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 Phasing out coal- and fossil Financing for the on-site oil-based fuels used on-site generation of renewable energy The IKEA business has a EUR 100 million Going forward, it's important to gain business cases that address energy-intensive processes such as 昀椀nancing programme to support the on-site generation of renewable energy. glass furnaces, ceramic kilns, boilers for heating This provides discounted loans to IKEA and steam and surface treatments. Together, these suppliers, enabling investments to represent a very large part of the climate footprint accelerate the transformation to 100% in production and require large investments to renewable energy. address. Since most of these processes are heat- and fuel-driven, they can't be addressed through the programme to enable the purchase of renewable Since the launch of the programme in FY19, the sum electricity. Only through on-site investments can of recommended applications has been around EUR these processes be converted to 100% renewable 33 million of the EUR 100 million. energy. During FY23, four supplier business cases were reviewed and recommended for 昀椀nancing. Some of the previously approved investments have seen delays in deployment because of the political The share of coal- and fossil oil-based the remaining two suppliers will conclude the and macroeconomic situation in Europe. Some complete coal phaseout by FY27. fuels increased from 7% in FY22 to 9% investments, such as the MEVA gasi昀椀cation project, in FY23. have seen delays related to permits. Fossil oil-based fuels are mostly used for internal Phasing out coal-based fuels remains a challenge, transport at factories. The electri昀椀cation of Projects to which money has been disbursed will see and these fuels continue to have the largest forklifts is, therefore, an important step in additional renewable energy of 41 GWh annually and negative impact on climate change and air reducing these fuels. an estimated reduction in GHG emissions of 23,000 pollution. Our textile sourcing from India, Pakistan tonnes CO2 eq. and Türkiye represents 99% of our remaining use of on-site coal, and we have committed During FY23, we simpli昀椀ed the application process phase-out plans from these suppliers. Out of for 昀椀nancing based on feedback from our suppliers. the eight suppliers who reported the use of We also expanded the scope of the programme coal on-site in FY23, six will manage to secure a by adding charging infrastructure to the scope of complete phaseout of coal on-site by FY25, and 昀椀nancing investments related to electri昀椀cation. 21 - IKEA CLIMATE REPORT FY23