FEATURE
Net-Zero Retail and Why It Matters
By : Mun Wei Chan , SustainableSG means working towards “ net-zero ” carbon emissions by balancing carbon emissions with removals or eliminating the emissions altogether . Recognizing that the private sector can contribute to reducing emissions and keeping under the 1.5C global warming safe threshold , more than 1,500 companies pledged in 2020 to slash their emissions to net-zero over time .
I recently taught a customized programme on carbon management for an online content company . The company is headquartered in Singapore with multiple offices overseas . The CEO decided to measure his company ’ s carbon footprint because of mounting concerns about the technology industry ’ s growing energy consumption and emissions , driven by cloud computing , faster CPUs and graphics cards than ever before , and users like you and me playing games and consuming online content .
In fact , some of the biggest names in the video gaming industry – the likes of Microsoft , Niantic , Rovio , Sony Interactive Entertainment and Ubisoft – launched the Playing for The Planet Alliance during the United Nations Climate Summit in New York in September 2019 . Members of the Alliance collectively reach out to more than 1 billion video game players , and have made environmental commitments such as reducing corporate emissions , integrating green messages and activities in games , planting trees and reducing plastics in their products .
One of the concepts I taught in the carbon management class was carbon neutrality , which
IKEA Sustainability Report FY19
IKEA is one of the most progressive climate action companies . Their sustainability report for financial year 2019 states their 2030 commitment “ to become climate positive by reducing more greenhouse gas emissions in absolute terms than the IKEA value chain emits , while growing the IKEA business .” In other words , IKEA ’ s moonshot strategy is to go one step beyond net-zero by absorbing more emissions than its business emits .
What ’ s insightful is that IKEA publishes the carbon footprint for each stage of the value chain for their products , as shown in the chart below from their 2019 sustainability report .
Extraction and preparation of materials is the stage with the highest level of emissions . This is because mining , forestry and fabrication are all energy-intensive activities . Product use at home is the next most emission-intensive stage as it includes energy consumption for powered devices . Such product lifecycle analysis is useful because it provides companies the in-depth knowledge to reduce emissions for every part of their value chain .
IKEA has a compelling three-prong strategy to reduce emissions . First , it will reduce absolute emissions in all its work processes . Measures include introducing circular economy concepts ( such as the new initiative in certain markets to buy back used furniture for resale ), working towards the use of 100 % renewable energy , and using more sustainable materials in its products .
The second aspect of IKEA ’ s emission reduction strategy is to store carbon in its products . This complements the buyback initiative because when a product is used for a longer period , the longer is the embedded carbon locked away . The third strategic aspect is to go beyond its own value chain to work with customers , suppliers and partners to reduce their emissions , such as selling solar panels for home-use . This multiplier approach allows IKEA to mitigate a carbon footprint four times larger than its own corporate emissions .
IKEA ’ s climate action strategy is sound in that it has comprehensively measured its environmental impact , it has made public where it wants to go , and there is a detailed and viable game-plan to reach the finish line . A global pace setter indeed .
However , the reality is that most companies in the retail industry are either not familiar with carbon footprinting or are at an early stage of their carbon management journey .
In business , before we talk about the how , we need to convince ourselves of the why . There are three reasons why a company should be part of the climate action movement . First , it shows that the leadership is aware of the strategic and operational risks posed by climate change , and are on top of things . Second , companies are becoming increasingly purpose-driven . It is always worthwhile to do something for the greater good to motivate and inspire your people . Third , more consumers are asking whether goods are made and disposed in a socially responsible , environmentally friendly and safe manner .
In a nutshell , risk management , social purpose and catering to changing customer sentiments are all strategic levers that can impact a company ’ s market standing and financial performance .
Climate change is the defining global challenge of our time . When I next need to change my work chair , the brand that is top of mind is IKEA . They not only make good products at affordable prices ; I support them knowing that they are building a better world .
Go ahead , start your net-zero journey by finding out what you can do and aim to be the IKEA of your SKU .
ABOUT THE AUTHOR :
MunWei Chan is the founder of SustainableSG ( https :// sustainablesg . net /), a Singapore-based training and consultancy business that works with public and private sector organizations regionally on sustainability , strategy , risk management and entrepreneurship .
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