A Sustainable Business is Good for Business

Erin Davis: Welcome to REAL TIME, the podcast for, and about REALTORS®, brought to you by the Canadian Real Estate Association. I'm your host, Erin Davis, and we are so glad you joined us today for what we think is going to be an informative and heartfelt chat. As Canadians, many of us consider ourselves to be sustainable consumers, a confusion around the topic can be a barrier to progress.

On this episode of REAL TIME, IKEA Canada CFO Geoffrey Macdonald helps us examine consumer sentiment towards sustainability, a word and concept we're really going to delve into, as well as what companies should consider when crafting a meaningful sustainability strategy, including how to educate their customers on its impact. It was IKEA founder, the late Ingvar Kamprad, who said, "No method is more effective than the good example." That's a great leaping-off point today for our conversation. Welcome to REAL TIME, Geoffrey. Can I call you Geoff?

Geoffrey Macdonald: Absolutely.

Erin: Okay. Would you start off by telling us a bit about your role at IKEA Canada?

Geoff: Yes, for sure. I've had the privilege of leading the chief financial office organization for Canada, which is actually a bit of a misnomer in the sense that the organization is much broader than the title suggests it. Encompasses not only our core financial activities but also our operations, legal and governance, and business risk and compliance functions. The term CFO is also a bit of a misnomer when we talk about measuring our performance, as it's beyond a typical financial lens. It's actually something that I'm quite proud of working at IKEA; performance.

My role as CFO to secure good performance is measured, yes, on the financials, but also on meeting social and environmental objectives. That very much reflects the fact that we're a purpose-led and mission-driven company. Across the organization, we've got a super simple but powerful idea; create a better everyday life for the many people in all aspects of our business. With that, we're committed to a set of values that include togetherness, cost-consciousness, caring for people in the planet, and leading by example.

Erin: Yes. As your founder said, no method is more effective than the good example. I love that as a business motto or a mission statement. It's really quite simple, but powerful, isn't it?

Geoff: Absolutely, it is. It informs how we want to act in all aspects of our business, whether that be within the organization and working with our coworkers being a good example, but then also outwardly to the rest of our communities to make sure that we are doing the things that we are committed to, the things that we say that we want to do, to truly deliver and ideally be leaders within our communities, particularly on the things that matter most to us being people in planet positive, being sustainable in our operations to help lead the change that we see that needs to be done.

Erin: Oh, so much of what you're saying is going to resonate with REALTORS®. I'm so glad we're talking with you today. Sustainability is a big term, maybe even a bit abstract for some, but from a business perspective, Geoff, what do you see it as fundamentally encompassing?

Geoff: Absolutely. It's a bit of a nebulous term. I agree with you. We know that consumers want to live more sustainably, for sure. In our discussions in the studies that we do, that is absolutely- that comes through clearly, but the key is they often don't know how to do so, and most importantly, how to do it affordably. We see this desire to live more sustainably, and we see that desire impacting behavior, decisions of consumers across the spectrum from the use of materials like plastic, what food is consumed. I think probably most pertinent to those listening here, where people are living both in terms of their actual dwelling but also transportation considerations, all in the spirit of limiting climate footprint.

For us, sustainability is achieving economic growth and positive social impact at the same time with environmental protection and regeneration key in achieving those elements of growth. We're focused on three key pillars. It's being circular and climate positive. Those are factoring into our operational considerations becoming fully circular and climate positive by 2030. The second pillar is healthy and sustainable living, and that's to support our customers by giving them inspiration on products and services to allow them to live in an affordable, sustainable life at home.

The third pillar is fair and equal. This is how we do business with the suppliers in our communities and around the world to secure sustainability and care for people across our whole value chain, from suppliers to coworkers.

Erin: Why is it important for companies to be purpose-driven, Geoff, with regards to issues like sustainability and social impact?

Geoff: I think there are two components to your question, in the sense that we see being purpose-driven with respect to sustainability and social impact being so important, because that is a fundamental belief for us in being people and planet positive. That's a term that we use at IKEA. It's something we fundamentally believe, and caring for people and planet is one of our core values as a responsible business.

It's also very much an expectation of so many consumers, as we've talked about, nowadays, and this is how companies need to operate. The second component is that if companies or any type of business are seeking to do positively from a sustainability or people impact perspective, it's really important that it be led as a purpose-driven objective. It's not jumping on the latest trend perspective.

I say that particularly in this space because if there isn't a fundamental underlying purpose attached to doing good sustainably or in terms of social impact, and I deeply felt commitment to it, the sincerity of the efforts will crumble under scrutiny, and we know there's a lot of scrutiny, particularly around the term greenwashing, that if that commitment isn't there the truly values-driven commitment, then it's really hard to do the hard work to achieve true sustainable change.

Erin: I think you're talking about authenticity too, like the message that what comes from the heart goes to the heart. People have pretty good radar these days as to what is authentic and what is just towing a company line or almost virtue signaling that some companies do, saying, "Hey, look over here, look what we're doing." But, are you really doing it? That's where the authenticity comes in, right?

Geoff: That's exactly right. It's important that you actually do more than you say, and ensure that, certainly, that the commitments that you make, that you are taking the actions that follow through, and that people can trust and believe that that is deeply felt belief that you are doing the things that are important to you and the communities around you.

Erin: It really can be shown just from the moment you even pull up into the parking lot at IKEA, which we did a couple weeks ago in Vancouver, where there's EV charging spots right there. Right away you're saying, "Okay, we're really doing this. We're not just talking about it and having you park and go in the store." We're saying, "Here you go, charge up your car while you're shopping." It really is the beginning of the message from the moment that you pull in, and that's really effective.

Geoff: Yes. That's an example of our mantra is to make a better everyday life for the many people. There are so many facets of that, it's in terms of our products, it's in terms of the food that we have in our stores, whether that be for eating at the store or taking away, but it's also in terms of the impact that the other aspects of our lives have in our communities. Transportation, we want to, as much as possible, support customers and coworkers to arrive at our stores with sustainable transit options. To the extent that people are driving, yes, we've got the EV charging stations, again, both for customers and coworkers, to provide that support, to let people live in a more sustainable way.

Erin: What does sustainability look like at IKEA, and where did the company's sustainability journey begin? It's not brand new.

Geoff: No, absolutely it isn't, Erin. It truly began at the start of IKEA, the sustainable mindset and both having good cost-conscious business that can sustain its operations over the long term and over that time do good for people and planet was very much in the mind of the founder of IKEA, and in the community in which the company was founded. It's a community called Småland in Sweden. It's actually quite a rocky terrain, but with lots of grass on top of those rocks.

That land, in order for it to be productive farmland, the rocks need to be picked up. Over centuries, the people in Småland extract the rocks in order to be able to have flat and fertile land. With those rocks, they're not just discarded. They're actually used to create significant rock walls that delineate the different farmland, they delineate and keep the animals in the pastures.

It's very much using a circular mindset to development. That type of thinking, right from the beginning, has been woven into the considerations of how we now operate as IKEA around the world, and how we inspire the many Canadians, and how we do business and care for people connected with business around the world.

If we look at those pillars that I mentioned before, being circular and climate positive, by 2030, it's our ambition to reduce more greenhouse gases than we emit while also, at the same, time growing our business. We have wind farms. We have solar panels on many of our units to offset the energy that we consume. We talked about the EV charging as well.

We strive for resource and energy independence, securing long-term access to sustainable raw materials, having a positive impact on the communities in which we operate, and using the resources that we have within the limits of the planet. If we look at healthy and sustainable living, again by 2030, our ambition is to inspire and enable more than a billion people to live a better everyday life within the boundaries of the planet.

It's simple solutions that can inspire the many Canadians to live more sustainably without breaking the bank. Finally, fair and equal, again, by 2030, our ambition is to create a positive social impact for everyone across the IKEA value chain. These are ambitious goals that we've established, but they set a standard to really push ourselves to deliver on our ambition around positive change and then act as a leader in the area.

In turn, we hope that this sets a good example, as we talked about before, of how businesses can achieve sustainable growth to prove, as we say, it's good business to be a good business.

Erin: When we return, how Canadians feel about our impact on the planet, and what IKEA is doing to further our collective aim. Here's something you maybe didn't know. You heard that IKEA founder, Ingvar Kamprad, grew up in Småland, Sweden, right? Did you also know that that's the reason those ball field play areas are also called Småland? Well, now you do.

Of course, IKEAs have cafes, but so does CREA. It's a virtual space where you can enjoy the exchange of ideas, trends, concerns, and so much more. Go to CREACafe.ca. Now, back to our conversation on REAL TIME with IKEA's Geoff Macdonald. A recent study said that four-fifths of Canadians acknowledge that their actions as consumers have a global impact. We are seeing that what we do does indeed have an impact. What responsibility, Geoff, do companies have, to educate customers on the footprint of their buying behavior?

Geoff: Yes, it's a good question. Transparency in operations, and the impact that companies have nowadays, has become an expectation of consumers. People expect companies to do their part when it comes to sustainability. It's important for us at IKEA and our approach of us doing a little and the customer doing a little, just as we have in terms of assembling articles, that we each have a shared role in being more sustainable in how we operate.

It's fantastic that customers generally have greater awareness of their impact and the challenges facing the planet today. It gives us the opportunity to provide the information that is critical to consumers, to our customers, to know that when they use our goods, when they're using our services, what impact that has to help them decide how they can choose.

Particularly, when shopping, identifying the renewable resources that we use in our products, the energy efficiency that our products provide.

That information, we think, is critical and does inspire Canadians to know how to live more sustainably. We did some research last fall, and we found that 68% of Canadians say that buying back and reselling furniture is something that furniture retailers should be doing. As well, 80% say that retailers should sell secondhand options at a discount. 74% say it's important for retailers to keep their products from ending up in landfills.

It's been a part of our business for some time, but our circular hubs are as-is sections very much provide the opportunity and the information for consumers to take the actions on their part to live more sustainably.

Erin: Since most people want to live more sustainably, what value do you think REALTORS can bring to the table to help?

Geoff: I think REALTORS® occupy a critical space, along with home furnishing retailers like IKEA, in terms of the ability to have a real impact in how people can live more sustainably, but homes are where people spend so much of their time.

Erin: No more so than in the last three years, homes became everything to us.

Geoff: Absolutely, and you know what? We noticed that our relationship with our homes fundamentally changed, and how we see our homes based on the pandemic. I think we all took time, I know I certainly did, to reevaluate the aspects of our home and how we want to interact with them, and what we can perhaps achieve with a little bit of inspiration to make it the place that, since we spend so much time there, including during a pandemic period, that it has what's around us, the building itself, but what's in it has a profound impact on us.

It also, in terms of whether it be the impact of the house that we live in, the apartment, whatever it may be, and the home furnishing accessories that are in it, it can determine how sustainable we are in our living. As we've talked about, we know that people want to live more sustainably, but they, so often, don't know how to. As I think about this, in particular, when purchasing a home, there's so many considerations, and quite frankly, stress, that can come with it, that while it may be a closely held ideal or desire to live sustainably, without adequate support, it can be really difficult to navigate and be able to make the decision that is the more sustainable decision.

I think it's a real opportunity for REALTORS® to offer that value-added perspective. When evaluating properties for purchase, what are the systems, as you mentioned? What are the considerations from an environmental perspective in that area that make a particular property more or less sustainable? Of course, also when advising on home sales, what can be done in that home to make it more appealing from a sustainability perspective, because we do know, based on our research, that this is becoming an increasingly important aspect of consumers.

As for synergies between REALTORS® and IKEA, as I mentioned, we study this and we identify what's important for customers in their homes. From an IKEA perspective, it's lighting and energy efficiency. Our entire range has been LED for years. We've moved to rechargeable batteries across our range, and we've got affordable window coverings that regulate the temperature in your home to decrease the reliance on climate control.

We've also got a range of home smart products that can help put your lighting on timers, respond to voice commands in order to be more efficient. We've got our faucets. It's a range of taps, dishwashers, shower, sink accessories that are water saving and energy efficient, and they're simple investments that go a long way, and quite frankly, worth pointing out to prospective home buyers and sellers, as to the value that a particular property can give.

Erin: Our conversation with Geoff McDonald continues in a moment. Next up, finding out what matters to those around you, and then focusing on authenticity. Some wise words as we wrap up episode 39 of REAL TIME. Keep track of the latest real estate trends, and maybe more importantly, the reasons behind them at CREA.ca. Experts and fellow REALTORS tell the real stories, their impact on you and your clients, and might even help you prepare for the future in the second half of this year.

Now, back to Geoff Macdonald, as we continue our talk about sustainability, and what that word means to us in business, and really, every aspect of our lives. Finally, Geoff, what advice can you offer businesses that haven't yet considered a sustainability strategy?

Geoff: It's important to start where you are. It's to know what matters to your customers, and what matters to your coworkers. Then think about how you can facilitate that. What's most important when thinking about a sustainability strategy is to be authentic. We talked about authenticity before. In order to be that true role model, it needs to be felt each day in your operations that we want to do this either because it's what our customers are asking, it's what our coworkers are asking, it's what is our fundamental purpose.

That will allow you to be authentic and ensure the commitment to the purpose is there, because deviations in this area will be scrutinized closely, and goodwill will be lost easily if it isn't truly authentic. As I mentioned before, it really is focused on doing more and saying less. Take action, they don't have to be huge actions at the beginning. They can be small actions. It doesn't matter how small, but every effort makes a difference. It's to focus on those simple things easily accessible and digestible that gets you going, and that builds a momentum in terms of really creating sustainable change.

Erin: You've had some very successful ad campaigns, including Start the Car, which I think everybody says when they get a good deal on something, but the other three words, one little thing, and that's what's resonating so much about our conversation here today and what you're saying, that you don't have to do as the movie title goes, everything everywhere, all at once, that just one little bit, you can be that drop in the ocean, but it's a start.

Geoff: That's exactly right. It was a very successful campaign that we had. It's so true because it allows all of us to participate. This is not just a challenge that is either faced by large or small organizations or certain types of people, it's everyone. We all have a part of it. We all have a role to focus on how we can live more sustainably within the limits of the resources of our planet.

It's incumbent upon all of us, and it needn't feel like a massive burden because really just beginning with simple actions, they help in and of themselves. The more that we all take simple actions, the more that we see that this can be done, and particularly with IKEA products, it can be done affordably.

Those elements that as we build them more and more into our way of living, it creates a snowball effect and it brings more and more people on board to see that, "Hey, it is possible from an IKEA perspective, it's possible to grow a business, but do it in a sustainable way." That's very much our mantra in terms of being able to be a leader in this space. We're super proud to be able to carry this message because it very much values driven and purpose-led that this is the impact that we want to have in our operations.

Erin: Absolutely. How do you justify the financial investment of operating more sustainably when the business case isn't always clear? Is it having that vision, making it your mission? How would you make that message more digestible to smaller companies or smaller businesses?

Geoff: It's a really good question. It's actually something that we tackle each year in our business planning. There are investments that we want to make that they're connected to our values, that it really does help to have fundamentally in our values that we want to be more people and planet positive, that that helps to make the business case. Now, there are certainly several investments in terms of money or energy from a sustainability perspective that actually pay off quite quickly. There are plenty of areas of opportunity and investment, particularly with technology improving and energy cost increasing, that those investments have an easy calculation.

Where it's a bit more of a murky or unclear business case, to link back to what I talked about before in terms of how we evaluate performance, it's helpful to have an expansive view of performance of your business or organization, and to understand how these sustainable investments create value for your organization in situations in which perhaps the strict purely financial value is a little bit less clear.

If it has a positive impact on the other elements in which you measure performance of your business, it will ultimately be successful for your business. There's a saying from Ingvar, our founder, is that what's good for our customers is also, in the long run, good for us. We know that we can't continue to use strict financial or maybe even 20th-century approaches to meet the 21st-century demands. Fundamentally, we need to understand what creates value for us, and it goes back to our commitment and our belief that it's, quite frankly, good business to be a good business.

Erin: Doesn't that relate to all of us, and especially REALTORS. Thank you so very much for your time today, and your message. We are very grateful.

Geoff: Thank you, Erin. It's been a pleasure.

Erin: REAL TIME is a production of Alphabet® Creative. We invite you to download all 39 episodes of REAL TIME to enjoy wherever and whenever you like on your favorite podcast platform. I'm your host, Erin Davis, technical engineering by Rob Whitehead of Real Family Productions. Thanks for listening, and we'll talk to you again soon on REAL TIME.