Ikea revisited

In 2013 I blogged about (and tainted) Ikea for their lack of environmental sustainability. They recently joined a growing list of companies who are upstaging governments and have pledged over a billion dollars to help fight climate change and they are making numerous steps to improve their business practices which were previously lacking. Ikea Chief Sustainability Officer, Steve Howard, has been given the latitude to assemble a team to make real progress and improvements. The key to validating improvement on most things is to measure it, make educated decisions on where to apply effort, apply effort, and re-measure. That is the simplistic approach Howard is taking and he is the first to recognize it is an iterative process. He discussed this in part at his TED Talk.

Where some companies seem to talk sustainability for marketing purposes, Ikea’s commitment is genuine. In 2014, 42% of their total energy consumption came from renewables. With over 700,000 solar panels installed on Ikea buildings and a commitment to own and operate 224 wind turbines, they have quickly outpaced their competitors. They are well on pace with core things like water and energy conservation but more importantly have taken serious stock in obtaining materials from sustainable sources. In 2014, that was 41% of their wood and 75% of their cotton as examples. They are also shifting their portfolio of products to help home owners be more sustainable.

Recognizing that ‘A journey of a thousand miles starts with a single step’, I hereby approve shopping at Ikea again if you are unable to re-purpose or salvage something.

Avoiding a Kodak moment

In the mid 1970’s, Kodak had a 90% share of film sales in the U.S. and owned numerous patents for digital photography.  In 1975 they even made a digital camera but scrapped it out of fear that digital photography would hurt their own film sales.  At the time Kodak faced little competition and their executives could not comprehend a world without traditional film so they continued business as usual.  By the 1990’s they began to struggle financially because they did not adapt to the market and bankruptcy, patent sales, and division divestitures followed.  While a portion of the company emerged from bankruptcy in 2013, they changed the meaning of the phrase “Kodak moment” for many.

Today, many businesses are faced with similar dilemmas of how to adapt to a changing marketplace.  It is a delicate dance as evolution and change are often viewed as risky as staying the course.  Many corporations have created the position of Chief Environmental Strategist or Chief Sustainability Officer to focus on reducing energy consumption and costs and to make more sustainable choices.  Some companies (like Microsoft, Google, Amazon, Apple, Dell, Ecolab, and more) have taken it a step further and are making significant investments in renewable energy, running and cooling their data centers in creatively efficient ways, and even self-imposing a carbon tax in an effort to be responsible about emissions and be prepared for the pending government imposed carbon tax.  California, Quebec, British Columbia, Ireland, Sweden, Norway, and France are just some of the geographies leading by already putting a price on carbon.  More are going to follow and for those in the energy sector, diversifying and embracing other products are likely necessities for evolving.

Six of the ten highest revenue producing companies in the world deal in oil and gas, one of them is Saudi Aramco (The Saudi Arabian Oil Company).  Owning a company that has nearly a hundred years’ worth of reserves and assets totaling about $30 trillion dollars might make going with business as usual tempting.  Many suspect that Saudi Arabia has slashed the price of oil to stick it to Russia or Iran, or to stall other drilling projects and all of those might be accurate.  However, a new theory is slowly taking shape that Saudi Aramco is recognizing the problem it has with owning more oil than the world can possibly consume before oil demand drops significantly.  This theory seems further evidenced by their recent shift in R&D spending in renewable energy fields.  It would seem plausible that Saudi Aramco is attempting to prevent having their own Kodak moment. In 2000, the former oil minister of Saudi Arabia, Sheikh Ahmed Zaki Yamani said “Thirty years from now there will be a huge amount of oil and no buyers.  Oil will be left in the ground.  The Stone Age came to an end, not because we had a lack of stones, and the oil age will come to an end not because we have a lack of oil.”

Not so different than when we once enjoyed slashed prices on the Sony Walkman cassette player, console television sets, and rotary telephones; perhaps oil will join the list though not likely to be abandoned quite as rapidly as the others…