IKEA ESG FY23 Report

FY23 has been another year of challenges for people around the world, as well as for the IKEA business.

In this report Introduction About this report Introduction letter Page 3 This report summarises our performance compared to The IKEA business in FY23 Page 4 the IKEA sustainability strategy, People & Planet Positive, FY23 sustainability highlights Page 5 during FY23. It covers the entire IKEA value chain and franchise system and provides an update on activities and the ongoing work to measure progress. The IKEA 1 The IKEA sustainability strategy Page 6 Sustainability Report is issued by Inter IKEA Group. FY23 global trends and challenges Page 7 The reporting period follows the 昀椀nancial year 2023 (FY23), which runs from 1 September 2022 to 31 August 2023. Percentages in this report may not total 100% due Healthy & sustainable living Page 8 to rounding di昀昀erences. Please note that we review and FY23 summary of progress Page 9 update historical data for accuracy on an annual basis. FY23 key activities Page 10 These changes are updates to external reference data, improved calculation methodologies and data quality. Our circularity agenda Page 15 FY23 summary of progress Page 17 The IKEA business is de昀椀ned as the business activities performed by all companies operating within the IKEA FY23 key activities Page 18 franchise system. “We” in this report refers to the IKEA business. The IKEA value chain encompasses more than Our climate agenda Page 22 the IKEA business and includes sourcing and extracting FY23 summary of progress Page 25 raw materials, manufacturing, transporting of products, FY23 key activities Page 27 retail activities in stores, customer travel to stores, product use in customers’ homes and product end-of-life. Regenerating resources, protecting ecosystems, and improving biodiversity Page 30 To ensure the long-term growth and development of the FY23 summary of progress Page 31 IKEA business, we use a franchise system. This provides FY23 key activities Page 32 昀椀nancial stability while allowing franchisees to challenge, test and explore new markets and ideas. Together, we Fair & equal Page 46 continue to develop the IKEA Brand. FY23 summary of progress Page 47 FY23 key activities Page 48 IWAY – the IKEA supplier code of conduct Page 55 Stakeholder engagement Page 57 Sustainability governance Page 58 SDG index Page 59 1 Inter IKEA Group consists of Inter IKEA Holding B.V. and all its subsidiaries. An overview of Inter IKEA Group can be found here. 2 - IKEA SUSTAINABILITY REPORT FY23

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Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index INTRODUCTION LETTER Taking action here and now to pave the way for another 80 years FY23 has been another year of challenges In FY23, the IKEA climate footprint was estimated to A signi昀椀cant achievement this year was the conducted a double materiality assessment to for people around the world, as well as be 24.1 million tonnes CO2 eq, down 12% from FY22 development of rigorous action plans that allowed us inform our work. Looking ahead, we are preparing to for the IKEA business. We all experienced and 22% compared to the baseline year, FY16. The to strengthen our climate goals in line with the 1.5°C adjust our reporting in alignment with global and EU FY23 reduction was due mainly to lower production target and the SBTi Net-Zero standard. Our new goals initiatives like the CSRD. the e昀昀ects of in昀氀ation and a higher cost volumes but was also a result of increased renewable involve halving greenhouse gas emissions from the of living, geopolitical con昀氀icts, climate electricity use in both retail and production, as well IKEA value chain in absolute terms by FY30 compared In a challenging business environment, our change and the accelerating loss of as continued energy e昀케ciency improvements in the to FY16, and striving for a 90% reduction by FY50. Any commitment to playing our full part in contributing nature. In times like these, we try to be IKEA lighting range. Last year, however, we also saw remaining emissions will be neutralised within the to a fair and equal society is more important than both realists and optimists, and let IKEA a slight increase in the use of coal in production, IKEA value chain – without using carbon o昀昀sets – to ever. One way is to provide and support decent values, culture, and spirit lead the way. presenting a challenge to address in FY24. reach net-zero emissions. Our previous goal for FY30 and meaningful work. In FY23, we extended our We would like to give a big thanks to all was a 15% reduction. Our new goals were submitted responsible wage practices framework – an approach our colleagues, suppliers and partners A milestone that will impact our future footprint to SBTi in mid-November 2023 and are currently to putting equal focus on equality at work, pay for your support and hard work. is the introduction of bio-based glue in one of our pending approval. To further support change, the principles, competence, dialogue and a living wage board factories. Today, 5% of the climate footprint for IKEA business was present at COP28, joining in the – to IKEA franchisees. As a next step, we will initiate FY23 also marked 80 years since Ingvar Kamprad the total IKEA value chain is connected to the use of call to phase out fossil fuels, halt deforestation, and pilots among suppliers. We also continued our founded IKEA in 1943. Ever since then, we have had glue in board materials. address the root causes of air pollution. partnerships with social businesses. In FY23, we had the privilege of being part of people’s homes and a total of 12 partnerships with over 11,000 people lives. Our circularity agenda, which includes using more The IKEA business has long promoted responsible from vulnerable and marginalised groups now recycled materials, is crucial for lowering our climate sourcing within our business. We have steered employed in IKEA production. Overall, IKEA stores welcomed 860 million visitors footprint. While some materials, like ceramics, are market transformation for key raw materials in FY23, and sales amounted to EUR 47.6 billion, an challenging to recycle. One breakthrough from FY23 and continue to use innovative approaches to As our work continues, we stay optimistic. increase of 6.6% compared to FY22. Both store sales was the SILVERSIDA product series. It represents our forest management, protection, restoration, and Sustainability is an integrated part of our business, and online sales continued to grow in value despite 昀椀rst successful attempt to use ceramic production regeneration. During the year, we continued the and our long-term commitment to making the continued challenge of lower sales quantities. waste to make new tableware. SILVERSIDA products work of understanding our impact and dependency sustainable living a昀昀ordable and accessible to the Looking ahead, we’re focusing on our three main are made from 65-70% factory waste materials. on biodiversity across our value chain using the many will continue to guide us for the next 80 years. Science Based Targets Networks (SBTN) as guidance. opportunities: become even more a昀昀ordable, more accessible and more sustainable. Another challenge is producing 昀椀breboard from recycled materials. The share of recycled content in In FY23, we took a big step by launching an Today, achieving our IKEA vision of creating a better our particleboard was 30%, compared with 0.3% for industry-昀椀rst global wood supply map, increasing everyday life for the many people means acting here 昀椀breboard. But now, we're using new technology transparency by publicly sharing the origins of the and now to contribute to limiting climate change, enabling the use of more than 50% recycled wood in wood used in IKEA products. reversing nature loss and reducing inequality. 昀椀breboard. In FY23, we started producing the popular VOXTORP kitchen front in high-gloss white using the Additionally, we are progressing the work to secure more sustainable 昀椀breboard. our readiness for the Corporate Sustainability Jon Abrahamsson Ring Pär Stenmark Reporting Directive (CSRD) by 2026. Last year, we Chief Executive O昀케cer, Chief Sustainability O昀케cer, Inter IKEA Group Inter IKEA Group 3 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index The IKEA business in FY23 219,000 IKEA co-workers 231,000 co-workers in FY22 The IKEA franchise system ~1,500 With around 800 home furnishing suppliers in more IKEA suppliers and partners1 than 50 markets and over 150 global food suppliers Inter IKEA Group IKEA franchisees IKEA Inter IKEA Systems Ingka Group 9,500 service owner of the IKEA Concept 31 markets providers and worldwide franchisor products in the IKEA range Over 1,600 new products launched in FY23 IKEA of Sweden Al-Futtaim Dairy Farm Ikano Group Miklatorg develops and designs the 4 markets 4 markets 5 markets 4 markets overall IKEA product range IKEA Marketing & Al-Homaizi House Market Sarton Al-Sulaiman 3.8 billion Communication 3 markets 3 markets 3 markets 2 markets develops and designs MAPA Northern Birch Falabella visits to IKEA websites A decrease of 11.6% compared to FY22 communication content 1 market 1 market 1 market IKEA IKEA Supply product sources and distributes suppliers the IKEA product range 860 million 467 stores in 62 markets IKEA Industry visits to IKEA stores 14 new IKEA stores a strategic IKEA manufacturer (An increase of 4.6% compared to FY22) 71 new customer meeting points (1 closed, 1 relocated) 47.6 billion Sales in value increased, while sales in volume 2 and number of products sold in FY23 decreased This is a simpli昀椀ed overview of the IKEA franchise system and value chain (read more). In total, there were 12 IKEA franchisee IKEA retail sales (in EUR) groups in 62 markets as of 31 August 2023. Inter IKEA Group includes the IKEA franchisor (Inter IKEA Systems B.V), range, supply and manufacturing. The IKEA sustainability agenda is set and governed by the Strategic Sustainability Council, hosted and led by Inter IKEA Systems B.V., with the Inter IKEA Group CEO as chair. Read more about our sustainability governance on page 58. 1 We work with approximately 1,500 suppliers for home furnishing, transport, logistics and distribution services, components, and food. 2 Excluding sales taxes, including sales of IKEA products, food and services by IKEA franchisees. 3 3 We measure produced volumes in cubic metres (m ). 4 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index FY23 sustainability highlights Strengthening the IKEA climate goals and actions to align with the 1.5°C target trajectory. Rolling out an energy-saving This includes at least halving the IKEA value awareness campaign across 21 IKEA chain greenhouse gas emissions in absolute markets globally, emphasising small, terms by FY30¹ (compared with FY16) and cost-e昀昀ective, at-home actions to Taking an important step towards our reaching net zero by latest FY50. Our new reduce energy consumption. FY30 commitment to provide and goals are currently pending approval by SBTi. 1.5C° Page 10 support living wages by sharing our Page 23 Responsible Wage Practices framework across the IKEA business. Introducing the plant-based hot dog Page 50 in 14 markets, adding more plant- based alternatives to our food o昀昀er. Page 13 Increasing the share of renewable electricity – from 75% to 77% for retail, 86% to 90% for logistics services, and 63% to 71% for production – compared -22% to FY22. Reducing the amount of plastic Page 27 packaging of consumer goods by Launching an initiative to fast- approximately 47% and reducing total track biodiversity assessments Decreasing our climate plastic packaging (including consumer in FSC-certi昀椀ed forests to better footprint, in absolute packs, multipacks, unit loads, and measure impacts at-scale and improve handling materials) by approximately 44% biodiversity outcomes. terms compared to our compared with the baseline year FY21. Page 36 FY16 baseline, by 6.9 Page 20 million tonnes of CO2 eq Supporting nearly 3,000 asylum – a reduction of 22%. Implementing the use of new bio- seekers and refugees from 2019 based glue, beginning with the IKEA to 2023 through the Skills for Page 24 Employment programme in IKEA Industry board factory in Kazlų Rūda, 2 retail, with 54% going on to 昀椀nd jobs Lithuania, taking an important 昀椀rst Using, for the 昀椀rst time, inside or outside IKEA. step towards our goal to reduce ceramic production waste greenhouse gas emissions from glue to make the new tableware Page 54 by 30% by FY30. range, SILVERSIDA. Page 27 Page 20 1 Our previous goal for FY30 was a 15% reduction. 2 In retail markets operated by the franchisee, Ingka Group. 5 - IKEA SUSTAINABILITY REPORT FY23

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Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY The IKEA sustainability strategy The purpose of our sustainability system and value chain. Each company strategy, People & Planet Positive, is working under the IKEA Brand sets its to inspire, activate and lead us in our own strategic goals to contribute to the High-level material topics Key challenges IKEA focus areas & commitments decision-making and goal-setting in common ambitions and commitments. Our order to achieve the changes we want sustainability ambitions and commitments for to see in the world, as well as the 2030 are in line with the SDGs. Health & wellbeing entire IKEA ecosystem. Life at home & work impact Unsustainable consumption Healthy & sustainable living On 5 January 2023, the Corporate • Inspiring and enabling people to live Sustainability Reporting Directive (CSRD) healthier, more sustainable lives The strategy is structured based on material Resource e昀케ciency entered into force, and then on 31 July 2023, Climate footprint • Promoting circular and sustainable topics (see diagram, right). These are considered the European Commission adopted the consumption the most important sustainability issues on European Sustainability Reporting Standards • Creating a movement in society around which the IKEA business can have an impact. Material use better everyday living (ESRS), a critical step for the EU's sustainability When we developed the strategy, we looked at agenda. This year, we continued our work to Sourcing impact what stakeholders expect from us and where Production impact become CSRD-ready. We performed our 昀椀rst Climate change Circular & climate they could see us making the biggest positive Double Materiality Assessment (DMA), which Logistics impact changes. As an outcome, we clustered the we will disclose in upcoming sustainability Operations impact • Transforming into a circular business identi昀椀ed material topics into three major reports. We have also started an ongoing • Becoming climate positive challenges – unsustainable consumption, assessment to identify and close the gaps for • Regenerating resources, protecting climate change, and inequality – linked to the reporting under the ESRSs. ecosystems, and improving biodiversity IKEA focus areas and commitments: Healthy Human rights & sustainable living, Circular & climate, and We don’t have all the answers and can't Decent work Inequality Fair & equal Fair & equal. The UN Sustainable Development achieve our goals alone. We're working Goals (SDGs) and the requirements stemming together with partners and striving to balance Social impact • Being a responsible business and from sustainability legislation have also played securing both economic growth and positive contributing to resilient societies a role in the development of our sustainability social impact with environmental protection • Providing and supporting decent and strategy. and regeneration. meaningful work across the IKEA value chain • Being an equal, diverse and inclusive The IKEA People & Planet Positive strategy The IKEA sustainability strategy introduced in 2018 sets a common business describes the sustainability agenda and direction for the IKEA franchise system and value chain. See our summaries of each strategic focus area for more information on the ambition for everyone in the IKEA franchise progress we made in FY23. 6 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY FY23 global trends and challenges Our sustainability strategy is continuously ! Addressing the ongoing climate crisis on nature and prioritising actions to take in a ! Transforming food systems reviewed to secure alignment with We have already begun seeing worse impacts stepwise manner. We are currently assessing The global food system is increasingly in the the total IKEA strategic landscape and of climate change on communities around our impact and dependency on nature across external developments. We receive and the IKEA value chain and welcome the Business spotlight as it contributes to – and is a昀昀ected by review ongoing input from stakeholders, the world. In the six years from 2016 to 2021, for Nature campaign “It’s Now for Nature” to – nature and biodiversity loss, climate change, UNICEF reported that 43.1 million children were encourage business action on protecting and land and soil degradation, humanitarian key scienti昀椀c reports, advisory boards, 1 displaced due to weather-related disasters. sustainability council meetings, regulatory restoring nature. crises, and con昀氀icts. Making susbstantial and legislative developments and our Combating climate change is a critical changes to the way we farm, source food and partners. This supports us in identifying global challenge. The IKEA business remains eat can play an important role in addressing and addressing trends within major global committed to the Paris Agreement to limit ! Protecting human rights these challenges around the world. We must challenges, revising our plans, and raising global warming to 1.5°C and to contribute by act to protect, conserve, and restore nature leading with actions, facts and science-based Upholding human rights is an imperative for – including halting and reversing the loss of ambition levels wherever possible. building resilient and just societies worldwide. forests – and other important ecosystems to goals. Due to the accelerating inequality, global ensure that food systems deliver signi昀椀cant and geopolitical unrest and the devastating impacts measurable progress. We aim to play our part ! Geopolitical tensions and con昀氀ict ! Safeguarding and restoring natural systems of environmental emergencies on the most in contributing to food systems and agricultural These challenges are set against the As climate change and other environmental vulnerable, there is increasing demand for practices that deliver progress for people, backdrop of continuous destabilising and crises worsen, preserving and restoring nature companies to respond to human rights issues nature and climate. devastating con昀氀icts and humanitarian stands out as a critical challenge. Following across their value chains. Companies are crises, which have the potential to divert the adoption of the historic Kunming-Montreal expected to step up their due diligence e昀昀orts the attention of governments away Global Biodiversity Framework in 2022, and address any adverse impacts. Regulatory ! Making healthy and sustainable living from addressing climate change and governments and organisations worldwide developments such as the EU Corporate a昀昀ordable biodiversity loss. Another trend is the rise, are now tasked with meeting 23 targets for Sustainability Due Diligence Directive (CSDDD) Findings from the Globescan 2023 Healthy in many countries, of governing powers 2030 and four key goals by 2050 in order to are accentuating the role of companies in and Sustainable Living consumer research that undermine environmental e昀昀orts restore biodiversity and nature and give the taking responsibility for human rights issues. programme show that healthy and sustainable The IKEA business is committed to contributing 2 and legislation. It is more important than world a chance to mitigate some of the worst living is considered too expensive. The ever that businesses keep the momentum e昀昀ects of a changing climate. In May 2023, to a fair and equal society by respecting and increased cost of living remains a challenge going, showing the strong will of the the Science Based Target Network (SBTN) promoting human rights across the IKEA value for many people globally, emphasising the private sector to address these challenges released the 昀椀rst version of their guidance chain and contributing to resilient societies. need for companies to make healthy and with urgency. to set science-based targets for nature, sustainable o昀昀erings more a昀昀ordable and guiding companies in assessing their impact accessible to all. 1 UNICEF, "Weather-related disasters led to 43.1 million displacements of children over six years" 2023. 2 GlobeScan, "Healthy & Sustainable Living Report", 2023. 7 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY Healthy & sustainable living Our ambition for 2030 is to inspire and enable more than 1 billion people to live a better everyday life within the boundaries of the planet. 8 - IKEA SUSTAINABILITY REPORT FY23

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Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY Commitments and goals FY23 summary of progress Inspiring and enabling people to live healthier, During the year, there were The integrated cold start function avoids through communication campaigns like more sustainable lives more than 4.6 billion visits to the unnecessary use of hot water for daily our global "saving energy campaign". We will develop and promote products, services and home furnishing IKEA retail through our stores activities, like brushing one's teeth, and Read more about our energy saving solutions that inspire and enable people to reduce their impact on and websites. We know we features a small aerator, reducing water services (page 10). the environment and/or improve their health. We will raise awareness have a big opportunity and 昀氀ow while preserving pressure. and share knowledge on how to live a healthier, more sustainable responsibility to make a positive As a large provider of food, the IKEA We’re a founding member of the 50L business also has a responsibility to life at home. Our focus is on energy- and water-e昀케ciency, waste reduction, healthy and sustainable food, and improving indoor air di昀昀erence through our home Home Coalition, a global action-oriented provide healthier and more sustainable quality. furnishing and food o昀昀ers and initiative focused on developing and food choices. During the year, we by sharing our knowledge. scaling innovations in water and energy continued the work of expanding and Promoting circular and sustainable consumption use in the home. In FY23, the coalition improving our plant-based food o昀昀er by Our work to inspire and enable healthy started its 昀椀rst city pilots to tackle water introducing new products such as the We will o昀昀er products and solutions designed from the beginning to scarcity. plant-based hot dog (page 13). have circular capabilities, a low environmental impact, and be made and sustainable living is focused on 昀椀ve of renewable and/or recycled materials. We will also make it easier to areas where our o昀昀er has a direct impact Research shows that two of the top acquire, care for and pass on IKEA products in circular ways. on people's health and ability to reduce their environmental footprint at circular behaviours people engage in are Creating a movement in society around better everyday living home: air, energy, water, food, and waste. repairing broken items and avoiding the In FY23, we broadened our product and purchase of home items due to aspects We will work to make healthy and sustainable living the standard of quality or fashion.1 Read more about service o昀昀erings in all 昀椀ve focus areas. practice by inspiring and enabling more sustainable behaviours how we are working to transform into a in society. This includes, for example, how we use marketing and Today, four out of ten IKEA store circular business (page 15). communication to shape demand. By advocating for policies and visitors live in water-scarce regions. We regulations that support a healthier, more sustainable society, we continue to design products that help We continue to work on enabling and strive to use our in昀氀uence for the bene昀椀t of the many. reduce daily water consumption in the inspiring consumers to shift towards more home. BROGRUND tap is an example sustainable behaviours. Part of this work of a product that enables customers to has involved 昀椀nding ways to prolong consume less water as well as less energy. the life of products and raise awareness 1 GlobeScan and IKEA, “Healthy & Sustainable Living Global Consumer Insights”, 2023. 9 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY FY23 key activities Air Energy We continue our work to enable people to be Home solar service Developing a昀昀ordable and high-performing solutions to enable people to purify the air at more energy e昀케cient at home. Home solar services, including solar panels home is an example of how the IKEA business and where suitable a battery storage can make a di昀昀erence and contribute to cleaner Launching an energy saving campaign system or electric vehicle charging points, indoor air quality. In FY23, a campaign was developed and launched are currently being o昀昀ered in 11 countries. Read more about how we’re working to create across 21 markets to raise awareness of energy- This service enables customers to produce cleaner indoor air quality. saving actions at home. The campaign highlighted their own energy. In FY23, we extended products from the IKEA range that can reduce our home solar service to customers in energy use, such as bulbs and energy-saving California, USA working with a leading solar appliances, as well as more general ways to create technology and energy services provider. Exploring solar-powered light through design an energy e昀케cient and comfortable home. Heat pump Together with the social business Little Sun, the Working together with Polarpumpen IKEA business created a collection designed to raise awareness around the need for alternative Bringing renewable energy to customers in Sweden, this service o昀昀er enables energy solutions. Launched in March 2023, 1 customers to buy quality heat pumps at IKEA Energy Services aims to make it easier for SAMMANLÄNKAD consists of two sun-powered IKEA customers to use and produce renewable a昀昀ordable prices and to potentially use less energy to heat and cool their homes. Heat LED lamps. The lamps aim to o昀昀er individuals energy at home and to reduce their reliance on pumps can reduce household electricity a 昀椀rst-hand encounter with solar energy within energy generated from fossil fuels. Through consumption, depending on the heating or the comfort of home settings, fostering dialogue Enabling awareness of indoor air quality IKEA Energy Services, we o昀昀er a range of energy about its viability as an alternative energy source. at home cooling solution in place before. In its 昀椀rst services with di昀昀erent partners in 11 countries year, about 2,500 households in Sweden Little Sun is an organisation dedicated to We enabled customers to monitor the air so far. Our o昀昀erings di昀昀er by location and may include home solar solutions for self-generated bene昀椀ted from the heat pump service. giving more people access to solar energy in quality in their homes by launching the renewable electricity, renewable energy IKEA is gathering information and communities without regular access to electricity, VINDSTYRKA air quality sensor. insights from the heat pump service primarily in Sub-Saharan Africa. purchasing subscription options, and a昀昀ordable heat pumps to reduce home energy usage for o昀昀ering subscriptions and will explore the An air puri昀椀er designed for the home heating and cooling. possibility of expanding into other markets in the future. Expanding our energy-e昀케cient bulbs o昀昀er The indoor air puri昀椀er, UPPÅTVIND was We continue to develop and grow the range of launched globally. more a昀昀ordable energy-e昀케cient bulbs, expanding the selection of both style and function to enable a 1 IKEA Energy Services is a business unit within Ingka Group. reduction of electricity consumption in homes. 10 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY Water By continuing to develop and improve the Integrating water-saving technology into Creating a water recycling shower e昀케ciency of our water-using products, we are products and designing products that inspire solution enabling and inspiring customers to decrease and enable water-e昀케cient living The IKEA business continues to invest their water consumption while potentially The LILLREVET hand shower features a pressure- in the development of a water recycling contributing to energy savings. The water that runs through the taps and showers we sell compensating 昀氀ow regulator for consistent water shower solution, which focuses on cleaning makes up 16% of the total water use across the 昀氀ow. It consumes 6.8 litres of water per minute¹ shower water in a closed-loop system. IKEA value chain. – an improvement over the regular VOXNAN hand The innovative solution aims to save up to shower, which consumes 8 litres per minute.¹ 80% of water and reduce energy use by up to 70% compared to average showers. In Read more about saving water at home. For The ÅBÄCKEN mist nozzle was launched in FY23 addition, we are working on establishing information about water in our supply chain, to enable households to reduce their water use. It standards and requirements related see page 33. was made available in all IKEA markets starting in to compliance and testing. Together October 2022. The mist nozzle enables customers to reduce bathroom tap water consumption by with Uni昀椀ed Water Label (UWLA) – an established water and energy labelling Accelerating collaboration e昀昀orts - up to 95%. When 昀椀tted to the bathroom tap, the scheme for taps and showers in Europe 50L Home Coalition ÅBÄCKEN mist nozzle reduces the water 昀氀ow to – we are investing in the development of 0.25 litres per minute in mist mode and up to 1.9 In FY23, we started the 昀椀rst city pilots in litres in spray mode. criteria for the water recycling shower Los Angeles, equipping 32 di昀昀erent homes solution system. This involves working with with water metering devices. Together Raising awareness through design test laboratories and certi昀椀cation bodies with pilot sponsors within the coalition, we to develop requirements and standards installed part of the homes with our best- In order to inspire more sustainable shower to support market acceptance and secure in-class water-saving solutions to evaluate habits, the SVÅGAN water meter was launched function and safety. In FY23, there has the potential new water-use habits of the in FY23 as a commercial pilot. The pilot was been increased focus on collaborating with families that live in them. Read more about launched in Spain due to the country’s water industry peers and competitors to establish the initiative to accelerate water innovation scarcity and in Denmark due to the high cost new standards for this product type, both in cities here. of water in Copenhagen. The product displays on a European and international level. shower duration, litres of water consumed and water temperature in an e昀昀ort to bring awareness to water usage in real-time. LILLREVET consumes less water compared to regular hand showers heads. 1 Independent veri昀椀cation by KIWA Europe & IAPMO. 11 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY Food Last year, around 700 million customers Adding more plant-based meals to our o昀昀er experienced the IKEA food o昀昀er at IKEA We continue to work towards our goal that 50% restaurants, bistros and Swedish food markets. of the main meals o昀昀ered in our restaurants Throughout FY23, we continued our work to will be plant-based2 by 2025. Based on improve and expand our plant-based food 3 estimates shared from 31 IKEA retail markets, selection. We also continued to work to support just over 30% of the main meals o昀昀ered in FY23 a dietary shift towards healthier options. were plant-based. Research shows there’s still a great opportunity The food business at IKEA is undergoing a to continue increasing the amount of plant- transformative change. This transformation has based food consumed through our food o昀昀er, impacted both people and systems, which we as 41% of meat-eaters said they would switch to rely upon for reporting purposes. As a result, plant-based alternatives if they tasted good and the 昀椀gures in our FY23 Sustainability Report are 1 weren’t more expensive. based on the best available information given these ongoing developments. Supporting a dietary shift towards plant- dishes. IKEA Japan, for example, provided based options enhanced education to co-workers on the We recognise the importance of shifting diets bene昀椀ts of plant-based food and worked with toward more plant-based foods as being a key local suppliers to develop local plant-based step in addressing the challenges in the global dishes. Since FY22, plantball sales have steadily food system. increased across the country. Some markets have taken additional steps to increase customer appetite for plant-based food and thereby grow the plant-based food sales share compared to traditional meat 1 GlobeScan and IKEA, “Healthy & Sustainable Living Global Consumer Insights”, 2023. 2 Meals contain up to 10% animal-produced ingredients, such as dairy, eggs and honey. 3 Operated by Ingka Group. 12 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY Launching a plant-based hot dog Supporting a dietary shift toward The hot dog has been an iconic part of the healthier options IKEA shopping experience for over 40 years. In FY23, we launched guiding principles for Now, we have developed a plant-based healthy and nutritious food for children. The hot dog as the latest innovative addition principles set out to safeguard and create to the family of plant-based products that clarity in terms of how we work with food dedicated to and developed for children. The we o昀昀er. We want to inspire even more customers to choose plant-based products principles also include responsible practices for children's marketing and advertising. at the same price or at a more a昀昀ordable price compared to animal protein-based They will function as an important extension options. of the IKEA Food Nutrition Pro昀椀ling system (IFNPS)2 The plant-based hot dog was well received and will provide robust and by customers in the 14 IKEA markets across knowledge-based direction to future product Europe, where it launched in FY23. We plan development and goal setting. to introduce the plant-based hot dog to With the guiding principles established, eight additional European markets, with we will now focus on developing and Working to make plant-based food expansion to the Australia and US markets implementing new children's dishes that in FY24. a昀昀ordable and accessible meet them, like our plant-based pieces, SLAGVERK. Developing a plant-based hot dog to As of 1 October 2023, we o昀昀er plant- match the classic IKEA hot dog texture based food at the same or a lower was a challenge. We aimed for a sensory price than the animal protein-based 1 experience similar to animal protein-based alternatives in more than 30 markets. hot dogs. Our plant-based version – made This includes veggie balls, plant balls, from rice protein, onion, apple, salt and veggie hot dogs, and plant-based soft ice. pepper – captures the traditional sausage's Read about our e昀昀orts to o昀昀er more smoky 昀氀avour. plant-based food. Today, the plant ball is available in 55 out of 62 IKEA markets (close to 90%). Our aim is to make the plant ball accessible in all markets. SLAGVERK breaded wheat-based pieces. 1 Ingka Group is the largest IKEA franchisee. 2 IFNPS classi昀椀es foods or beverages as healthier if they have a better nutritional composition compared to equivalent foods from a similar product category. By evaluating all our foods this way, we can better work toward making our food healthier. 13 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY Waste We continue our work to develop and promote products, services and home furnishing solutions that inspire and enable people to handle and minimise waste at home. Introducing a deposit system for food containers in Germany In FY23, IKEA Germany partnered with RECUP and REBOWL to not only ful昀椀l EU obligations but also to make their cups and bowls the preferred option for IKEA customers. The reusable packaging provides customers with the opportunity to buy their drinks and take-away food from the IKEA Bistro in a RECUP cup and REBOWL bowl. The cups and bowls can be reused or returned for a refund either on-site at the IKEA store or in any of the 12,000 partnered retail locations across Germany. This saves both resources (single-use cups and packaging) and operational costs. Striving to o昀昀er inspiring sorting solutions In FY23, we launched the LÖVKVAST bin with a lid, which is designed to enable recycling habits. The design allows customers to secure two bags simultaneously for separately keeping wet and dry waste in a single location. 14 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY Our circularity agenda Our ambition is to be a circular business by 2030. We are committed to design all of our products with circular capabilities. We aim to use only renewable or recycled materials and to provide new solutions for our customers to prolong the life of products and materials. 15 - IKEA SUSTAINABILITY REPORT FY23

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Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY We're on a journey to transform the IKEA value chain to become circular Recycled raw materials (third party) Virgin materials (renewable and non-renewable) The model (to the right) illustrates the 昀氀ow of IKEA products in a more circular economy – from idea and the sourcing Materials & ingredients of materials to the use of products in customers' homes Recycle Each stage of the IKEA value chain has and back into the circular 昀氀ow for reuse or recycling. We're Collection and an impact. We are taking many steps to working to eliminate waste, circulate products and materials handling at mitigate our negative impacts. A crucial 1 product end-of-life and move away from the use of virgin non-renewable part of this e昀昀ort is creating circular materials. We’re also developing more services and products 昀氀ows that extend the value of products and materials within or outside the to enable customers to participate in the circular economy Design IKEA value chain. A circular 昀氀ow of IKEA and create and are continuously working to improve our social and Recycle products, as part of a fully circular environmental impact at every stage of the value chain. (third party) society, is our ambition for the future. We create products using the IKEA Democratic Design Remanufacture principles of form, function, quality, sustainability and low price and by applying our Circular Design principles in the design phase. Our design thinking considers many aspects – like choosing the most suitable materials, always aiming to Reuse do more with less, and optimising manufacturing methods OUTSIDE THE IKEA WITHIN THE IKEA VALUE CHAIN VALUE CHAIN Production while designing on the factory 昀氀oor. We also want to prolong the life of products by designing with circularity in mind and o昀昀ering products and services that make it possible and Product use in easier to reuse, refurbish, remanufacture and recycle. Remanufacture customers' homes (third party) Resell We recognise that the IKEA value chain doesn’t exist in isolation. It 昀氀ows through communities and nature and is Refurbish connected to an infrastructure in society that enables the Product growing circular economy. The IKEA value chain impacts transport people, livelihoods, ecosystems, biodiversity and the climate. Refurbish & resell That’s why we strive to take a full value chain approach (third party) and work in partnership with franchisees, suppliers, NGOs, governments, other businesses and organisations to minimise our negative impact on people and the planet. Customer travel & home deliveries 1 IKEA retail A majority of the collected products at end-of & other operations life, today goes to incineration and land昀椀lls. Our ambition is to completely eliminate this. 16 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY FY23 key activities Aiming to design all products with circular capabilities Guided by the Circular Product Design Making it easy to Principles, we strive to design products maintain furniture from the very beginning to be reused, through product design refurbished, remanufactured and/or recycled to extend their lifespan as long as possible. Products are also material Piloting a start-up for recycling banks for the future, meaning they can be down and feathers taken apart and recycled when they are no This year, we piloted a new longer functioning. initiative in Belgium, Germany and the Netherlands that encourages our customers to bring back products 昀椀lled with down and feathers, that are no longer being used, for recycling The 昀椀rst step to ensuring products last into GULKAVLE pillows and longer is to enable customers to care for their products throughout the time they FJÄLLBRÄCKA duvets. own them. Maintaining large furniture pieces with textile surfaces can be challenging. In FY23, we introduced several big furniture pieces with removable and machine washable fabric covers, such as the KLEPPSTAD bed frame, PERSBOL armchair, SAGESUND upholstered bed and STRANDMON slipcover. By introducing more products with removable and washable fabric covers, we make it easier for customers to care for and maintain their products. 18 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY Aiming to only use renewable or recycled materials by adapting Developing circular solutions for existing and new customers and 昀椀nding new sources and developing new materials to acquire, care for, and pass on products Renewable and recyclable materials are key Examples of increasing the share of We want to encourage and enable our Giving old or unwanted furniture to becoming a circular business. We continue recycled plastic customers to acquire, care for, and pass on a second life our work to optimise the use of materials for HÅLLBAR their products in circular ways by providing Through Buyback & Resell, customers our home furnishing solutions, aiming to use convenient solutions. in 28 markets can bring back IKEA only responsibly sourced renewable or recycled The HÅLLBAR collection, consisting of a series furniture to one of our stores and receive materials. Read more about our secondary raw of sorting bins designed to meet waste sorting a voucher to spend in-store or online. A materials (recycled) on page 42. needs, was launched in 2020. Products in majority of returned items are resold via the HÅLLBAR collection are going through a our As-Is areas. Any items not resold are The amount of materials used in the IKEA range is transition to being made from recycled sources. recycled or donated to local community based on estimations for most types of materials. To date, IKEA plastic products produced in projects. Over 211,600 customers used Accurate yearly 昀椀gures for di昀昀erent amounts of Europe contain at least 70% recycled content, the service in FY23 (FY22: 105,000) and materials continue to only be available for wood where more than half of it comes from post- gave 430,000 (FY22: 230,000) items a and paper. Therefore, there are no updates to the consumer sources such as household plastic second life. 昀椀gures shared in FY21, where we reported that waste. The same journey is ongoing in the Despite our Buyback service, we know 56% of the materials we sourced were renewable other production regions, resulting in lowering and 17% were recycled. Read more about recycled the CO2 on a material level by approximately that many people still dispose of furniture materials on page 42. 60% compared to if entirely made from fossil that is in good condition and could be virgin plastic. Increasing the availability of spare parts reused. In Norway, we are trialing a new to prolong the life of products partnership with the municipality of Oslo UPPDATERA During FY23, we provided 23.2 million to create a dedicated collection point for 1 unwanted IKEA furniture at the Haraldrud assembly parts (FY22: 21.5 million) to Moving from recycled polythylene enable our customers to prolong the life municipal recycling centre. Returned IKEA terephthalate (PET) to recycled polypropylene of products. We also continued working on furniture will be checked, cleaned and (PP) in our UPPDATERA products (consisting of solutions to provide furniture spare parts2 resold in our As-Is areas. We hope this multi-use plastic boxes) lowered CO2 emissions will improve convenience for customers for customers. Our aim is to o昀昀er easy, on a material level by approximately 12%. The and increase the amount of good quality convenient and a昀昀ordable solutions for our lower emissions of PP are mainly driven by the customers. IKEA furniture that we can resell. lower energy consumption of recycling plastic than for PET. Additionally, this change provided better a昀昀ordability for customers. UPPDATERA plastic boxes, now made from recycled 1 Assembly parts are small 昀椀ttings, such as nuts, bolts and screws, that hold together the main component parts of a piece of furniture. They are identi昀椀able in polypropylene (PP), have a lower climate footprint than before Read more about the climate footprint of assembly instructions of products with a series number. Assembly parts can be ordered and delivered for free through an online tool on the IKEA website. 2 Furniture spare parts are replaceable parts of furniture which are not assembly parts, for instance, back and seat cushions, upholstered covers, armrests while being more a昀昀ordable. materials in the IKEA Climate Report FY23. door fronts, drawer parts, panels, bed slats, shelves, tabletops and legs, handles, etc. 19 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY Turning waste into resources, aiming to send zero waste to land昀椀ll Preventing products and materials from Some key movements that enable the Waste performance at IKEA Industry becoming waste and turning waste that cannot reduction include a move towards paper This year, we’ve continued working with our be avoided into resources are key to a circular pallets, paper-based materials replacing Five Main Fractions methodology – where economy. By taking a holistic approach that plastic bags and wrappers, solid paper all production units analyse their situation involves product design, production, supply constructions replacing blister packs, 昀椀bre- chain management and customer engagement, and focus on 昀椀ve fractions: the largest based 昀椀tting bags and honeycomb paper volume, the most hazardous one, mixed we aim to turn waste into resources and send 昀椀llers, to name a few. fraction, the most expensive, and fractions zero waste to land昀椀ll. to land昀椀ll. Each factory prioritises and sets up a plan on how to act, test and evaluate Phasing out plastic packaging From BLANDA to BÄRFIS ways to minimise, reuse, recycle or send One of the ways we aim to prevent waste waste to energy recovery. After testing In FY21, we set a new goal to phase and evaluation, a scaling-up project will be out single-use plastic in our consumer generation is through product design. For evaluated the year after. In FY23, 9 units out packaging by 2028, and by FY25 launch example, products in our range such as the of 21 (FY22: 9) successfully achieved the goal all new products in our home furnishing BÄRFIS over the door hook rack are made Using ceramic production waste of sending no waste to land昀椀ll. range without plastic packaging. At the of the o昀昀cut material from the BLANDA to make new tableware A focus point and challenge for IKEA Industry time, less than 10% of the total annual bamboo bowl. volume of packaging material consisted Making ceramics from waste materials has has been to 昀椀nd sustainable alternatives long been a big challenge in the ceramics for ash from bio-boilers and glue water of plastics. To reduce that 昀椀gure further, Textile to textile initiative industry. Together with one of our suppliers, from production processes. We will conduct we've shifted our focus to packaging made we are now producing brand new ceramics for additional testing on these topics in FY24. In FY23, IKEA Taiwan collaborated with from paper or 昀椀bre-based alternatives. As a the SILVERSIDA tableware range from scrap result, compared to FY21, we have reduced range development to repurpose curtains materials. Launched in FY23, the SILVERSIDA the amount of plastic packaging used for un昀椀t for sale or returned from customers Halving food waste in line with the SDGs consumer goods by approximately 47% by using their fabric to create tote bags. As product series represents the 昀椀rst example and in total packaging (including consumer part of this initiative, a collaboration was of how we are successfully using ceramic In June 2023, the World Resources Institute packs, multipacks, unit loads, and handling established with the Taiwanese Industrial production waste to make new tableware. (WRI) recognised the IKEA business for materials) by approximately 44%. Development Administration and the SILVERSIDA products are made up of 65-70% halving food waste (compared to the FY17 internal factory waste. This innovation will baseline, in meal preparation at IKEA Ministry of Economic A昀昀airs to promote textile recycling. open up future possibilities for developing restaurants) in line with the Sustainable 1 昀氀ows for recycling post-consumer ceramic Development Goal (SDG) 12.3, setting an material, which would otherwise end up in a example for other companies. land昀椀ll or downcycling. 1 World Resources Institute, "IKEA Becomes First Global Company to Halve Food Waste", 2023. 20 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY Taking the lead and joining forces with others through advocacy, collaboration, and business partnerships Our commitment to sharing knowledge and Engaging and leading in European Continuing to support the ongoing work working together with others to advance the standardisation work for furniture of the EU Green Deal transformation towards the circular economy circularity As policymakers advance the roll-out of continues through our engagement e昀昀orts. The leadership to set new circular the EU Circular Economy Action Plan, we While we continue to learn more about our own economy standards for the furniture business capabilities within these areas, we also continue to support their e昀昀orts by o昀昀ering engage in open dialogue with policymakers and industry continues under CEN Technical fact- and experience-based insights and other partners. committee (TC207-WG10) – furniture contributions. circularity. In FY23, this European During FY23, we welcomed the legislative A common theme that has arisen through our Standardisation Committee appointed proposal for an Ecodesign for Sustainable an IKEA representative as the convenor numerous advocacy engagements is the need to lead the work on evolving new Products Regulation, we o昀昀ered feedback for a more harmonised approach to regulation. methodologies for circular product design on the most important design elements This includes enabling more consistent trade strategies. to drive circularity, and we supported and customs practices, an aligned language, and the inclusion of products such as textiles, setting a stable foundation for all stakeholders The 昀椀rst standard (EN 17902 Furniture - furniture, and mattresses in the forthcoming across the global economy. Circularity - Evaluation method for dis/ EU rules. We also advocated the importance re-assembly capability) was approved by of certain incentives and preconditions for European National Members in October circular development, such as incentives 2023 and will be o昀케cially published in that enable more reuse and repair, setting a 2024. Additionally, the committee has modern de昀椀nition of "waste", and a scalable Renewing our collaboration with the Ellen agreed on and started working on three market for secondary raw materials. McArthur Foundation new projects as potential future standards Together with the European Furniture We renewed our partnership agreement for the subjects around repairability/ Industries Confederation (EFIC) and with the Ellen McArthur Foundation – a refurbishment, product lifetime/durability, EuroCommerce, we advanced the debate and remanufacturing. non-pro昀椀t organisation committed to within a broader industry context, aiming creating a circular economy – in FY23. We at contributing to progress in areas such as will continue working together to accelerate ecodesign criteria and the digital product the transformation to circular economy, passport. as well as actively share our learnings and experiences along the way. 21 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY Our climate agenda By FY30, we are committed to becoming climate positive by reducing more greenhouse gas (GHG) emissions than the IKEA value chain emits, while growing the IKEA business. This will be achieved without relying on carbon o昀昀setting. This is how we contribute to limiting the global temperature increase to 1.5°C by the end of the century. 22 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY Commitments and goals During FY23, we aligned our strategic 1 Drastically reducing GHG emissions across the IKEA value chain and are part of how we climate goals with the 1.5°C trajectory the IKEA value chain, in absolute terms responsibly source materials for the IKEA range. and the Net-Zero Standard by Science The overall goal is, by FY30, to reduce the Reducing the IKEA climate Based Targets initiative (SBTi). We absolute GHG emissions from the IKEA value A strategic goal will be set once the Land Sector footprint in line with 1.5°C submitted our goals to SBTi mid- chain by at least 50% compared to FY16 and Removals Guidance by GHG Protocol is 昀椀nalised, which is expected to be in the summer of November 2023 and validation is (previous goal was a 15% reduction). By FY50 1 Drastically reducing GHG emissions across the IKEA value chain, in at the latest, we will reduce the absolute GHG 2024. This accounting guidance is the 昀椀nal piece currently pending. emissions from the IKEA value chain by at least since the establishment of the Forestry, Agriculture absolute terms and Land (FLAG) target setting standard by SBTi Our main priority is drastically reducing 90% compared to FY16. established in September 2022. Even though a goal 2 Removing and storing carbon from the atmosphere through forestry, agriculture greenhouse gas emissions across the IKEA and products within our value chain As a result of our new net-zero goals, we have has yet to be set, we're pursuing actions that we value chain. Any remaining emissions will be either updated or set new goals for most parts know will make a positive contribution. neutralised – reaching net-zero emissions by 1 FY50 at the latest – by removing and storing of our value chain. For materials, we have carbon from the atmosphere through better set the goal to at least halve our emissions Contributing to additional by FY30 compared to FY16 baseline. For 3 Going beyond IKEA reductions in society2 forest and agricultural management practices food ingredients, we have updated our FY30 We will contribute to additional reductions in within the IKEA value chain. Additionally, we goal from -25% to -50% emissions reduction society by taking an extended responsibility for will go beyond net zero and go beyond IKEA by 3 Going beyond IKEA contributing to additional reductions in society. compared to FY16. For product use at home, the climate footprint of our customers, suppliers we have set our FY30 goal to -70% emissions and in our sourcing areas – not just the part Read more about our work on climate change, reduction compared to FY16. We have also set a which we can account for in the IKEA climate including a detailed breakdown of our climate FY30 goal for reduced emissions from product footprint. A strategic goal for this will be set once footprint in the IKEA Climate Report FY23. end-of-life by 30% compared to FY16. the guidance for “removing and storing carbon” is ready and when the framework for going beyond has been developed by SBTi. We are Reducing more emissions than 2 Removing and storing carbon from the already taking actions that we know will have a the IKEA value chain emits atmosphere through forestry, agriculture positive contribution, even though a goal has not and products within our value chain yet been set. Storing carbon in trees and agricultural crops We 昀椀rmly believe that we need to address the used for materials, food, and fuels removes root causes of our climate footprint within CO2 from the atmosphere. If the land is also our own value chain or in connection to our 1 Excluding production, product transport, co-worker commuting and responsibly managed, it has the potential to customers, suppliers, and sourcing areas. We will business travel. 2 An e昀昀ect that's in addition to what's required to reduce the IKEA reduce climate impact. In contrast to carbon value chain emissions to be aligned with the 1.5°C target and will not use carbon o昀昀sets to achieve our ambition to 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 reach net-zero emissions. reduction goal. 23 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY 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 Materials FY23 11.2 -7% (vs FY16) FY16: 31.0 -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) FY16 3.5 Baseline The largest portion of the IKEA climate footprint comes from raw Production FY23 2.4 -32% (vs FY16) material extraction and processing (46.6%) and IKEA product use in 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) FY17 1.4 Baseline (FY17, due to incomplete FY16 data) For a full breakdown of the climate footprint accounting, scope 1, 2 Product transport & and 3 emissions, read the IKEA Climate Report FY23. 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 Co-worker commuting FY16 0.50 Baseline In FY23, the total IKEA climate footprint decreased by 3.2 million & business travel FY23 0.45 -10% (vs FY16) Goal FY30: -50% in relative terms compared to FY16 tonnes of CO2eq in absolute terms compared to FY22 – a reduction of 12%. The reduction in FY23 was attributed to the FY16 2.1 Baseline continued increase in renewable electricity use at both retail and Customer travel & FY23 2.0 -5% (vs FY16) home deliveries -30% Goal FY30 compared to FY16 production units, energy e昀케ciency improvements in our lighting range and lower production volumes. 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 24 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY FY23 summary of progress 1. Drastically reducing GHG emissions across 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 Read more in the IKEA Climate Report FY23. 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. 25 - IKEA SUSTAINABILITY REPORT FY23

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Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY 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 9% upstream (produced volume) and 2% identify the actions needed to halve emissions by FY30 The IKEA climate footprint in both absolute and relative terms downstream (sold volume), compared with FY22. compared to our FY16 baseline. These action plans will Our upstream supply chain includes materials, provide the foundation for our continued reduction of FY16 FY21 FY22 FY23 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 travel, customer travel and home deliveries, 100% 31.0 0.48 product use at home and product end-of-life. 0.36 28.7 0.44 Our calculation methodology for production 90% 0.45 uses a spend-based allocation (share of EUR 27.2 purchased) for supplier factory emissions, which 80% determines the IKEA share of GHG emissions, 0.26 24.1 so the increase of relative emissions in FY23 can 70% 0.26 0.25 be largely attributed to the e昀昀ects of in昀氀ation. That is, more GHG emissions were allocated to 60% the IKEA business even if our actual production at supplier factories was comparable to previous 50% 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) the various positive movements we've made in 3 Climate footprint (upstream) per m produced volume incl. food, indexed vs. baseline FY16 the business such as the introduction of more 3 (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 the digitalisation of data collection, we aim to 3 (million tonnes CO2 eq per million sold volume m ) provide more accurate data in the FY24 report. 26 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY 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 FY22 (in terms of kWh), the share of coal- to the FY16 baseline, we have managed These movements were supported by FY22 to 69% in FY23. This was mainly and fossil oil-based fuels increased to 9% to more than halve these emissions. This our renewable electricity programme driven by an increase in renewable in FY23. Our GHG calculation methodology means that an estimated 4 million tonnes for suppliers, which is now active in 13 heating in Germany (+37 percentage uses a spend-based allocation (share of EUR CO2 eq less will be emitted over the lifespan supplier markets. points), followed by Lithuania (+18 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. substitution of coal with renewable energy. 27 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY 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 Targets initiative (SBTi) on land-based emissions and for the climate and income for the farmers in this substantial amounts of carbon dioxide (CO2) from the atmosphere. When trees are made into wood-based products, they act as 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 removals from Forest, Land and Agriculture (FLAG) – project are expected to be signi昀椀cant. work that we have also contributed to. change mitigation, and the many contributions of natural forests, in terms of biodiversity or soil protection, for example, have 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 28 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY 3. Going beyond IKEA by taking an extended responsibility for customers and suppliers In FY21, our methodology to measure going beyond launched ÅBÄCKEN water nozzle, which can enable IKEA contribution from suppliers will be followed up IKEA was 昀椀nalised. However, it remained a challenge customers to save up to 95% of water used in taps on in the FY24 Climate Report. to measure and follow up across the IKEA business at home.2 0.23 in a consistent way. Addressing this is a prerequisite In FY23, the SOLSTRÅLE home solar o昀昀er was 1 available in 11 IKEA markets. to setting a strategic goal. However, it's important to Renewable energy for suppliers The total avoided note that while no strategic goal has been set, we're Actions by the IKEA business to convert our supplier emissions through the renewable electricity it already actively working with actions that are part of generated was approximately 0.10 million tonnes 0.09 0.10 partners to 100% renewable energy for their entire the going beyond IKEA agenda. factory or operations, not just the IKEA share of their CO2 eq (-55% compared to FY22). This is calculated business. as the e昀昀ect of the electricity in the national grid, To secure that the actions are part of the IKEA which the renewable electricity from home solar FY16 FY22 FY23 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 value chain. This means that they are either part the climate footprint for product use at home is of the IKEA range, supplier base or sourcing area. Actions by the IKEA business to improve forestry or calculated for lighting and appliances. Millions of tonnes CO2 eq avoided through SOLSTRÅLE home solar. The impact of going beyond IKEA initiatives will not agricultural practices for the total surroundings/ contribute towards our emission reduction goals in landscape where we source raw materials. The our net-zero commitment and therefore should not possibility of following up on this impact will be enabled through the Land Sector and Removals be viewed as an o昀昀set. Guidance by GHG Protocol. To avoid overestimating Therefore, any contribution must be within one of the contribution, we're only accounting for the the following three areas: contribution occurring each year instead of adding up the total GHG emissions avoided since baseline Resource use at home FY16. Solutions enabling the generation of renewable This year, we're only disclosing the e昀昀ect of resource energy like, for example, the SOLSTRÅLE home use at home through the SOLSTRÅLE home solar 1 solar o昀昀er. It also includes solutions to improve the o昀昀er. While most parts of the digitalisation for e昀케ciency of energy- and water-consuming products climate footprint reporting are now ready, going when used as intended. One example is the recently beyond IKEA remains to be done. The going beyond 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. 29 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY Regenerating resources, protecting ecosystems, and improving biodiversity Our ambition for 2030 is to regenerate resources 1 while growing the IKEA business. We aim to only use responsibly sourced renewable or recycled materials in our o昀昀er and have a positive impact by regenerating resources, protecting ecosystems and improving biodiversity. This also means working to identify, prevent, mitigate, and address any potential negative impact on people linked to our business activities. We are dependent on materials and ingredients for our home furnishing o昀昀er and food products, and we will always work to 昀椀nd new ways to do more with less. 1 The term "growing" in this context refers to the link between business growth and increased consumption of raw materials. Our ambition to "decouple material use from growth" re昀氀ects our aim to reach more customers with IKEA products but without a proportional rise in the volume of material resources we use. 30 - IKEA SUSTAINABILITY REPORT FY23

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Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY FY23 key activities Biodiversity Continued advocacy for biodiversity tree species selection, the impact of planted regulations and reporting trees in disturbed areas, the importance of We participated in the European Business and tree diversity for broader biodiversity and the Biodiversity Forum in June 2023, hosted by potential of genetic variation in native trees WWF-France, which discussed the next steps for reforestation. Read more about research for both the private and public sectors. The by the Swedish University of Agricultural focus of the forum was on how the changing Sciences (SLU) related to Sow a Seed. regulatory context is making it mandatory for companies to pay attention to and accelerate Reviving nature through the establishment the biodiversity agenda, including increasingly of biodiversity parks in India complex reporting requirements. The IKEA business shares the concerns voiced during In FY23, WWF-India, with the support of the the forum. IKEA business, developed three biodiversity parks in India in an e昀昀ort to restore cotton As a SBTN Corporate Engagement Program ecosystems through regenerative agriculture The world is experiencing a biodiversity Insights from research on a unique 25-year practices. These parks host habitats for crisis.1 participant, we’ve had the opportunity to use forest restoration programme The human-caused loss of species, some of the methods and tools prior to their wider butter昀氀ies, bees and other pollinators, ecosystems and genetic diversity is one release and to provide feedback on their feasibility. Launched in 1998, the Sow a Seed project supporting the conservation of biodiversity of the greatest challenges of our time. Based on the publicly released guidance, we will in Sabah, Borneo, aimed to restore 18,500 in the area. Restoring cotton ecosystems The IKEA business impacts and depends reassess our impact work to align with the improved hectares of rainforest degraded by logging not only supports pollinators, but also local communities by improving conditions for on biodiversity mostly through the direct methodology. and 昀椀re. and indirect use of land, sea, freshwater cotton 昀椀bre production. A main part of the initiative included scienti昀椀c and raw materials. We are continuously evaluating various methods, research, supported by IKEA funding. In FY23 including the Taskforce for Nature-related Financial a postdoctoral position ended, scienti昀椀cally During FY23, we continued the work of Disclosures (TNFD) framework, to increase the concluding that biodiversity improvements in understanding our impact and dependency on transparency of our reporting on nature-related the area. biodiversity across our value chain according to the dependencies, impacts, risks, and opportunities. Key lessons learned include the creation of a Science Based Targets Network (SBTN) guidance. valuable natural resource, the adaptability of 1 Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES), "Global Assessment Report on Biodiversity and Ecosystem Services", 2019 32 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY Water stewardship Our ambition is to be good water Our strategic focus areas consider where we Partnering with WWF in India and Türkiye piloting the implementation of regenerative agriculture. The pilot, which started on 7.9 stewards and contribute to increasing have the most in昀氀uence and opportunities for As part of the WWF and IKEA partnership, the availability of clean water in our impact: improving water quality and increasing we are not only working to improve water hectares of Better Cotton farms in 2020, is now own operations and the rest of the water availability throughout our value management and tackle water challenges in its third year. Some achievements observed value chain, by 2030. We’re working chain, enabling reduced water consumption across the IKEA value chain but also include; improved soil health, enhanced in the home, demonstrating leadership and advancing conservation beyond. In FY23, biodiversity, increased crop diversity (from two to use water as e昀케ciently as possible collaborating with others in water stewardship we advanced work connected to river basin to 昀椀ve crops), and higher levels of soil carbon and reduce industrial e昀툀uents to ambitions. projects in India and Türkiye: sequestration. This pilot aims to test global 1 minimise environmental damage. know-how in regenerative cotton farming. INDIA The knowledge gained will help scale the Identifying river basins most connected to As a part of the collective action programme implementation to more hectares of farms. Water use across the value chain our supply chains in the Noyyal Bhavani river basin, the (billion m3) As global frameworks and methodologies are Marlimund Lake catchment was identi昀椀ed under development, the IKEA business has as a pilot wetland restoration initiative in FY21 0.71 adopted – the WWF recommended – Contextual collaboration with the local government. Target Setting (CTS) methodology. To build Together with the local community, the FY22 0.72 restoration project aims to restore the native the targets, in FY23, we identi昀椀ed the 15 river shola forest, grassland and swamp over FY23 0.61 basins most connected to our supply chains based on current and projected (2030) water the next 昀椀ve years to improve river 昀氀ows. scarcity. In FY24, we will set and accelerate Extensive mapping of the animals and plant Materials (74% – 0.45) action towards targets. species that live in the lake was conducted Food ingredients (5% – 0.03) to establish a baseline for the removal and Production (3% – 0.02) replacement of invasive species with native ones. Based on the mapping, a detailed IKEA retail & other operations (1% – 0.007) action plan has been submitted to the State Product use at home (16% – 0.10) for approval. It is expected that full-scale implementation of the restoration work will be initiated by 2024. TÜRKIYE In Soke, a key cotton-growing region in the Buyuk Menderes Basin, WWF and the IKEA business (together with other partners) are Photo provided by WWF 1 Audits of water management and e昀툀uent water treatment plants in our supply chain are conducted annual. Read more about IWAY, the IKEA supplier code of conduct. 33 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY Joining the Open Call to Accelerate Action Increasing water recycling in our textile on Water supply chain In March 2023, the IKEA business participated One textile supplier in China has installed in the UN Water Conference. At this historic a reverse osmosis and evaporator facility. meeting (the 昀椀rst UN conference on water in 40 The overall recycling rate has increased years), we joined the Business Leaders' Open from 74% in FY22 to 96% in FY23, resulting Call to Action on Water. We have committed to; 3 in four million m of recycled water • Improving water resilience in water basins being used in the facility. The increased where we operate recycling contributes to a 21% reduction in freshwater use compared to FY22. • Implementing resilient water management practices for both water quantity and Building a 昀氀oating platform to clean water Flood and drought risk assessment at quality in our supply chains in Pakistan IKEA Industry Poland sites • Joining others to make a positive water In FY23, WWF and the IKEA business, through During 2023, 昀氀ooding and drought risks impact in at least 100 vulnerable global our partnership to restore biodiversity in were assessed, and nature-based actions water basins by 2030, focusing on the cotton-growing regions, created a small to become more resilient were proposed. A most stressed basins in our operations and supply chains arti昀椀cial 昀氀oating platform for 昀氀owering plant wetland to prevent 昀氀ooding during heavy species. The platform is used to clean water rain was constructed at the Manufacturing Our plan to achieve these commitments for a small village in Khanewal, Punjab, Development Centre in Zbaszyn – a good includes target setting, working with and Pakistan. example of a nature-based solution. supporting suppliers throughout the IKEA value The platform improved the village’s local The assessment will continue, and more chain and continuing our work with WWF on water source – a pond that was a source of solutions will be proposed at other IKEA vulnerable water basins. diseases and pests such as mosquitoes with Industry sites during FY24. wastewater coming from the village. The free-hanging roots of reed plants 昀椀lter the water, removing pollutants and microbes. The cleaned water is now being used for growing cotton, which supports the lives and livelihoods of nearly 5,000 people in the village. This nature-based solution is low-cost and low-maintenance, and its scalability is currently being explored. 34 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY Wood (forestry) Wood is the material most used in the wood processing volume and, for the 昀椀rst time, IKEA wood processing volume Europe IKEA range.1 provide a more substantial breakdown separating 84% (million m3 Round Wood Equivalent (RWE)) It's part of the IKEA identity North our virgin wood consumption from our recycled America Asia and our Swedish heritage and includes wood consumption as well as an estimated volume 0.4% 13% Includes virgin, recycled wood and the estimated particle board, 昀椀breboard, paper-based Africa volume of the residual wood material from sawmills products and solid wood. of the residues from the sawmill manufacturing 0.002% as well as paper, industrialised bamboo, and indirect process. With this breakdown, our total virgin wood South America materials, e.g. packaging. consumption is reduced as residual wood material 2% Oceania 1% We're committed to making responsible forest is now excluded and calculated as consumed within FY23 16.8 million m3 management the norm across the world, going the sourcing market. The updated calculation beyond the wood sourced for the IKEA business; method is based on information reported by our halting deforestation and reforesting degraded Total wood processing Indirect material suppliers, the best available data for our business With an industry-昀椀rst global wood supply map, launched in FY23 昀椀gure for home furnishing (3 million m3) landscapes; and driving innovation to use wood in type and commonly approved conversion factors. for increased transparency, the IKEA business is sharing where products (13.8 million m3) smarter ways. Read more about our forest agenda. all the wood material (excluding paper) in IKEA products comes from. The map includes information about wood species, sourcing Within our commitment to drive innovation to use regions, volumes and how the IKEA business works to improve forest Wood residue byproduct from sawmill (1 million m3) In FY23, to increase the accuracy of our wood wood in even smarter ways, we have set a goal for management across di昀昀erent markets. Recycled wood material in products (2.3 million m3) consumption data across our home furnishing at least a third of the wood in the IKEA range to be Virgin wood material in products (10.5 million m3) products and indirect material use (e.g., packaging), recycled wood by 2030. In FY23, 17% of our wood- we reviewed and updated our calculation method. based range was made of recycled wood material Markets which supply the most virgin wood for Many parts of the wood industry have become more IKEA products (FY22: 15%). e昀케cient and smarter in their use of wood due to technological advancements in wood processing, In FY23, 97.8% (FY22: 99,9%) of our total wood used since our initial calculation method was developed. 16% Others was either Forest Stewardship Council certi昀椀ed (FSC) 3% or recycled.3 Latvia Until now, our wood consumption was calculated A slight decrease occurred due to our decision in FY22 to no longer accept wood from 3% 3% Slovakia based on the total wood processing 昀椀gure of round Russia and Belarus. This meant that a few suppliers Vietnam 32% wood equivalent.² This method included a signi昀椀cant Poland amount of residue material from the sawmill needed to 昀椀nd alternative sourcing options. All 4% manufacturing process – for example wood chips, wood used still met our IWAY forestry minimum Czech Republic requirements. 4% 10% o昀昀cuts, wood shavings, and sawdust – which was Romania Sweden 1 Based on purchasing value. sometimes used by other supply chains outside of ² To measure our wood consumption with one relevant unit, we Europe remained the main wood-sourcing region for 6% apply conversion factors for di昀昀erent wood materials used in our products and calculate back to cubic metres of roundwood the IKEA business. This consequently in昀氀ated our materials used in IKEA home furnishing products, Germany 10% 3 volumes. equivalent (m RWE). Roundwood equivalent (RWE) is a measure with over 80% of all wood use in IKEA products 9% Lithuania of the volume of logs (roundwood) used in the making of wood- China based products. coming from this continent. 3 We consider a goal to be fully reached when we achieve To become more accurate in our reporting, from more than 98% ful昀椀lment overall. Due to disruptions or new suppliers/business partners, we can’t guarantee 100% ful昀椀lment FY23 onwards we will continue to share the total at every given point in time. 35 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY Understanding the impact of FSC forest Global consumer insights on the forestry management on biodiversity sector At COP15, where the Kunming-Montreal As one of the leading wood users in the Global Biodiversity Framework (GBF) was retail sector, we strive to use our size and adopted, the IKEA business, together with global reach to positively in昀氀uence, and FSC, WWF, and other leading companies, even transform, the forestry industry. We participated in the launch of an initiative asked GlobeScan to conduct foundational to fast-track biodiversity assessments in research amongst consumers and experts FSC-certi昀椀ed forests. The initiative builds into how the forestry sector and wood on learnings from earlier work to quantify sourcing are currently perceived and the impact of FSC (the Value and Impact understood. Analysis (VIA) initiative in 2014). The results of the 8,000 consumers In FY23, the initiative worked on evaluating surveyed across eight of our markets how currently available data reported by demonstrate that over 80% are very or certi昀椀cate holders can be used to evaluate somewhat concerned about the state the biodiversity impact of FSC Forest FSC in Poland Expansion of the WWF and IKEA forest of the world’s forests. It shows that the Management. This initiative will support The wellbeing of the world’s forests is partnership to Brazil and Colombia responsible sourcing of wood is important FSC certi昀椀cate holders in demonstrating a primary focus for the IKEA business. During FY23, the IKEA business and WWF to consumers, and 75% would prefer to their biodiversity impacts in line with the Therefore, the decision in Poland in buy from a company known for its forest Kunming-Montreal Global Biodiversity continued our long-standing partnership, FY23, to discontinue participation in the where forests have been in focus. Working side- conservation e昀昀orts. Framework agreed on at COP15. most credible global forest management The results demonstrate the need for This initiative represents a big step by-side for over 20 years, covering 19 locations, greater engagement towards consumers towards strengthening the FSC global certi昀椀cation system, FSC, makes us our global partnership has been instrumental deeply concerned. in driving responsible forest management, on issues and products, as well as the certi昀椀cation system with an understanding The IKEA business plays an active role in increasing transparency across wood supply value and bene昀椀ts of responsible forest of its biodiversity impact, which can be a assisting a continuous and constructive chains and protecting ecosystems. We are, management and using wood. We will positive change at scale for the entire forest share the research in FY24. for the 昀椀rst time, initiating projects in South management sector. dialogue between di昀昀erent stakeholders America – Brazil and Colombia. For the projects to support a positive solution. in South America, the plans were developed to focus on community forest management, landscape conservation and recovery activities. Additionally, we are starting a new pilot project on landscape restoration in Thailand. 36 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY conditions. To supplement the due diligence In FY23, as a result of the partnership, Kew other prede昀椀ned board mills and recycled processes, vetted third-party certi昀椀cation Gardens launched a 昀椀rst-of-its-kind publicly wood supply chains with the aim to 昀椀nalise the schemes should be a recognised tool. available DNA database of all rattan species. veri昀椀cations at all relevant second-tier critical The database includes a new test protocol, We are committed to no deforestation and sub-contractors by the end of 2023. o昀昀ering a unique possibility to identify no forest degradation across our primary Implementing responsible sourcing along species, enabling companies to gain deeper deforestation-linked commodities (soy, palm forest material supply chains is not an easy knowledge of rattan supply chains and to act to protect threatened species. This oil, beef, leather, co昀昀ee, cocoa, rubber, wood task for the stakeholders involved, including development supports the IKEA business in and sugarcane), with a target date of 31 sub-contractors. Mapping the supply chains 1 increasing traceability which is a step towards December 2025. was among the most challenging activities ensuring no threatened species are sourced. During FY23, we remained an active participant for suppliers because it was the 昀椀rst time that By launching this database and sharing all in the EU Commission Expert Group/Multi- some sub-contractors were asked to disclose the tools for free, the aim is to inspire other Stakeholder Platform on Protecting and this type of information. companies to use it to increase the traceability Restoring the World’s Forests – including the Despite these challenges – or perhaps because of their rattan supply chains as well. EU Timber Regulation and the Forest Law of them – the process has led to many bene昀椀ts, Enforcement, Governance, and Trade (FLEGT) such as a greater understanding from our regulation – by providing fact- and experience- sub-contractors on responsible sourcing, Contributing to the development of EUDR based insights and contributions to the transparency and traceability. Thousands of deforestation legislation development of legislation. sub-contractors handling forest-based material The IKEA business has long promoted have been mapped along supply chains all the way to the forest roadside. Most supply chains Launching a 昀椀rst-of-its-kind rattan species responsible sourcing within our business. Implementation of responsible sourcing are relatively short, reaching only to second- DNA identi昀椀cation database We have steered market transformation with Rattan can be a useful renewable forest respect to key raw materials and continue along forest material supply chains tier sub-contractors. However, a few reported resource in many applications. Historically, it to use innovative approaches to forest During FY23, together with our business supply chains are going all the way to tier 昀椀ve. has not been possible for the wider industry management, protection, restoration, and partners, we secured the robust requirements regeneration. The wood used in IKEA products outlined in our supplier code of conduct, to accurately identify the di昀昀erent types of rattan used in supply chains and over- is sourced from responsibly managed forests, beyond 昀椀rst-tier suppliers. harvesting of rattan from forests in Vietnam which do not contribute to deforestation. The implementation follows a stepwise and Indonesia can threaten biodiversity and We fully support the European Union’s goal to approach. The 昀椀rst step was completed at the ecosystems by contributing to the potential minimise the EU’s contribution to deforestation end of 2022 when supply chains connected to extinction of some rattan species. Therefore, and forest degradation. We urge a risk-based solid wood and prede昀椀ned board mills were in 2019, the IKEA business together with approach based on mandatory due diligence mapped with IWAY Must requirements and the Royal Botanic Gardens, Kew, in the UK, processes, including reporting and risk veri昀椀ed at all 昀椀rst-level critical sub-contractors. partnered around research on rattan species mitigation measures dependent on the market Starting on 1 January 2023, we began the 1 Commodities and products in the scope of the European Union identi昀椀cation. second step of implementation, focusing on risk pro昀椀le, nature of the commodity and local Deforestation-free Regulation (EUDR) will have to meet the corresponding timelines. 37 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY Agriculture Agricultural raw materials are used in the more holistic scope that the IKEA business has ANNUAL CROPS in biodiversity, land and water use, climate, people throughout the IKEA o昀昀er. They include and communities. Cotton perennials such as co昀昀ee, tea and palm oil, as well as annual crops such Since FY15, the IKEA business only uses virgin For example, we're piloting cases during the next as cotton and animal-based products. cotton certi昀椀ed by our approved schemes or Cotton is the main agricultural material two 昀椀scal years that aim to source from and monitor recycled cotton. for the IKEA business. the same farm landscapes over a longer period (estimated 昀椀ve years) to track progress in soil health, In FY23, the total volume of cotton in IKEA landscape restoration and community wellbeing. products, including non-virgin cotton, Agriculture practices have wide-ranging impacts was 109,000 tonnes (FY22 144,100 tonnes). on water usage, pollution and conservation, nature During this process, as we continue to incorporate Around 80% of our virgin cotton came from and biodiversity, CO2 emissions and sequestration, additional markets and their local supply chains, smallholder farmers, and around 20% from animal welfare, and the lives of people and we are learning where we have more direct control large land-holding farmers. We continue communities connected to the cultivation of versus where we need to engage in di昀昀erent ways to emphasise physical segregation and agricultural materials. with others. Because we operate as a franchise system, which allows for both global and unique end-to-end traceability, diversi昀椀cation, risk In FY23, we started developing requirements for the mitigation, and the promotion of circular local o昀昀ers, we don’t yet have a complete overview new Agriculture Section in IWAY, the IKEA supplier of all products sourced or sold. A systematic cotton supply chains in an e昀昀ort to reduce Country of origin for cotton code of conduct (page 55). This is an important step approach and common requirements for our food the environmental and social impacts of our Fresh/virgin cotton 1 cotton supply chains. Read more about our in our responsible sourcing e昀昀orts. Through the supply chains will help us to increase visibility and view on cotton. requirements, we aim to take a holistic and coherent insight into operations, including the handling of 3% approach to responsible sourcing of agriculture raw animals. Cotton is one of the key focus areas in the 4% Cameroon materials addressing human rights, environmental Türkiye 1% impacts, including the risks of deforestation, and Food ingredients in this report represent long-term global partnership between the Burkina Faso IKEA business and WWF. 5% 1% animal welfare across the total value chain. approximately half of the total food ingredients Ivory Coast Others* sourced for the IKEA food business (supplied by 24% We are also preparing a transition from single IKEA Food Supply AG). For the remaining ~50%, 10% Pakistan raw material focused to wider landscape focused USA we're continuing to build a better understanding of action plans. Although we will continue to work on the gaps and how to ensure more comprehensive 14% initiatives connected to speci昀椀c raw material supply reporting in the future. India 18% chains, our aim is to quantify our impact and e昀昀orts China 17% * Brazil Others: Australia, Greece, Israel, Kazakhstan, Kyrgyzstan, South Africa, Spain 1 We use reputable sustainability standard systems in di昀昀erent agricultural areas to promote sustainability practices and performance for a variety of agriculture-based products in our o昀昀er. 38 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY ANNUAL CROPS (CONTINUATION) PERENNIALS Economic empowerment for communities Integrating climate responsiveness into Palm oil Co昀昀ee in cotton landscapes of Pakistan agriculture practices in Pakistan In FY23, 99.9% of the palm oil used was In FY23, we used 100% Rainforest In order to build resilience to the impacts of Freshwater is a scarce natural resource Roundtable on Sustainable Palm Oil Alliance-certi昀椀ed co昀昀ee.² climate change in cotton landscapes, WWF in Pakistan. Close to 90% of available (RSPO)-certi昀椀ed. and the IKEA business have been actively freshwater is used for agriculture. With • Candles: 15,170,000 kg (100% RSPO Cocoa engaging with communities, and particularly measures taken through the WWF and IKEA certi昀椀ed) In FY23, we used 100% Rainforest Alliance- women, in acquiring alternative skills – such partnership project and the adoption of • Food: IKEA Food Supply AG (IFSAG):² certi昀椀ed cocoa in IKEA Branded products.² as embroidery, bee farming, micro-nurseries climate-smart agriculture practices, farmers 733,630 kg (100% RSPO certi昀椀ed); and and kitchen gardening – that can support have documented savings of 24% in crop- Trader 1,260 kg (96% RSPO certi昀椀ed) Tea establishing small businesses while also water productivity.1 Through technology and • Total: 15,904,890 kg increasing resilience to climate change. improved sowing techniques, 535 hectares In FY23, we used 100% Rainforest Alliance-certi昀椀ed and Fairtrade-certi昀椀ed tea in our range.² These e昀昀orts have resulted in an almost 20% of agricultural land have saved 791,908 increase in family income, on average, in the m3 of farm water and reduced nearly 24% communities where this applies. in greenhouse gas emissions (GHG) per hectare. In addition, to mitigate the e昀昀ects of warming temperatures, project farmers have used agricultural land unsuitable for cotton production to grow indigenous plants. 1 2 Crop water productivity is the total crop yield divided by total This percentage is based on food ingredients supplied by IKEA Food Supply AG, which represents approximately half of the total food ingredients sourced amount of water used to raise the crop. for the IKEA food business. For the remaining ~50%, we continue to build a better understanding of the gaps and how to be more comprehensive for future reporting. 39 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY ANIMAL BASED Animal welfare Chicken Seafood The IKEA business is committed to ensuring external experts, we are further developing the IWAY In FY23, 100% of the chicken volume² was In FY23, 100% of the seafood volume² was animal welfare across the IKEA value chain. Animal Welfare Section 6.1. We remain committed to sourced according to third-party certi昀椀cations Aquaculture Stewardship Council (ASC)- or Our animal welfare e昀昀orts are guided by the the roadmaps and goals that we've agreed on with that cover the majority of the IKEA animal Marine Stewardship Council (MSC)-certi昀椀ed 1 (2022: 98%, 2020: 91.2%, 2019: 93.7%, 2018: Five Provisions and Welfare Aims, a further suppliers for the IKEA food business on chicken and welfare requirements. development of the globally recognised Five pork. 91%). Freedoms that goes beyond basic care. Pig The IWAY Animal Welfare Section 6.1 is an important Sheep During FY23, we have taken steps to enabler to advance animal welfare in the entire In FY23, 81.3% of the pork volume² was sourced Wool: In FY23, we 昀椀nalised a carbon removal consolidate the IKEA standpoints and IKEA value chain. The process of further developing according to third-party certi昀椀cations that our approach to animal welfare, being present cover the majority of the IKEA animal welfare pilot project together with our New Zealand requirements on animal welfare. We're merging the work driven by IKEA Food Better in coalitions and monitoring data and reporting, requirements. wool partner. This pilot aims to ensure Programmes with additional agricultural enables us to better understand how to facilitate integrity in calculating and reporting methods criteria that will address animal welfare in all improvements in animal welfare in all our supply Cattle that follow the established GHG protocol IKEA supply chains. Internally, within the IKEA chains. and Science Based Targets initiative (SBTi) business and together with suppliers and Beef: In FY23, we developed pilots, together guidelines for CO2 removal. But also, it has with selected partners in the USA, for grass-fed enabled us to learn more about soil health beef. These pilots will enable the IKEA business and biodiversity parameters that need to be to align and verify methods to calculate GHG understood holistically. The results from the emissions and other key parameters that impact pilot are positive and con昀椀rm the potential ecosystems such as biodiversity, soil health, to remove CO2 through our wool farms if water and community wellbeing. regenerative practices are implemented. Leather: Leather traceability and compliance has been a top priority for many years securing high standards of animal welfare and environment in our leather supply chains. Now, in addition to consolidating leather requirements into the overall animal welfare 1 The Five Provisions and Welfare Aims focus on providing animals with requirements, we have also taken the necessary optimal nutrition, health, behaviour and environment recognising how all of these contribute to the good mental state of the animals. steps to ensure our readiness for the coming 2 This percentage is based on food ingredients supplied by IKEA Food European Union Deforestation-free Regulation Supply AG, which represents approximately half of the total food ingredients sourced for the IKEA food business. For the remaining ~50%, (EUDR) legislation on deforestation by 2025. we continue to build a better understanding of the gaps and how to be more comprehensive for future reporting. 40 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY Inorganics Inorganic raw materials are minerals suppliers – what information we need from Collaborations for building a responsible used in the production of metals, them and how we can partner with other sourcing scheme for sand 1 companies to in昀氀uence more sustainable glass, ceramics, chemicals and practices and sources. Silicates and sands can be found in many electronic components. IKEA products such as worktops, drinking We are members of the Aluminium Stewardship and decorative glassware, tableware, The IKEA business is a relatively small consumer Initiative (ASI), contributing to their work ceramics, wall and 昀氀oor tiles, picture frames of inorganic materials. However, those that and furniture featuring glass. Since we we do use can be found in critical applications to increase chain of custody certi昀椀cation are reliant on silicates and sand, in FY23, like furniture, appliances, lighting, tableware, in aluminium supply chains. In FY23, we the IKEA business and the University of collaborated with large steel- and aluminium- Queensland's Sustainable Minerals Institute and pots and pans. They're also used in consuming companies to pilot certi昀椀cation Photo provided by Pact in Australia, collaborated on a study aimed products speci昀椀cally designed for healthier and programmes for recycled content and chain of at exploring and de昀椀ning responsible sand more sustainable living, like air puri昀椀ers and custody for aluminium smelters. rechargeable batteries. and silicate sourcing practices. We are also members of the Responsible Continued partnership with Pact on In addition, in FY23, we participated in the We’re always looking at how to best use Minerals Initiative (RMI) working towards social improving working conditions of miners Organisation for Economic Co-operation and resources to optimise materials for the right economic development in mineral production During FY23, the IKEA business continued Development (OECD) meeting to reach out purpose. For example, we only use stainless and sourcing. building on the partnership with Pact, an to other actors in silicate and sand supply steel for products in cooking and eating chains (with Pact also participating) to learn functions or for use in wet rooms. We also use international non-pro昀椀t. The partnership, We know some raw materials don’t currently which started in 2020, aims to identify risks about their experiences and practices. Our high-strength steel in other functions, which have a renewable substitute and that the and build knowledge about the sustainability goal is to open dialogues between mining uses less material while o昀昀ering the same technology to recycle other raw materials impacts of inorganic extraction and mining and downstream sectors on responsible function and quality. doesn’t exist yet. As this process takes time, we to improve responsible sourcing and sand sourcing and 昀椀nding additional continue to be committed to working towards minimise negative impacts on people and partners. In FY23, we continued pilot mapping supply securing responsibly sourced virgin inorganic planet. Together, we are working to support chains back to their source for both inorganic materials while replacing them whenever small-scale miners in Rwanda with better and secondary raw materials. Through this possible. We’re focused on replacing materials equipment for safer working conditions. e昀昀ort, we have identi昀椀ed the main players that have the largest climate footprint. in upstream sourcing. We are now using this knowledge to investigate e昀昀ects on our direct 1 Not including fossil-based chemicals. 41 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY Secondary raw materials (recycled) Secondary raw materials (also called to work across categories within the IKEA Metal recycled materials) are essential to business and work closer to the recycled sector to secure higher volumes and a wider variety of Signi昀椀cant increase in share of transforming into a circular business materials. recycled aluminium (page 16). By continuously increasing Our ambition is to have at least 80% the share of recycled materials recycled aluminium content in our in IKEA products, we also want to Participated in the Circulate Initiative products by 2030. Working with contribute to a circular economy (TCI) forum on responsible waste partners across the IKEA value chain, where nothing is wasted and old management in recycled plastics supply such as waste sorting and smelters, products become new resources. chains we have been able to accelerate that journey. During FY23, we have made Today, there is no existing international The amount of materials used in the IKEA signi昀椀cant progress by reaching 77% range is based on estimations for most types of standard for responsible waste recycled aluminium content in IKEA management practices. We support e昀昀orts products, up from 57% in FY22. materials. Accurate yearly 昀椀gures for di昀昀erent to create such a standard. In May 2023, we amounts of materials continue to only be joined The Circulate Initiative (TCI) forum in available for wood and paper. The disclosed Bangalore, India, together with other major climate footprint, therefore, is a conservative brands, social entrepreneurs, commercial Increasing the use of recycled steel estimate that doesn't re昀氀ect the actual recyclers and waste picker representatives. During FY23, our focus has been on improvements for material used in the IKEA We support the TCI Responsible Sourcing switching to steel manufacturers who range. It also means that there is no update to Initiative, which aims to improve human have the technical capabilities to use a the 昀椀gures shared in FY21, where we reported rights across recycled plastic value chains in greater share of recycled content, which that 56% of the materials we sourced were ways that can be measured, managed, and also reduces the climate footprint in renewable and 17% were recycled. See the IKEA are compliant with regulations. production (see the IKEA Climate Report Climate Report FY23 for more details. FY23). We are selecting steel suppliers In addition, we are part of the World that use electric furnaces rather Today, sourcing of recycled materials in scalable Business Council for Sustainable than burning coal. Electric furnace amounts and suitable quality is a challenge. Development and, since FY21, its Business technology allows the production of However, one of the most critical challenges is in Commission to Tackle Inequality (BCTI). The steel with a higher share of recycled protecting human rights in the informal waste initiative aims to elevate business action materials. We have mapped metal collection and sorting sectors. on inequality and bring together leading supply chains in Europe, China and businesses and other key stakeholders to Vietnam and are testing products with a During FY23, we continued to build up recycled create a platform for collaboration and an high recycled-steel content in China. material supply chains. We see a big opportunity agenda for business action. PAX wardrobe sliding doors are now made with a minimum of 80% recycled aluminium. 42 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY Wood Textiles Completed an in-depth risk assessment of textile value chains The global post-consumer textile recycling sector is immature, which limits textiles as a source of secondary raw materials at scale. However, there is a big potential for the IKEA business, together with other large companies, to be a leader in developing the recycled textiles sector. In FY23, together with Article One, we We're now producing the kitchen front VOXTORP in high gloss completed an in-depth risk assessment white, using more than 50% recycled wood in the 昀椀breboard. New recycled 昀椀breboard technology of textile value chains, including recycled By 2030, at least one-third of the IKEA wood-based materials. The objective was to identify range will be made from recycled wood. Fibreboard is any human rights risks across 昀椀ve key a key material for IKEA furniture, but one of the biggest Share of recycled wood in particle board (%) materials in the recovered materials challenges is its recyclability. In FY23, the share of recycled supply chain, discovering opportunities to content in particle board we use was 30% and 0.3% in help strengthen risk mitigation and build FY21 27% capabilities to assess human rights risks 昀椀breboards. in other IKEA recovered materials supply In FY23, we developed a new technology that enables FY22 27% chains. the recyclability of 昀椀breboard. We're now using this In FY23, we explored new feedstock types technology in the production of IKEA products, which FY23 30% is guiding us in developing new ways of working with and streams as well as technologies to these materials. The process is used to produce the FY30 80% accelerate textile-to-textile recycling and SKÅDIS pegboard and now, for the 昀椀rst time, in producing continued to build new supply chains By 2030, we aim to secure that at least 80% of our utilising post-consumer textile products the VOXTORP kitchen front in high gloss white with particle board is based on recycled wood. such as quilts and pillows. We piloted 昀椀breboard made of more than 50% recycled wood. thermo-mechanical recycling of polyester We are in dialogue with partners to join us in scaling up textile waste into yarns, and we partnered this technology and together moving the manufacturing with the social enterprise Saahas Zero industry in a new direction using recycled wood 昀椀bres. Waste in India to run a feasibility study for the collection and sorting of domestic post- consumer textile waste. 43 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY Plastics Glass Given the limited availability of recycled plastic waste Continuing the work on our Sustainable Glass is fully recyclable and can be recycled in Europe, it can be di昀케cult to secure secondary Packaging Project again and again. The amount of energy needed plastics for use in products. In parts of the world, a In FY23, we made progress toward our goal to melt recycled glass is less than what is maturing but largely informal waste sector exists. of all IKEA food packaging being made of needed to melt virgin raw materials to make We support the transition of informal waste 昀氀ows to recyclable materials by 2025. This included new products. formalised setups that could create a potential supply the launch of SKUB PET bottles made of chain for secondary plastics, both to better protect 99% recycled content and initiating projects Some regions have a well-established and the human rights of waste workers and reduce plastic to move from non-recyclable to recyclable e昀케cient collection and treatment system for pollution. packaging for sauces and jams in IKEA post-consumer packaging glass (bottles and restaurants, as well as salmon and sausages jars). This is good for the sustainability of the For all plastics, not just packaging, we are focused on in IKEA restaurants and Swedish Food glass packaging industry, but because the four key movements: Markets. collected glass is used primarily in the bottle Recycled glass to replace virgin quartz in • Increasing the share of recycled plastic moving industry, it limits access to recycled glass new worktop range LOCKEBO toward post-consumer recycled plastics. for IKEA products and IKEA suppliers as a Renewed and extended work within the feedstock. In other regions of the world, the In FY23, we launched a new worktop range • Using materials in a smarter way, 昀椀nding new informal waste collection sector called LOCKEBO, which is made with recycled solutions to use plastic material in the most recycling infrastructure is di昀昀erent, and IKEA During FY23, together with IKEA Social suppliers have more access to recycled glass. glass. The glass composite material is the e昀케cient way and only using plastic on relevant We are continuously working to increase the same quality as virgin quartz and uses half applications. Entrepreneurship B.V., the IKEA business supply of recycled glass. the energy in production compared to quartz • Using plastic from renewable sources, such as bio- renewed and extended development worktops. LOCKEBO worktops are made with based, in the relevant applications. projects working close with informal waste recycled glass from many di昀昀erent sources: collection networks. The aim of these The IKEA business currently o昀昀ers several • Continuing to explore new materials and products that include a minimum of 50% Glass packaging (wine bottles, glass jars technologies, such as carbon-captured technology projects is to o昀昀er more formalised work – recycled glass. We are currently working on and containers), leftovers from car glass contributing to better working conditions, collections with 100% recycled glass that we’re manufacturers, glassware producers, as well for plastic. stable livelihoods and reliable incomes. We want to contribute to a just transition so planning to launch during 2024 in selected as broken car windows. Sustainable food packaging that workers aren’t left behind as the sector markets. becomes organised. Read more about IKEA We're aiming to phase out plastic from consumer Social Entrepreneurship B.V. projects. packaging by 2028. However, plastic packaging might remain in some parts of the IKEA food range where it is needed to secure quality and food safety standards beyond 2028, in which case it will come from renewable or recycled sources. A second part of the objective is to move to recyclable food packaging materials for 2025. 44 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY ChemicalsChemicals Our ambition is that all chemicals On track to phase out formaldehyde in Commitment to phase out PFAS without used in or for making IKEA products coatings on paper foils harmful substitutions should be safe throughout their We are on track to eliminate formaldehyde PFAS are a large group of chemicals used in Advocating for better 昀椀re and chemical safety standards whole lifecycle. We advocate for from coating on paper foils in IKEA various industrial and consumer applications policies, strategies and regulations products by mid-2024. All products that that are persistent and, therefore, do not Globally, legislators have adopted di昀昀erent approaches for safer and more sustainable are made from wood-based materials can degrade during use and when spread in the when it comes to product 昀椀re safety for upholstered contain formaldehyde, which is common environment. furniture and mattresses. While the IKEA business chemicals, materials and products. in the natural environment. High levels always aims to refrain from the use of speci昀椀c chemicals in our products, as described in the IKEA of formaldehyde can, however, lead to We recognise the signi昀椀cant health and Read more about the IKEA chemical strategy. environmental concerns about PFAS chemical strategy, we always meet all local market requirements. negative health e昀昀ects. That’s why we chemicals and acknowledge the special will continue our decades-long work to attention needed due to their widespread reduce formaldehyde emissions from all use and persistence in the environment. Existing 昀椀re safety regulations in some markets still demand speci昀椀c testing requirements, such as large IKEA products. We're continuously working The IKEA business is committed to phasing- to lower formaldehyde emissions and open 昀氀ame tests, which can prevent many companies are using a stepwise approach to reach out PFAS while also avoiding any harmful from completely avoiding the use of chemical 昀氀ame substitutions. retardants and hinder the chance to implement formaldehyde emission levels from wood- innovative solutions. based materials that are equal to, or lower The IKEA business has been working to than, levels emitted by natural wood. phase out PFAS in our supply chain since There is growing research and a common 2009. For example, in 2015, we phased- understanding of the hazards that many 昀氀ame out PFAS in textiles. During FY23, we’ve retardants have on people’s health and the Consultation for the USA state of Maine continued the work to identify further uses environment in the long term. Questions remain of PFAS, to add additional restrictions and about the e昀昀ectiveness of these types of chemicals in We continue to engage with regulators phase-out plans. We are prioritising high- preventing 昀椀res over time, the toxicity of the chemicals to provide experience-based feedback volume applications and applications with in 昀椀res, and the implication of these chemicals on through government consultations on the the largest environmental or health impacts. materials for future use. use and declaration of Products Containing That’s why we are working with legislative bodies and As a part of our work to phase out Per昀氀uoroalkyl and Poly昀氀uoroalkyl organisations to advocate for better chemical safety Substances (PFAS) chemicals. In FY23, the PFAS, in 2024 we'll introduce non-stick IKEA business provided feedback to the USA coated cookware that does not use standards when it comes to 昀椀re safety. In FY23, for example, we have contributed to the discussions on the state of Maine in a response to the Chapter polytetra昀氀uoroethylene (PTFE) material. revision of the UK Furniture and Furnishing Fire Safety 90 Rule for PFAS, highlighting the need for From 2025, this will also apply to non-stick Regulations, advocating for a change to the existing coated bakeware. During 2026, all cookware rules so a balance can be found between securing 昀椀re a clearly de昀椀ned, simple reporting process. and bakeware ranges will be non-PTFE. safety, chemical safety and enabling a circular economy. 45 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY Fair & equal By 2030, our ambition is to play our full part in contributing to a fair and equal society, by respecting and promoting human rights across the value chain and contributing to resilient societies. 46 - IKEA SUSTAINABILITY REPORT FY23

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Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY Commitments and goals FY23 summary of progress Being a responsible business and contributing to everyone in the IKEA value chain. Securing a just During FY23, our focus has been to create The responsible recruitment of migrant workers resilient societies transition to a net-zero and circular economy with a clarity and connections between our continues to be a particularly critical area of focus. • Respecting human rights and children’s rights by focus on enabling decent work through, for example, overall goals and commitments, and During FY23, the IKEA business collaborated with the operationalising the UN Guiding Principles on Business upskilling and reskilling to meet future demands. develop the actions needed to get us International Organization for Migration (IOM) on and Human Rights and the Children’s Rights and • Providing and promoting that everyone in the IKEA there. a project concerning the human rights of migrant Business Principles, ensuring we address the most value chain is empowered to play an active role in their workers (page 51). critical human rights risks and impacts across our value work. Everyone is free to join or form associations of IKEA touches the lives of millions around the world and chain. We also commit to promoting human rights and their choice (or to refrain from doing so) and bargain has long promised to stand by the side of the many We also continued our work around responsible wage children’s rights in society. collectively. people. In FY23, building on more than 20 years of IWAY, practices, by introducing our methodology to all parts • Ensuring ethical business practices, including • Providing and promoting that everyone in the IKEA our supplier code of conduct (page 55), we worked on of the business, including IKEA franchisees. We are now combating corruption, securing ethical handing of data value chain is recruited in a responsible way and free to developing an additional performance framework to assessing and identifying gaps related to responsible and digital technologies, complying with corporate tax enter into and terminate employment. strengthen our impact and support the implementation wage practices and will develop a roadmap to close policies, and being transparent about taxes paid. Read of our updated Fair & equal commitments. The them (page 50). more in our Inter IKEA Group Tax Report FY23. framework re昀氀ects our strategic goals and aligns In FY23, we launched an updated People Strategy, • Securing a strong approach in relation to climate, Being an equal, diverse and inclusive business with the newly adopted Corporate Sustainability Due strengthening the equality, diversity and inclusion health, political and social justice crises to secure the • Embracing all dimensions of human diversity and Diligence Directive (CSDDD), which requires companies (ED&I) direction and ambition across all IKEA to undertake due diligence on global operations safety, livelihoods and resilience of our co-workers and striving to re昀氀ect the demographics of the societies businesses. With "An Inclusive IKEA" as one of three partners across our value chain. in which we operate. Actively working to prevent regarding human rights, labour laws and environmental commitments (page 49). focus areas, we're developing ED&I competences and • Engaging with communities building on our role as a discrimination and ensuring equality in opportunity creating the preconditions for ED&I topics to drive our home furnishing business and leader in life at home to and treatment. people processes. create a positive social impact. • Promoting accessible and inclusive workplaces, both in Through internal and external interviews, research structure and culture, where people can be themselves on good practices, relevant standards and processes, and their voices are heard. partnerships, strategic goals, KPIs and impact Providing and supporting decent and meaningful work measurement, we have been exploring priority topics to across the IKEA value chain • Being a child-friendly business, securing child incorporate into the framework. safeguarding, family-friendly practices, and inclusion • Providing living wages and income in IKEA operations and empowerment of children and youth. We are committed to providing and supporting decent and supporting the same among our business partners • Securing a more inclusive and diverse IKEA value chain and meaningful work for all workers across our and in the wider sectors of which we are a part. by integrating social businesses, minority-owned value chain. We have taken many actions to better • Providing and supporting safe and healthy work, enterprises and small and medium-sized enterprises. understand the needs of drivers and seafarers, and labour rights, and social protection and striving have identi昀椀ed multiple opportunities to improve towards securing stable and predictable work for working conditions in the coming years (page 49). 47 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY FY23 key activities Being a responsible business WAR IN UKRAINE We have set a strategic commitment to by ensuring children are not left unattended or operationalise our contribution to resilient societies join their parents at the rattan processing site. and promote and respect human rights, in line with Farm workers who are parents have received the UN Guiding Principles on Business and Human additional training on children’s rights. Youth in Rights (UNGPs) and the Children's Rights and the community have received life skills such as Business Principles (CRBPs) by 2030. training on children’s rights and basic literacy skills on personal health. Restarting supplier operations in Ukraine During FY24, the Centre for Child Rights and in a stepwise approach with heightened Continuing our e昀昀orts to prevent and Business will continue the project in Indonesia human rights due diligence address children's rights risks deeper in our and in Vietnam. The IKEA business, together supply chains with our suppliers, will use the knowledge The IKEA business, together with the Centre gained to create awareness deeper in our for Child Rights and Business, is working to supply chains. When the war began in 2022, we paused our human rights due diligence and discussions, we create awareness on children’s rights and operations in Ukraine to prioritise the safety and were able to restart operations with a few direct risks, as well as to strengthen child protection security of co-workers and partners. Since then, partners in the southwestern region of Ukraine, we have been monitoring the situation, both from where the situation is most stable. We continue to e昀昀orts deeper in our supply chain. In FY22, we completed pilot projects to better a humanitarian and a business perspective. We monitor and conduct further evaluations. have remained in close dialogue with our business understand the risks and impact on children partners in Ukraine with the long-term goal to In addition to supporting our business partners restart operations. close to a昀昀ected areas, the IKEA business has also in the natural 昀椀bres supply chain, in which materials are often harvested in the wild. We been supporting organisations such as UNHCR, developed child protection guidelines and According to the UNGPs, in times of con昀氀ict, UNICEF, and Save the Children since the beginning piloted child protection training for suppliers, companies are expected to conduct heightened of the invasion, providing both monetary and in- sub-suppliers collectors and harvesters. human rights due diligence. kind donations for children and their families. During FY23, we supported the opening As we continue to evaluate the situation, we're During FY23, in close co-operation with UNHCR, of a child-friendly space in the village of using a risk-based approach and take into account the IKEA business provided over 850,000 home a sub-supplier for one of our key rattan our responsibilities under both human rights and furnishing products from Ingka Group retail (with furniture suppliers in Indonesia. Young international humanitarian law. an estimated retail value of EUR 9 million) to children of rattan workers can now access support people who have been forced to leave their After extensive evaluation, including risk homes. the facilities, where they're supervised by assessments, auditing, and conducting heightened trained caregivers. This improves child safety 48 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY Global survey of drivers’ working Securing seafarers’ rights in the IKEA supply conditions in the IKEA supply chain chain For the second time, we conducted Drivers’ In FY23, to address the topic of seafarers’ rights Voice – a global, anonymous survey of and wellbeing, we began to develop ocean truck drivers in the IKEA supply chain. From carrier requirements to ensure decent work for IKEA distribution centres and stores to our seafarers on vessels and ships in the IKEA value suppliers, the survey covered 90 locations chain. The requirements are being developed in across 20 countries, capturing responses collaboration with our ocean transport service from over 2000 truck drivers. providers and other external stakeholders and We found the majority of drivers view follow the Maritime Labor Convention and other their experience with IKEA driver facilities applicable maritime conventions. positively. In comparison to the previous These requirements will be applicable to ocean survey, participants reported fewer delays Improving road safety transport service providers and will be introduced Promoting human rights waiting for goods to be loaded. to our business partners during FY24. Based on the feedback from Drivers’ Road safety is fundamental to IKEA supply Promoting human rights includes working Voice, we are now addressing potential chain operations. We recognise our shared together with partners (page 57) and improvements at individual IKEA locations. responsibility to contribute towards the UN Building our approach to ethical handling of contributing to public discussion with our To tackle industry-wide challenges, we also Sustainability Development Goal of halving data and digital technologies perspectives. continue our work with the Responsible the global number of deaths and injuries Data and digital technologies come with In April 2023, Inter IKEA Group joined more Trucking Initiative – a collaboration with from road crashes by 2030. increasing ethical, regulatory and human rights than 40 other companies, businesses, and other shippers and transport providers This year, together with one of our transport considerations. We have committed to a human- networks in rea昀케rming our support for the EU's Corporate Sustainability Due Diligence committed to addressing social risks and and logistics service providers and 昀椀ve centric approach for our digital touchpoints and working conditions of truck drivers. sub-contractors, we piloted a road safety data-driven processes and have been developing Directive (CSDDD), promoting and respecting management system in Vietnam to better this across the IKEA business in FY23. human rights in line with international understand driving behaviour within IKEA We started to set requirements for the standards of the UNGPs and the OECD goods transport and engage drivers on road Guidelines for Multinational Enterprises. safety topics. responsible adoption of arti昀椀cial intelligence and robotics for automation, began developing In December 2023, the EU agreed to a position In addition to improving drivers’ road features in our digital interfaces for people to adopt the CSDDD marking, a breakthrough safety awareness, the project also involved for the critical issues of child labour, slavery, with disabilities or impairments, and identi昀椀ed company leaders and led to the creation of guidelines for online personalisation. During labour exploitation, pollution, environmental an internal road safety management system. FY24, we will continue to learn, partner and degradation and biodiversity loss. Through systematic engagement, we create develop to ensure the ethical handling of data a foundation for reducing risks to drivers and and digital technologies. other road users. 49 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY Decent and meaningful work IKEA INDUSTRY We're committed to providing and supporting decent and meaningful work across the value chain. IKEA Industry is the Inter IKEA owned strategic manufacturer that produces IKEA home furnishing products. Health and safety is a Responsible wage practices top priority to secure a safe workplace for the over 14,000 IKEA Our journey to take a holistic approach to responsible Industry co-workers. Incident reporting is an important driver wage practices (RWP), putting equal focus on equality in identifying improvements to prevent future accidents, and in FY23, 14,400 incidents were reported (FY22: 13,000). at work, pay principles, competence, dialogue and a living wage, continues across all IKEA businesses. To support a safe working place, we closely monitor, record 2 In FY23, RWP was introduced and began being and act on incidents with the aim of decreasing the number of 3 implemented in all parts of our business. The pace of accidents year on year. implementation is determined by various business IKEA Industry striving to make workplaces safe, everyday Our goal is for all co-workers to be safe at work and return home realities and local prerequisites. safely every day. In FY23, we saw a decrease not only in reported 4 A baseline assessment was completed in 31 IKEA retail lost time accidents (LTA) but in the frequency of these accidents markets,1 showing areas for improvement, including as well (FY22: 134, 4.4). competence development. Action plans are now in place to improve identi昀椀ed areas and to establish systematic ways of working with RWP processes. IKEA Industry IKEA Industry IKEA Industry * 5 * Other IKEA franchisees are in the exploration phase LTA – Lost time accident trend LTAF – Lost time accident frequency Reported incidents (thousands) and planning for RWP baseline assessments in FY24. To better support the implementation of RWP into FY21 123 FY21 3.85 FY21 56.3 various IKEA businesses and beyond, we have been FY22 134 FY22 4.4 FY22 13.0 gathering and sharing learnings, both from internal partners and from other companies, as well as FY23 88 FY23 3.6 FY23 14.4 external parties like the Fair Wage Network and * * WageIndicator Foundation. Accidents requiring a minimum of one day sick leave. Unsafe conditions, unsafe acts and near misses that could have led to an accident. We actively support the global movement towards decent work and living wages and the ambition to publish a global database on living wages. 2 An unsafe condition, unsafe behaviour or a near miss. 3 An occurrence resulting in damage or injury. 4 An on-the-job accident that results in an employee being absent from the workplace for a minimum of one full day work day. 5 Number of accidents reported per working hours. 1 All markets operated by the franchisee Ingka Group. 50 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY Strengthening rights of migrant workers Addressing concerns through a grievance Inclusion of young workers in the IKEA De昀椀ning the IKEA approach to a just The responsible recruitment of migrant mechanism supply chain transition workers continues to be a particularly In FY23, Inter IKEA Group continued work to We continue to work with a project We have committed to take action to critical area of focus. During FY23, the establish a grievance mechanism encompassing launched in 2021 that aims to further strengthen the resilience of people in our IKEA business collaborated with the the IKEA value chain so that workers and other strengthen the inclusion of young workers value chain and in the communities where International Organization for Migration stakeholders have an avenue to reach out to us in the IKEA supply chain, including providing we operate, focusing on those who are (IOM) on a project concerning Migrant- and raise a concern (page 58). decent work and learning opportunities. most vulnerable. This includes supporting Centered Human Rights Due Diligence A pilot programme, expected to start in FY24 Last year, 16 factories located in East people as society transitions to net- Assessment. The aim was to gain deeper across three markets, will study how to best Asia, Southeast Asia and South America zero industries and a circular economy, insights into the risks linked to both communicate and operate the grievance participated in the project. Together with through upskilling and reskilling to meet cross-border and in-country recruitment of mechanism. our suppliers, we focused on capacity- future demands and ensure no one is left migrant workers. building, gap assessments and system behind. Training was provided 388 IKEA co-workers improvements. We are currently working to de昀椀ne and 1050 workers from our suppliers based We held training sessions on the what a just transition means for the around the world. The training sessions recruitment process for young workers, IKEA business, applying a rights-based will continue in FY24. Results from the such as each country's legal requirements lens, re昀氀ecting on the impacts of our project showed a need for industry-wide and obligations. Topics included: environmental commitments and targets collaboration and collective action on the appropriate work for young workers by on people, as well as connecting with and topic of responsible recruitment of migrant industry, systems for recruitment and involving those most vulnerable. workers. To better protect migrant workers employment, and communication and in supply chains and prevent challenges dialogue with young workers. and risks associated with the labour We also performed gap assessments on migration process, both in country of origin responsible recruitment mechanisms, and country of destination, businesses including reviewing policies to promote need to focus e昀昀orts on three areas: decent work opportunities, written reviewing auditing systems, providing processes for recruitment and employment, training to ensure a good understanding training and job rotation plans for young of the labour migration process and ability workers. to identify risks in the context of local In FY24, we will continue to promote migration, and ensuring access to e昀昀ective inclusion of young workers and the youth grievance mechanisms and remediation processes. development programme to our business partners in other regions, for example, in South Asia. 51 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY Equality, diversity and inclusion Co-worker gender diversity in FY23 Women Men The IKEA business is actively working to Gender balance has improved support and welcome people from all IKEA % Co-workers % Managers In FY23, the gender balance improved in many franchisees backgrounds and identities in our operations. IKEA businesses compared to FY22. During Ingka Group 54 46 50 50 the year, 6 out of 12 franchisees took steps to Al-Futtaim 29 71 25 75 increase the number of women co-workers, IKEA People Strategy for a more • Launched holistic ED&I competence and 8 out of 12 increased the number of inclusive IKEA development training with Dairy Farm 49 51 42 58 women managers. In FY23, we launched an updated People management team workshops Ikano Group 47 53 52 48 3 out of 12 IKEA franchisees have reached at least 50% of their management positions 昀椀lled Strategy to strengthening the equality, o昀昀ered and facilitated across IKEA diversity and inclusion (ED&I) direction markets, including unconscious bias Miklatorg 59 41 56 44 by women, with 6 out of 12 reaching over 40%. training and LGBTQ+ inclusion. 2 22 78 30 70 and ambition across all IKEA businesses, Al-Homaizi In Ingka Group, 50% of managers and 48% of creating a foundation for working with • Developed and launched a practical House Market 60 40 48 52 CEOs identi昀椀ed as women in FY23, an increase the topic across our value chain. With "An guide to accelerate ED&I focused on from 45% in FY22. Inclusive IKEA" one of three focus areas, 1 four identity dimensions: gender, Sarton 48 52 49 51 We are working to expand our view on how we're developing ED&I competences, age, ethnicity and persons with to measure dimensions of diversity, including mainly among leaders and co-workers disabilities. It enables assessment and Al-Sulaiman 26 74 23 77 in our People & Culture group. This work goal-setting activities that will bring gender. Read more about our diversity data MAPA 46 54 40 60 in the Inter IKEA Holding B.V. Annual Report will create the preconditions to lead ED&I ED&I in line with the business agenda. for FY23. topics in a systematic way across human • Established the ED&I franchisee Northen Birch 47 53 48 52 resource processes and as an integrated network, bringing together ED&I Falabella 49 51 47 53 part of the business agenda. In order leaders across the IKEA franchise to set measurable, quantitative and system. qualitative targets, the development of Inter % Co-workers % Managers % Management team % Supervisory board people analytics and a co-worker insights • Established co-worker resource IKEA Group survey has been prioritised and will be communities across the IKEA introduced in FY24. business, inviting co-workers to Inter IKEA 40 60 33 67 contribute to a more inclusive IKEA Holding 3 The following concrete steps have been business and workplace. Franchise 52 48 44 56 67 33 taken. Range 55 45 46 54 55 45 Supply 43 57 34 66 58 42 1 Persons of all gender identities refer to women, men, persons of non-binary gender identities, and persons with di昀昀erent gender expressions. 2 Figures for Al-Homaizi are inclusive of in-sourced support functions. 3 Including IKEA Älmhult and Inter IKEA Group functions. 52 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY Steps taken across many IKEA Gender balance in the trucking industry organisations to improve gender balance and other aspects of diversity In FY23, e昀昀orts were made to promote gender balance in the transport and During FY23, the franchisee Ingka Group logistics industry, particularly in India, focused on three strategic priorities: where there is a signi昀椀cant shortage of gender, ethnicity, and disabilities. Ingka truck drivers. Almost 25% of commercial successfully piloted a new programme called vehicles remain unused due to this "Equal UP!", which aims to identify and shortage. address barriers to equal opportunities for In India, IKEA Supply Chain Operations people from underrepresented ethnic and partnered with Ashok Leyland, a leading cultural backgrounds. Ingka also created truck manufacturer, and – using their an approach to global disability inclusion – building competencies, accountability, and database – identi昀椀ed six women from Northern India, who had already trained leadership – while continuing their e昀昀orts to drive heavy vehicles, to participate on inclusive succession planning; 55% of those in the talent pipeline for key positions in further training at Ashok Leyland's identify as women and 50% of the people Rajasthan facility. In May 2023, they in Ingka leadership programmes identify as relocated to the city of Pune to become our women. 昀椀rst-ever women truck drivers at an IKEA distribution centre. The franchisee, Al Futtaim, which operates and gender and domestic violence protocols in An IKEA Philippines' campaign for LGBTQ+ inclusion The plan is to expand this model to in Dubai, Abu Dhabi, Oman and Egypt, has a the Dominican Republic and Puerto Rico, taking was awarded bronze at the Asia Paci昀椀c Tambuli continue diversifying the truck driving commitment to increase the ratio of people greater responsibilities beyond the workplace. In Awards 2023, which recognises purpose-driven identifying as women to 35% by 2025. Next the Dominican Republic, Sarton has been working brands. industry in India. year, targets will be set for departments together with the Ministry of Women and the Inter IKEA Holding B.V. and Inter IKEA Systems B.V. United Nations Development Programme (UNDP) to in昀氀uence change in various areas of towards an equality seal. have set a minimum target of at least 40% for the the business. Additionally, a community of least represented gender (male or female) in their women in leadership will be established to With operations in Singapore, Thailand, Malaysia, respective Management Boards and Supervisory support women's empowerment. the Philippines and Mexico, the franchisee, IKANO Boards by the end of 2030. Inter IKEA Group aims Sarton Group, the franchisee operating in has taken important steps to support the LGBTQ+ to have equal representation (50%) of females and the Spanish Islands, Dominican Republic and community in both Thailand and the Philippines. males in management teams by the end of 2030. Puerto Rico, has implemented workplace and IKEA Thailand celebrated Pride Month by co-hosting An action plan has been prepared to reach the sexual harassment protocols in all locations a public seminar on how to prevent LGBTQ+ goals and develop a gender-balanced, long-term discrimination and harassment in the workplace. succession pipeline. 53 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY Internship to expand the diversity of IKEA Social Entrepreneurship To continue to play our full part in contributing engineers in Sweden In FY23, IKEA Social Entrepreneurship had a to a fair and equal society we provide ongoing The IKEA business is participating in the total of 12 social business partners producing support for social entrepreneurs in and beyond Jobbsprånget internship programme, an products sold at IKEA stores. Through these our value chain. initiative by the Swedish Royal Academy partnerships the IKEA business can support In FY23, IKEA Social Entrepreneurship B.V of Engineering Sciences. The aim of the people from vulnerable groups around the supported 95 social enterprises in 23 countries initiative is to support academics new to world in 昀椀nding employment and a steady around the world through a combination income. The number of people employed of impact investment and capacity-building Sweden who 昀椀nd it challenging to enter the Swedish job market. During the pilot, at social business partners producing IKEA accelerator programmes. Two funds were we were able to employ talented, highly products in FY23 grew to 11,200. Over 6,000 newly established: one for supporting refugee motivated and experienced engineers from of these are from our newest social business and migrant employment in Poland and other cultures and markets. As of FY23, partner, Karupannya. In total, over 20,000 jobs Romania, the other providing capital for social over 100 interns have found employment and income opportunities were sustained by enterprises in the waste sector in India. With through the programme, with more than our social business partners in FY23, producing a focus on circularity, inclusive employment 50 in the IKEA business. products for IKEA and other businesses. and sustainable agriculture, 昀椀ve accelerator Our partnership with Jordan River Foundation programmes supported 80 social enterprises to strengthen their business and increase New UNHCR pledge (JRF) has developed over 昀椀ve years, stabilising their impact for people from vulnerable and At the UNHCR Global Refugee Forum in and growing over time. As of FY23, over 370 marginalised groups. Read more examples December 2023, Ingka Group made a new refugee women and Jordanian artisans are from IKEA Social Entrepreneurship. commitment to support 3,000 refugees and producing handcrafted products for IKEA asylum seekers by the end of 2027 through stores. their Skills for Employment programme in At the UNHCR Global Refugee Forum in IKEA retail. Surpassing its 2019 commitment December 2023, we renewed our commitment to support 2,500 people by 2023, the to employ 400 women at JRF by 2027. programme has supported 2,935 asylum We continued to launch products that sell seekers and refugees to date, with 54% globally, year-round, to increase volumes and The latest global collection created together with social businesses was launched in FY23 and had an increase in sales of over 35% compared to going on to 昀椀nd jobs inside or outside IKEA. create consistency in production and income Additionally, since 2022, the company has security at social businesses. last year’s global collection, VÅRDANDE. directly hired 332 forcibly displaced people through its Displaced Talent programme. 54 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY IWAY – the IKEA supplier code of conduct While IWAY has a focus on supporting our suppliers with their continuous development journey, Top home furnishing purchasing markets compliance with mandatory IWAY requirements (% of total volumes purchased) remains the foundation of our partnerships with suppliers. In FY23, more than 1,000 veri昀椀cation 3% activities were performed in the Inter IKEA Group Vietnam supply chain. They include gap assessments 4% 2% for new suppliers and full or focused audits for Sweden India existing suppliers. Following the pandemic, audits 2% 5% Türkiye are back on track, with remote audits being just Romania one of the types of veri昀椀cation activities. Read 5% 25% more about IWAY audits. Germany China 8% The IWAY System is continuously developed Lithuania and improved to maintain relevance. During 9% FY23, we launched new IWAY requirements for Italy 20% Poland ocean transport service providers, strengthening 17% requirements on decent work for for seafarers Other IWAY is the IKEA way of responsibly services typically include customer delivery working on vessels and ships in the IKEA value procuring products, services, materials and installation with workers who often chain (page 49). In addition, we have started work function independently and don't maintain an and components. It’s a complete to strengthen the IWAY Animal Welfare Section In total, we have around 800 home furnishings suppliers for employment relationship with the suppliers with additional criteria addressing animal welfare Inter IKEA Group. The largest home furnishing purchasing sustainability system for working 1 region in terms of volumes is Europe. or digital platforms. One challenge in such in all IKEA supply chains (page 40). We also started We believe in building together with all suppliers throughout instances is implementing requirements for long-term relationships with our suppliers and emphasise our value chain. It’s also the IKEA developing requirements for agriculture supply supplier development. The average length of collaboration systems to register working hours. chains, strengthening our responsible sourcing in with our home furnishing suppliers is 11 years. We take supplier code of conduct and a both environmental and social aspects. In parallel e昀昀orts to understand speci昀椀c local contexts and take a development programme for supplier During the year, to support suppliers consistent and risk-based approach to securing good social, we started to develop the roadmap for supply environmental and working conditions. sustainability practices. implementing IWAY, we o昀昀ered more than chain compliance with mandatory requirements in 1,000 implementation activities. These include the upcoming IWAY Agriculture Section. In FY23, we continued the implementation of capacity-building and training on topics the IWAY Digital Platform Work Section 6.0 like internal auditing, health and safety and among suppliers who rely on digital platforms responsible recruitment. Read more about how to provide services for the IKEA business. These we work with IWAY. 1 The purchasing share for EU in value is 64%. 55 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Healthy & sustainable living - Our circularity agenda - Our climate agenda - Regenerating resources - Fair & equal - IWAY 1 Competence development a focus of Non-conformities in working hours Inter IKEA Group suppliers and service providers actively working with IWAY collaboration with our suppliers registration, accident insurance and the responsible recruitment of migrant workers Number of IWAY Basic requirements ful昀椀lled Competence development is one of the key discovered during audits IKEA production (% of all suppliers) 2 and service Description components of the IWAY implementation supplier type 3 support to suppliers. All IKEA suppliers perform During IWAY audits performed at suppliers units FY23 FY20 FY21 FY22 FY23 internal audits to assess compliance with IWAY in FY23, the most commonly identi昀椀ed non- Home furnishing suppliers 1,383 Manufacture IKEA home 95 99 99 99.8 requirements at least once a year. Having an conformities to IWAY Must requirements were furnishing products connected to the following issues: internal veri昀椀cation process and system in place enables the suppliers to proactively address • Insu昀케cient systems for registering working Transport and distribution 395 Transport IKEA products from 94 97 99 99.8 deviations, as well as develop knowledge and suppliers (often referred suppliers to, and between stores hours, including overtime, were found at 13 to as partners and service and distribution centres understanding of the IWAY requirements and suppliers. providers)4 their implementation in their organisation. Supplier-led IWAY audits do not replace IWAY • Non-compliance to the accident insurance Food suppliers 441 Provide the food and ingredients 99 99 99 99.9 for the IKEA bistros, restaurants, audits performed by IKEA teams or third-party requirement was identi昀椀ed at seven suppliers. and Swedish Food Markets auditors. The accident insurance requirement was strengthened in IWAY 6 and now includes During FY23, regional teams of IKEA co- occupational illnesses. Including occupational IKEA Components 1,215 Provide components and 95 98 99 99.9 workers supported 22 suppliers implementing materials used in IKEA home illnesses is new in some regions and has led furnishing products to IKEA suppliers and sub-contractors supplier-led veri昀椀cation activities. Supporting to non-conformities, despite implementation and strengthening their ability to self-manage, support to suppliers. the IWAY system builds competences and IKEA global media 32 Provide pulp, paper, and print 93 94 95 99.5 enhanced outcomes and leads to discussion on • We identi昀椀ed cases of non-conformity on productions services for global media responsible recruitment of migrant workers productions5 sustainability topics between IKEA co-workers at three suppliers. Securing compliance with and suppliers. Critical sub-contractors 4,995 Critical home furnishing sub- 95 806 7 IWAY requirements on responsible recruitment 89 71 contractors where compliance of migrant workers is an important area that towards IWAY Must has been Verifying no child labour at suppliers we are working on in all markets where we veri昀椀ed operate. During the IWAY audits and veri昀椀cation activities performed in FY23, no suspected or con昀椀rmed As with all IWAY deviations, we take these issues cases of child labour were identi昀椀ed. We closely very seriously and are following the IWAY process monitor for this at all our suppliers and are of identifying root causes, securing that suppliers continuing to work to prevent and address 1 To create one competence centre for purchasing the supply of raw materials and components, as of 1 September 2021, the purchase of direct implement corrective actions, and phasing out material for IKEA owned factories of IKEA Industry is led from IKEA Components. 2 The table does not include local suppliers to IKEA franchisees. children's rights risks deeper in supply chains suppliers who don't address the issues in a 3 Some suppliers and service providers have multiple production and service units. IWAY applies on a unit level. (page 48). reliable and consistent way. During FY23, we 4 No air freight is used for our product transport. 5 ended our partnership with seven suppliers due to This 昀椀gure doesn’t include digital suppliers. 6 The FY21 result is lower compared to FY20 due to the impact of the COVID-19 pandemic on audits at sub-contractors, where many veri昀椀cation IWAY non-compliance. activities were reduced or put on hold due to worldwide travel restrictions. 7 The FY23 result is lower compared to FY22 as a number of veri昀椀cations have recently expired and are in the process of being reviewed. 56 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Stakeholder engagement An essential part of reaching the IKEA sustainability components, provide food for our restaurants Below is a select list of partners and collaborators • Nordic Business Network for Human Rights goals is working together with others. It's important and supply essential services to IKEA companies. we worked with during FY23. Read more about (NBNHR) to develop strong and meaningful relationships. IKEA stakeholder engagement. • Nordic Innovation Ethical AI Expert Group When we work together, we can drive and support • Customers: In order to live up to the IKEA vision of creating a better everyday life for the many • One Young World change, learn, inspire each other and 昀椀nd the best • Business for Nature solutions. Our key stakeholder groups are: people, we need to understand the needs of • Our Normal our customers. The IKEA business engages with • Business for Social Responsibility (BSR) • Co-workers: The 219,000 IKEA co-workers from customers in many ways, such as in stores, • The Centre for Child Rights and Business • Real Play Coalition' around the world share a special set of values online, by visiting them at home and via IKEA • Climate and Clean Air Coalition (CCAC) • Science Based Targets initiative (SBTi) and a vision to enable people to live a better, FAMILY. Each year, IKEA co-workers conduct • Science Based Targets Network (SBTN) more sustainable everyday life. They come thousands of home visits around the world. • Consumers Goods Forum (CGF) together in diverse, inclusive and open IKEA The data and insights collected are used in the • Ellen MacArthur Foundation (EMF) • Stockholm Environment Institute (SEI) development of IKEA products and services. Since environments, where each can o昀昀er something • The Climate Group and its EV100, EV100+ and • EuroCommerce unique. Every co- worker plays a role in creating a 2016, we've also conducted an annual global RE100 initiatives better business. survey about life at home around the world.' The • European Furniture Industries Confederation • The 10 YFP/One Planet Network results are published in the Life at Home Report. (EFIC) • Communities: We engage in the communities • Exponential Roadmap Initiative (ERi) • UNFCCC, including Race to Zero where we operate to learn and share ideas while • Partners and collaborators: The IKEA business • UN Global Compact working collaboratively to create positive impacts partners and collaborates with many external • GlobeScan on the environment, livelihoods and local organisations that are committed to tackling • ILO Child Labour Platform • UNICEF economies. large and complex global sustainability • World Business Council for Sustainable challenges that both impact and are impacted • Inner Development Goals Development (WBCSD) • Suppliers and partners: Working with over by the IKEA business. Our partners and • Institute for Human Rights and Business (IHRB) • World Economic Forum 1,600 direct suppliers and service providers in collaborators include businesses, governments, • International Chamber of Commerce (ICC) the areas of transport, logistics and distribution universities and NGOs. • We Mean Business Coalition services, components, and food to minimise the • International Organization for Migration (IOM) • World Resources Institute (WRI) environmental footprint of the total IKEA supply • International Social and Environmental chain and beyond, while improving working Accreditation and Labelling (ISEAL) Alliance • WWF conditions. There are millions of workers who • 50L Home Coalition – through our suppliers and service providers • Leadership Group for Responsible Recruitment – source, make and transport our products and (LGRR) 1 Through Ingka Group. 2 This is an Ingka Group initiative. 57 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index Sustainability governance Sustainability is an integrated part of our business Ethics and integrity • Read more about the Inter IKEA Group Raise a The IKEA Sustainability Report and the Climate Report and is led from a holistic perspective with an aligned The IKEA way of doing business is strongly rooted in Concern environment. summarise the combined performance of companies overall direction. Each part of the IKEA business operating within the IKEA franchise system and/ contributes to the total IKEA sustainability agenda. the IKEA values and culture – which is re昀氀ected in our In FY23, 129 concerns related to Inter IKEA Group were or in the IKEA value chain. These reports do not actions, decisions and behaviours. This behavioural reported. The majority of the concerns address any formal reporting requirement that may part is re昀氀ected in how we do business and how were reported in the supply operations, which have be applicable to companies covered in the report. we interact with each other, our business partners Strategic Sustainability Council and customers. The IKEA business requirements the most co-workers. Most cases reported concerned Inter IKEA Group will report under the EU Corporate The total IKEA sustainability direction (ambitions and cover a wide range of topics, including business either HR or business ethics related topics (e.g., Sustainability Reporting Directive when applicable in commitments) is set by the Strategic Sustainability ethics. Important documents covering business harassment, discrimination, leadership behaviour, FY26, for which preparations are ongoing. Council, hosted and led by Inter IKEA Systems requirements are: con昀氀ict of interest and bribery). 82% of the concerns raised were found to be (partly) substantiated, B.V., chaired by the CEO of Inter IKEA Group. It's • Code of conduct: for Inter IKEA Group co-workers leading to di昀昀erent disciplinary actions and process Read more comprised of representatives from Inter IKEA Group • IConduct: for IKEA franchisees and the franchisees to ensure alignment across improvements. For tax and 昀椀nancial compliance-related reporting, the IKEA franchise system while respecting their • IWAY: for IKEA suppliers and service providers please refer to company-speci昀椀c reports. Inter IKEA independence. Inter IKEA Group is committed to operating a Group publishes its reports on Inter.IKEA.com. Sustainability working groups, with experts from The Inter IKEA Group Code of Conduct, introduced in sustainable business with respect for human rights IKEA franchisees often issue their own reports, Inter IKEA Group and franchisees, discuss and align 2016, is undergoing a revision and is expected to and ensuring fair and safe working conditions in which may include both the IKEA business and other strategic initiatives to ful昀椀l the IKEA sustainability launch in FY24. It will be accompanied by wider our value chain. Our supplier code of conduct, IWAY, businesses. Please refer to these reports for more strategy. communication on ethics. The objective is to foster explains our expectations towards our business detailed information about each franchisee. an ethical workplace and to stimulate dialogue on partners thereon. One of the requirements in IWAY is ethical dilemmas. that our business partners should have a grievance Inter IKEA Group sustainability management mechanism in place for their workers. Inter IKEA Group sustainability management Raising a concern In FY23, Inter IKEA Group continued exploring the is responsible for aligning and developing The IKEA business promotes a culture of possibilities for setting up a grievance mechanism sustainability ambitions and commitments and inclusiveness, and everyone is encouraged and for the IKEA value chain so that workers can also reporting on performance. The group also provides should feel empowered to come forward and raise reach out to the IKEA business to raise a concern recommendations on strategic business decisions as last resort. We aim to ful昀椀l our commitments to with environmental and social impacts and prepares any concerns they might have. Inter IKEA Group o昀昀ers engage stakeholders and provide the means by which content and decisions for the Strategic Sustainability di昀昀erent options to raise concerns via our feedback culture, either by addressing the situation to the people can bring serious non-compliance issues with Council. person directly, with a manager or a People & Culture IWAY to our attention. A pilot is expected to start in colleague, or through the Raise a Concern FY24 in three selected markets to study how to best platform. communicate and operate the grievance mechanism. 58 - IKEA SUSTAINABILITY REPORT FY23

Introduction | Becoming People & Planet Positive | Stakeholder engagement | Sustainability governance | SDG index SDG index Sustainable Development Goals In昀氀uence through our strategy Sustainable Development Goals In昀氀uence through our strategy The United Nations Sustainable Development 1. No poverty 10. Reduced inequalities Fair & equal Goals (SDGs) provide a framework for collective Fair & equal IWAY action to tackle global issues, such as poverty, gender equality and climate change. We recognise that we have an important role to Healthy & sustainable living play in contributing to achieving the SDGs, 2. Zero hunger Healthy & sustainable living 11. Sustainable cities & IWAY Regenerating resources communities using the global in昀氀uence of the IKEA Brand and value chain. The SDGs have been used as one of the key inputs when the People & Planet 12. Responsible Healthy & sustainable living Positive strategy and the ambitions for 2030 3. Good health & Healthy & sustainable living consumption & Our circularity agenda well-being production Regenerating resources were developed. In FY24, we will review how IWAY we contribute to the SDGs and report on the outcomes of our work. 4. Quality education Fair & equal 13. Climate action Our climate agenda In this table, we summarise how the IKEA IWAY business, through its strategy, contributes to the SDGs. 5. Gender equality Fair & equal 14. Life below water Regenerating resources 6. Clean water & Healthy & sustainable living 15. Life on land Regenerating resources sanitation Regenerating resources 7. A昀昀ordable & clean Healthy & sustainable living 16. Peace, justice and energy Our climate agenda strong institutions Fair & equal 8. Decent work & Fair & equal 17. Partnerships for the Our circularity agenda economic growth IWAY goals Regenerating resources Our climate agenda Fair & equal 9. Industry, innovation Our circularity agenda and infrastructure Our climate agenda 59 - IKEA SUSTAINABILITY REPORT FY23