Ikea's Steve Howard on Bringing Sustainability to the Masses
A year ago, Steve Howard, founder and CEO of The Climate Group, became the chief sustainability officer (CSO) at Ikea, the privately held $32 billion Swedish home-furnishings giant. As Ikea releases its 2011 sustainability report, Steve talks with Heather King about his decision to move into industry, Ikea's push for certified cotton and timber and how to make sustainable products affordable to millions.
Heather King: Why did you leave the nonprofit you founded to join Ikea?
Steve Howard: When I was approached by Ikea, I was already contemplating my next chapter. I had advised more than 50 of the largest businesses in the world. I had good insight into whether or not a company would really make [sustainability] happen. I was on the lookout for an exciting company that was serious about sustainability. The job would have to be the right level in the right enterprise -- not reporting to someone, but rather as part of the executive team.
When I met with Ikea's CEO Mikael Ohlsson, I said: "If you're interested in being incrementally less bad, I'm the wrong guy. If you're interested in transformational, I'm in." Mikael's face lit up.
In addition to seeing real commitment from the top, I recognized Ikea's potential to bring sustainability to the mass market. From product design to a vertical integration that enables deeper supply-chain work to a global retail network, Ikea is positioned to sell sustainable products into millions of homes. That challenge is compelling.
HK: What is Ikea doing on the supply-chain front, especially with two challenging raw materials: cotton and wood?
SH: We are a decade into using IWay, a 'code of conduct' that specifies environmental and social requirements for sourcing and distributing products. This supply-management system has been honed over the past decade; there have been 165,000 improvements since we started. This year, our goal is to secure 100 percent compliance. This gives us confidence that people being are being paid fairly, that water- and air-treatment plants are installed and much more. We have 80 in-house auditors, and we supplement as needed.
In high impact areas such as cotton, we've made a lot of progress. Today, 24 percent of the cotton in Ikea products comes from sustainable sources. We're committed to take it to 100 percent by 2015.
Cotton is resource-intensive in terms of labor, water, pesticides and fertilizers. With the help of World Wildlife Fund, we've done a lot of work to reduce the water use in cotton production. This generates other significant positive impacts. As farmers reduce water consumption by half, they cut the need for pesticides by half, fertilizers by a third and increase yields. Their spending on pesticides and fertilizer locked them into a debt cycle. Now, with better yields and lower costs, they're coming out of poverty.
Our approach is similar in forestry. We are working with the Forest Stewardship Council to guide our practices and provide certification. By 2017, our goal is to source 10 million cubic meters of certified wood. That will mean about 50 percent of Ikea wood products will use certified wood. We will be the world's largest retailer of certified wood products.
HK: Let's look at the big picture. Ikea is in the business of selling high volumes of low cost goods. Your bookshelves, chairs and desk accessories are not collectibles that will be kept for generations. How can you fulfill the promise of sustainability and manage the lifecycle of the products that you sell?
SH: That's a great question. In actuality, given today's population, there aren't enough antiques to go around. We'd be sitting on the floor if that were our only furniture source.
Sometimes people confuse low price with disposability. At Ikea, we are obsessed with quality. Our products are about form, functionality, style and sustainability. Our business model is to make sustainable products affordable for as many people as possible. We do this with products made of sustainably sourced and produced wood and cotton. We also do it by making products like LED light bulbs and induction cookers affordable. Both of these significantly reduce home energy use.
By 2015, all of our products will be renewably sourced and designed for recyclability. In reality, if you can ensure that the raw materials come from a sustainable source, if you can be sure the factories provide a great opportunity and a good quality of life, if you can operate with renewable energy, you are delivering highly sustainable products.
For end of life, we are looking at how we can close the loop and fully recycle products. We're exploring furniture reuse for people that can't afford furniture of their own. We want to be part of the circular economy.
The challenge for us, and really any business, is to move with resolve. This is a no-brainer. I don't think we've fully realized the extent to which sustainability is going to shape society and the business landscape over the next couple of decades.
Editor's note: This article was updated to peg the correct value of Ikea's sales at $32 billion.
Ikea photo via Shutterstock.