Circularity & Energy: Ingka Group’s 2025 Sustainability

Ingka Group’s Sustainability Report FY25 explores how the world’s largest IKEA retailer is pushing hard on climate, circularity and social impact, while preparing for tougher European reporting rules. 

“When I look at how far we’ve come on our sustainability journey, I feel genuinely proud - and grateful,” says Karen Pflug, Chief Sustainability Officer at Ingka Group.

“In FY25, we made real progress. We scaled circular services that make it easier for customers to live more sustainably.

“We took bold steps to decarbonise our home deliveries and improve energy efficiency in our own operations. 

“We also made new investments in the renewable energy and circularity sectors and expanded our programmes to support equality, diversity and inclusion.”

FY25 at a glance

FY25 marks Ingka Group’s first sustainability report explicitly structured around ESG pillars, reflecting its preparation for the EU’s Corporate Sustainability Reporting Directive (CSRD) and European Sustainability Reporting Standards. 

During the year, 94.8% of global operations were powered by renewable electricity and absolute Scope 1 and 2 emissions fell 22.3% year-on-year, putting the company on track towards its 2030 climate goals.

Operational decarbonisation was paired with rapid growth in zero‑emission home deliveries, which rose to 60.1% from 41.1% in the previous year, and a 60% cut in production food waste since FY17, avoiding waste equivalent to 9.6 million meals in FY25 alone and 47.5 million cumulatively since FY17. 

The report also stresses that Scope 3 emissions data, largely tied to the IKEA supply chain overseen by Inter IKEA Group, will be reported later in FY26 as methodologies are strengthened, underlining the complexity of value‑chain decarbonisation.

Environmental achievements

On climate, Ingka Group’s clearest achievement is its deep reduction in operational emissions: a 70.6% absolute cut in Scope 1 and 2 emissions versus FY16, driven primarily by renewable electricity and efficiency measures across stores, warehouses and offices. This sits alongside earlier progress reported for the wider Ingka climate footprint (Scopes 1–3), which had already fallen by 30.1% against FY16 while revenues increased by 23.7%, signalling that growth and emissions are beginning to decouple.

The business continued to invest heavily in renewable generation, supporting on‑site production and power purchase from wind and solar assets owned through Ingka Investments, which already covered nearly 60% of electricity in 28 countries as of earlier reporting. Operational initiatives ranged from energy‑efficient lighting and heating in stores to logistics optimisation for delivery fleets, contributing to both lower emissions and long‑term cost resilience.

All sustainability, net zero and sustainable supply chain leaders should attend:

• Sustainability LIVE: The Net Zero Summit - QEII Centre, London, March 4-5
• Sustainability LIVE: The US Summit - Navy Pier, Chicago, April 21-22

Co-located with Procurement & Supply Chain LIVE, these events brings together CSOs, ESG leaders and senior decision-makers at a moment when sustainability, supply chains and commercial performance are increasingly interconnected.

Tickets can be booked online today for The Net Zero Summit and The US Summit. Group discounts available.

Environmental areas for improvement

Despite strong progress, the report makes clear that challenges remain, especially in closing the remaining 5.2% gap to reach 100% renewable electricity and in tackling value‑chain emissions. Ingka Group acknowledges that Scope 3 emissions – primarily linked to product manufacturing and materials managed by Inter IKEA Group – are not yet reported for FY25 due to ongoing improvements in calculation methodologies, with an update promised in FY26.

Zero‑emission deliveries, though rising sharply, still fall short of the long‑standing ambition of 100% by 2025, hindered by limited availability of suitable vehicles and charging infrastructure in some markets. 

The group also faces the broader retail challenge of reducing climate and nature impacts tied to raw materials, product use and end‑of‑life, meaning further shifts in design, sourcing and customer behaviour will be essential in the years ahead.

Water positivity

Water is embedded within IKEA’s broader “Climate, nature and circularity” focus area, with efforts concentrated upstream in raw material sourcing and manufacturing, where water use and pollution risks are highest. 

Inter IKEA Group’s FY25 Sustainability Statement highlights the need to integrate responsible management of natural resources, including water, into policies and codes of conduct for suppliers, acknowledging that extraction and processing of materials drive many key environmental impacts.

For Ingka Group’s own operations, efficiency improvements in stores, distribution centres and food operations – such as optimised dishwashing, facility management and maintenance – are part of its standard sustainability toolkit, complementing energy and waste initiatives. 

As reporting under CSRD evolves, more granular disclosures on water‑related impacts, risks and dependencies across the IKEA value chain are expected, which should provide a clearer picture of hotspots and priority actions.

Biodiversity

Biodiversity is addressed primarily through the lens of “nature,” with Inter IKEA Group committing to reduce negative pressures and impacts on ecosystems while contributing to protection, improvement and enhancement of nature in its sphere of influence. 

This includes transforming sourcing of key raw materials to reduce reliance on virgin, non‑renewable resources and embedding responsible forestry, agriculture and land‑use practices through supplier standards and codes of conduct.

For Ingka Group, biodiversity outcomes are closely tied to decisions on land use for stores and renewable energy assets, as well as the materials flowing through its retail system. 

As nature‑related reporting matures, the group will need to demonstrate how its investments, partnerships and circular business models can help address drivers of biodiversity loss such as habitat conversion, pollution and over‑extraction within and beyond its direct operations.

Circularity

Circularity is a defining theme of Ingka Group’s FY25 report, with progress highlighted across resale, take‑back and repair‑oriented services. The Buyback service sourced nearly 686,500 used IKEA products in FY25, while 424 stores now operate “As‑is” areas for second‑hand and discontinued items, making circular choices more visible and accessible to customers.

Ingka also launched a peer‑to‑peer IKEA second‑hand marketplace in Norway, Portugal and Spain, with plans to extend this model across Europe, reinforcing its ambition to prolong product lifespans beyond the first owner. These initiatives reflect Inter IKEA Group’s broader circular strategy built on Circular Design Principles, which aim to decouple growth from virgin material use by enabling reuse, repair, refurbishment and recycling at scale.

The ‘S’ of ESG

Social impact sits under the “Fair and equal” focus area of the IKEA Sustainability Strategy, which aims to respect and promote human rights, improve decent and meaningful work and advance equality, diversity and inclusion across the value chain. Ingka Group’s FY25 reporting emphasises its role as a large employer and community partner, using its stores as hubs for local engagement and support.

The group’s climate and circular actions also carry a social dimension, particularly through efforts to make sustainable home solutions affordable and accessible to more people. As CSRD‑aligned reporting advances, stakeholders can expect more detailed disclosures on worker wellbeing, supply‑chain labour standards and community investments within the Ingka ecosystem.

Governance

FY25 is a turning point in governance, with Ingka Group explicitly aligning its report structure to ESG pillars and to the EU’s emerging sustainability reporting regime. 

Inter IKEA Group has developed a CSRD reporting manual in FY25 to document methodologies and interpretations for sustainability metrics, and updated internal policies on environmental and social responsibility and sourcing, strengthening governance over non‑financial data.

As a foundation‑owned company, Ingka Group stresses that its long‑term perspective allows it to invest for both financial resilience and positive impact. Governance structures that integrate sustainability into decision‑making – spanning risk management, strategy and performance incentives – will be increasingly critical as regulatory expectations and stakeholder scrutiny intensify.