Dr. Steve Howard
- 11 October 2011
- Are the motivations behind your sustainability strategy financial or moral?
IKEA is a values-driven company and we’re driven both by the business idea that you can get high quality product and good value at a low price, and our vision of creating a better everyday life for many people. So our values, our business idea and our vision combine to shape the direction of the company and our decisions. We don’t see anything wrong with making good business decisions where the reasons for those decisions come from our values.
- Who has been your biggest champion?
Our CEO Mikael Ohlsson and his predecessor Anders Dahlvig have both been strong supporters of IKEA’s approach to sustainability. But the decisions we have taken on sustainable business have simply not been contentious within IKEA’s management community. Also, whilst our strategy was values-driven at the start, we’ve now realized that sustainability is going to shape the business landscape, and that companies that don’t embrace it are going to find it very tough going indeed.
- You’ve set a bold target for renewables? Why is there no greenhouse gas reduction target?
Culturally we’re an organization that likes to develop a track record before talking about our achievements, so setting a strong target on renewable energy has been a departure from this. On setting emissions targets, dealing with the scope of our emissions is complex, as is setting meaningful strategies to reduce them. For example, when we sell an energy-efficient LED light bulb it actually increases our emissions because of the extended lifetime of the product, even though we are helping our customers to reduce their emissions by switching to better lights. So we need to work out a way to deal with this type of thing fairly and transparently before announcing a target.
- IKEA has a somewhat unique ownership structure, but are there lessons you have learnt that would be applicable to other companies?
Unilever’s CEO Paul Polman recently said he wasn’t interested in short-term investors. As IKEA is foundation-owned we don’t need to worry about shareholders, and our management takes a similar long-term view. Shareholders of publicly-owned companies need to stand by management teams that choose to do this, and this will enable more companies to take the approach we are taking.
- Does IKEA plan to engage on public policy in the future?
We recognize that we need to be at the table and more part of the discussion; this hasn’t been part of our identity so far. Things that are important to us like renewable-energy investments and public-transport infrastructure are always heavily reliant on public policy. In ten years’ time the world probably won’t need government incentives for renewable energy, but support will always be needed for good urban planning and to ensure a price on carbon. We make investments in renewable energy partly because there’s a reasonable return, and this is because there are long-term policies in place. Going forward, we’ll need more genuine public-private partnerships to get things done.
- How do you reconcile what some might say is a fundamentally unsustainable business model with leadership on the Clean Revolution?
I accept that if we stopped pursuing our goals today then significant elements of our product range could be deemed unsustainable. But if we achieve all that we want to do then I don’t see why IKEA can’t be a model of sustainability. By 2015 all our products will either be renewable, recycled or recyclable. Right now we can make four to five durable LACK tables from the same amount of material it takes to make one solid wooden table. If we are successful in closing the loop in everything we do then what will be unsustainable about our business model?
- What challenges do you see on this issue for IKEA in the next five years?
The two central challenges facing us are climate change and resource scarcity. If we want to continue to provide people with great products then these are things we’ll need to focus on perpetually. I think climate change is solvable – it is essentially a timing issue in terms of the world’s response and we need to speed up that response. But resource scarcity is something on which we need to get our act together as a society.
Dr. Steve Howard is Chief Sustainability Officer for the IKEA Group. He is former CEO and co-founder of The Climate Group, which he co-founded in late 2003. At The Climate Group he advised the world's leading governments and businesses on climate change strategy, and chaired high-level meetings with attendees and speakers including Governor Schwarzenegger of California, and former-UK Primer Minister, the Rt Hon. Tony Blair.