We have been able to be quite entrepreneurial…. Early in the [pandemic], we were in the red in our forecasts. We never went in the red. We actually managed to navigate through [that period] with not-phenomenal bottom line results but surviving.

Read more: How American Shoppers Broke the Supply Chain

We were victim to the supply chain disruption for a while, only to realize that this is a new reality. We have to retain our agility. We also learned along the way that we were probably a bit too rigid in the way we were set up.

It's really the trend topic right now. Maybe we should ask generative AI the same question and see if it answers differently than what I’m going to do now.

We have developed different ways of steering our business where we basically ask machines to help us to make commercial choices, help us steer towards optimization of [what we] stock and so forth. When it comes to the latest generation of AI, we are currently doing a fast-tracking, a review of both the opportunities and the risks. I think we need a little bit more time to figure out both the plus and the minus account.

[One is] if the data is misused in any way. Where do we see people are adding value? Where would we not agree on a machine adding value? Where would we say this is absolutely fine for a machine to help us to do? It becomes almost philosophical. We’re still in the early stages of understanding this in society. I think it's a collective responsibility.

It's incredibly accurate. I still believe that the manuals with the pictures are helpful.

What AI didn't know is that we are now replacing the fittings with click solutions. Which is one of the other real revolutions in Ikea. We are standardizing and setting up another way of constructing furniture, which also by the way has an immense impact from a sustainability point of view with less use of material. Instead of screwing your furniture together, you will actually click it together with super smart fittings, which is less material and less work.

The most beautiful execution of that is when we use wood and click fittings, where basically you don't have any glue or any metals. And the more you sit on the chair, it will make the compound stronger. To be honest, in the old days, if you would move some of our furniture, move with it four or five times, the compound itself will start to get a little bit loose and in the end, deteriorate. So it's a great opportunity to prolong the life length for furniture.

It's a fascinating question, and one of the most important questions on the planet right now. I think we have all underestimated the Anthropocene age and the impact we humans have. Obviously the consumption model and the economic model of the 1900s will not serve humanity in the future. So we need to change.

Today, we are trained to assume that things like sustainability that are good would actually add to the cost. In Ikea, from the start, we were taught that wasting resources was a sin. So if you look at our tradition and history, long before anybody could spell sustainability, it was about reducing air in the packages, filling up the containers, making a flatpack.

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The only way Ikea can be successful in the future is to be in a hurry to get sustainable. We need to get smarter on how we use energy and materials across the whole value chain. And that's the only way we will be able to be affordable.

So we are—from an ethical point of view, from a brand point of view, from a cost point of view—in a hurry.

I would also [note] that Ikea is normally a big market share in secondhand. Our furniture tends to rotate. If you go to any eBay in the world, you would probably see Ikea on the top of the list of items [that] have been circulated.

It serves as the best example of circularity for us. Most people sleep on a mattress. On average, they last for about 10 years. In the Netherlands, which is a country of 17 million people, what means is that you have 1.7 million mattresses per year that go to waste. Imagine the tower of annual waste for something that is quite big, has a big carbon footprint.

The solution came together with an entrepreneur in the Netherlands and the Dutch government. The government imposed legislation that mattresses had to be taken back. They couldn't be incinerated anymore. As a consumer, you need to bring your mattress to a collection point. And that made it then logistically possible for us to collect mattresses and bring them back to, if you like, a reverse factory, where we break it up into three or four categories of material and we sell it back in the chain.

We did not stop at Ikea's market share. Today, we have a capacity to take back every mattress in the Netherlands. And the beauty is it's a quite okay business. It's not a gold mine, but it's a plus. We are actually in expansion to many markets now to take that concept not only for Ikea but for others. It's the new business model that will actually become profitable at the same time as you take care of a huge problem.

The barriers are that we need markets where the government does what the Netherlands did. We will look into the opportunity to apply this on sofas as well. And if you take sofas and mattresses in Ikea, you probably come up to some 15% to 20% of our total carbon footprint. So that would be immense for us.

We are reconstructing the digital foundation of Ikea by adding everything from the basic shopping experience to virtual reality and augmented reality. Some of us feel still—a bit of the statement of the catalogue and maybe the look of it that, we miss it. But there was a lot of paper and a lot of transport paper for very little use at the end of the day.

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That's correct. We were one of the first companies to set up a climate plan back in 2016, alongside with the Paris Agreement. At that time, we set out the goal to be minus 15% in carbon by 2030. That's absolute, so we have to factor in our growth. The very good news is that we are already at minus 13.6%. That is actually a 2022 number, which is actually fact-based proof that it's a good idea for growth to decarbonize. [The company says it grew 24% during this same period.] I would say production and transport is moving in the right direction. But on top of that, we need the circularity.

Small- and medium-size enterprises are also part of our value chain. Most Ikea suppliers are actually quite big companies today, which is a benefit from a climate perspective, because they are fewer contacts and a capability to scale many of these things we are talking about. But we have more than 1 million customers who use Ikea and are typically smaller companies who use us for furnishing their office, cafe, or shop. So we have [together with We Mean Business] started to now actually invite our customers to be part of the journey. We have just started to pilot it in two countries. We encourage them to do a climate plan, because it's the right thing to do ethically, but also because it will help them to strengthen their competitiveness. We have a platform [SME Climate Hub] with a lot of self-help tools for how you actually can do your own assessment and make your own, so to say, draft climate plan. This is a bit new, but it's something that we’re going to stay with.

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