IKEA’s Latest Climate Target: Glue

Swedish furniture brand IKEA is switching to a new glue to help meet its climate goals, underscoring how small changes can make a measurable impact.

Inter IKEA—which owns the IKEA brand, develops its products and manages its supply chain—said around 5% of its value chain’s carbon footprint comes from fossil-based glue in its particle-and-fiber boards, used in products such as cupboards, wardrobes and shelves. It said Wednesday that it is aiming to eliminate 40% of its fossil-based glue in the boards by fiscal 2030, which could cut its greenhouse-gas emissions by 1.5 percentage points, depending on future business growth.

A factory in Kazlu Ruda, Lithuania will be the first to use a biobased glue made from corn in industrial plants rather than the food chain. IKEA is also trialing other biobased glues. The changes are part of IKEA’s efforts to meet its goal to use only renewable or recycled materials by fiscal 2030.

“It’s not an easy transformation. We are talking about the industry using the same glues for 60 years and that glue has been optimized for performance and cost for 60 years,” said Venla Hemmilä, material and technology engineer at IKEA of Sweden.

IKEA began searching for alternatives to fossil-based glue more than a decade ago, but found lower carbon, biobasedoptions were too expensive and the industry wasn’t well prepared to supplythem. Today, there is still a premium for biobased glues but it isn’t expected to be passed onto shoppers and should come down as production scales up.

The company expects biomaterials to become more cost competitive with fossil-based materials in the coming years. IKEA hopes its manufacturing footprint will accelerate that cost reduction of greener alternatives and that other companies will follow its lead. It declined to provide the names of the green glue suppliers for competitive reasons.

Glue became a focus for the group after 2016. That year IKEA examined how its climate goals aligned with the Paris Agreement and charted how they could expand the business while cutting their emissions, said Andreas Rangel Ahrens, head of climate at Inter IKEA Group.

“It is so easy to set goals, but how do you actually understand the impact and what to drive?,” Mr. Rangel Ahrens said.

To address that challenge, Mr. Rangel Ahrens said IKEA carried out a breakdown analysis of the sources of its carbon footprint, including production, materials and food. It also enlisted consultants to conduct life-cycle assessments of certain materials. In the 2022 financial year, IKEA said 52% of its emissions came from the materials in its products, the next highest contribution was 14% from people using its products at home, followed by production, which was responsible for around 8%.

Companies often use spending metrics, such as purchased goods, to calculate the carbon footprint of their materials. Instead, Mr. Rangel Ahrens said IKEA uses weight because it allows them to measure changes in a material, such as recycled and renewable content.

For example, when IKEA looked at its particle-and-fiber boards, it estimated the emissions coming from transport, forestry and energy, among other areas. It discovered around half of the material’s emissions were from the glue used to bind the wood chips and fibers together, meaning that fossil-based glue was responsible for about 5% of IKEA’s carbon footprint, Mr. Rangel Ahrens said.

This detailed approach to break down a product’s footprint allows sustainability teams to identify specific areas for other parts of the business to work on. “We are not just telling them you should reduce emissions from suppliers by 80% and go fish,” Mr. Rangel Ahrens said. We tell them where to focus and then they actually know what to do rather than just getting a very ambitious goal dropped on their laps, he said.

The company has also reduced emissionswith other targeted changes, including plant-based meatballs, a bookcase that uses paper foil instead of veneer, and switching to LED lightbulbs. It is also exploring how to add biobased content into coatings.

“It’s very important for us that sustainability is not a luxury for the few. It needs to be available also for people with thin wallets,” Mr. Rangel Ahrens said.

Australia’s commodity-rich economy recorded its weakest growth momentum since the early 1990s in the second quarter, as consumers and businesses continued to feel the impact of high interest rates, with little expectation of a reprieve from the Reserve Bank of Australia in the near term.

The economy grew 0.2% in the second quarter from the first, with annual growth running at 1.0%, the Australian Bureau of Statistics said Wednesday. The results were in line with market expectations.

It was the 11th consecutive quarter of growth, although the economy slowed sharply over the year to June 30, the ABS said.

Excluding the Covid-19 pandemic period, annual growth was the lowest since 1992, the year that included a gradual recovery from a recession in 1991.

The economy remained in a deep per capita recession, with gross domestic product per capita falling 0.4% from the previous quarter, a sixth consecutive quarterly fall, the ABS said.

A big area of weakness in the economy was household spending, which fell 0.2% from the first quarter, detracting 0.1 percentage point from GDP growth.

On a yearly basis, consumption growth came in at just 0.5% in the second quarter, well below the 1.1% figure the RBA had expected, and was broad-based.

The soft growth report comes as the RBA continues to warn that inflation remains stubbornly high, ruling out near-term interest-rate cuts.

RBA Gov. Michele Bullock said last month that near-term rate cuts aren’t being considered.

Money markets have priced in a cut at the end of this year, while most economists expect that the RBA will stand pat until early 2025.

Treasurer Jim Chalmers has warned this week that high interest rates are “smashing the economy.”

Still, with income tax cuts delivered at the start of July, there are some expectations that consumers will be in a better position to spend in the third quarter, reviving the economy to some degree.

“Output has now grown at 0.2% for three consecutive quarters now. That leaves little doubt that the economy is growing well below potential,” said Abhijit Surya, economist at Capital Economics.

“But if activity does continue to disappoint, the RBA could well cut interest rates sooner,” Surya added.

Government spending rose 1.4% over the quarter, due in part to strength in social-benefits programs for health services, the ABS said.

IKEA’s Latest Climate Target: Glue

The furniture group has spent more than a decade working to replace a fossil-based glue that represents 5% of its global carbon footprint

Excluding the Covid-19 pandemic period, annual growth was the lowest since 1992