What makes a business one that is 'Paris Agreement compatible'?
The following three inspirational examples of a successful transition to a sustainable business model were presented during the "Businesses Fit For 1.5C: An integrated approach for climate health" conference that took place in February 2022.
Action is the best source of optimism
Karol Gobczyński, Head of Climate and Energy at Ingka Group
The Ingka Group, which operates IKEA stores throughout the world, has set science-based targets in line with the commitment to halve GHG emissions by 2030 and achieve climate neutrality by 2050. The group’s efforts are inspired by the recognition that since businesses are part of the problem, they have a responsibility to their customers and co-workers to become part of the solution. Since changes to the cost and revenue structure will be inevitable in a net zero economy, it makes perfect sense to embrace new business models as soon as possible, thus capturing opportunities for growth.
For the Ingka Group, the journey began by examining the company’s footprint across the value chain. Armed with this understanding, the next move was to design products with circular capabilities and to work on providing circular services. This involves using materials and foods with a lower footprint, increasing electrification and renewable energy use in both products and operations, improving efficiency, providing sustainable mobility options in terms of both customer mobility and deliveries, and making sustainability an easy choice for customers by offering spare parts and buy-back services. The group is also making huge investments in renewable energy generation and currently owns more wind turbines than stores throughout the world.
While some might regard the size of the organization as a challenge, its global spread can rather be seen as an opportunity. When measuring and reporting are integrated across the group, there is massive potential for action. In addition, by extending reporting and target setting to all the group’s suppliers, these positive impacts can be extended even further.
Circularity by design
Eva Karlsson, CEO of Houdini Sportswear
A trailblazer in the circular economy since 2001, the Houdini clothing company takes nature as its blueprint, aiming for a resource flow in which nothing becomes a waste.
The global take, make, waste apparel industry is responsible for huge resource consumption, emissions, and pollution. Between 80 and 150 billion garments are produced each year, 60% of which end up in landfills or incinerators within the first year. In response, Houdini’s vision is to work in partnership with nature rather than at the expense of nature. Making clothes that are durable and versatile, it aims to reduce the volume of garments produced, at the same time focusing on minimalistic design in which every detail enables a shift from negative to regenerative. Its design checklist includes questions such as: Does the product deserve to exist? Is it versatile? Will it age well? Does it have a next-life solution?
The company uses natural materials rather than synthetics, and by avoiding harmful chemicals its products are biodegradable, with 88% of them never becoming waste. Besides climate impacts, the company works within the nine planetary boundaries framework, focusing on a biosphere approach that includes biodiversity, land use, and oceans.
As an outdoor brand, the company advocates maximum experience in nature with zero impact, encouraging its customers to make lifestyle choices that turn them into caretakers rather than consumers. Communicating and collaborating with its customers, enables and inspires them to adopt a 1.5°C-compatible lifestyle by offering additional services such as rentals, repairs, and a return and reuse system, even using digital solutions to nudge people towards wardrobe sharing, for example. In the context of transformations such as these in the fashion industry and society, there is no contradiction between sustainability and good business.
A mission to disrupt the way industry works
Erika Gyllström, Head of Sustainability, Northvolt
In the context of the electrification revolution, which will boost demand for batteries tenfold in Europe alone by 2030, the Swedish company Northvolt was founded in 2016 with a mission to build the world’s greenest battery with a minimal carbon footprint and the highest ambitions for recycling. Its products are used in the automotive and transport sectors, as well as energy storage and industrial and portable applications, and very early on the company attracted support from leading industrial partners, allowing it to become a leader in the shift to decarbonisation and an enabler of the clean energy transition across the transport and energy sectors. The company’s Swedish Gigafactory, for example, has a capacity of around 60 GWh, sufficient to power around a million electric vehicles per year.
As well as driving the downstream transition to a decarbonised energy and industrial system, the company’s commitment to sustainability is translated into high environmental standards in its own internal manufacturing operations. Its factories are designed to be green, circular, and innovative, with targets of 100% renewable energy covering total energy use. With a focus on circularity, it is constantly improving its resource efficiency and in-house recycling capabilities, thereby reducing demand for virgin materials to the fullest possible extent and even allowing it to upcycle waste for sale to other industries. The aim is to achieve a closed-loop system that will cut the use of fresh resources, with a target of 50% recycled materials in cells by 2030. Up to 95% of metals in a battery can be recovered with quality in line with virgin materials, demonstrating a viable alternative to conventional mining.
Battery production is an energy-intensive industry, and the traditional approach to manufacturing has not prioritized sustainability. In consequence, the vast majority of batteries produced today carry a significant carbon footprint.
As the world moves towards ramping up global battery manufacturing capacity to support the energy transition, it is critical that a sustainable approach to battery manufacturing is embraced. It is just this sustainable approach that Northvolt is pioneering. By powering battery manufacturing with clean energy and leveraging recycled materials, we aim to produce batteries with a carbon footprint 90% lower than the industry average today.
Acknowledging the urgent need for decarbonisation, a responsible business must aim for fundamental rather than incremental change, not merely to achieve compliance but as a means of value creation. At the same time, a responsible business must support policy-makers, share its knowledge, and continue to investigate innovative technologies to ensure that they really are sustainable and viable. It must source its raw materials responsibly, which means looking not only at emissions but also at social impacts on local communities. Finally, it must adopt a holistic approach, recognising how its commercial relationships can drive not only decarbonisation, but also local environmental and social justice both upstream and downstream of its operations.