Leading through disruption | Zurich Talks - Risk to Resilience

In this first episode of Zurich Talks - Risk to Resilience, Jesper Brodin, former CEO of IKEA, shares how climate-smart decisions can drive innovation, reduce costs and strengthen resilience. 

Zurich Talks - Risk to Resilience is a content series that turns Zurich’s global climate and sustainability engagements into practical insights for customers, colleagues and partners.

Transcript

SPEAKER_00 0:16

Hello, everybody, and welcome. This is the first episode of Zurich's Risk to Resilience, a series that follows Zurich's sustainability engagements across the world, tracking the key climate moments that we observe. Our aim is to bring Zurich leaders and external experts together to explore the anticipation of climate risks and how we build resilience. Our first episode is on planning power for the AI economy. AI is driving one of the fastest surges in electricity demand in decades. Data centers are scaling at unprecedented speed. And the question no longer is: will that demand continue to grow? But rather will energy systems be able to absorb that growth without increasing emissions and systemic risk. We wanted to make sure that we provide the perspective of a leader, a leader who truly knows what it means to run a business at scale whilst also still keeping values such as people and planet in mind. So without further ado, I would like to welcome Jesper Bloddin, former CEO of Inca, known as IKEA and senior advisor to the IKEA Foundation.

SPEAKER_02 1:19

Well, thank you. Thanks for the opportunity. It's so cool to be here on the first Siri Climate Week.

SPEAKER_00 1:25

I know. I think it's a pretty big deal for all of us here today.

SPEAKER_02 1:27

Wonderful.

SPEAKER_00 1:28

So we thought we'd ask you a first question, considering you have led one of the most recognizable companies in the world. I mean, I think over 160,000 coworkers and blue boxes worldwide. You've also led the company through serious disruptions, such as pandemic, global conflict, social pressures, and a shift in sustainability and now AI. How have you managed to keep IKEA values rooted in decision making while still making the organization competitive for a rapidly changing world?

SPEAKER_02 1:57

What a good question. I think on the note of resilience, it's interesting. Not everybody knows, but the company is special in many different ways. But one of the uh unique things with the financial construct of IKEA is it's always been built on one financial policy, which is that we need to earn the money before we spend it. So I think IKEA is like one example of resilience. No loans, uh, super strong balance sheet, uh built for a rainy day. And the last 10 years there's been a lot of rain. So we needed to sort of bank on that resilience. But I think on the culture note, it's interesting. Culture for us in IKEA, it's it's about a true mission, a true uh purpose, which in our case is about uh creating a better everyday life for the many people, in particular in life at home, but in general across our value chain. Um, and then it's a set of values that unites us. Um and the cool thing, I think, during the last 10-year period was A, when the pandemic hit, we were actually quite fast in resolving things. You know, when when uh the pandemic made IKEA close down globally, we didn't have online uh in IKEA. No online at all. It looks like 100 years ago, but it's only 10 years ago.

SPEAKER_01 3:13

Okay.

SPEAKER_02 3:13

And we basically had UK app as a pilot, and we had a three-year plan of implementation. We did it in six weeks uh across all uh countries and places. Uh, and when I got the question from somebody from Financial Times actually, how I could have taken so much good decisions as a CEO. For a moment I thought that was uh wonderful to hear. But the truth is, like, if you have a strong culture, people don't feel uh paralyzed when there is a crisis, they feel engaged. And I think that's one of the signs of a strong culture. People take action and act with speed when there is a need for it.

SPEAKER_00 3:49

And how do you make sure that you inspire that? I mean, if if we're if we're constantly in a risk-based environment and we know that they're becoming more interconnected, how do you make sure that your people know that they can take risks themselves in that context?

SPEAKER_02 4:01

Well, I think I think it's one of these eternal questions, and I still ask myself on how I could do that and could have done that even better. But I think two things you have to uh walk the talk, you have to be out there, you have to show show up. Um, and then the constant encouraging for people to make mistakes and test and try things.

SPEAKER_01 4:20

I even went to cards.

SPEAKER_02 4:22

I went to it's classic by now. I went to like it's like a sign of desperation on my leadership, maybe. But I met a group of people who told me that even in IKEA they felt afraid of making mistakes. Though everything we speak to in our culture and try to encourage, even you know, Ingvar, our founder, he said, I'm gonna give a million Swedish crowns to the best mistake every year. And then he looked at me and he said, No, you're gonna win it every year. So I'm not doing it. Now, what I did was I issued a card, uh basically your banana's card, okay, where if you do something, if you have a dream and you want to pursue a banana on there, yeah. I can give you a card later. And the thing is, I have co-signed an apology for the mistake, so you only add your name, and then you're together with the CEO apologizing for your mistake. And um don't just be handed out to a lot of people, and and I've actually we created a documentation around uh some of the incredible breakthroughs, but also some of the fun mistakes that came out of it. So that's just one way of doing it.

SPEAKER_00 5:24

I mean, you're um you're in the world of insurance, and for us, we we think a lot about how we understand risk and price it. But in your role as CEO, did you actually think about risk? Was this something that informed your decision, or are we just obsessing about not doing that? Yeah.

SPEAKER_02 5:39

Of course we do. I think in IKEA, and I think obviously everybody does it. To a certain extent, I have to admit that when I go back 10, 15 years and I look how we used to work, we risk methodology around it. We would identify, we would look at impact and likelihood, we would discuss it, we put it in the files, and nothing very much never happened. And now we're living all of those crises, to be honest, each one of them that we can almost imagine at the same time. So I think living in uh risk exposure has got a totally different meaning in the last uh uh decade or so. Um but it's also um I think the interesting thing, I think the generation of leaders of today is uh becoming very good. The ones there are some people who haven't been able to sustain their leadership during these uh times, but a lot of people are just very good at navigating crises and issues, to the point that I'm starting to think that there is a risk that we become problem junkies because we're good at it. And the world is not about solving problems, uh, it's about dreaming and having visions and acting on opportunities. I think to, in such crazy times, to reserve time for that spirit of innovation will become even more important.

SPEAKER_00 6:56

But if leaders are so confronted with risks on, you know, from geopolitics to business disruption, how can you then maintain that long-term view? Because you know, climate, for example, is one of those risks that we see on the longer-term horizon, although effects are immediate today, but it's something that we have to plan long in the future for. So, do you think that we're set up for that?

SPEAKER_02 7:14

Um It's never easy, right? But I think the if you look at the climate uh uh topic, I think uh I sometimes hear people are not aware, people are not committed, there is no progress, it's going too slow. My view is all of those statements are absolutely wrong, and I actually have facts to prove it. So if you look at yeah, but if you look at the uh awareness, the um risk analysis made by World Economic Forum. Oh, I think I think you even have that uh picture somewhere. Let's see. Yes, it's a report that's I'm gonna go through this in detail now. But it speaks a very clear language. You see, in the in the short-term perspective, it's an array of the risks that we all know. But when you ask leaders of the world, what do you see in the 10-year perspective? It's a very unanimous picture about uh it's connected to planetary boundaries, to environmental issues. So uh awareness is there. And when you look at, we don't have the picture here, but if you go to the United Nations Global Compact's latest research, the commitment to uh sustainability among CEOs is north of 90%. Okay, and recently it's been growing very fast. The understanding of the business case or the potence of the business case has been rising as well. So today, 88% of the world CEOs, I think 23,000 of them asked, um, claim that the business case for sustainability is better than five years ago, which is true, it is. And then you look at the speed of change, it's mind-blowing what's going on. If I go back to the first climate week I attended back in 2018, not in Zurich, in another place called New York, um, I remember we were we came with commitment and faith and belief that this was important for us, but we didn't have much to prove. If I look what has happened down the road at IKEA with uh an enormous progress, also financially from a benefit side, uh, on it. But if I give you as an example, the World Economic Forum CEO Climate Alliance. Now, if you take the combined 133 multinational companies who are part of that alliance, and you add that scope one, two, and three, end-to-end, if it would be a country, it would be the third biggest country in the world when it comes to carbon. So for me and for us, it's like if we're going to change the world, we need those companies. If they can't do it, it's not possible to be done. But if they can do it, it's good news. None of these companies had a plan or a commitment or progress eight years ago. Today, the last three years uh measured, uh, there's been uh progress of minus 12 in absolute carbon and a growth of more than 20%. So the proof of that actually it's good business to be a good business is out there. So I would say we started late, we woke up late, humanity, to the crisis, but the speed is quite uh daunting, and we need to do much, much more, and we need to work faster and better together. But it's very good news what's going on out there. I think.

SPEAKER_00 10:16

And were there any examples that you initiated or brought into IKEA that kind of had that cost competitiveness, the kind of security, but also doing the right thing when it comes to transition?

SPEAKER_02 10:26

Well, we tried a lot of things, some some of them didn't work. Um, but if you look at the total landscape of IKEA, it's quite fascinating because IKEA, since the Paris Agreement, uh IKEA has grown by 24% top line, and the carbon is down by 30% absolute, not relative to the growth, but actually absolute. And if you look what we did, uh a lot of it is investments in renewable energy. So the ecosystem is today invested 140%. We're trying to get it right end to end and continue. But IKEA today is actually a mid-sized utility company for energy. That was not a strategy, it's sort of neither. 4.5 billion euro invested in renewables. And we had years the last decade when the revenue of being a utility company in a home furnishing company was not insignificant in the crisis. So, and then except for that revenue, except for the uh lowering of the energy bill, which is uh significant, the independence of energy, which is I think anybody would agree to that. That would be a good idea. But not only so, uh electrical mobility is coming across, um waste, reduction of waste in everything. So, you know, climate smart is resource smart, is cost smart. So I think in the early stages of circularity, what we're doing, everything we touch almost uh has a great business opportunity because we do things smarter with less resources. Um so today the company has saved billions of euros thanks to being climate smart. I mean, I think a strong message.

SPEAKER_00 12:04

And I think you're you're you're known for saying it's good business to be a good business, you know. And we talked about how um it's important that CEOs take on that leadership and you know provide that message. But in an environment where customers today potentially are not willing to pay for that premium and governments are financially constrained, if businesses are just you know um catering to demand, how do we square that? Who takes the lead on this? Is it the job of CEOs or where does that sit for you?

SPEAKER_02 12:31

Well, I think I think uh to be honest, I think there are two things normally CEOs uh ask of political leaders. It's consistent to see over time and alignment cross-borders, and it's been chaotic the last years, uh, to be honest. So I think CEOs would be maybe uh politically correct not to express it as clear as I did now, but it's been a lot of failures, I think, the last years on policy overrun to doing nothing and everything in between. However, I think the thing is you touched one, I think, mythical area of uh being uh climate smart, and that is you simply you shouldn't go for doing it as a premium. Because if you do that, you basically do the expensive way. You add something on top of, you make it marginal, and you don't have the economic benefits of it. I think for me, it was like a moment of insight when we had a globe scan review with 34,000 IKEA customers across the whole world who came back with uh 68%. This is a couple of years ago, 68% of our customers claimed that the biggest concern they have is climate change in the long-term perspective. But only six percent says they are willing to pay more. And I thought, uh to be very honest, that that meant that people don't care after all. A few weeks after this, I went to uh do a home visit in Belgrade. I met a lady, two kids, single mother. Her mother comes in every day to help her out. She has two jobs. She looked at me and she said, Do you think I can afford it? I was like, Okay, good. So if you want climate smartness, you need to re- you need to basically re-engineer your value chain. You just don't do a little bit on the top. And when you do that re-engineering, then you get the full economic scale. You're basically leaving one economic model and you enter something smarter. Um, it's not always easy. Not all industries have the solutions, but most actually do. So that's how you need to do it.

SPEAKER_00 14:26

It's really interesting that you say because from an insurer perspective, I mean we we think day and night about how we support our customers and how can we show up to provide those insights so that you know we can play a role in exactly what you're trying to do. But it would just be really interesting from your perspective to see how can we better support customers like IKEA in um you know making this possible.

SPEAKER_02 14:45

So I brought a long list here of uh no. No, I I think there are three things. I think you're doing great things. I think you also over the years have done a lot. I mean, us being here is a sign of your commitment and showing up, so it's wonderful. If there are three things I would think of, it's I think people trust you and trust your data. I think you could be the leader on uh contributing to the truth, what actually is going on, um, and be good at repeating that. I think you could do an even better job in uh in the right way in this politicized world, so to say, both have the courage and find your narrative angle with the trust that sits with your brand to share the story of what's actually going on in the in the world, and then I think, like you do now, to take a leadership of convening the world around topics. There are things that you, as a company in your scope one, two, and three, uh, need to address, but I think you will have a much bigger impact if you actually support the rest of us out there with convening us around the most important risk areas and see how we can resolve them together.

SPEAKER_00 15:52

So ultimately, good business is good business, and we need to just continue um the journey started. And maybe just a final question because I know Ingvar, the founder of IKEA, was you were quite close to, and um, it was a journey. And you've you've said so many times about how he's inspired you through quotes. But is there anything that you can draw from that relationship to to you know give a view of the audience of what we well, you know, sometimes when somebody's not around anymore, the stories become even more important.

SPEAKER_02 16:20

And what I found with Ingwer is like some of the wisdom from him becomes almost eternal. And I give you one of the moments we had, um, me and a colleague, we had a moment with him. The second last time I met him, uh, on his porch, we had a coffee and we asked him, so Ingber, I think he was 90, 91 years old, and we said, How should we think about the future? And he said, Oh, you should think long term, he said, and he said that all the time. So we said, just for the sake of variety, so how long term? And he said, uh, 200 years is good. And I think about Curic is uh it's only 150 years. 150, 150, not the thing is, I can't let go of that because what I think to leaders out there today, you know, occupied with all these things happening right now, sum out one year, three years, seven years. What is going to be the real trends and where do you place your leadership? And you know, to a certain extent, uh politicians will come and go, viewpoints will come and go, but things like the climate issue, it's unfortunately uh not something that comes and goes. It's here and we haven't yet resolved it. So zoom out a little bit, and then I think people will remember where you uh also in the uncomfortable situations and times and places of the world, people will remember not only um what you spoke about, but also your silence. So I think the importance of actually showing up in a smart uh way, but also saying this is something that we are here to be part of resolving together.

SPEAKER_00 17:51

I think that's a a strong message, and I don't know about our audience, but I'm inspired as always. And um, we just can't thank you enough for taking the time to come speak to us today during Zero Climbing Week.

SPEAKER_02 18:03

Thank you so much.

SPEAKER_00 18:04

Thank you.