Furniture giant commits to reducing use of virgin raw materials but experts raise concerns about supply chain domination. Are companies ready to rethink the way they do business?
Ikea has bought forest in Romania and the Baltics, wind farms in Poland and now it is investing in a plastic recycling plant in the Netherlands.
For the Swedish furniture giant, extending control across its supply chain in this way could help it become more sustainable by avoiding environmentally damaging activities like illegal deforestation and plastic waste.
Ikea is not alone in this strategy.
Apple, for example, has invested in forest in the US to increase the supply of sustainable pulp and paper goods that it needs for packaging. Google and Amazon, meanwhile, are two of a number of big companies that have bought renewable energy, in part to protect themselves against variable electricity prices.
The latest Ikea move saw it acquire a 15% minority stake in Dutch plastic recycling plant Morssinkhof Rymoplast, spending some of the €3bn (£2.54bn) the company has allocated to sustainability investments.
Plastic production accounts for 6% of global oil consumption (pdf), a figure expected to grow to 20% by 2050 on current trajectory.
With increasing consumer awareness around plastic waste, Ikea’s investment in Morssinkhof Rymoplast builds on the company’s goal (pdf) to make its plastic products (representing around 40% of its total plastic use) using 100% recyclable and/or recycled materials by August 2020.
Pia Heidenmark Cook, Ikea’s acting chief sustainability officer, says the investment is intended to help Morssinkhof Rymoplast develop its capabilities. The Dutch company currently has facilities across the Netherlands and the capacity to produce more than 220,000 tons of high grade recycled materials a year.
“It is our first investment with the recycling industry […] so at this point, it’s really a learning experience to understand more about what is needed for getting high quality plastic that can be fed into our products,” says Cook.
Jakob Rehme, professor of industrial economics at Sweden’s Linköping University, suggests that such investments can be a logical preemptive step for a company whose demand for materials is so significant. “This [demand] means they often need to tackle the sourcing strategy that could lead to a resource scarcity – of recycled plastics for instance,” says Rehme.
If and when regulation gets tougher and producers are required to have a percentage of recycled plastic in new products, an investment in recycling will help Ikea secure what could become a highly sought after material.
“We’ve seen this trend in a number of business sectors,” says Dexter Galvin, head of supply chain at CDP. “Climate change and resource scarcity present global supply chains with significant risk […] some businesses respond with a broader global sourcing model but many are pursuing vertical integration [where a business expands its operations in the supply chain].”
For some, however, there are concerns around the motivations and consequences of businesses expanding in this way.
Rehme says, for example, that a significant driving force behind the food and drink industry’s investments in recycling has been to avoid regulation and shape a voluntary system instead. He warns that while large company involvement can potentially be a force of good, they can also end up dominating an entire supply chain and hurting SMEs or companies from developing nations.
For Donna Marshall, associate professor at University College Dublin, it can also be about greenwash. In the absence of demonstrating real progress when it comes to reducing environmental impact, she says, providing innovative sustainable suppliers with support is “great PR for a company”.
Ikea disputes such criticism of its latest investment. “Our approach to the circular economy is not to buy up recycling companies,” says Cook. “It’s one element to learn more and better understand upcycling, but it’s not the prime strategy.”
With Ikea’s plans to open its first store in Hyderabad, India, next year, and ambitions to hit €50bn (£42.29bn) revenue by 2020, Cook says the circular economy is integral to expanding without using further raw virgin materials.
Avots: The Guardian
