IKEA CLIMATE Report FY23

This report summarises our performance during FY23 compared to the IKEA climate commitments, which are an integrated part of the IKEA sustainability strategy, People & Planet Positive.

In this report Introduction letter Page 3 About this report Our climate agenda Page 4 This report summarises our performance during FY23 FY23 summary of progress Page 5 compared to the IKEA climate commitments, which are an integrated part of the IKEA sustainability strategy, People & The IKEA climate footprint throughout the value chain Page 10 Planet Positive. This report covers the entire value chain and franchise system and provides an update on activities and the Materials Page 11 ongoing work to measure progress. The IKEA Climate Report is issued by Inter IKEA Group.1 Food ingredients Page 16 The reporting period follows the 昀椀nancial year 2023 (FY23), Production Page 18 which runs from 1 September 2022 to 31 August 2023. Percentages in this report may not total 100% due to rounding Product transport & logistics services Page 22 di昀昀erences. Please note that we review and update historical IKEA retail & other operations Page 25 data for accuracy on an annual basis. These changes are due to updates to external reference data, improved calculation Co-worker commuting & business travel Page 27 methodologies and data quality. Customer travel & home deliveries Page 28 The IKEA business is de昀椀ned as the business activities performed by all companies operating within the IKEA franchise Product use at home Page 29 system. “We” in this report refers to the IKEA business. The IKEA value chain encompasses more than the IKEA business and Product end-of-life Page 32 includes sourcing and extracting raw materials, manufacturing, transporting of products, retail activities in stores, customer Air pollution Page 33 travel to stores, product use in customers’ homes and product end-of-life. Appendices To ensure the long-term growth and development of the IKEA business, we use a franchise system. This provides 昀椀nancial Greenhouse gas inventory: scope 1, 2 & 3 emissions Page 36 stability while allowing franchisees to challenge, test and explore new markets and ideas. Together, we continue to FY23 progress on external initiatives Page 37 develop the IKEA brand. Climate footprint calculation methodology Page 38 Read the complete IKEA Sustainability Report FY23. Air pollution inventory: emissions across the value chain Page 41 Air pollution footprint calculation methodology Page 42 1 Inter IKEA Group consists of Inter IKEA Holding B.V. and all its subsidiaries. An overview of all Inter IKEA Holding subsidiaries can be found here. 2 - IKEA CLIMATE REPORT FY23

Introduction letter | Our climate agenda | FY23 summary of progress | The IKEA climate footprint throughout the value chain | Air pollution | Appendices Making progress and strengthening our climate goals 2023 was the warmest year on record, Türkiye reaching 100% renewable electricity during the example of how we enable our customers to generate is also one of the main contributors to climate change, and current forecasts predict that we year, there are now 25 IKEA retail markets that only use renewable energy at home (page 9). as nature is an important carbon sink and securing its are heading towards a global warming renewable electricity (page 26). resilience is of utmost importance. We will be working 1 Millions of people are already a昀昀ected by climate together with partners and stakeholders to halt and of about 2.7°C. Despite the clear signs For materials – our largest climate footprint – we have change. In the six years from 2016 to 2021, UNICEF reverse nature loss. To further support change, the IKEA and evidence pointing to the world being clear plans in place for each material area and, in FY23, reported that 43.1 million children were displaced due to business was present at COP28, joining in the call to 2 From a health perspective, set a new goal to halve GHG emissions from materials weather-related disasters. phase out fossil fuels, halt deforestation and address o昀昀 course in addressing global warming, it’s more important than ever to act with by FY30 compared to FY16. A milestone that will impact 2.4 billion people are currently breathing dangerous the root causes of air pollution. urgency and stay committed to the Paris our future footprint is the introduction of bio-based glue levels of polluted air, with the combustion of fossil fuels 3 Agreement and align with the 1.5°C limit. in one of our board factories. As glue in board materials being a large contributor. Looking ahead to 2050, it's We are immensely proud of all the hard work our represents 5% of the total climate footprint within the projected that 1.2 billion people will be displaced as a co-workers, suppliers and partners do across the 4 result of climate change. These are simply staggering That’s why we have strengthened our strategic climate IKEA value chain, this movement will have a signi昀椀cant IKEA value chain to make the changes we want to see goals and actions to align with the 1.5°C trajectory impact on our climate footprint (page 12). We also 昀椀gures. For a business with a vision to create a better happen, step by step. It gives us the optimism that everyday life for the many people, we must do what we – moving from a goal of an absolute reduction of launched our 昀椀rst ceramic product using internal factory it can be done! Together, we will take the necessary waste – the tableware SILVERSIDA. can to limit climate change. actions needed to reach our new ambitious goals and greenhouse gas (GHG) emissions from the total IKEA contribute to limiting global warming to 1.5°C. value chain of at least 15% by FY30 to at least 50% It's important for us to lead with facts and to be able An important movement in society, if we are to (page 4). Our overall goal is to reach net-zero emissions to substantiate the goals we set and understand what limit climate change and contribute to clean air, is without using any carbon o昀昀sets by FY50 at the latest. it takes to reach them. This safeguards credibility and the complete phase-out of fossil fuels – abated and These goals are aligned with the Net-Zero Standard 5 – and any connected subsidies. We must unabated accountability. E昀昀ects from COVID-19, the war in Ukraine by Science Based Target initiative (SBTi) and are now address the root causes of climate change. Therefore, pending their approval. and impacts from high in昀氀ation made the work to set we support the Fossil to Clean campaign by We Mean our new climate goals a bit harder than we 昀椀rst thought. We now have clear plans in place and will share these in Business and are engaging in many other initiatives. In FY23, the absolute reduction of greenhouse gas more detail in FY24.Hopefully, we can inspire others to Only by striving towards 100% renewable energy can we emissions from the entire IKEA value chain was 12%, take action aligned with 1.5°C. limit global warming. There are no shortcuts. compared to FY22, and 22% compared to the baseline year FY16. The reduction resulted from a continued As a business, we have the possibility and the We know that climate change, nature loss and inequality increase of renewable electricity use in both retail and responsibility to reduce the GHG emissions of our own are interdependent. Protecting and restoring nature is Jon Abrahamsson Ring Pär Stenmark production units, energy e昀케ciency improvements in value chain and contribute with further reductions a vital part of our climate agenda since climate change Chief Executive O昀케cer, Chief Sustainability O昀케cer, our lighting range, and lower production volumes. With is one of the main drivers of nature loss. Deforestation Inter IKEA Group Inter IKEA Group in society. Our home solar o昀昀er, SOLSTRÅLE is one 1 Climate Action Tracker, "No change to warming as fossil fuel endgame brings focus onto false solutions" 2023. 2 UNICEF, "Weather-related disasters led to 43.1 million displacements of children over six years" 2023. 3 WHO, "Health topics: Air pollution" 2019. 4 Zurich Insurance Group, "There could be 1.2 billion climate refugees by 2050. Here’s what you need to know" 2022. 5 IPCC de昀椀nition of "abated and unabated". 3 - IKEA CLIMATE REPORT FY23

Introduction letter | Our climate agenda | FY23 summary of progress | The IKEA climate footprint throughout the value chain | Air pollution | Appendices Our climate agenda During FY23, we aligned our strategic 1 Drastically reducing GHG emissions across the IKEA value chain and are part of how we responsibly climate goals with the 1.5°C trajectory IKEA value chain, in absolute terms source materials for the IKEA range. and the Net-Zero Standard by Science The overall goal is, by FY30, to reduce the absolute Reducing the IKEA climate Based Targets initiative (SBTi). We GHG emissions from the IKEA value chain by at A strategic goal will be set once the Land Sector and footprint in line with 1.5°C Removals Guidance by GHG Protocol is 昀椀nalised, submitted our goals to SBTi mid- least 50% compared to FY16 (previous goal was which is expected to be in the summer of 2024. This Drastically reducing GHG emissions November 2023 and validation is a 15% reduction). By FY50 at the latest, we will 1 across the IKEA value chain, in reduce the absolute GHG emissions from the IKEA accounting guidance is the 昀椀nal piece since the currently pending. establishment of the Forestry, Agriculture and Land absolute terms value chain by at least 90% compared to FY16. (FLAG) target setting standard by SBTi established in 2 Removing and storing carbon from the Our main priority is drastically reducing September 2022. Even though a goal has yet to be atmosphere through forestry, agriculture greenhouse gas emissions across the IKEA As a result of our new net-zero goals, we have set, we're pursuing actions that we know will make a and products within our value chain value chain. Any remaining emissions will be either updated or set new goals for most parts positive contribution (page 8). 1 of our value chain. For materials, we have set neutralised – reaching net-zero emissions by FY50 the goal to at least halve our emissions by FY30 at the latest – by removing and storing carbon compared to FY16 baseline (page 11). For food Contributing to additional from the atmosphere through better forest and 3 Going beyond IKEA reductions in society2 agricultural management practices within the ingredients, we have updated our FY30 goal from We will contribute to additional reductions in IKEA value chain. Additionally, we will go beyond -25% to -50% emissions reduction compared to society by taking an extended responsibility for net zero and go beyond IKEA by contributing to FY16 (page 16). For product use at home, we have the climate footprint of our customers, suppliers 3 Going beyond IKEA additional reductions in society. set our FY30 goal to -70% emissions reduction and in our sourcing areas – not just the part which compared to FY16 (page 29). We have also set a we can account for in the IKEA climate footprint. A FY30 goal for reduced emissions from product strategic goal for this will be set once the guidance end-of-life by 30% compared to FY16 (page 32). for “removing and storing carbon” is ready and when the framework for going beyond has been 2 Removing and storing carbon from the developed by SBTi. We are already taking actions Reducing more emissions than atmosphere through forestry, agriculture and that we know will have a positive contribution, even the IKEA value chain emits products within our value chain though a goal has not yet been set. Storing carbon in trees and agricultural crops used for materials, food, and fuels removes We 昀椀rmly believe that we need to address the root CO2 from the atmosphere. If the land is also causes of our climate footprint within our own responsibly managed, it has the potential to value chain or in connection to our customers, 1 Excluding production, product transport, co-worker commuting and suppliers, and sourcing areas. We will not use business travel. 2 reduce climate impact. In contrast to carbon An e昀昀ect that's in addition to what's required to reduce the IKEA value chain emissions to be aligned with the 1.5°C target and will carbon o昀昀sets to achieve our ambition to reach never act as any discount or o昀昀set to reach the GHG emission o昀昀sets, the removals and storage occur within the net-zero emissions. reduction goal. 4 - IKEA CLIMATE REPORT FY23

Introduction letter | Our climate agenda | FY23 summary of progress | The IKEA climate footprint throughout the value chain | Air pollution | Appendices FY23 summary of progress 1. Dr1. Drastically rastically reducing GHG emissions acreducing GHG emissions across the IKEA value chain, in absolute termsoss the IKEA value chain, in absolute terms In FY23, the IKEA climate footprint is estimated to be For product transport, the share of alternative fuels, 24.1 million tonnes CO2 eq in absolute terms, which such as biogas and electricity, increased from 6% to is a decrease of 12% compared to FY22 and 22% 10%. For logistics service units, such as warehouses, compared to baseline FY16. The reduction in FY23 was the renewable electricity share increased from 86% to attributed to the continued increase in renewable 90%. electricity use at both retail and production units, energy e昀케ciency improvements in our lighting range Product use at home represents the second-largest and lower production volumes. Due to an overstock portion of the IKEA climate footprint, and since the situation at the beginning of the year, our produced baseline FY16, greenhouse gas emissions have more volume declined in FY23. We came into FY23 with than halved. Compared to FY22, we saw an emissions challenges that were lagging from an unpredictable reduction of 13% in FY23. The reduction is attributed business climate, supply chain constraints and high to a 6% improvement in energy e昀케ciency (lumen per in昀氀ationary pressure from previous years. Watt) of the lighting range, as well as a 3% reduction in sales quantity (pieces). External factors such as In IKEA retail & other operations, the share of improvements in the renewable energy share for renewable energy increased from 63% in FY22 to electricity grids in our retail markets also contributed 69% in FY23, with the share of renewable electricity to 4% of the emissions reduction. increasing from 75% to 77%. Materials used in IKEA products account for the In production, the renewable electricity share largest part of our climate footprint. The footprint increased from 63% in FY22 to 71% in FY23, while of materials (including the share of recycled or the renewable energy share remained 昀氀at at 48%. renewable materials) is mainly based on estimations. The 昀氀at trend in renewable energy is mainly due to While lower production volumes in FY23 did contribute a signi昀椀cant decrease in biofuel use related to the partly to the decline in the material footprint, we also close-down of our production facilities in Russia and had several material developments during the year an increase in on-site coal consumption at some of which are highlighted in pages 11 to 15. our suppliers. A total of 142 additional factories or suppliers achieved 100% renewable electricity in FY23, bringing the total to 408, which constitutes 37% of our direct suppliers.¹ 1 Includes home furnishing, components and media print suppliers but excludes food suppliers. 5 - IKEA CLIMATE REPORT FY23

Introduction letter | Our climate agenda | FY23 summary of progress | The IKEA climate footprint throughout the value chain | Air pollution | Appendices While our absolute footprint was down in As a part of our net-zero goal setting, we launched FY23 by 12%, our relative footprint grew by a comprehensive business consequence analysis to The IKEA climate footprint in both absolute and relative terms 9% upstream (produced volume) and 2% identify the actions needed to halve emissions by FY30 downstream (sold volume), compared with FY22. compared to our FY16 baseline. These action plans will FY16 FY21 FY22 FY23 Our upstream supply chain includes materials, provide the foundation for our continued reduction of food ingredients, production, product transport overall emissions and should reverse the increase in and logistics services and downstream includes relative emissions we saw in FY23. 110% IKEA retail, co-worker commuting and business 0.48 100% 31.0 0.48 travel, customer travel and home deliveries, 0.36 product use at home and product end-of-life. 28.7 0.44 90% 0.45 Our calculation methodology for production 27.2 80% uses a spend-based allocation (share of EUR 24.1 purchased) for supplier factory emissions, which 0.26 determines the IKEA share of GHG emissions, 70% so the increase of relative emissions in FY23 can 0.25 0.26 be largely attributed to the e昀昀ects of in昀氀ation. 60% That is, more GHG emissions were allocated to the IKEA business even if our actual production 50% at supplier factories was comparable to previous years. In addition, the climate footprint of material, the largest portion of our footprint, is largely based Climate footprint of the total IKEA value chain both upstream and downstream on estimations which today do not account for (million tonnes CO2 eq) 3 the various positive movements we've made in Climate footprint (upstream) per m produced volume incl. food, indexed vs. baseline FY16 3 the business such as the introduction of more (million tonnes CO2 eq per million produced m ) recycled and renewable materials. As a result of Climate footprint (downstream) per sold volume, indexed vs. baseline FY16 3 (million tonnes CO2 eq per million sold volume m the digitalisation of data collection, we aim to ) provide more accurate data in the FY24 report. 6 - IKEA CLIMATE REPORT FY23

Introduction letter | Our climate agenda | FY23 summary of progress | The IKEA climate footprint throughout the value chain | Air pollution | Appendices FY23 key activities across the IKEA value chain to drastically reduce GHG emissions Introducing bio-based glue into the IKEA range The Kazlų Rūda factory in Lithuania became the 昀椀rst IKEA Industry factory to use bio- based glue. This is an important 昀椀rst step in the work to reduce the climate footprint from glue by 30% by FY30. As glue in board materials represents 5% of the total climate footprint within the IKEA value chain, such a decrease will have a signi昀椀cant impact on our climate footprint. Halving emissions from product use at Increasing the renewable electricity Moving towards 100% renewable home share in production energy in IKEA retail & other operations Emissions from product use at home The share of renewable electricity for The share of renewable energy consumed Towards the phase-out of coal- and fossil includes the electricity consumption of production increased from 63% in FY22 in IKEA retail & other operations, which oil-based fuels in production lighting, home electronics and appliances to 71% in FY23. Signi昀椀cant increases were includes our stores and other customer After a decrease from 11% in FY16 to 7% in and the burning of candles. Compared achieved in China, India and Vietnam. meeting points, increased from 63% in to the FY16 baseline, we have managed These movements were supported by FY22 to 69% in FY23. This was mainly FY22 (in terms of kWh), the share of coal- to more than halve these emissions. This our renewable electricity programme driven by an increase in renewable and fossil oil-based fuels increased to 9% means that an estimated 4 million tonnes for suppliers, which is now active in 13 heating in Germany (+37 percentage in FY23. Our GHG calculation methodology CO2 eq less will be emitted over the lifespan supplier markets. points), followed by Lithuania (+18 uses a spend-based allocation (share of EUR purchased) for supplier factory emissions, of our products sold in FY23 compared to percentage points) and the Czech which determines the IKEA share of GHG FY16. The main drivers of this reduction Republic (+16 percentage points), which emissions. In FY23, there was a greater increased the overall share of renewable include a signi昀椀cant improvement in the allocation of coal use to the IKEA business – heating from 22% in FY22 to 32% in FY23. energy e昀케ciency of products over the an increase which is largely attributable to years, as well as an increase in renewable At the same time, the share of renewable electricity in electricity grids in the electricity increased marginally from 75% the e昀昀ects of in昀氀ation. markets where our customers live and in FY22 to 77% in FY23. Our remaining suppliers who use coal use our products. This is considered when on-site have committed roadmaps and estimating the climate footprint of product deployment plans to secure the complete use at home (page 40). substitution of coal with renewable energy. 7 - IKEA CLIMATE REPORT FY23

Introduction letter | Our climate agenda | FY23 summary of progress | The IKEA climate footprint throughout the value chain | Air pollution | Appendices 2. Removing and storing carbon from the atmosphere through forestry, agriculture, and products within the IKEA value chain Forest plantations grow When logged, CO2 remains stored in products faster than natural forests, made from wood (An estimated lifetime of 20 as described below, and can years has been used for wood-based products remove carbon from the and excludes the e昀昀ects of recycling.) atmosphere at a higher pace. By recycling the wood at the end of a product's life, the removed carbon continues to be stored. ORED CARBON By prolonging the life of wood-based products, the removed carbon remains stored even longer. Increasing the level of removed and During FY23, we continued our contribution to has been completed, we will set a strategic goal VED AND STstored carbon the work of the GHG Protocol in developing their for removing and storing carbon through forestry, Land Sector and Removals Guidance. The guidance agriculture and products as part of our climate REMO will secure principles on how to account for and agenda. That goal will de昀椀ne the ambition level for report GHG emissions and carbon removals and carbon removals and storage by FY30 and how we storage connected to land use and products made will neutralise any remaining GHG emissions after with renewable materials. Throughout the project, reducing them by at least 90% by FY50 at the latest. Natural forests play a crucial role in climate change mitigation. In this the IKEA business has been part of the Advisory example, they grow slower than the plantation and reach an even state Committee and Technical Working Groups. During While our goal is pending, we’re still taking action of carbon removed and stored. At the same time, these areas are of great importance due to their already stored carbon and biodiversity. They need to FY23, we also contributed by conducting pilots in the to improve carbon removals and storage. One be an integral part of any landscape approach to secure healthy ecosystems. IKEA supply chain during the public consultation and such initiative is the EUR 100 million 昀椀nancing of a piloting phases. carbon removal and storage programme. As a part DECADES of this programme, in 2022 we started a 昀椀ve-year Above is a simpli昀椀ed model illustrating an example of removing and storing carbon through the establishment of The guidance provides the accounting principles for engagement to work with smallholder farmers in fast-growing tree plantations plus restoration of natural forests on degraded land, including the e昀昀ect of prolonging the carbon storage through wood-based products and recycling. Trees from responsibly managed forest plantations absorb the target setting standard by the Science Based Vietnam to prolong acacia rotation. The bene昀椀ts substantial amounts of carbon dioxide (CO2) from the atmosphere. When trees are made into wood-based products, they act as for the climate and income for the farmers in this Targets initiative (SBTi) on land-based emissions and temporary carbon storage. This storage e昀昀ect can be extended through reuse, refurbishment, remanufacturing and recycling of the material at end-of-life. In resilient landscapes, the contribution of responsibly managed forest plantations towards climate project are expected to be signi昀椀cant. removals from Forest, Land and Agriculture (FLAG) – change mitigation, and the many contributions of natural forests, in terms of biodiversity or soil protection, for example, have to work that we have also contributed to. be considered together. A holistic view, where we balance forest growth, harvest, carbon storage in land and products and other environmental services, such as biodiversity, is critical. The guidance is now expected to be completed during the summer of 2024. Once the guidance 8 - IKEA CLIMATE REPORT FY23

Introduction letter | Our climate agenda | FY23 summary of progress | The IKEA climate footprint throughout the value chain | Air pollution | Appendices 3. Going beyond IKEA by taking an extended responsibility for customers and suppliers In FY21, our methodology to measure going products when used as intended. One example now ready, going beyond IKEA remains to be done. beyond IKEA was 昀椀nalised. However, it remained is the recently launched ÅBÄCKEN water nozzle, The going beyond IKEA contribution from suppliers a challenge to measure and follow up across the which can enable customers to save up to 95% of will be followed up on in the FY24 Climate Report. 0.23 IKEA business in a consistent way. Addressing water used in taps at home.2 this is a prerequisite to setting a strategic goal. In FY23, the SOLSTRÅLE home solar o昀昀er was 1 However, it's important to note that while no Renewable energy for suppliers available in 11 IKEA markets. The total avoided strategic goal has been set, we're already actively emissions through the renewable electricity it 0.09 0.10 Actions by the IKEA business to convert our working with actions that are part of the going supplier partners to 100% renewable energy for generated was approximately 0.10 million tonnes beyond IKEA agenda. their entire factory or operations, not just the IKEA CO2 eq (-55% compared to FY22). This is calculated share of their business. as the e昀昀ect of the electricity in the national grid, FY16 FY22 FY23 To secure that the actions are part of the IKEA which the renewable electricity from home solar business transformation, all actions and activities Improving forestry and agriculture in IKEA replaces. The average e昀昀ect is calculated for the for going beyond IKEA are connected to the IKEA sourcing areas lifetime of the home solar panels, similar to how Millions of tonnes CO2 eq avoided through SOLSTRÅLE home solar. value chain. This means that they are either part Actions by the IKEA business to improve forestry or the climate footprint for product use at home is of the IKEA range, supplier base or sourcing area. agricultural practices for the total surroundings/ calculated for lighting and appliances. The impact of going beyond IKEA initiatives will not landscape where we source raw materials. contribute towards our emission reduction goals The possibility of following up on this impact in our net-zero commitment and therefore should will be enabled through the Land Sector and not be viewed as an o昀昀set. Removals Guidance by GHG Protocol. To avoid Therefore, any contribution must be within one of overestimating the contribution, we're only the following three areas: accounting for the contribution occurring each year instead of adding up the total GHG emissions Resource use at home avoided since baseline FY16. Solutions enabling the generation of renewable This year, we're only disclosing the e昀昀ect of energy like, for example, the SOLSTRÅLE home resource use at home through the SOLSTRÅLE 1 solar o昀昀er. It also includes solutions to improve home solar o昀昀er. While most parts of the the e昀케ciency of energy- and water-consuming digitalisation for climate footprint reporting are 1 In FY23, the SOLSTRÅLE home solar o昀昀er was available in the following markets: Australia, Belgium, France, Germany, Italy, The Netherlands, Poland, Portugal, Spain, Sweden and Switzerland. 2 This excludes lighting, appliances, taps, showers and circular services or solutions since they are already accounted for as GHG emissions in the IKEA climate footprint. Any improvement of these is accounted for in the IKEA climate footprint (drastically reducing GHG emissions) instead of going beyond IKEA. 9 - IKEA CLIMATE REPORT FY23

Introduction letter | Our climate agenda | FY23 summary of progress | The IKEA climate footprint throughout the value chain | Air pollution | Appendices IKEA climate footprint Performance vs. baseline FY16 (million tonnes CO2 eq) Climate footprint at each stage of the IKEA value chain (million tonnes CO2 eq) FY16 FY23 Goal FY30 compared to baseline (FY16) FY16 12.1 Baseline 1 Baseline FY23 11.2 -7% (vs FY16) FY16: 31.0 Materials -50% Goal FY30 compared to FY16 1 -12% (vs FY16) FY16 0.86 Baseline FY22: 27.2 Food ingredients FY23 0.86 -0.3% (vs FY16) -50% Goal FY30 compared to FY16 FY23: 24.1 -22% (vs FY16) The largest portion of the IKEA climate footprint comes from raw FY16 3.5 Baseline material extraction and processing (46.6%) and IKEA product use in Production FY23 2.4 -32% (vs FY16) customers’ homes (15.9%), which includes the energy consumption -80% Goal FY30 compared to FY16 of lighting and appliances over the lifetime of a product. FY30: 15.5 -50% (vs FY16) For a full breakdown of the climate footprint accounting, scope 1, 2 Product transport & FY17 1.4 Baseline (FY17, due to incomplete FY16 data) and 3 emissions, see page 36. Goal FY30 logistics services FY23 1.0 -28% (vs FY17) Reduce by at least 50% in absolute terms compared to Goal FY30: -70% in relative terms compared to FY17 baseline FY16. Our previous goal for FY30 was a 15% reduction. Our new goals were submitted to SBTi in mid- FY16 0.58 Baseline November 2023 and are currently pending approval. IKEA retail & other operations FY23 0.42 -27% (vs FY16) -80% Goal FY30 compared to FY16 In FY23, the total IKEA climate footprint decreased by 3.2 million Co-worker commuting FY16 0.50 Baseline & business travel FY23 0.45 -10% (vs FY16) tonnes of CO2eq in absolute terms compared to FY22 – a Goal FY30: -50% in relative terms compared to FY16 reduction of 12%. The reduction in FY23 was attributed to the continued increase in renewable electricity use at both retail and Customer travel & FY16 2.1 Baseline FY23 2.0 -5% (vs FY16) production units, energy e昀케ciency improvements in our lighting home deliveries range and lower production volumes. -30% Goal FY30 compared to FY16 FY16 8.0 Baseline Product use at home FY23 3.8 -52% (vs FY16) -70% Goal FY30 compared to FY16 FY16 1.7 Baseline Product end-of-life FY23 1.5 -12% (vs FY16) -30% Goal FY30 compared to FY16 FY16 0.31 Baseline 1 Historical 昀椀gures are revised only if data quality or calculation methodologies improve. 2 FY23 0.36 +18% (vs FY16) 2 Includes the climate footprints of capital goods, materials connected to retail equipment and Other co-worker clothing, and waste generated in IKEA operations. Goal: No goal as these climate footprints are currently not actively addressed, but will come as the agenda develops 10 - IKEA CLIMATE REPORT FY23

Introduction letter | Our climate agenda | FY23 summary of progress | The IKEA climate footprint throughout the value chain | Air pollution | Appendices Materials - Food ingredients - Production - Product transport & logistics services - IKEA retail & other operations - Co-worker commuting & business travel - Customer travel & home deliveries - Product use at home - Product end-of-life Materials (46.6% of the total IKEA value chain climate footprint in FY23) 1 Climate footprint (million tonnes CO2 eq) FY16: 12.1 Baseline FY22: 13.5 +11% (vs FY16) FY23: 11.2 -7% (vs FY16) -50% Goal FY30 compared to FY16 Goal FY30 (updated) each supplier. Safeguarding data availability and In FY23, the climate footprint from towards more recycled content or using new By FY30, reduce the absolute GHG emissions from materials materials decreased by 17% compared to quality, as well as addressing gaps and overlaps, innovative materials or technologies, for example, by at least 50% compared to baseline FY16. remains a challenge, especially from our suppliers. FY22 and 7% compared to the baseline can still initially a昀昀ect the price – limiting the Sub-goal Work, therefore, continues into FY24 with the aim FY16. potential scale and impact. Even when a昀昀ordable, By FY30, aim to only use recycled or renewable materials. of providing accurate climate footprints of materials sustainable materials exist, access can be limited for the next IKEA Sustainability Report and IKEA The main contribution to the decrease was a drop or the traceability of the raw materials di昀케cult to Climate Report. secure. Finding innovations and solutions that can 6% in volume (m3) of products manufactured in FY23, be quickly deployed remains challenging as many Textiles and comfort materials compared to FY22. 8% 5% Reducing the climate footprint of materials is a new materials and technologies are at the research 2 Rigid plastic Other long-term development agenda. As a part of our stage or in need of scaling up. Drawing any further conclusions on the performance of the climate footprint of materials new net-zero goals, we have increased our ambition 10% Weight 59% to halve emissions from materials by FY30 compared Read more about our work with responsible Metals Wood continues to be di昀케cult, as the amount of materials to our FY16 baseline. The long-term development sourcing of materials in the IKEA Sustainability (tonnes) used in the IKEA range is based on estimations for and innovation plans for our material agenda are Report FY23. 12% most types of materials. Accurate yearly 昀椀gures for steered by IKEA material directions. These material Paper di昀昀erent amounts of materials continue to only be directions have so far helped us to identify actions 12% available for wood and paper. The disclosed climate that will enable us to reach most of the needed 18% Rigid plastic footprint, therefore, is a conservative estimate Textiles and footprint reduction by FY30. Each business plan comfort materials 21% that doesn’t re昀氀ect actual improvements for the of our home furnishing businesses is linked to Wood materials used in the IKEA range. It also means that a material roadmap leading up to FY30. These Climate footprint there is no update to the 昀椀gures shared in FY21, roadmaps address the implementation of material 13% where we reported that 56% of the materials we (tonnes CO2 eq) Paper sourced were renewable and 17% were recycled. innovations and developments, as well as active 10% material choices within the IKEA range. 2 27% 1 Other Scope: GHG Protocol, scope 3 emissions: Purchased goods and services – raw Metals During FY22, a project was started to develop material extraction and transports occurring until the entry gate of tier 1 home furnishing, food (packaging only), components, and catalogue and solutions for measuring the material amounts, both The overall challenge of balancing a昀昀ordability, print suppliers. 2 as designed in the range and as manufactured at accessibility, and sustainability remains. Moving Other: candles, ceramics, custom-made worktops, electronics, green plants, Share of material weight (% tonnes) vs. climate footprint (% tonnes CO2 eq). glass and natural 昀椀bres. 11 - IKEA CLIMATE REPORT FY23

Introduction letter | Our climate agenda | FY23 summary of progress | The IKEA climate footprint throughout the value chain | Air pollution | Appendices Materials - Food ingredients - Production - Product transport & logistics services - IKEA retail & other operations - Co-worker commuting & business travel - Customer travel & home deliveries - Product use at home - Product end-of-life Wood-based materials Wood is the most widely used material with the overall IKEA ambition of aiming to use only in the IKEA range. It's part of our identity renewable and recyclable materials by FY30. 20% 4% and Swedish heritage and includes High/medium Others Ensuring that board materials are produced using particleboard, 昀椀breboard, solid wood, density 昀椀breboard 100% renewable energy is another way we are (HDF/MDF) 55% layer glued and veneer. 98% of all wood Particleboard reducing the climate footprint of wood-based and paper we use comes from sources materials. IKEA owned board factories currently Weight such as Forest Stewardship Council® use 91% renewable energy, and we are now in the (tonnes) (FSC®) certi昀椀ed or recycled wood. process of measuring renewable energy at our Through our forest agenda, we aim to external board suppliers. We are working towards 21% Solid wood improve the sustainability performance developing a quanti昀椀ed baseline to identify gaps of wood even more. and take the appropriate actions to secure 100% renewable energy. The four main movements to reduce the climate The 昀椀rst IKEA Industry board factory to footprint of wood-based materials are: Although smaller in impact, we are also taking steps use new bio-based glue 14% to convert coatings of boards – such as paints and Others foils – into recycled or renewable content. The goal The 昀椀rst IKEA Industry factory to use a glue 46% system made of technical starch from corn1 Particleboard • Using glues with lower climate footprints is to convert 50% into renewable content, compared in large scale production, is now ongoing in (including bio-based glues) to today’s 5%. Climate • Increasing renewable energy in board production Kazlų Rūda, Lithuania. This results from 10 footprint • Increasing renewable and recycled content in years of e昀昀ort to 昀椀nd alternatives to fossil- (tonnes CO2 eq) coatings Finally, one of the main ways to lower the climate based glues. At the same time, multiple • Improving forest management practices and footprint of wood-based materials is through trials with other glue systems are being 32% improved land management practices where wood conducted. High/medium making more from less density 昀椀breboard is sourced. This is a key element of our forest (HDF/MDF) agenda. Read more in the IKEA Sustainability Report 8% The glue used to bond wood components or 昀椀bres Solid wood in IKEA products represents approximately 5% FY23. of the total IKEA climate footprint. Moving from fossil-based to bio-based glue is a key enabler for Share of material weight (% tonnes) vs. climate footprint achieving our overall climate goal. We are taking a (% tonnes CO2 eq). stepwise approach, aiming for most board-producing factories in the IKEA supply chain to use glues with a lower climate footprints by FY30. This also aligns 1 Technical starch is made from industrially grown plants that are separated from the food value chain. 12 - IKEA CLIMATE REPORT FY23

Introduction letter | Our climate agenda | FY23 summary of progress | The IKEA climate footprint throughout the value chain | Air pollution | Appendices Materials - Food ingredients - Production - Product transport & logistics services - IKEA retail & other operations - Co-worker commuting & business travel - Customer travel & home deliveries - Product use at home - Product end-of-life Metals While metals are recyclable and essential and innovative types of steel, they have a much Diversifying sourcing of metals with lower climate footprint compared to conventionally lower climate footprints for the IKEA range in 昀椀ttings and 5% cookware, they have a large climate produced steel. Stainless In FY23, we made signi昀椀cant progress on steel 2% footprint. This is due to energy-intensive the share of recycled aluminium used in Other Making better material choices in the product IKEA products, with an increase of 77%, up 7% extraction and processing and the heavy development process is another way to reduce the Aluminium use of coal and coke in the steel industry. from 57% in FY22. PAX wardrobe sliding climate footprint of metals. This ensures that we can doors, for example, are now made with a Weight develop more-from-less solutions, optimise material minimum of 80% recycled aluminium. (tonnes) The four main movements to reduce the climate use in production, and choose the right metal for footprint from metals are: the right application – which includes selecting For carbon steel, we have focused on 86% carbon steel over stainless steel whenever possible. sourcing alternative grades, such as Carbon steel • Increasing recycled content in steel and high-strength steel. It has a lower climate aluminium footprint because less material is needed • Using material in a smarter way, such as using to reach the required strength compared to less material for the same function standard steel. High-strength steel is being 3% • Using the right material for the right application used in, for example, the NYTILLVERKAD 5% Other Stainless • Converting to low-emission steel collection chair and the ÖNNESTAD chair. steel Climate Achieving 100% recycled metals is challenging and We're also taking advantage of footprint is currently considered infeasible. This is attributed developments in the steel manufacturing industry. For example, we're using hot- 26% (tonnes CO2 eq) to a mismatch between the high demand for steel Aluminium rolled steel, which is now available in and the limited availability of scrap materials. thicknesses down to 0.9 mm. This allows us 65% Additionally, to attain the necessary composition Carbon steel to utilise steel produced in a method that and performance standards, a proportion of virgin has a smaller footprint than the traditional material is often required to be incorporated into cold-rolled process. metals. As a relatively small buyer on the market, our leverage is limited. Based on this, we consider Share of material weight (% tonnes) vs. climate footprint converting to low-emission steel, over further (% tonnes CO2 eq). increasing the recycled content, a preferred option in the long term. Since the use of coke and coal ÖNNESTAD – a replica of the GOGO chair from 1973 – uses only half has been nearly eliminated in producing these new the amount of steel for its productions compared to GOGO. 13 - IKEA CLIMATE REPORT FY23

Introduction letter | Our climate agenda | FY23 summary of progress | The IKEA climate footprint throughout the value chain | Air pollution | Appendices Materials - Food ingredients - Production - Product transport & logistics services - IKEA retail & other operations - Co-worker commuting & business travel - Customer travel & home deliveries - Product use at home - Product end-of-life Plastics Plastics are found throughout the IKEA Our main challenges include the a昀昀ordability of, and accessibility to, the right feedstock as well as the right 8% o昀昀er – from furniture and electronics to PET (any type, 昀椀ttings and packaging material. technical solutions on a commercial scale, especially excl. for in textiles 8% and comfort for our three key plastic materials: polypropylene (PP), ABS (any type) materials) The three main movements to reduce the climate acrylonitrile butadiene styrene (ABS) and polyamide footprint from plastics are: (PA). 11% PE (any type) Weight • Reaching the full potential of mechanically recycled Another challenge is determining the climate footprint 3% (tonnes) plastics of renewable plastics, which is highly dependent PS 3% PA • Using mass-balanced renewable and chemically on the type of feedstock, management practices, 12% 55% recycled plastics for polypropylene (PP) production location and process steps. Others PP (any type, excl. • Adopting new technologies and feedstock sources for in textiles and 13% comfort materials) In FY23, we reduced the amount of plastic packaging ABS (any type) 39% of consumer goods by approximately 47% and 7% PP (any type, excl. for in textiles decreased total plastic packaging (including consumer PET (any type, excl. for in textiles and comfort Climate packs, multipacks, unit loads and handling materials) and comfort materials) materials) footprint by approximately 44% compared to FY21. Making recycling bins from recycled (tonnes CO2 eq) content 11% We continue to shift towards using more recycled or PE (any type) 15% renewable plastics for both existing and new products. The HÅLLBAR collection, consisting of a 4% Other However, since these recycled or renewable materials series of sorting bins designed to meet PS waste sorting needs, was launched in 2020. 11% PA can have di昀昀erent properties, product development is also needed. Lowering the climate footprint of the Products in the HÅLLBAR collection are UPPDATERA cutlery trays going through a transition to being made In the short term, we'll continue to use more post- We moved from recycled polythylene from recycled sources. Share of material weight (% tonnes) vs. climate footprint industrial feedstock to convert to recycled materials. To date, IKEA plastic products produced (% tonnes CO2 eq). terephthalate (PET) to recycled From FY25 onwards, we'll begin to use more post- in Europe contain at least 70% recycled polypropylene (PP) in our UPPDATERA consumer – rather than just pre-consumer – and content, where more than half of it comes Sub-goal products (consisting of multi-use plastic renewable feedstock in our range while we develop boxes) lowering the CO2 emissions on a from post-consumer sources such as By FY28, aim to phase out plastic from customer packaging. innovations in materials and technologies to meet our material level by approximately 12%. The household plastic waste. The same journey climate goal and our ambition to only use renewable lower emissions of PP are mainly driven by is ongoing in the other production regions, or recycled materials by FY30. As of January 2020, all the lower energy consumption of recycling resulting in lowering the CO2 on a material single-use plastic products have been removed from plastic than for PET. Additionally, this change level by approximately 60% compared to if the IKEA home furnishing range globally. entirely made from fossil virgin plastic. provided better a昀昀ordability for customers. 15 - IKEA CLIMATE REPORT FY23

Introduction letter | Our climate agenda | FY23 summary of progress | The IKEA climate footprint throughout the value chain | Air pollution | Appendices Materials - Food ingredients - Production - Product transport & logistics services - IKEA retail & other operations - Co-worker commuting & business travel - Customer travel & home deliveries - Product use at home - Product end-of-life Food ingredients (3.6% of the total IKEA value chain climate footprint in FY23) 1 Climate footprint (million tonnes CO2 eq) FY16: 0.86 Baseline In FY23, the climate footprint from that arise from how food is grown, and we continue FY22: 0.87 +0.4% (vs FY16) food ingredients decreased marginally to work with partners in the supply chain to lessen FY23: 0.86 -0.3% (vs FY16) those impacts. For information about food in our 7% by 0.7% compared to FY22 and 0.3% Poultry, 5% supply chain, see the IKEA Sustainability Report seafood & Oils -50% Goal FY30 compared to FY16 compared to the baseline FY16. other meat 2% FY23. Legumes & seeds 8% Goal FY30 (updated) Sugar, As part of our new net-zero goals, we have revised We continue to work towards our goal that 50% of sweeteners our goals for food ingredients to 50% emissions & chocolate 21% By FY30, reduce the absolute GHG emissions from food Water ingredients by at least 50% compared to baseline FY16. the main meals o昀昀ered in our restaurants will be reduction compared to baseline FY16 (the previous plant-based2 Weight by 2025. Based on estimates shared 9% (% share) goal was 25%). 3 Beef & pork Sub-goal from 31 IKEA retail markets, just over 30% of the 19% Fruits & The IKEA food business is undergoing a main meals o昀昀ered in FY23 were plant-based. 10% vegetables Sub-goals 2025: 50% of main meals o昀昀ered in the * However, there is more work to do in increasing the Other restaurants will be plant-based. transformative change. This transformation has 10% 10% impacted both people and systems, which we quantity sold. Grains & starches Dairy & eggs rely upon for reporting purposes. As a result, the 昀椀gures in our FY23 Climate Report are based on the best available information given these ongoing 1% Legumes & seeds developments. We continue to work on improving 5% 4% our data quality and have enhanced the data quality Oils Fruits & vegetables 11% 10% for FY22 and FY23. The historical data (FY16-21) Poultry, Dairy & eggs still follows previous logic and assumptions with a seafood & 2% other meat Grains & starches larger share of estimated data due to the di昀케culty Climate of baselining. We aim to update these 昀椀gures in our 5% footprint 6% (% share) * FY24 report. Sugar, Other sweeteners & chocolate 55% Our sustainability goals to date have primarily Beef & pork focused on increasing the availability of plant-based 1 food o昀昀erings, as we recognise the importance Scope: GHG Protocol, scope 3 emissions: Purchased goods and services – raw of shifting towards more plant-based diets as an material extraction and processing of food ingredients up until the entry gate * Other: includes beverages of tier 1 food suppliers. 2 important solution for addressing greenhouse gas Meals contain up to 10% animal-produced ingredients, such as dairy, eggs and honey. 3 (GHG) emissions. We also recognise the impacts Operated by Ingka Group Share of material weight (% tonnes) vs. climate footprint (% tonnes CO2 eq). 16 - IKEA CLIMATE REPORT FY23

Introduction letter | Our climate agenda | FY23 summary of progress | The IKEA climate footprint throughout the value chain | Air pollution | Appendices Materials - Food ingredients - Production - Product transport & logistics services - IKEA retail & other operations - Co-worker commuting & business travel - Customer travel & home deliveries - Product use at home - Product end-of-life Production (10% of the total IKEA value chain climate footprint in FY23) 1 Climate footprint (million tonnes CO2 eq) FY16: 3.5 Baseline In FY23, the climate footprint from production totaling 48.4 MW peak capacity, or 49.8 GWh yearly FY22: 2.3 output. In FY23, IKEA Industry sold a majority of 1% -34% (vs FY16) increased by 3.4% compared to FY22. Compared to Fuels for internal FY23: 2.4 -32% (vs FY16) 4 the baseline FY16, we've seen a reduction of 32%. its EU-ETS emission rights. The funds from the transport -80% sale of the emission rights will be reinvested to 36% Goal FY30 compared to FY16 Electricity 63% We saw positive movements in FY23 compared to accelerate climate actions in line with our net-zero consumption Heating & FY22 with the increase in the share of renewable goals. This way, we aim to make a more signi昀椀cant Energy cooling electricity consumed. The dissonance between the contribution to reducing emissions compared to consumption Goal FY30 increase in the climate footprint and the reduction simply retiring the emission rights. (MWh) By FY30, reduce the absolute GHG emissions from production in produced volumes is attributable to multiple by 80% compared to baseline FY16. factors: While we produced fewer goods in FY23 To continue our e昀昀orts to drastically reduce GHG Sub-goals compared to FY22, the costs of sourcing increased emissions from production, striving towards 1% in the same time frame. This in昀氀ationary situation 100% renewable energy, our focus remains on Process emission led to the allocation of more greenhouse gas By FY25 at the latest, phase continually improving energy e昀케ciency. We're also 2% 1% 9% 5 out all coal- and fossil oil- Fuels for internal Refrigerants 7% (GHG) emissions per EUR produced within our focused on the following movements: transport based fuels used on-site in supplier factories. Shutting down our production production where feasible, signi昀椀cantly reducing operations in Russia, where we had a large use • Promoting on-site renewable energy generation 60% the climate footprint and FY22 FY23 FY25 of biomass, also contributed to an increase in the and new installations to make more renewable Heating improving air quality. Share of coal- and fossil overall climate footprint for production. energy available to the many. Climate footprint & cooling oil-based fuels used on-site (tonnes CO2 eq) (% kWh)2,3 • Enabling the purchase of renewable electricity 36% We continue to see strong movements within our for what can’t be generated on-site. Electricity IKEA Industry production sites, where we had an • Phasing out the use of coal- and fossil oil-based internal goal of reaching an 80% GHG emissions fuels used on-site. Strive towards 100% 100% reduction by FY25 compared to the FY16 baseline. • Electrifying production processes, heating and renewable energy 48% 48% (electricity, heating, At the end of FY23, IKEA Industry already achieved internal transports. 3 Production climate footprint vs. energy consumption. cooling and fuels) in a 79% reduction. production by FY30. In FY23, the business unit inaugurated its largest 1 Scope: GHG Protocol, scope 3 emissions: Purchased goods and services – scope 1 & 2 emissions and connected scope 3: fuel- and energy-related activities solar farms at IKEA Industry Zbąszynek and FY22 FY23 FY30 (including transmission and distribution losses) of tier 1 home furnishing, food, components, and catalogue and print suppliers. 2 To secure consistency with data reported by our external suppliers, data covers the calendar year 2022. Babimost (Poland) with a capacity of 19.1 MWp. It's Renewable energy share (% kWh)2,3 3 Excludes food suppliers due to breakdown in emission categories not available for these suppliers. Food production accounts for 21% of the total production one of the largest photovoltaic (PV) farms directly footprint. 4 connected to the factory in Poland. So far IKEA EU-ETS stands for the European Union Emissions Trading System. It is a cap-and-trade system designed to limit greenhouse gas emissions from industries in the Industry has installed over 100,000 PV modules, European Union. 5 Refrigerants and process emissions do not consume energy. 18 - IKEA CLIMATE REPORT FY23

Introduction letter | Our climate agenda | FY23 summary of progress | The IKEA climate footprint throughout the value chain | Air pollution | Appendices Materials - Food ingredients - Production - Product transport & logistics services - IKEA retail & other operations - Co-worker commuting & business travel - Customer travel & home deliveries - Product use at home - Product end-of-life Striving towards 100% renewable energy in production In FY23, renewable energy consumption in Renewable electricity 1 the production of IKEA products remained Share of renewable electricity (% kW) Increase from FY22 (% points, kWh) Decrease from FY22 (% points, kWh) With the launch of the renewable electricity 昀氀at at 48%. programme for supplier partners in calendar Argentina (0%) Latvia (96%) -0.7% During FY23, we saw positive movements in the year 2021 (CY21), we started with a focus on Australia (2%) +0.4% Lithuania* (97%) +0.1% adoption of renewable electricity in our value chain. three of our largest sourcing markets (in terms Austria (81%) +6% Luxembourg (100%) The share of renewable electricity in production of GHG emissions from electricity) – China, increased from 63% in FY22 to 71% in FY23. This India and Poland. Encouraged by the response Bangladesh (4%) +0.4% Malaysia (0.5%) 2 development was counteracted mainly by the from supplier stakeholders, we introduced Belarus (0.3%) Mexico (3%) -4% stoppage of our factory operations in Russia where the programme in a second wave of countries Belgium (90%) +72% Netherlands (35%) +7% Bosnia and Herzegovina (0%) -0.8% Pakistan (29%) +10% during FY23 to support suppliers in the Czech we had signi昀椀cant usage of biomass for heating Republic, Germany, Italy, Lithuania, Portugal, Brazil (9%) -25% Philippines (0%) processes. The increase in coal on-site (page 21) also contributed to maintaining the same share of Romania, Slovakia, Sweden, Türkiye, and Bulgaria (10%) +2% Poland* (84%) +0.7% renewable energy on a year-to-year basis. Vietnam. Canada (0%) -41% Portugal* (78%) -0.5% China - Hong Kong (76%) +76% Romania* (76%) +5% 2 The biggest market movement that we have China - Mainland* (87%) +25% Russia (50%) -8% seen is in China, where the renewable electricity Croatia (1%) +1% Saudi Arabia (0%) 93% 93% share of total electricity within our supplier Czech Republic* (16%) -4% Serbia (97%) +69% partners increased from 62% in FY22 to 87% in Denmark (11%) -2% Slovak Republic* (97%) +6% FY23. Egypt (1%) -0.7% Slovenia (9%) -63% Estonia (39%) -31% South Korea (74%) +35% 48% 48% Finland (89%) +3% Spain (58%) +19% Among our di昀昀erent types of suppliers, a main France (5%) -43% Sweden* (94%) +0.9% driver of the increase of renewable electricity Germany* (24%) -39% Switzerland (13%) +1% has been IKEA Components suppliers, producing Greece (100%) Taiwan (11%) -2% components for our tier-1 suppliers, and within Hungary (86%) +3% Thailand (7%) -3% our suppliers producing metals, plastics, and India* (58%) +48% Tunisia (91%) +38% FY22 FY23 FY22 FY23 昀氀oat glass. Indonesia (5%) +5% Türkiye* (67%) +36% Total production (incl. IKEA operated units Ireland (60%) +60% Ukraine (39%) Industry & Components) (Industry & Components) In FY23, we introduced more comprehensive and stricter guidelines for the recognition of Israel (76%) +35% United Arab Emirates (64%) +28% (continues on next page) Italy* (76%) -2% United Kingdom (8%) -18% Renewable energy share (% kWh) Japan (24%) +8% United States (32%) +1% Jordan (0%) Vietnam* (44%) +28% 1 The order of the countries is alphabetical and therefore does not represent the quantity of electricity consumed by suppliers in each of the countries. Kazakhstan (0%) 2 * Includes data collected between January 2022 and March 2022. Part of renewable electricity programme 19 - IKEA CLIMATE REPORT FY23

Introduction letter | Our climate agenda | FY23 summary of progress | The IKEA climate footprint throughout the value chain | Air pollution | Appendices Materials - Food ingredients - Production - Product transport & logistics services - IKEA retail & other operations - Co-worker commuting & business travel - Customer travel & home deliveries - Product use at home - Product end-of-life Product transport & logistics services (4.2% of the total IKEA value chain climate footprint in FY23) 1,2 Climate footprint (million tonnes CO2 eq) • Reduce: Working together with our service FY17: 1.4 Baseline (FY17, due to incomplete FY16 data) In FY23, the climate footprint from The aim is to only use zero-emission medium and providers to reduce energy and fuel FY22: 1.3 -10% (vs FY17) product transport and logistics services heavy-duty vehicles (MHDVs) and only purchase FY23: 1.0 -28% (vs FY17) consumption, increase equipment utilisation, decreased by 20% compared to FY22, zero-emission ocean transport services by 2040. and 28% compared to the baseline FY17. As this is a long-term agenda and a bigger and optimise our network. development is expected during the coming years, • Replace: Replacing fossil fuels and energy with Goal FY30 The IKEA business is a large global shipper. In FY23, we did, however, make small but important steps during FY23. We continued the deployment of zero-emission solutions and renewable energy. By FY30, reduce the relative GHG emissions from product we made approximately 1.7 million shipments, electric vehicle (EV) trucks and learned how to • Rethink: Integrating innovations and new types transport by 70% compared to baseline FY17 (in terms of kg generating 1 million tonnes CO2 eq of greenhouse CO2 eq per tonne-kilometre transported goods). utilise them more e昀케ciently. We also became the of collaborations into our value chain. gas (GHG) emissions. By FY30, reduce the absolute GHG emissions from logistics 昀椀rst member of the Zero Emission Maritime Buyers services by 80% compared to baseline FY19. Though we see a decrease of transport by 4% in Alliance (ZEMBA) with the aim to speed up the transported tonne-kilometre compared to our transformation of the ocean industry towards zero- 2% Sub-goals emission solutions. Logistic services 4% baseline year FY17 (due to lower produced volume), Rail 0.4% Barge we see a bigger increase in our e昀케ciency and By calendar year 2040, 100% a reduction in relative emissions from product E昀케ciently decarbonising the transport and logistics 0% 0.12% only procuring zero- supply chain requires an end-to-end perspective. emission medium and FY22 FY23 2040 transport (CO2 eq per tonne km transported) by The entire journey of home furnishing goods from heavy-duty vehicles 5% compared to FY22, and 25% compared to the Climate footprint 50% 3 Share of zero-emission medium and (MHDVs). suppliers to warehouses and stores, via ocean, heavy-duty vehicles (MHDVs) (tonnes CO2 eq) Truck baseline. The e昀케ciency improvement stemmed land, terminals and ports must be considered. By (% tonne-kilometre transported goods) from an increased share of intermodal land 44% transportation and increase use of biofuels and addressing this in a systemic way, sub-optimisation Ship By calendar year electric locomotives. The average loading volume and limiting the focus to only speci昀椀c parts of the 2040, only purchase 100% journey are avoided. The decarbonisation agenda is 0% 0% per shipment was increased during FY23, thereby zero-emission ocean FY22 FY23 built on the following three pillars: transport services.4 2040 avoiding 19,608 transport shipments. This led to Share of zero-emission ocean transports both lower emissions and lower costs. (% tonne-kilometre transported goods) 100% The share of alternative fuels and electricity used 86% 91% now accounts for 10% in terms of tonne-kilometre By calendar year 2025, consume 100% goods transported. The use of alternative fuels renewable electricity in 1 increased to 10% in FY23, compared to 6% in FY22. Scope: GHG Protocol, scope 3 emissions: Upstream transportation and distribution and connected fuel- and energy-related activities of tier 1 product transport all logistics service units. suppliers. 2 FY22 FY23 FY25 The share of land intermodal increased from 46% The baseline for product transport is FY17 due to limitations in source data for FY16 to follow-up progress. For the sake of the baseline for the IKEA value chain, it Renewable electricity share (% kWh) has been estimated for FY16. to 51% since FY22. 3 As de昀椀ned by The Climate Group. 4 As de昀椀ned by Cargo Owners for Zero Emission Vessels. 22 - IKEA CLIMATE REPORT FY23

Introduction letter | Our climate agenda | FY23 summary of progress | The IKEA climate footprint throughout the value chain | Air pollution | Appendices Materials - Food ingredients - Production - Product transport & logistics services - IKEA retail & other operations - Co-worker commuting & business travel - Customer travel & home deliveries - Product use at home - Product end-of-life Moving towards Striving towards 100% renewable zero-emission ocean shipping energy in logistics services In FY23, the absolute climate footprint In FY23, the absolute climate footprint New energy-e昀케cient distribution from ocean transports decreased by from logistics services decreased by centre in China 25% compared to FY17. 35% compared to FY22. When new IKEA distribution centres are built, sustainability needs to be considered This was primarily due to improved vessel The decrease was mainly due to a higher share from the start. One such example is the of renewable electricity, from 86% in FY22 to 91% new distribution centre in Foshan in e昀케ciency within the industry and the use of biofuels. There was also a reduction in the in FY23. This is on track towards the goal of using southern China, which opened in FY23. relative emissions from ocean transport by less 100% renewable electricity by calendar year 2025 The unit has a total of 4,877 photovoltaic than 1% compared to FY22 and by 22% compared (CY25). to the baseline FY17. (PV) panels installed on the roof and in The movement was made possible by the the parking lot. These have a capacity of renewable electricity programme for suppliers, 2.5 MW and can generate around 2 GWh Even though we use biofuels in ocean shipping investments in renewable energy by the IKEA of renewable electricity per year, and also today, the long-term solution is zero-emission franchisee Ingka Group and making renewable power 20 charging stations for co-workers’ shipping, which is not yet available at scale. To Continuing the journey towards zero- electricity a top priority in the tender processes electric cars. emission ocean shipping move the industry faster towards zero-emission for external logistics service units. options, sector initiatives such as the Cargo To further support zero-emission Owners for Zero Emission Vessels (coZEV) In March 2023, we became the 昀椀rst member For external units, IKEA goods sometimes make transports, four charging piles that can ambition statement and the Zero Emission of the Zero Emission Maritime Buyers Alliance up only a part of the capacity of a warehouse. charge up to eight EV trucks at the same (ZEMBA). ZEMBA is a buyers’ group of cargo However, in line with going beyond IKEA, the whole time are available. Currently, 60% of all Maritime Buyers Alliance (ZEMBA), are key. owners in which 20 global companies have warehouse needs to run on 100% renewable transports to and from the unit are made come together to demand zero-emission ocean energy, not just the capacity for the IKEA with EV trucks. shipping. business. This is an example of how the IKEA In order to improve the energy e昀케ciency business in昀氀uences GHG reductions beyond our In September 2023, ZEMBA launched the 昀椀rst- of the distribution centre, skylights are in climate footprint. ever request for proposal (RfP) to accelerate place to utilise the natural daylight, and all the transition to zero-emission shipping – a After 100% renewable electricity has been ceilings are equipped with LED lights and highly needed action-oriented initiative, where achieved by CY25, the next milestone will be to daylight sensors. A common monitoring ZEMBA is seeking bids for 600,000 twenty-foot reach 100% renewable energy (including heating, platform is also installed to continually containers (TEUs) fuelled by zero-emission cooling and fuels) by CY30. fuels, over a period of three years. identify energy e昀케ciency improvements. 24 - IKEA CLIMATE REPORT FY23

Introduction letter | Our climate agenda | FY23 summary of progress | The IKEA climate footprint throughout the value chain | Air pollution | Appendices Materials - Food ingredients - Production - Product transport & logistics services - IKEA retail & other operations - Co-worker commuting & business travel - Customer travel & home deliveries - Product use at home - Product end-of-life IKEA retail & other operations (1.8% of the total IKEA value chain climate footprint in FY23) 1 Climate footprint (million tonnes CO2 eq) In FY23, the climate footprint from IKEA the 昀椀rst IKEA store on the South American continent Reducing food waste FY16: 0.58 Baseline retail and other operations decreased - with 100% renewable electricity already secured. FY22: 0.51 -12% (vs FY16) by 17% compared to FY22, and 27% We reached the goal of reducing food waste from FY23: 0.42 -27% (vs FY16) compared to the baseline FY16. Since it’s relatively easier to secure 100% renewable preparing meals for IKEA restaurants by 54% -80% Goal FY30 compared to FY16 electricity, we are focusing on achieving that 昀椀rst. compared with the baseline FY17. In FY23, we saved Doing so provides time to identify solutions and 5 We saw a modest increase in both the share of up to 8.5 million meals. renewable electricity, moving from 75% to 77% plan investments for renewable heating, cooling Goal FY30 between FY22 and FY23, and the overall renewable and fuels, which are more capital-intensive and The reduction was achieved with a food waste energy share, which progressed from 63% to 69% sometimes require retro昀椀tting existing buildings. measurement solution that uses a smart scale. The By FY30, reduce the absolute GHG emissions from retail between FY22 and FY23. Renewable energy includes We prioritise electri昀椀cation of heating using ground- tool measures the amount of food waste produced and other own operations by 80% compared to baseline and air-source heat pumps over other solutions in IKEA restaurants, bistros, Swedish cafés and co- 2 FY16. renewable electricity in addition to renewable wherever possible. sources of heating, cooling, and fuels for transport. worker restaurants. By the end of FY23, 95% of all Sub-goal Noteworthy improvements to renewable heating IKEA stores had food waste solutions in place. were observed in Germany (+36 percentage points), By FY25, consume Lithuania (+18 percentage points) and the Czech 100% renewable 100% 3% electricity in retail and 75% 77% Republic (+16 percentage points). Heating other operations.3 9% One of the drivers behind the slight increase in Refrigerants renewable electricity share was that IKEA retail 12% Türkiye achieved 100% renewable electricity in FY23, Fuels for Climate footprint internal 75% transport (tonnes CO2 eq) Electricity FY22 FY23 FY25 compared to 7% in FY22. We also made signi昀椀cant Renewable electricity share progress in other retail markets, such as Australia (% kWh) (from 17% in FY22 to 78% in FY23) and Thailand (from 11% in FY22 to 34% in FY23). The new retail market in Halving food waste in line with the SDGs Chile also opened its 昀椀rst store in Santiago de Chile - In June 2023, the World Resources Institute (WRI) recognised the IKEA business for halving food waste (compared to the FY17 baseline, 1 Scope: GHG Protocol, scope 1 & 2 emissions and scope 3: Fuel- and energy-related activities (including transmission & distribution losses) of Inter IKEA Group operations (excl. production at IKEA Industry and IKEA Components) and IKEA retail part of our franchisees’ business. This, therefore, includes scope 3: Franchises. in meal preparation at IKEA restaurants) in 2 Scope: Inter IKEA Group and the IKEA retail business of Ingka Group. line with the UN Sustainable Development 3 Scope: Inter IKEA Group (excl. production at own units of IKEA Components and IKEA Industry) and the IKEA retail business of Ingka Group (scope 1 & 2). 6 4 Scope: IKEA restaurants, bistros, Swedish cafés and co-worker restaurants which have implemented the digital solution to measure food waste. Goal (SDG) 12.3, setting an example for other 5 This was calculated for all IKEA CMPs using a food waste digital solution. companies. 6 WRI, "IKEA Becomes First Global Company to Halve Food Waste" 2023. 25 - IKEA CLIMATE REPORT FY23

Introduction letter | Our climate agenda | FY23 summary of progress | The IKEA climate footprint throughout the value chain | Air pollution | Appendices Materials - Food ingredients - Production - Product transport & logistics services - IKEA retail & other operations - Co-worker commuting & business travel - Customer travel & home deliveries - Product use at home - Product end-of-life Striving towards 100% 2 renewable energy for Share of renewable energy (% kW) Increase from FY22 (% points, kWh) Decrease from FY22 (% points, kWh) ¹ Renewable electricity Renewable heating, cooling Renewable electricity Renewable heating, cooling IKEA operations 3 3 and fuels and fuels To drastically reduce our GHG emissions in line Australia 78% (+60%) 0% Latvia 100% 6% (+0.1%) with the 1.5°C target, we’re striving towards Austria 100% 42% Lithuania 99.9% 69% (+18%) 100% renewable energy for all IKEA operations Bahrain 0% 0% Malaysia 22% (+10%) 0% Bangladesh 0% 0% Mexico 11% (+5%) 0% (stores, warehouses, factories, o昀케ces and other Belgium 100% 0% Morocco 0% 0% operations) in every market. In FY23, 25 IKEA Brazil 0% 0% Netherlands 83% (-15%) 9% (+2%) markets consumed 100% renewable electricity, Bulgaria 0% 0% Norway 100% 99.8% (+6%) compared to 24 in FY22. For heating and cooling, Canada 100% 3% (+3%) Oman 0% 0% 昀椀ve IKEA markets are at or almost at 100%. In Chile 100% (+100%) 0% Pakistan 0% 0% FY23, 257 IKEA stores have installed solar panels China - Hong Kong 0% (-0.3%) 0% Philippines 0% 0% (compared to 248 in FY22). China - Mainland 99.9% (+2%) 2% (+2%) Poland 100% 93% (+2%) Croatia 100% 0% Portugal 100% 87% (+3%) Cyprus 15% (-19%) 0,1% (+0.1%) Qatar 0% 0% Securing 100% renewable electricity Czech Republic 99.4% (-0,1%) 20% (+16%) Romania 99.6% (+0.2%) 0% 4 from the start in IKEA Retail Chile Denmark 100% 70% (+3%) Russia 59% (+0.7%) 78% (-6%) Dominican Republic 0% 0% Saudi Arabia 0% 0% In FY23, the IKEA business welcomed Egypt 0% 0% Serbia 100% 0% Estonia 100% 0% Singapore 11% (+3%) 0% its 昀椀rst store in Chile, our 昀椀rst store in Finland 100% 98% (+2%) Slovak Republic 100% 98% (+2%) South America. Located in Santiago de France 100% 29% (-4%) Slovenia 100% 55% +6% Chile, this store started operating on Germany 100% 52% (+36%) South Korea 5% (+0.3%) 40% (-5%) 100% renewable electricity from the very Greece 0% 0% Spain: Mainland 100% 0% beginning. 5 Hungary 100% 77% (+4%) Spain: Islands 100% 0% Iceland 100% 0% (-96%) Sweden 96% (-4%) 99% (+1%) India 18% (+6%) 0% Switzerland 100% 79% (+2%) 1 Indonesia 0% (-0.2%) 0% Taiwan 4% (+2%) 0% Scope: Inter IKEA Group and the IKEA retail business of each IKEA franchisee. It therefore also includes IKEA Industry and IKEA Ireland 100% 99% (+0.7%) Thailand 34% (+22%) 0% Components units covered in the production footprint. Israel 0% 0% Türkiye 100% (+93%) 0% (-14%) 2 The order of the countries is alphabetical and therefore does not represent the quantity of electricity consumed by suppliers in each Italy 99.9% (-0.1%) 0% United Arab Emirates 14% (-22%) 0% of the countries. 3 Excluding electricity. Japan 100% 0% United Kingdom 100% 10% (+3%) 4 Reported data is from September 2022 and October 2022 before Jordan 0% 0% United States 97% (-2%) 26% (-6%) closure of IKEA retail operations in the country. 5 Kuwait 0% 0% Vietnam 0% 0% The Canary and Balearic Islands (Spain). 26 - IKEA CLIMATE REPORT FY23

Introduction letter | Our climate agenda | FY23 summary of progress | The IKEA climate footprint throughout the value chain | Air pollution | Appendices Materials - Food ingredients - Production - Product transport & logistics services - IKEA retail & other operations - Co-worker commuting & business travel - Customer travel & home deliveries - Product use at home - Product end-of-life Customer travel & home deliveries (8.4% of the total IKEA value chain climate footprint in FY23) 1 Climate footprint (million tonnes CO2 eq) FY16: 2.1 Baseline In FY23, the climate footprint from customers from the Swedish Food Market, café, and FY22: 2.1 0% (vs FY16) customer travel and home deliveries restaurant, which were not accounted for in previous FY23: 2.0 -5% (vs FY16)2 decreased by 5% compared to both FY22 reporting due to data unavailability. -30% Goal FY30 and the FY16 baseline. While the absolute emissions from home deliveries compared to FY16 showed an 8% increase compared to the baseline This is primarily due to a signi昀椀cant 17% reduction FY16, there was a 6% reduction compared to FY22. Goal FY30 in customer travel emissions compared to By FY30, reduce the absolute GHG emissions by 30% the baseline, as well as an 8% improvement This is driven by our commitment to increase the 2 share of deliveries made via electric trucks, which compared to baseline FY16. in e昀케ciency (in terms of kg CO2 eq per store rose from 12% to 25% between FY22 and FY23. This customer). The reductions have largely been Sub-goal facilitated by our strategic expansion into city transition to EVs marks a signi昀椀cant step forward in New, more accessible IKEA city store opens centres, which has improved the accessibility of our journey towards reducing the climate footprint in Copenhagen, Denmark By FY25, aim for 100% of 25% our stores and meeting places. As a result, average connected to our operations. transport for customer As a step towards expanding and bringing deliveries and services to journey times for our customers and co-workers a昀昀ordable home furnishing closer to use electric vehicles (EVs) 12% 100% have been reduced, contributing to an overall To reach the FY25 goal, aiming for 100% zero-emission or other zero-emission customers, the 昀椀rst IKEA city store in Denmark 2 home deliveries,² we are continuously testing new solutions. emissions reduction. opened in August 2023. Its location in FY22 FY23 FY25 solutions, such as using hydrogen vehicles in Austria downtown Copenhagen makes it accessible Share of EV or other Achieving emission reductions for customer travel and China. We are also 昀椀nding innovative ways to for more than a million people within 20 zero-emission solutions increase the share of zero-emission deliveries, such depends on the increased use of zero-emission as utilising cargo bikes in Milan and implementing minutes by bike, public transport or car. To vehicles, particularly electric vehicles (EVs). To boat deliveries in Paris. While our ambition is 100% support more sustainable travel to and from support this, the IKEA franchisee Ingka Group the store, the city store has 500 bike parking 11% Home expanded its charging infrastructure to 3,090 EV zero emissions by FY25, we recognise that more spaces. Loaner cargo bikes and direct home deliveries chargers at IKEA stores in FY22. Building on this realistically we will reach 80%, due to limitations in 89% Climate technology, availability of charging infrastructure and delivery options are also o昀昀ered for customers Customer progress, the number further increased to 4,575 footprint travel in FY23. policies in the markets. Even if this falls short of the – enabling zero-emission home deliveries. (tonnes CO2 eq) 100% ambition, it's a huge leap compared to where 250 trees and shrubs are planted on-site with Notably, this year we extended our coverage for we started from. a quarter of the façade covered with green customer travel calculations to include IKEA food planting. The open roof garden also serves as a As part of the goal to reach 50 cities, the IKEA new public park within the city and will become part of a long green pedestrian street on franchisee Ingka Group has deployed 100% zero- emission vehicles in 17 cities and continues to expand rooftops. Solar cells on the roof also contribute 1 Scope: GHG Protocol, scope 3 emissions: Downstream transportation and distribution of Inter IKEA Group operations and IKEA retail part of our franchisees’ business. this work to additional cities. to providing renewable energy to the store. 2 Scope: Inter IKEA Group and the IKEA retail business of Ingka Group. 28 - IKEA CLIMATE REPORT FY23

Introduction letter | Our climate agenda | FY23 summary of progress | The IKEA climate footprint throughout the value chain | Air pollution | Appendices Air pollution Clean air is essential for a healthy and impacts of air pollution while making the correct more sustainable life. We are committed renewable energy choices. to actively reducing air pollutants from Precursors to PM2.5 our operations and in customers’ homes. Movements that will contribute to reducing air pollution Includes black include: Primary carbon, organic NH3 SO2 PM2.5 PM2.5 carbon, mineral dust, and particles Last year, we published what was among the 昀椀rst made up of ever outdoor air pollution inventory of a business • Aiming towards only having electric and other zero- sulphate, nitrate across its value chain. The purpose of doing this is emission home deliveries by FY25 – reducing air and ammonium. to be transparent about the impact on air pollution pollution generated in populated areas (see page 28). NMVOC NOx caused by our business. We also want to raise • Using only zero-emission heavy-duty vehicles by awareness about the importance of disclosing calendar year 2040 at the latest (see page 22). and addressing air pollution in hopes that other • Purchasing only zero-emission ocean shipping by Ground-level businesses and organisations do the same and take calendar year 2040 (see page 22). CH4 CO ozone measures to address this very important topic. • Phasing out coal- and fossil oil-based fuels used in IIn FY23, we continued to build on our air pollution the production of IKEA products, where feasible, by Precursors to ground-level ozone agenda. Through the digitalisation of the climate FY25 at the latest (see page 21). • Investing in new, cleaner technology to generate footprint reporting, we hope to have the 昀椀nal activity data available to also disclose the air pollution electricity and heat on-site from wood waste with footprint from materials and food ingredients in the very limited emission of air pollutants, such as the 1 IKEA Climate Report FY24. technology by MEVA Energy. • Increasing the number of plant-based options in our NH3 Ammonia We have also been developing mitigation scenarios food range and agricultural management practices SO2 Sulphur dioxide for air pollution across our value chain. As we NMVOC Non-methane volatile organic compounds used (e.g., from livestock and fertilisers), reducing air NOx Nitrogen oxides outlined in the IKEA Climate Report FY22, we see that pollution generated by agriculture. PM2.5 Particulate matter of size 2.5 μm or less our decarbonisation agenda has ancillary bene昀椀ts • Consuming only 100% renewable electricity in IKEA CH4 Methane with our air pollution agenda. Working on the root retail markets and the top 10 supplier markets by CO Carbon monoxide causes of emissions will help mitigate negative FY25 (see page 25). Overview of the air pollutants with the largest adverse e昀昀ect on health Based on the impact on health, Inter IKEA Group, in alignment with the Alliance for Clean Air, has decided to track the following 昀椀ve air pollutants over time: NH3, SO2, NMVOC, NO 1 x, and PM2.5. Methane (CH4) is also important to track but is currently not possible to In FY21, IKEA Industry signed an agreement for renewable electricity production with Meva Energy AB. The Meva Energy technology generates both electricity and extract from the current greenhouse gas emissions reporting. This will be addressed in the future. heating from wood waste that's currently not possible to recycle and is incinerated. 33 - IKEA CLIMATE REPORT FY23

Introduction letter | Our climate agenda | FY23 summary of progress | The IKEA climate footprint throughout the value chain | Air pollution | Appendices Air pollutants tracked within the IKEA value chain– performance vs. baseline FY16 (thousand tonnes) FY16 4.8 Baseline Progress in reducing air pollution in FY23 PM2.5 Particulate FY22 4.4 -8% (vs FY16) matter, ≤ 2.5 µm • During FY23, PM2.5 decreased by 8% FY23 4.0 -15% (vs FY16) compared to FY22, mainly because of our increased consumption of renewable electricity across production, retail and other operations. FY16 0.8 Baseline NH3 • Sulphur dioxide levels went down by 26% Ammonia FY22 0.9 +14% (vs FY16) FY23 0.8 +5% (vs FY16) compared to FY22 and 55% compared to FY16. This strong progress was a result of a higher adoption of intermodal solutions – increasing FY16 2.8 Baseline from 46% in FY22 to 51% in FY23. SO2 Sulphur dioxide FY22 1.7 -39% (vs FY16) • Nitrous oxides levels also saw a decrease of FY23 1.3 -55% (vs FY16) 12% compared to FY22 and a reduction of 24% since FY16. The increase in renewable electricity across our value chain, the increased e昀케ciency FY16 28.1 Baseline of our lighting range coupled with grid NOx Nitrogen oxides FY22 24.6 -12% (vs FY16) improvements in various markets around the FY23 21.4 -24% (vs FY16) world and the move to zero emission vehicles played a signi昀椀cant role in reducing this air pollutant. FY16 8.6 Baseline NMVOC Non-methane FY22 9.1 +6% (vs FY16) volatile organic compounds FY23 8.1 -5% (vs FY16) For a full breakdown of emissions across the stages of the value chain, see appendix page 36. 34 - IKEA CLIMATE REPORT FY23

Introduction letter | Our climate agenda | FY23 summary of progress | The IKEA climate footprint throughout the value chain | Air pollution | Appendices Greenhouse gas inventory: scope emissions 1, 2 & 3 Sum of GHG emissions (tonnes CO2 eq) FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 Scope 1 122,975 115,729 110,893 82,962 70,978 68,714 78,371 61,467 On-site generation, fuel combustion and refrigerants Scope 2 Purchased electricity & heating Location-based 430,830 378,183 413,843 405,406 377,651 369,515 371,606 283,571 Market-based 278,014 220,216 269,193 158,879 92,860 76,987 28,804 17,621 Scope 3 1. Purchased goods and services 15,981,148 16,197,335 17,209,516 17,004,122 15,264,259 16,562,384 16,397,911 13,987,358 Food ingredients 963,022 899,309 974,772 891,476 721,033 700,534 867,276 861,316 Materials 12,104,912 12,292,274 13,238,396 13,087,259 11,835,942 13,639,662 13,477,895 11,215,033 Production 2,856,825 2,938,986 2,947,516 2,968,840 2,671,931 2,177,642 2,007,006 2,183,274 Retail equipment & co-worker clothing 56,389 66,766 48,832 56,547 35,354 44,546 45,733 43,358 2. Capital goods 199,633 193,558 348,943 316,464 188,116 126,622 114,448 286,463 3. Fuel- and energy-related activities 108,960 71,947 97,880 60,845 55,585 49,334 41,527 31,325 4. Upstream transportation and distribution 1,253,607 1,387,283 1,463,193 1,385,675 1,188,797 1,358,230 1,260,073 1,006,777 5. Waste generated in operations 53,190 79,700 103,207 87,552 51,432 46,654 36,179 34,069 6. Business travel 145,809 140,092 148,713 113,583 54,336 13,457 28,818 52,848 7. Employee commuting 352,820 376,863 393,447 397,395 388,376 427,260 423,540 397,390 8. Upstream leased assets 0 0 0 0 0 0 0 0 9. Downstream transportation and distribution 2,132,296 2,175,531 2,263,626 2,263,156 1,975,340 1,976,729 1,886,727 1,811,155 Customer travel 1,940,864 1,956,449 2,013,753 1,954,469 1,708,100 1,645,102 1,668,882 1,606,902 Home deliveries 191,432 219,082 249,873 308,687 267,240 331,627 217,845 204,253 10. Processing of sold products 0 0 0 0 0 0 0 0 11. Use of sold products 7,990,576 7,467,481 7,230,826 6,384,018 5,743,429 5,534,869 4,390,868 3,819,585 Appliances 1,780,111 1,756,626 1,777,768 1,752,255 1,529,837 1,653,852 1,309,509 1,056,961 Candles 71,946 68,051 66,232 58,792 53,269 56,031 51,614 41,309 Lighting 6,138,519 5,642,804 5,386,826 4,572,898 4,157,939 3,824,338 3,029,556 2,721,315 Home electronics 0 0 0 73 2,384 649 189 0 12. End-of-life treatment of sold products 1,686,746 1,668,840 1,783,251 1,782,493 1,635,301 1,771,085 1,619,666 1,480,157 13. Downstream leased assets 14. Franchises 572,923 581,000 675,573 626,581 632,016 585,336 510,644 421,964 15. Investments 0 0 0 0 0 0 0 0 Grand total (For scope 2 emissions, the market-based value is used 30,878,697 31,417,301 32,098,261 30,663,726 27,340,825 28,597,660 26,817,574 23,723,800 for purchased electricity and heating) Outside the scopes 430,126 363,543 428,057 485,710 452,485 443,576 495,822 370,009 Biogenic emissions (from on-site fuel combustion) 36 - IKEA CLIMATE REPORT FY23

Introduction letter | Our climate agenda | FY23 summary of progress | The IKEA climate footprint throughout the value chain | Air pollution | Appendices FY23 progress on external initiatives The following is a summary of all IKEA 1 1 Coolfood Pledge5 Goal FY30 and FY50 Progress FY23 commitments towards external initiatives. The 昀椀gures below are a summary of the progress versus the IKEA commitment for the Coolfood Pledge. The goal is to, by Based on the pre-de昀椀ned scope of each NEW Goal FY301: Inter IKEA Group commits to reduce FY30, aim for at least a 25% absolute reduction in food-related -22% To reach net zero we will initiative, the values could di昀昀er compared absolute GHG emissions across the IKEA value chain (scope -50% neutralise remaining GHG emissions or a 38% relative reduction in food-related GHG to those shared in the IKEA Sustainability 1, 2 & 3) at least 50% by FY30, from a FY16 base year. This emissions by removing and emissions per 1,000 calories compared to FY16. includes a reduction of at least 50% for scope 3 GHG 30.9 24.1 -90% storing carbon in forestry, Report FY22 and IKEA Climate Report FY22. emissions. agriculture and products within our value chain. Progress against 25% absolute target 1 (million tonnes CO2 eq) NEW Goal latest FY50 : Inter IKEA Group commits to reach FY16 FY23 FY30 FY50 net-zero GHG emissions across the value chain by latest FY50. Science Based Targets initiative (SBTi) (million tonnes CO2 eq) Agriculture Carbon Total % change supply opportunity since The target boundary includes biogenic chain costs baseline emissions and removals from bioenergy emissions Goal FY30 Progress FY23 Goal FY30 Progress FY23 feedstocks. For greenhouse gas (GHG) FY16 1.01 4.13 5.14 0% emissions from bioenergy, the global Inter IKEA Group commits 1 -26% FY17 0.99 4.03 5.03 -2% warming potential (GWP) of CO2 is assumed FY30 goal (updated) : For FY18 1.04 4.19 5.23 +2% to reduce scope 1 & 2 0.4 IKEA franchisees’ (scope 3, 0.57 FY19 0.88 3.41 4.29 -16% GHG emissions -82.1%⁴ to be zero, while the GWP of CH4 and category 14) retail operations FY20 0.72 2.77 3.49 -32% compared to FY16.3 0.42 N2O are still included. See listed emission -80% (their scope 1 & 2), reduce FY21 0.83 3.40 4.24 -18% 0.08 -82.1%⁴ the respective absolute GHG -80% FY22 1.00 4.15 5.15 0% factors in the climate footprint calculation FY16 FY23 FY30 emissions 80% by FY30, from FY16 FY23 FY30 FY30 -25% methodology, page 38. the FY16 base year. (million tonnes CO2 eq) (million tonnes CO2 eq) Goal FY25 Progress FY23 Goal CY40 Progress FY23 Progress against 38% relative target (kg CO2 eq per 1,000 kcal) 100% 100% Agriculture Carbon Total % change Inter IKEA Group commits EV100+ by The Climate supply opportunity since to consume 100% Group: Only procuring zero- chain costs baseline renewable electricity for 97% emission medium and heavy- emissions its own operations (scope duty vehicles (MHDVs). 53% 1 & 2) by FY25. 0% 0.12% FY16 2.53 10.32 12.85 0% FY16 FY23 FY25 FY16 FY23 FY40 FY17 2.46 9.99 12.45 -3% FY18 2.41 9.73 12.14 -6% (million tonnes CO2 eq) FY19 2.10 8.14 10.24 -20% FY20 2.04 7.84 9.88 -23% FY21 2.31 9.45 11.77 -8% Goal CY40 Progress FY23 FY22 2.35 9.77 12.12 -6% FY30 -38% 100% Cargo Owners for Zero Emission Vessels (coZEV): 1 Submitted to SBTi in mid-November 2023 and pending approval. Only purchase zero-emission 2 Pending methodology through the Land Sector and Removals Guidance by the GHG Protocol. ocean transport services. 5 3 The 昀椀gures presented here di昀昀er from those in the rest of the IKEA Climate Report Scope includes scope 1 & 2 emissions for Inter IKEA Group owned operations for IKEA retail & other operations and production (IKEA Industry and FY23 because its calculation methodology introduces concepts such as the Carbon 0% 0% IKEA Components). Opportunity Costs. As this is reported in the beginning of each calendar year, the 4 Preliminary submission to SBTi for scope 1 and 2 reduction is 82.1%. We might revise and strengthen the target in our FY24 report. FY16 FY23 FY40 IKEA Climate Report FY23 covers the progress up until the calendar year 2022. (million tonnes CO2 eq) 37 - IKEA CLIMATE REPORT FY23

Introduction letter | Our climate agenda | FY23 summary of progress | The IKEA climate footprint throughout the value chain | Air pollution | Appendices Climate footprint calculation methodology • Tank-to-Wheel (TTW): TTW emissions cover all Overall away from quali昀椀ed estimations – or that science material amounts. For the other material areas, we The following is a high-level summary of how the and accounting standards are improved. Historical the energy used once transformed. These are currently lack systems to follow up, and so we rely IKEA climate footprint is calculated. The scope data is always revised to ensure that all disclosed emissions occurring during the combustion of on close collaboration with our direct suppliers to fuels by vehicles. covers the entire IKEA value chain. This includes performance re昀氀ects progress and not a change in estimate the amounts to the best of our knowledge. the raw material extraction and processing for accounting. • Well-to-Wheel (WTW): WTT + TTW together make As we improve our ability to measure more the materials or food ingredients used in the IKEA up WTW GHG emissions. materials and have to estimate a smaller part of our range, how they are produced at our direct suppliers material usage, the material footprint is subject to Emission factors change. or IKEA owned factories, and then transported to the IKEA stores and warehouses. It covers all IKEA For used emission factors, please see each separate Materials However, historical data is always revised for entry. comparability to ensure that any trend is due to stores, warehouses, o昀케ces and other operations, The climate footprint of materials is calculated as as well as co-worker commuting and business 1 improvements of the materials rather than the data travel. All travel by IKEA customers to IKEA stores is We always strive to use the latest values for global the cradle-to-gate footprint from raw material quality. included, as well as any home deliveries, ordered warming potentials of reported GHG as de昀椀ned by extraction and all processing steps and transport by customers, of products from IKEA stores to the Intergovernmental Panel on Climate Change up until the gate of our tier 1 suppliers where the The climate footprint is also subject to change as their homes. The product use at home is mainly (IPCC) in its Sixth Assessment Report (AR6). Due IKEA products are manufactured, which are covered the emission factors in ecoinvent and other LCA the electricity consumption needed to power our to a lag in updates in third-party emission factor under “production”. The amount of material is databases are updated from one version to another. databases and for the purposes of comparability, lighting and appliances products, as well as the GHG multiplied with an emission factor speci昀椀c to its emissions released when burning candles. Finally, this can di昀昀er. As soon as these sources are recycled content, renewable content, sourcing updated with AR6 values, we will adapt to these and the climate footprint from the product end-of-life country (if available) and material company (if Food ingredients secure that IKEA climate footprint calculations are is included should a product not be recycled, but available), using ecoinvent and other life cycle conducted in line with the most recent IPCC reports. The climate footprint for food ingredients is assessment (LCA) databases. The emission factors instead incinerated or land昀椀lled. Some agendas are are based on sector averages, which are then calculated in a similar way as materials – from For GHG emissions from bioenergy, the global still under development. Until these are integrated modelled based on the amount of traceability and cradle-to-gate to the factory manufacturing the into other climate footprints, they are categorised as warming potential (GWP) of CO2 is assumed to primary data we have available for the supply chain food products. For food ingredient amounts, a "Other" for the sake of transparency. be zero, while the GWP of CH4 and N2O are still of that material. As more traceability is gained or system is in place to measure the ingredients per The climate footprint calculations are conducted included. more primary data is obtained from our material product for the global food range. A majority of the in line with the GHG Protocol and its guidance The following types of emission factors may be suppliers, the emission factors are continually market-speci昀椀c range is now also measured using the same system. Today, 20% of the total weight re昀椀ned to make them more speci昀椀c to the IKEA documents. referenced in the report and are de昀椀ned below: supply chain. sold is estimated due to lack of recipe-speci昀椀c data. The calculation models are annually reviewed • Well-to-Tank (WTT): WTT fuels account for the The climate footprint is also subject to change as upstream scope 3 emissions associated with For material amounts, measured data exists for to re昀氀ect the IKEA value chain, and its parts, as the emission factors in ecoinvent and other LCA all wood and paper because systems are in place extraction, re昀椀ning and transportation of the raw accurately as possible. Updates could be made databases are updated from one version to another. to measure and follow up on at least a yearly due to increasing traceability and gaining access fuel sources to site (or asset) prior to combustion. level. These represent about three-quarters of the to more supplier-speci昀椀c information – moving 1 Cradle-to-gate is an assessment of a partial product life cycle from resource extraction to factory. 38 - IKEA CLIMATE REPORT FY23

Introduction letter | Our climate agenda | FY23 summary of progress | The IKEA climate footprint throughout the value chain | Air pollution | Appendices In FY23, we made the following updates to the stricter guidelines for recognition of renewable IKEA retail and other operations This survey data acts as a representative sample methodology: electricity consumption. We introduced principles The climate footprint of IKEA retail and other and re昀氀ects the total commuting patterns of all related to accounting rules and acceptable employees of the IKEA business. The commuting • The calculation logic was updated based geographical attributes, time recognition and operations covers all IKEA operations (stores, schedule and number of days working are applied warehouses, o昀케ces, etc.) by Inter IKEA Group on availability of the market-speci昀椀c range, technology selection. to the actual number of employees for Inter IKEA reducing the share of estimated data. This and the IKEA retail business of each of the IKEA Group, the IKEA franchisee Ingka Group and other update was conducted for years FY22 and franchisees. It does not include IKEA owned factories IKEA businesses. FY23. By next report, all historical data will be by IKEA Industry and packaging and distribution updated with the improved calculation logic Product transport and logistics services units by IKEA Components, since these are reported For business travel, the climate footprint is and recipe data. The climate footprint of product transport is in production. calculated by our travel agencies and their travel measured as any transport managed by IKEA Supply The footprint is measured as the scope 1 and scope booking systems, which have integrated climate Chain Operations, IKEA Industry, IKEA Components 2 emissions of each unit, as well as any connected footprint calculations. All climate footprints are Production and IKEA Marketing & Communication. In essence, calculated using emission factors provided by BEIS this is all product transport from our direct supplier fuel- and energy-related activities (scope 3, category and encompass various modes of travel, including 3). All units provide their primary data on the The climate footprint of production is the 昀椀nal step to any IKEA unit, as well as product transport air, rail, public transport, rental cars, private vehicles, in the supply chain where IKEA home furnishing or between IKEA units. It is measured per shipment for consumption of energy sources and refrigerants, taxis and hotel accommodations. food products, components or printed media are each transport route and calculated in line with the as well as any renewable energy attributes for Both footprints cover WTT emission factors. produced. It also includes the IKEA owned factories standard EN 16258. The emission methodology in purchased energy (electricity and district heating or operated by IKEA Industry and packaging and this category is in alignment with GLEC Framework cooling). In FY23, we made the following updates to the distribution units by IKEA Components. The footprint is measured as the scope 1 and scope 2 emissions of by Global Logistics Emissions Council (GLEC). The related GHG emissions for each energy source methodology: each tier 1 supplier or unit, as well as any connected In FY23, we made the following updates to the are calculated using emission factors provided • The methodology for co-worker commuting methodology: by the GHG Protocol (combustion of fuels and now encompasses the return journey for co- fuel- and energy-related activities (scope 3, category refrigerants) and the IEA (purchased electricity and workers, which was previously omitted from our 3). All units provide their primary data on the consumption of energy sources and refrigerants, • The climate footprint of logistics services now heating). The only exception to this is for the IKEA calculations, resulting in a twofold increase in our as well as any renewable energy attributes for incorporates emissions from the distribution franchisee Ingka Group, where the GHG emissions climate footprint. centres that are operated by the IKEA franchisee from fuels are calculated using emission factors purchased energy (electricity and district heating Ingka Group based on Distribution Service by BEIS. Work is in progress to align the emission and cooling). The related GHG emissions for each Agreement with Inter IKEA Group and the factors throughout the IKEA businesses. energy source are calculated using emission factors distribution centres owned by Inter IKEA Group. Customer travel and home deliveries provided by the GHG Protocol (combustion of fuels), These were previously under the Retail and Other The climate footprint of customer travel is measured UK Department for Business, Energy & Industrial Operations footprint as part of Category 14: Co-worker commuting and business travel on the IKEA store level based on the number of Strategy (BEIS) (upstream emissions of purchased Franchises. The climate footprint from co-worker commuting customers (transactions) combined with a survey fuels and refrigerants), and the International Energy through Brand Capital. The survey provides the for the Inter IKEA Group is based on the survey Agency (IEA) (purchased electricity and heating). In average time travelled by customers to the store per FY23, we have continued to use the market-based conducted for co-worker travel to stores, factories mode of transport. The average travel time at the approach as set in FY22. During FY23, we introduced and o昀케ces by the IKEA franchisee Ingka Group. 39 - IKEA CLIMATE REPORT FY23

Introduction letter | Our climate agenda | FY23 summary of progress | The IKEA climate footprint throughout the value chain | Air pollution | Appendices city level per mode of transport is converted into Product use at home Product end-of-life distance using Numbeo. Emission factors for each The climate footprint of product use at home is The climate footprint for product end-of-life is mode of transport are obtained from BEIS. WTT based on the energy consumption for the home calculated in a similar way as materials. The big emission factors have been applied to the climate model for both the customer travel and home use of IKEA lighting, home appliances and home di昀昀erence is the scope, which is the grave (end- deliveries footprints. electronics as well as the burning of candles. of-life) footprint, not the cradle-to-gate we use for Smart home products from IKEA are currently materials. The weight of material in products sold is A fuel-based approach has been used to arrive excluded from the footprint. We are developing multiplied with an end-of-life emission factor speci昀椀c at last-mile emissions. The fuel consumption was the methodology to measure the climate footprint to that material and the country's average waste estimated by using an average fuel consumption of smart home products from IKEA, and it will be handling in each IKEA market. per kilometre for diesel and an average for kWh included in the FY24 climate report. The energy Currently, no consideration in the model is taken for per km for electric vehicles. Data for certain IKEA consumption is measured in line with the GHG how the product has been designed for recycling franchisees has been estimated where unavailable. Protocol as the energy consumption through the product's lifetime. Since, in principle, all energy or the speci昀椀c waste-handling infrastructure at the As the IKEA business is driving visitation to the IKEA consumption is electricity consumption, the climate IKEA store level. customer meeting points, the methodology will be footprint is calculated by multiplying the energy The climate footprint is subject to change as the reviewed to better re昀氀ect our new way of meeting consumption with that of the national electricity accuracy for the amount of materials increases and the customer and new ways to deliver products to customers’ homes. grid for the speci昀椀c country in which the product the emission factors in ecoinvent and other LCA was sold. For candles, the climate footprint is databases are updated from one version to another. In FY23, we made the following updates to the calculated by multiplying the amount of wax (in In FY23, no changes to the methodology were methodology: terms of weight) with the speci昀椀c emission factor for conducted. • We expanded customer categorisation beyond combustion for the speci昀椀c wax (emission factors IKEA store customers to include IKEA food provided by the GHG Protocol). customers, driven by improved data availability. To calculate the share of renewable electricity, a Other The data now includes IKEA customers coming to location-based approach is used since we cannot In addition to the climate footprints above, there are the Swedish Food Market, Café and/or restaurant. track the speci昀椀c electricity contract of each This adjustment has resulted in a higher count customer. areas currently not as actively addressed. Until the in the number of IKEA customers compared to agendas of these mature and they are integrated calculations of previous years. It provides a more In FY23, no changes to the methodology was into the other climate footprints, they are kept comprehensive and accurate assessment of our conducted. under the category “Other”. This includes capital customer base and its climate impact. goods, waste generated in operations, and material for retail equipment and co-worker clothing. • Updated emission factors have been used both For transparency purposes, these footprints are from BEIS and Numbeo. calculated and disclosed. 40 - IKEA CLIMATE REPORT FY23

Introduction letter | Our climate agenda | FY23 summary of progress | The IKEA climate footprint throughout the value chain | Air pollution | Appendices Air pollution inventory: emissions across the IKEA value chain Air pollutants (tonnes) FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 Materials N/A N/A N/A N/A N/A N/A N/A N/A Food ingredients N/A N/A N/A N/A N/A N/A N/A N/A Production .5 1,757 1, 724 1,854 2,019 1,755 1,518 1,509 1,394 PM2 NH3 (Ammonia) N/A N/A N/A N/A N/A N/A N/A N/A SO2 (Sulphur dioxide) N/A N/A N/A N/A N/A N/A N/A N/A NOx (Nitrogen oxides) 3,785 3,797 3,859 3,870 3,532 3,076 3,154 3,179 NMVOC (Non-methane volatile organic compounds) 3,375 3,230 3,495 4,007 3,523 3,079 3,111 2,656 Product transport & logistics services PM2 .5 626 622 631 596 549 636 710 564 NH3 (Ammonia) 37 37 31 30 30 32 40 32 SO2 (Sulphur dioxide) 2,563 2,543 2,668 2,510 1,580 1,410 1,501 1,078 NOx (Nitrogen oxides) 11,513 11,436 11,007 10,417 9,427 10,793 12,346 9,826 NMVOC (Non-methane volatile organic compounds) 324 323 269 253 234 270 332 266 IKEA retail and other operations PM2 .5 53 56 60 60 56 60 62 59 NH3 (Ammonia) N/A N/A N/A N/A N/A N/A N/A N/A SO2 (Sulphur dioxide) N/A N/A N/A N/A N/A N/A N/A N/A NOx (Nitrogen oxides) 656 683 740 715 669 686 662 593 NMVOC (Non-methane volatile organic compounds) 9 9 10 10 10 11 12 12 Co-worker commuting and business travel N/A N/A N/A N/A N/A N/A N/A N/A Customer travel and home deliveries PM2 .5 1,162 1,168 1,223 1,239 1,108 1,081 981 969 NH3 (Ammonia) 6 6 6 6 6 6 5 5 SO2 (Sulphur dioxide) N/A N/A N/A N/A N/A N/A N/A N/A NOx (Nitrogen oxides) 4,504 4,684 4,998 5,400 4,793 4,831 3,165 3,077 NMVOC (Non-methane volatile organic compounds) 1,406 1,558 1,603 1,783 1,610 1,681 1,625 1,577 Product use at home PM2 .5 506 505 509 482 449 437 390 397 NH3 (Ammonia) N/A N/A N/A N/A N/A N/A N/A N/A SO2 (Sulphur dioxide) N/A N/A N/A N/A N/A N/A N/A N/A NOx (Nitrogen oxides) 5,011 4,743 4,621 4,106 3,681 3,531 2,829 2,500 NMVOC (Non-methane volatile organic compounds) 73 69 69 66 62 60 53 51 Product end-of-life PM2 .5 650 639 665 748 695 798 733 666 NH3 (Ammonia) 743 765 788 868 840 919 853 788 SO2 (Sulphur dioxide) 206 210 217 200 193 209 190 175 NOx (Nitrogen oxides) 2,614 2,660 2,743 2,544 2,453 2,656 2,423 2,229 NMVOC (Non-methane volatile organic compounds) 3,370 3,361 3,528 4,016 3,744 4,324 3,962 3,580 41 - IKEA CLIMATE REPORT FY23

Introduction letter | Our climate agenda | FY23 summary of progress | The IKEA climate footprint throughout the value chain | Air pollution | Appendices Air pollution footprint calculation methodology Overall We aim to disclose the impact on both climate and we will be working to improve and further re昀椀ne the Materials We’re aware that key parts of the value chain are clean air in the actions we take in our climate agenda, existing inventory. Air pollution from materials is currently not included missing in our air pollutant emissions inventory where feasible. in our disclosure due to limitations in data available – especially materials and food ingredients – but While the creation of this inventory is a very Emission factors to measure the footprint su昀케ciently and accurately, our aim is to be transparent about the impact we important 昀椀rst step, there were also three key and not all industrial processes found in cradle-to- can con昀椀dently disclose today to raise awareness limitations and challenges that we faced during this All emission factors used are provided by the Guide. gate LCAs of materials used in the IKEA range are about the importance of disclosing and addressing 昀椀rst year: The Guide's emission factors come from EMEP/EEA today covered by the emission factors provided by air pollution. Each entry within this section will 1. The Guide covers six key emitting sources that air pollutant emission inventory guidebook 2019. the Guide. specify the scope and methodology used in the FY23 can contribute to air pollutant emissions across a In addition to the emission factors provided by the As data availability within IKEA increases and the calculation. As we learn, and as the guidance further company’s value chain. These include electricity Guide and EMEP/EEA, a few additional adjustments completeness of industrial processes in the air improves, the air pollution inventory will likewise consumption, stationary fuel combustion, have been made to create the air pollution reference pollution guidance increases, it will enable us to also improve. transport, industrial processes, agriculture and data used for the inventory: disclose the air pollution footprint from materials. The air pollution footprint calculations are conducted waste. Due to time and data constraints, the IKEA • Electricity consumption: The inventory has been in line with “A Practical Guide for Business: Air inventory currently covers four out of these six based on tier 1 emission factors on di昀昀erent types Pollutant Emission Assessment” by Climate and Clean key emitting sources (e.g., all sources apart from of fuel used to generate electricity provided in the Food ingredients Air Coalition and Stockholm Environment Institute agriculture and industrial processes). Guide. To create country-speci昀椀c emission factors Air pollution from food ingredients is currently (hereafter referred to as "the Guide"), which Inter 2. Emission factors were not available in the for each air pollutant, fuel mix data for electricity not included due to limitations in data available to IKEA Group was part of developing. European Monitoring and Evaluation Programme output from International Energy Agency (IEA) relates to respective tier 1 emission factors to measure the footprint su昀케ciently and accurately. The calculation models are reviewed annually (EMEP)/European Environment Agency (EEA) calculate a weighted average. to re昀氀ect the IKEA value chain and its parts as Guidelines for some key activities that are part of accurately as possible. Updates could be made the IKEA value chain, speci昀椀cally for the processing • Stationary fuel combustion: Air pollutants for Production due to increasing traceability and gaining access to of raw materials into materials. This means that this scope have been based on the tier 1 default The air pollution footprint of production is the more supplier-speci昀椀c information – moving away not all air pollutant emissions could be covered emission factors for stationary fuel combustion 昀椀nal step in the supply chain where the IKEA home from quali昀椀ed estimations – or that science and under industrial processes of materials. provided in the Guide. No additional adjustments furnishing or food products, components or printed accounting standards are improved. At all times, all 3. For transport, a simpli昀椀ed model was used have been made, but only mapped to the media is produced. It also includes the IKEA owned historical data is revised to ensure that all disclosed to quantify emissions, which can introduce respective fuels in activity data. factories operated by IKEA Industry and packaging performance re昀氀ects progress and not a change in uncertainty in the air pollutant emissions occurring • Waste: Default emission factors for tier 1 di昀昀erent and distribution units by IKEA Components. accounting. from this speci昀椀c source. waste treatment methods from the guidance The footprint is based on any on-site generation of There is currently no guidance on how to calculate As outlined in the best practices within the guidance has been used for the inventory. These waste the air pollution footprint using a market-based treatment methods have been mapped to the energy and any purchase of energy (e.g., electricity, for inventory compiling, these limitations and approach for renewable energy consumption. treatment method share per country from “OECD: heating, etc.), corresponding to the scope 1 and Therefore, the air pollution inventory is calculated challenges have been mapped and clearly identi昀椀ed Environment/Waste/Municipal Waste – Generation scope 2 emissions in the GHG Protocol of each tier based on a location-based method, mainly relying on by the team that has been working to quantify air 1 supplier or unit. All units provide their primary pollutant emissions across the IKEA value chain, and and Treatment” to calculate country-speci昀椀c data on the consumption of energy sources, as grid-average data. emission factors. 42 - IKEA CLIMATE REPORT FY23

Introduction letter | Our climate agenda | FY23 summary of progress | The IKEA climate footprint throughout the value chain | Air pollution | Appendices well as any renewable energy attributes for bought Components, since these are reported in production. multiplied by the respective air pollutant emission Product end-of-life energy (electricity and district heating or cooling). The footprint is based on any on-site generation of factor. An occupancy rate has also been applied for The air pollution footprint for product end-of-life The related air pollution for each energy source is the modes of transport. Air pollution from hotel stays calculated using emission factors provided by the energy and any purchase of energy (e.g., electricity, has not been calculated. For emissions from home is calculated in a similar way as materials. The big heating, etc.), corresponding to the scope 1 and Guide. delivery, the air pollutant factor for trucks less than di昀昀erence is the scope, which is the grave (end-of-life) scope 2 emissions in the GHG Protocol of each tier 7.5 tonnes from EEA is considered representative of footprint, not the cradle-to-gate we use for materials. 1 supplier or unit. All units provide their primary the trucks the IKEA business uses. In case the Euro The weight of material in products sold is multiplied data on the consumption of energy sources, as Product transport and logistics services class types are unknown the average is considered. with an end-of-life emission factor speci昀椀c to that well as any renewable energy attributes for bought Air pollutants factors for FY16–23 are based on material and the country's average waste handling The air pollution footprint of product transport is energy (electricity and district heating or cooling). EMEP/EEA guidebook. The distance per fuel type is in each IKEA market. Currently, no consideration measured as any transport managed by IKEA Supply The related air pollution for each energy source is multiplied by the respective fuel type per emission in the model is taken to how the product has been calculated using emission factors provided by the Chain Operations, IKEA Industry, IKEA Components factor. designed for recycling or the speci昀椀c waste-handling and IKEA Marketing & Communication. In essence, Guide. infrastructure at the IKEA store level. these are all product transports from our direct Air pollution from stationary fuel combustion is supplier to any IKEA unit, as well as product currently not included in our disclosure. While Product use at home transports between IKEA units. we have activity data for the scope of operations It is measured per shipment for each transport route connected to this footprint, work remains to be done The air pollution footprint of product use at home and calculated by using the EMEP/EEA air pollutant to connect the applicable air pollutant emission is based on the energy consumption at home for emission inventory guidebook 2019. factors. lighting, home appliances, and home electronics. The burning of candles is currently excluded. Smart home The air pollution for logistics services is based on any products from IKEA are currently excluded from on-site generation of energy and any purchase of Co-worker commuting and business travel the footprint. We are developing the methodology to measure the climate footprint of smart home energy (e.g., electricity, heating, etc.), corresponding to the scope 1 and scope 2 emissions in the GHG Air pollution has not been calculated for co-worker products from IKEA, and it will be included in the Protocol. It does not currently include stationary fuel commuting as an accurate model has yet to be FY24 climate report. combustion. The scope includes distribution units developed. The energy consumption is measured in line with the owned by Inter IKEA Group and those operated by GHG Protocol as the energy consumption through IKEA Franchisee Ingka Group. the product's lifetime. Since, in principle, all energy Customer travel and home deliveries consumption is electricity consumption, the air IKEA retail and other operations The air pollution footprint of customer travel is pollution footprint is calculated by multiplying the The air pollution footprint of IKEA retail and other measured on the IKEA store level based on the energy consumption with a country-speci昀椀c emission factor. This is calculated using energy mixes provided number of customers (transactions) combined operations covers all IKEA operations (stores, with a survey through Brand Capital on the mode by the IEA (purchased electricity) and energy source- warehouses, o昀케ces, etc.) by Inter IKEA Group and the IKEA retail business of each of the IKEA franchisees. of transport to the store by customers as well as speci昀椀c emission factors for the generation of It does not include IKEA owned factories by IKEA distance and time travelled. The total distance electricity provided by the Guide. Industry and packaging and distribution units by IKEA travelled per mode of transport to the store is 43 - IKEA CLIMATE REPORT FY23