Ingka Group, the largest IKEA franchise holder in the world, will invest €1.5bn to phase out direct use of fossil fuels as part of its renewable energy transformation.

The investment in energy efficiency improvements and renewable heating and cooling technology will contribute towards Ingka's target of reducing its climate footprint from its own operations by 85% by 2030 compared to a 2016 baseline.

The latest investment is in addition to €7.5bn the group has already committed.

"Ending our reliance on fossil fuels is essential to tackling the climate crisis and halving global emissions by 2030," said Jesper Brodin, CEO of Ingka Group.

"At IKEA, we started our journey in 2009 and have invested heavily in both on and offsite renewable energy production to enable the transition. We have already reduced emissions across our IKEA stores by 60.4% since 2016 and 96% of our retail sites now use renewable electricity.

"The future of energy must be renewable, and this additional investment will enable us to reduce our carbon emissions, increase efficiency and lower costs in the long term. It’s also good for business – a win-win."

Ingka Group is committed to the Paris Agreement and working towards drastically reducing greenhouse gas emissions and phasing out fossil fuels in line with its Science-Based Targets.

Ingka Group has reduced its overall emissions by 24.3% against 2016 levels. Heating and cooling are currently the largest drivers of emissions with Ingka’s own operations category.

This additional investment will be used to accelerate ongoing efforts to retrofit IKEA units with energy efficiency upgrades and renewable heating and cooling.

All new units will be built with renewable heating and cooling, and work is already under way to retrofit 150 existing properties. 

“Transitioning to renewable heating and cooling is a vital enabler on our decarbonisation journey; however, it’s a complex and costly process," said Karen Pflug, chief sustainability officer, Ingka Group

"This investment means we can progress further and faster with our plans – and we know it will pay off in the long term.”

Ingka Group´s investment arm, Ingka Investments, has already invested and committed to over €4bn in off-site renewable energy, making it a mid-sized renewable energy production company. 

“As businesses, we have an important role to play in phasing out fossil fuels, but we cannot do it alone. We welcome the COP28 pledges on renewable energy and energy efficiency and consensus on transitioning away from fossil fuels," Brodin added.

"Now, to move from pledges to impact, governments and businesses need to combine efforts and address obstacles, such as complex and inefficient policy, permitting and reporting frameworks.

"We have five years left to deliver to the Paris Agreement – with the right commitment and leadership we have it in our hands."

To enable the transformation across society, Ingka Group would welcomes the following actions from governments:

• Rapidly scaling up renewable energy through targets as well as incentives and at the same time phasing out fossil fuel and connected subsidies.
• Investing in the required grid infrastructure fit for distributed renewable generation and the needs for electrification.
• Set stronger energy efficiency regulations across sectors.
• Simplify permitting processes around renewable energy projects and infrastructure while respecting a just transition, local communities, and environmental standards.
• Encourage and incentivise the renovation and retrofitting of commercial and residential buildings including insulation, heating/cooling, and energy storage.

(Pic: Eamonn Farrell/Photocall Ireland)