How Ikea Uses Renewable Energy Integration in Procurement

IKEA's dedication to sustainability offers tangible benefits to both its operations and the environment.

Speaking after IKEA's Annual Summary and Sustainability Report FY24 was published, Ingka Group CEO Jesper Brodin explained the company demonstrates that the “business case for investing in climate action works.”

This, together with the information in the report, underscores IKEA's commitment to integrating sustainability within its procurement strategies.

As an example, IKEA Australia reports an 89% reduction in its operational climate footprint over the past 10 years, signifying a strategic shift in its procurement processes towards sustainable energy sources.

IKEA adopts solar to power warehouse operations

Optimising the supply chain involves leveraging renewable energy. Solar energy, with its cost-effectiveness and enhanced efficiency, plays a pivotal role in this transition.

IKEA's Marsden Park in Sydney is at the forefront of this initiative, with a solar project capable of powering up to 70% of its warehouse operations.

This AU$2.9m (US$1.8m) project, spearheaded by Smart Commercial Solar, involves the installation of over 4,000 solar panels across 9,000m², making efficient use of available rooftop spaces. These infrastructure decisions highlight strategic procurement choices in renewable energy.

Further enhancing these efforts, IKEA's project includes a 1MW battery installation to ensure that excess energy harvested during the day can be effectively utilised during periods of peak demand, thereby supporting continuous operations and optimising energy procurement.

Speaking on the integration of these sustainable practices, IKEA Australia Country Sustainability Manager, Renea Robson emphasises: “Showing we have significantly reduced our emissions from operations while growing the IKEA Australia business proves that investing in climate action and delivering commercial success is absolutely achievable — together.”

Renea further highlights: “This new project we are proud to launch at our Marsden Park distribution centre is a standout example of the kind of investments we are making — not only because they are good for the planet and taking our renewable energy ambitions to the next level, but because they benefit our business, too.”

For over a decade, IKEA Australia has prioritised renewable energy procurement strategies, leveraging large roof and parking area spaces for energy generation and storage, which commenced in 2014. Today, solar panels are installed in nine out of ten major IKEA stores, including the Marsden Park distribution centre.

The advancement at Marsden Park not only boosts renewable energy generation from 26% to 70% but also facilitates the supply of clean energy to power electric vehicles used for home deliveries, integrating energy efficiency into last-mile delivery procurement strategies.

Smart Commercial Solar’s CTO, Kealy Day states: “What I’m most proud of in this project is how Smart has evolved with technology and the market to make solar and battery storage a cost-effective, practical solution for businesses. It’s proof that clean energy isn’t just the right choice — it’s now the smart choice.”

Sustainability elevates IKEA's procurement strength

IKEA Australia's annual summary coupled with its sustainability report articulates a multi-faceted evaluation of success, spanning four key pillars. These pillars are measurable and reflect IKEA's dedication to aligning its business strategies with sustainable practices.

In FY24, IKEA Australia achieved significant milestones, including 100% renewable electricity use in retail operations, and 44% of main dishes in its food offer being plant-based, reflecting sustainable procurement across its supply chain.

Additionally, strategic initiatives ensured that 45% of customer orders were delivered in zero-emissions vehicles, peaking at 65% in January 2025. Another key investment includes AU$4.5 million in dedicated electric vehicle chargers for delivery partner fleets, illustrating a cohesive approach to sustainable transport procurement.

These developments highlight IKEA Australia's procurement agility and commitment to integrating sustainability into its wider operational strategy, providing a pivotal case study for c-level procurement executives aiming to blend environmental and business goals.

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