Ikea store operator announces $1B recycling investment target

The investment arm of Ingka Group, an operator of Ikea retail outlets in about 30 countries, has set a goal to invest as much as 1 billion euros ($1.03 billion) in companies that are increasing their recycling collection and processing infrastructure.

The funds will come from the Netherlands-based Ingka Group's Ingka Investments arm.

“In doing so, we invest to recycle more end-of-life products into secondary raw materials," the group says.

The retail store operator says the investments are needed because the global economy consumes 75 percent more natural resources than the Earth can regenerate each year and that less than 20 percent of waste is recycled.

Ingka Group operates Ikea stores in the United States, Canada, China, Australia, India, Japan, South Korea and two dozen nations in Europe.

In 2017, the group established Circular Investments to invest in companies contributing to the transition to a circular economy, with a focus on plastics, mattresses, textiles, wood and food waste—all materials or product lines in which Ikea is involved.

“We aim to grow profitable businesses that avoid millions of tons of CO₂-equivalent [emissions] and increase the availability of recycled material on the market,” the company says.

Since 2017, Ingka Group says its portfolio companies have recycled around 2.7 million metric tons of materials overall, avoiding more than 9.4 million metric tons of CO₂e in emissions, by its calculations.

“When a product’s life at home ends, Circular Investments begins,” says Lukas Visser, Circular Investments portfolio manager for Ingka Investments. “Ingka Investments is committed to transitioning toward a circular economy and retaining the value of materials. For us, that means investing in companies that are developing technology or growing capacity to prevent waste or supply recycled materials.”

A previous portfolio company to which Circular Investments has provided funds is Netherlands-based Morssinkhof Rymoplast, a postconsumer plastics recycler with an annual capacity to 515,000 metric tons per year. The company operates 11 recycling facilities in Belgium, Germany, Poland and the Netherlands and has two more under construction in Belgium.

Circular Investments also is backing mattress recycling and recycled-content furniture foam producer RetourMatras. That firm operates facilities in the Netherlands, the United Kingdom and France with a total annual capacity to process 2.5 million discarded mattresses.

On the technology front, Circular Investments has backed Austria-based Next Generation Group (NGG), which Inkga Group says offers “future oriented plastic recycling solutions as well as advanced solutions for the treatment of organic waste.”

“Our 1 billion euros ambition to invest in growing recycling infrastructure is crucial to Ingka Group’s broader sustainability strategy to go beyond our own operations," Ingka Investments Managing Director Peter van der Poel says. "Through investments, we are committed to doing our part to ensure that valuable materials are recycled and reused in the production of new products.”

He also endorses legislative and regulatory incentives to recycle.

"What would help us go further is if legislation was stronger at prioritizing recycling over incineration and landfilling, for example by ensuring that extended producer responsibility (EPR) schemes were resulting in higher recycling rates," van der Poel says. "We also welcome eco-design regulations to encourage the demand for these recycled materials, and we are actively collaborating with relevant authorities and other stakeholders to address these issues.”