Good morning. This is Eamon Barrett, filling in for Peter for the next six weeks while he’s out on parental leave. Perhaps appropriately as Peter adjusts to his new sleep schedule, we’re starting by looking at beds.
How can one of the world’s latest furniture retailers, churning out hundreds of millions of homeware pieces each year, reduce the impact of its business on the world? Well, there are a few options, including sourcing less-intensive wood crops or minimizing shipping distances. But at Ingka Group, the owner of the largest number of IKEA franchises, it’s their approach to the circular economy that most interests me.
“For me, recycling is the last resort really. It’s very much about keeping products in use for longer,” Karen Pflug, the chief sustainability officer at Ingka Group, told me this week. Ingka operates 482 IKEA franchises across 31 countries, raking in $44.88 billion of revenue a year.
I’d thrown Pflug the criticism that IKEA is a purveyor of environmentally damaging “fast furniture”—cheap items designed to last just a few years before being thrown away and replaced, journeying in a line from factory to landfill.
Pflug told me Ingka is working to “break the myth” that IKEA simply sells cheap products made cheaply. That means, first of all, designing products to be more durable and, secondly, designing products that can be repaired when they start to break.
According to Ingka’s latest sustainability report, published Wednesday, IKEA gave out 21.9 million spare parts to customers in 2022, extending the life of furniture for 1.8 million customers. Ingka also expanded the number of “circular hubs” in operation at its IKEA stores, increasing sales points where customers can buy secondhand returns from 170 to 306.
But when products inevitably wear down beyond repair, recycling those goods is the best thing to do. Yet even that requires innovative design and cross-industry collaboration.
“It definitely has to be an ecosystem thinking because it’s something we don't have all the answers to,” Pflug says.
One of IKEA’s most notable forays into recycling has been its ambitious target of recycling every mattress disposed of in the Netherlands—that’s 1.5 million a year—even if those mattresses weren’t originally sold by IKEA.
To meet the challenge, Ingka partnered with four industry specialists to create a circular economy where old foam mattresses are dissolved into repurposed polyol, a key chemical ingredient in making foam, which can be used as a feedstock for new mattresses.
One of their partners, Renewi, is a waste management services company, which helps Ingka manage the challenge—the key challenge of any circular economy initiative—of actually collecting the old product from consumers and delivering it to the recycling plant.
But when researching Ingka’s mattress-melting initiative I found that some IKEA stores outside of Ingka’s franchise have taken a different approach to repurposing old beds. In Toronto, for instance, IKEA runs an exchange program where the company will collect your old mattress and donate it to families in need. The disparity of those two solutions to the same problem of old mattress disposal speaks to how sustainable business solutions are best solved for locally, even when dealing with a multinational conglomerate.
Pflug would agree, saying that in her role as CSO, one of the “big challenges is finding how we move big topics like circularity and climate agenda across the value chain” of IKEA partners and operations. In 2019, Ingka Group implemented a change to combat that problem. The franchisee made all of its IKEA country retail managers regional CSOs, ensuring that “sustainability is clearly integrated to strategy and planning from the start.”
“We take our responsibility seriously around climate, so myself and our team need to work throughout the entire business to make sure sustainability is not just a side topic,” Pflug says, laying down a guideline for other business leaders. “It’s about integrating sustainability responsibilities with budget and investment.”
Eamon Barrett
eamon.barrett@fortune.com
