IKEA, the Swedish furniture retailer, is leveraging AI to help meet its sustainability goals, from reducing food waste in its restaurants to optimizing delivery routes and designing longer-lasting products.
In September 2024, I wrote about how business leaders are considering using AI to reach their sustainability goals but are unsure where to start. Examining how companies that have ventured down this path approach this issue provides some learnings about what’s happening in this space.
During the Vancouver Web Summit 2025, I had the opportunity to speak with Parag Parekh, chief digital officer at IKEA (Ingka Group), to learn about how this retailer is leveraging AI to achieve its sustainability goals, from forecasting food waste to enabling product circularity, as well as the challenges that arise.
IKEA’s approach offers valuable insights for companies eager to embrace AI as a tool to advance their sustainability goals, and raises timely questions about how sustainability and responsible AI use intersect in practice.
IKEA Uses AI as a Tool for Climate Action
IKEA has made several climate commitments, including ensuring that by 2028, all product deliveries will be made through electric vehicles, having all its stores powered by renewable energy and halving emissions by 2030.
IKEA is making sure to use its resources to achieve these goals, including AI. One example of how IKEA is doing so is in its restaurants, where AI helps forecast demand and reduce food waste. “We use AI to help us understand the waste being generated and to forecast and plan what we should prepare for the next days to avoid waste,” Parekh explains.
Also, IKEA customers often ask, “Can I recycle my furniture? Can I give my furniture a second life or take over furniture owned by someone else that’s in good condition?” Parekh says.
In response, IKEA created Preowned, a peer-to-peer platform that connects customers looking to sell with those who want to buy, allowing IKEA products to find second homes. Pre-Owned has been launched in three European cities: Madrid, Oslo, and Lisbon.
Other AI-sustainability use cases include the recycling of Christmas trees into Billy bookcases in Poland, and working with RetourMatras in the Netherlands to recycle not just IKEA mattresses, but those of any brand, to avoid burning, dumping, and waste.
In its supply chain, IKEA uses AI to reduce shipping-related emissions by ensuring that products are shipped to stores closest to customers. “We are also looking at the whole supply chain footprint and network to see how we can use AI to plan and forecast better, thereby avoiding the footprints, shipments or reshipments,” Parekh says.
Reflecting on the value of AI in achieving sustainability goals, he adds: “Historically, we either felt we didn’t have the possibility, or the barriers were just too many to meaningfully and commercially do it. Suddenly, it’s starting to become possible with AI.”
Challenges IKEA Faces
Although IKEA is exploring more ways to leverage AI in the sustainability context, it also acknowledges that there are some challenges.
One challenge Parekh flags is that “some of the problems we have to solve for sustainability are not necessarily the most interesting ones. Because of this, it can be difficult to get partners aligned in a way that they understand what the problem is and why it matters.”
Limited resources present another challenge. IKEA, like many other companies, needs to address a myriad of sustainability issues, but can’t tackle them all at once due to limited resources. IKEA’s approach has been to “identify the top two or three things we want to tackle, and then commit to the solutions,” Parekh says.
IKEA also makes a point to prioritize collaborations with partners and the broader community, through initiatives like Action Speaks, the collective climate action platform it founded, and learning from these groups to identify opportunities. These “meaningful partnerships,” as Parekh puts it, are essential in helping the company scale its sustainability actions.
Another challenge that many companies face is ensuring that sustainability and digital teams aren’t working in silos.
Parekh, however, says IKEA tries to address this by ensuring that AI and sustainability teams work hand-in-hand to solve business problems. This cross-functional model enables IKEA to integrate sustainability goals into its digital strategy from the onset, rather than later as an afterthought.
What Can We Learn from IKEA?
IKEA’s approach demonstrates both the promise and complexities of utilizing AI to achieve sustainability goals, emphasizing the need for clear guardrails that help maximize efficiencies.
Given the challenges and limitations of AI, IKEA has also established a digital ethics policy to guide employees on how to (and how not to) use AI, to better serve customers, coworkers, and the planet.
The policy also specifically states that AI will be instrumental to the company achieving its 2030 climate-positive ambition, and that it will “explore sustainable AI practices such as energy-efficient AI model training and responsible data operations, ensuring the use of AI does not negatively impact the planet.”
As Parekh emphasizes, “we don’t use AI for the sake of AI.” “We apply it only when we believe it helps the customer, the coworker or the planet.”
For companies looking to adopt AI in their sustainability efforts, a Responsible AI policy is essential. The policy should clearly outline the benefits and risks of utilizing AI to drive its sustainability efforts, how these risks will be mitigated over time, and the prohibited uses of AI.
While IKEA’s policy recognizes the need to avoid using AI in a manner that negatively impacts the planet, it is equally important for companies to ensure that AI tools do not compromise human rights—a core aspect of social sustainability. A third-party human rights impact assessment can be a valuable tool to get a better sense of the potential risks, affected stakeholders and measures that need to be put in place to mitigate these risks.
Also, although the focus has primarily been on AI’s application to environmental sustainability, there is value in exploring how AI can advance social sustainability goals, including, improving worker health and safety, strengthening stakeholder engagement processes, and addressing modern slavery, child labor, and forced labor in supply chains, among others.
In a world where the value of ESG is being questioned, staying committed to long-term sustainability goals has become even more critical. For companies exploring how to incorporate AI into their ESG strategies, some lessons can be learned from IKEA’s approach. As Parekh reminds us, “being good is good business.”