IKEA: Why Decarbonisation & ESG Are Business Imperatives
New reports from the World Economic Forum (WEF) highlight a stark reality for businesses: decarbonisation is no longer a choice but a necessity.
The findings, published by the Alliance of CEO Climate Leaders in collaboration with Earth system scientists, outline the mounting financial and environmental risks of climate inaction.
Jesper Brodin, CEO of Ingka Group and co-chair of the Alliance, is unequivocal about the stakes: “The cost of engagement far outweighs the cost of proactive investments. The transition to a carbon-free economy is already here – and it’s unstoppable.”
The data backs him up. According to the Alliance's report, climate-related damages have already surpassed US$3.6tn since 2000.
Without decisive action, businesses could see up to 7% of annual earnings wiped out by 2035—equivalent to enduring a COVID-19-level disruption every two years.
The economic opportunities in the green transition
Far from being a financial burden, the report argues that climate action presents significant economic opportunities. The global green economy, currently valued at US$5tn, is forecast to nearly triple to US$14tn by 2030.
“Climate action does not have to come at the expense of economic performance,” Jesper explains.
Ingka Group, the parent company of IKEA, exemplifies this principle. Since 2016, the company has reduced its climate footprint by 24.3% across Scope 1, 2 and 3 emissions while growing its business by 30.9%.
Jesper is keen to stress that sustainability is not just ethical, but essential for long-term business viability. “Being resource-smart is cost-smart, is business-smart,” he says.
The Alliance of CEO Climate Leaders represents a formidable coalition, with members generating a combined $4 trillion in revenue and employing 12 million people across 12 industries.
From 2019 to 2022, this group collectively reduced emissions by 10% while growing revenue by 18%.
Being resource-smart is cost-smart, is business-smart.
Climate risks are forcing boardroom action
The reports emphasise two categories of climate risk that businesses are facing.
Physical risks, such as floods and rising sea levels, pose immediate threats to operations and infrastructure.
Meanwhile, transition risks—ranging from regulatory changes to stranded assets—demand strategic adaptation to shifting market and policy landscapes.
Karen Pflug, Chief Sustainability Officer of Ingka Group, emphasizes the necessity of integrating climate considerations into core business decisions.
“Climate change is now an increasingly visible reality impacting all of us each year,” she says.
“Embedding climate risks and opportunities into a business's decision-making process is not only the right thing to do but a necessity for a thriving business.”
Karen points to tangible successes in areas like plant-based foods, renewable energy, and electrified transport as examples of how climate action can reduce costs and open new markets.
Climate change is now an increasingly visible reality impacting all of us each year.
Investing in renewable solutions
For Ingka Group, renewable energy is a cornerstone of its climate strategy. The company has invested over US$4bn in renewable energy since 2009, generating more energy than its operations require.
By 2030, Ingka plans to raise this figure to US$7.5bn, further accelerating the shift away from fossil fuels.
In addition to energy production, the company has committed US$1.5bn to renewable heating, cooling systems, and energy efficiency improvements.
These investments align with its science-based targets to dramatically cut greenhouse gas emissions and support the goals of the Paris Agreement.
“Our investments show that reducing emissions and building resilience is not just feasible but profitable,” Karen explains.
“The transition to renewable energy isn't just a strategy—it's a competitive advantage.”
The transition to renewable energy isn't just a strategy—it's a competitive advantage.
A sustainable business imperative
The reports make clear that industries can achieve substantial emissions reductions at limited cost.
With carbon pricing aligned to net-zero targets, many sectors could abate over 50% of their emissions, with some reaching net zero entirely.
“The cost of inaction is not only environmental but economic,” Jesper says, gravely. “This is the only sustainable business model for generations to come.”
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