Ingka Group, the world’s largest IKEA retailer, has strengthened its sustainability performance in FY25, delivering meaningful gains across renewable energy, emissions reduction, and circular business models. The progress comes as European companies prepare for tighter disclosure and accountability requirements under the EU’s evolving ESG regulatory framework.

In its latest sustainability report, Ingka detailed advances in climate action, resource efficiency, and governance, while signaling a more structured alignment with upcoming EU sustainability reporting obligations, including the Corporate Sustainability Reporting Directive.

“When I look at how far we’ve come on our sustainability journey, I feel genuinely proud – and grateful,” said Karen Pflug, Chief Sustainability Officer at Ingka Group, highlighting improvements in cleaner deliveries, energy efficiency, and circular business innovation.

Renewable Energy Becomes the Operational Backbone

A central pillar of Ingka’s progress in FY25 has been the near-complete transition to renewable electricity across its global operations. The company reported that 94.8% of electricity used across stores, warehouses, and offices now comes from renewable sources.

This shift contributed to a 22.3% year-on-year reduction in Scope 1 and 2 emissions. Compared with FY16, these emissions are now down 70.6%, reflecting sustained investment in energy efficiency measures such as upgraded lighting, heating systems, and logistics optimization.

While the final 5.2% gap remains, Ingka says continued investments in on-site generation and long-term power purchase agreements are expected to close the gap in the coming reporting periods.

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Cleaner Deliveries and Operational Efficiency Gains

Ingka has also continued to decarbonize its last-mile logistics. Zero-emission home deliveries reached 60.1% in FY25, a significant increase from 41.1% the previous year. Progress varied by market, with infrastructure constraints, particularly charging availability, slowing adoption in some regions.

Food operations delivered parallel efficiency gains. Production food waste has fallen 60% since FY17, equivalent to approximately 9.6 million meals saved in FY25 alone. The reductions support both emissions and cost efficiency goals, reinforcing the link between sustainability and operational performance.

Circular Business Models Move Into the Mainstream

Circularity is no longer a pilot concept for Ingka but a core commercial strategy. During FY25, nearly 686,500 used IKEA products were returned through the Buyback service, extending product lifecycles and reducing demand for virgin materials.

In-store resale also expanded, with 424 stores now operating “As-is” areas offering second-hand or discontinued items. In addition, peer-to-peer resale pilots launched in Norway, Portugal, and Spain aim to further normalize reuse and product longevity within the IKEA ecosystem.

The company notes that these initiatives are beginning to decouple revenue growth from emissions growth, a long-term objective for large consumer retailers facing resource and climate constraints.

Scope 3 Emissions Remain the Hardest Challenge

Despite strong progress in owned operations, Ingka acknowledges that its most complex sustainability challenge lies in Scope 3 emissions. These emissions are largely embedded in product manufacturing and upstream supply chains, many of which are managed by Inter IKEA Group rather than Ingka directly.

Improved Scope 3 data is expected in FY26 as methodologies and supplier reporting systems mature. In parallel, Ingka is strengthening supplier requirements on energy use, materials efficiency, water stewardship, and biodiversity protection, reflecting growing regulatory and investor scrutiny of value-chain impacts.

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Governance and Reporting Enter a New Phase

FY25 marks a structural shift in how Ingka presents its sustainability performance. For the first time, disclosures are fully organized around environmental, social, and governance pillars, signaling tighter internal oversight and clearer accountability.

This governance evolution is designed to support compliance with the EU’s next generation of ESG reporting rules, where sustainability data is expected to carry the same rigor and auditability as financial information.

A Pragmatic Sustainability Blueprint for Global Retail

For a retailer operating at global scale, Ingka’s approach reflects a pragmatic sustainability strategy. Renewable energy, circular services, and efficiency gains deliver near-term emissions reductions, while better data, governance, and supplier engagement lay the groundwork for tackling more complex Scope 3 impacts.

As ESG expectations harden across Europe, Ingka’s FY25 performance suggests that sustainability is moving beyond ambition statements toward measurable, operational reality.

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