Why does IKEA care about sustainability? Kind of a hard question…
Steve Howard: I’m going to give you a slightly long answer, if that’s okay. Long but structured. We have many businesses that have been around for any length of time, and we’ve got strong sustainable values in our culture. We’ve also got a vision that was set up more than 30 years ago by our founder. And the vision is to help create a better every day life for many people. So you’ve got people thinking how can you get a better more functional sofa at a lower price so the family in – whether it’s Cincinnati or Shanghai – that’s moving into an apartment can have a great sofa to sit on. We’re motivated by that. And that vision naturally structures to sustainability. And then you also want to continue to lower prices and then you actually look to efficiency in a big way. So efficiency is a great proxy for the long part of the sustainability – if you can be breathtakingly efficient. I’ll give you a couple of examples of where it connects really well.
We have a lamp called the Vidja lamp and there was a design challenge there. As we redesign products we put them through a score card. With that, we eliminated 24 out of 33 elements. Clever design, we did. We lowered the weight of the product by about a half. We also reduced packaging by nearly a third in that product. We also slashed the amount of cotton – mixing it with viscose. The product was better, it was lighter and we lowered the price by more than a third to the customer. So it actually fundamentally changed the footprint of our product. The other thing – we could actually ship 128 of the lamps on a pallet rather than 80. If you can imagine from a fuel efficiency point of view – in one year you could effectively get a 60% increase in fuel efficiency just by the way you design things and pack them. But we take that across the entire range. So it’s good business sense. And then there’s a sort of values driven element.
Obviously no one’s perfect – we’re a good company, with good people doing good things for good reasons overall. So people are well-motivated, and we know that there are four numbers in sustainability. One and half planets – you’ve heard it at the conference here – one and a half planets of consumption today. We can’t carry on for too much longer so we use lots of resources. We have to be really mindful of where they come from and to make sure we secure sustainable forests or farmlands. We have to take a lead on that otherwise, you know, with one and a half planets of consumption, it’s not going to be there for future generations or for the next generation of IKEA. The next number is three billion – three billion extra consumers by 2030. We have two billion consumers today – two billion people in the global middle class. That swells by three billion to five billion by 2030. Six is the next number – six degrees warmer.
If you just take those three numbers and think, “Okay we’re expecting six degrees warming, three billion extra consumers on one and a half planet’s resources – this shapes the business landscape. So [sustainability has] gone from “it would be nice to do” to an absolutely business-critical thing to do. And as soon as I explain that, or my colleagues explain that anywhere in the business – we have a conversation and everybody will say, “What can we then do? How can we help our customers live a more sustainable life at home with super low priced LEDs or induction stoves. How can we help design efficiency and renewable materials and recyclability into products? How can we make our operations completely sustainable? That’s why we are going for 100% renewable energy – we actually own and operate wind farms in six countries now.