Seven Lessons From A Decade Of Impact Investing
Almost all of us have, at some point, assembled an IKEA shelf or sofa, but have you ever wondered where the company gets the wood for those things?
It’s a big question, because 30 percent of the world’s greenhouse gasses come from the way we manage our forests, farms, and fields; and IKEA has pledged that each of the 16 million metric tons of pulp and timber it uses each year will either be made of recycled material or certified as being sustainably harvested. More importantly, the company is well on its way to achieving that goal by its target date of 2020, as its entry on the Forest Trends Supply Change portal shows.
If all big companies did this, we’d be well on our way to fixing the climate mess – but they don’t, so we aren’t, raising the question: how is IKEA getting the job done?
In part by purchasing entire forests across Romania, Bulgaria, and the Baltics so it can harvest timber slowly and carefully while restoring degraded areas, respecting wildlife, and giving all of us a chance to enjoy the occasional walk in the woods.
Despite all these public benefits, the purchase isn’t part of IKEA’s well-known philanthropic efforts. Instead, it’s part of the company’s business plan: IKEA expects to make money from its forests, but it explicitly wants to “do well by doing going good,” and that makes this an “impact investment”.
Impact investments worldwide total about $115 billion, according to the Global Impact Investing Network, and about $8 of that found its way into investments designed to support forests, farms, and fields over the past ten years, according to an Ecosystem Marketplace report called “State of Private Investment in Conservation 2016”.
Photo courtesy of Ron Kroetz.