‘Not going to stand for this’: The IKEA exec emboldened by Donald Trump
By Jessica Yun
If you work for a major Australian corporation taking steps to build a business that’s better for the planet, this senior IKEA executive has a message for you.
“Please stay true to it,” the furniture maker’s chief sustainability officer, Karen Pflug, said during a recent visit to Australia.
“In the end, it will be short-term thinking of the political pendulum swinging left, right, and we need to think long term. What’s better [than] to really build a more sustainable, fairer, safer future for everybody?”
Karen Pflug, chief sustainability officer for IKEA worldwide, in the Tempe IKEA store.Credit: Edwina Pickles
Pflug is referring to the reverberations of several executive orders made by US President Donald Trump, who in his first weeks of office pulled the US from the Paris Agreement on climate, declared an energy emergency to advance his “drill, baby, drill” agenda to accelerate domestic oil and gas production, repealed predecessor Joe Biden’s efforts to encourage electric vehicles, rolled back environmental regulations and froze green energy funding.
Trump’s anti-climate agenda has reverberated across corporate America, prompting major corporations once keen to demonstrate values of sustainability, diversity and inclusion to capitulate on those initiatives. Six major US banks have withdrawn from the Net-Zero Banking Alliance; the world’s largest investment manager, BlackRock, withdrew from a similar group for asset managers, triggering the departure of other asset managers.
Jeff Bezos’ Earth Fund ceased its $US18 million ($29 million) grants to a climate certification organisation. Oil and gas giant BP has slashed renewable energy investments to increase oil and gas production. Shell, ExxonMobil and Chevron have committed to ramp up fossil fuel production.
In spite of these backward steps, IKEA intends to be part of a collective that is charging ahead.
“We see the polarisation,” Pflug said. “I would be kidding if I said it wasn’t disappointing, but I think it makes us even more determined.
“It actually is bringing a lot of people ... together. It’s united Europe. It’s united many companies who say, ‘No, we’re not going to stand for this’.”
Andrew Petersen, chief executive of the Business Council of Sustainable Development Australia (BCSDA), said the Trump-led crusade against climate action by and large hasn’t spilled over to Australian shores.
“Unlike in the US, where it’s probably true to say that political shift is shaking the corporate resolve, Australian business is really leaning into climate commitments,” he said. “You’re seeing, for example, things like executive bonuses [tied] to net zero targets being put in place.
“The major listed companies are increasingly being judged by a global ESG benchmark and supply chain expectations ... it’s becoming operational rather than optional.”
Walking the talk
For a global retailer, IKEA is unusual for its strident commitment to integrate sustainability into its operations. It has the stats to prove it: greenhouse gas emissions from products and food have fallen by 31.2 per cent since fiscal 2016, with a broader goal to reach net zero emissions by 2050. Nearly 97 per cent of its electricity comes from renewable sources, up from 69.7 per cent in fiscal 2016.
In Australia, all of its retail operations are now powered by renewable energy, and nearly half of its customer orders were delivered in a zero emissions vehicle. It has backed local wind farm projects, reduced food waste by 37 per cent, and diverted nearly a million products from landfill.
As action on climate change becomes even more politicised, Pflug believes keeping sustainability on the agenda in boardrooms and in leadership meetings must be justified on the balance sheet. “Banging on a stick” and “be[ing] too activist about it” can often be the wrong approach.
“The numbers have to speak for themselves,” she said. “Speaking a CFO’s language, speaking business people’s language, not bamboozling them with science and climate figures. Often they don’t want to have the greater good conversation.
“You’ve got to inspire both the senior people and the co-workers to bring them along with you,” she added. “You need both inspiration and the data to make better business decisions.”
Pflug recognises she is speaking from something of a privileged position, and acknowledges that executives in typical companies are often constrained by shareholders and focused on short-term profits. IKEA’s parent company, Ingka Group, is owned by Ingka Foundation, a philanthropic organisation; in 2024, 85 per cent of the company’s profits (€1.3 billion, or $2.3 billion) were reinvested back into the business, while 15 per cent went to the IKEA Foundation, which has a focus on combating poverty and climate change.
The Swedish manufacturer’s efforts can serve as a model to businesses of other sizes and sectors for what’s possible, Petersen said. “It reinforces the point that you can be sustainable and profitable.”
IKEA tracks progress on its sustainability goals in comprehensive annual reports. It’s to demonstrate that voluntary reporting is not only feasible but can drive transformative change across an organisation, but responsibility for this can’t be siloed to one division, Pflug said.
“What we’ve done is put reporting under the finance team,” she said. In each market IKEA operates in, the country manager holds the dual role of chief executive and chief sustainability officer.
Pflug at the IKEA Tempe store.Credit: Edwina Pickles
“When I talk to other companies, a lot [of the responsibility] is still sitting under the chief sustainability officer, and they feel all the weight of it on their shoulders. It needs to be co-owned across the business.”
Selling sustainability: Don’t charge more for it
Consumers vote with their dollar and don’t want to pay more for choosing a more environmentally friendly option, Pflug says. IKEA has built sustainability into its products by switching to recyclable materials and more sustainable cotton and wood.
It sells only rechargeable batteries, and its appliances are designed to reduce energy consumption (such as a nightlight with a sensor that turns off automatically). Its famous plant-based balls, priced the same or lower than real meatballs, are part of an effort to reduce the consumption of red meat, a major contributor to carbon emissions.
“‘Why should I have less in my wallet to try and help save the planet or do the right thing?’ I think that’s a very fair assumption for my customer,” Pflug said.
“It’s not a luxury for the chosen few … everybody can afford to be sustainable,” she added. “We do see other companies potentially charging more for the sustainable products.”
The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.