Sleep On It

Our philosophy on business at Mangrove Investor is that they should be good community members

In 2010, the Citizens United ruling by the Supreme Court ruled that companies can act as citizens. They have free speech under the first amendment to the U.S. Constitution. 

In our opinion, that comes with the obligation to be productive citizens as well. That means businesses need to contribute to the communities that host them. Some companies do that much better than others. And that’s where Ingka comes in. 

Ingka is a European holding company based in the Netherlands. And it is one of the best examples of a company that lives its values and is an excellent community member. It’s also the owner of a company everyone knows – Ikea. 

I tracked Ikea’s headlines for the past two years. And they tell the story of just how excellent an employer and community member that business is. For example, last November Ingka Group realized that its employees needed help to cope with inflation. The company set up a 10 million euro ($10 million) social fund and set larger staff discounts to support its employees. 

The company put out a statement:

“Each Ingka Group country will give support to co-workers who may need ‘one-off’ financial assistance to, for example, pay electricity bills or for housing costs.”

And it goes even further than that. The company invests in renewable energy projects:  

• In April 2022, Ingka Group bought nine solar photovoltaic (PV) park projects in Germany and Spain for a total of 340 million euros ($373 million) in its push to generate more renewable energy than it consumes.
• In August 2022, Ingka agreed to buy a 49% stake in three wind development projects offshore Sweden from renewables development company OX2 for 58 million euros ($57.5 million). 
• In February 2023, the company agreed to take a 15% stake in a A$2 billion ($1.4 billion) wind farm in its first renewable-energy investment in Australia.

These are investments meant to offset the company’s electricity demand with renewable sources. In addition to those investments, the company plans to make all its deliveries with electric vehicles by 2025.

But Ikea doesn’t stop there. The company also targeted its food waste. 

Ikea runs one of the world’s largest restaurant chains. And from 2017 to 2022, it cut its food waste by 54%. The company uses artificial intelligence tools to tailor the amount of food to cook. This both saves money and reduces its environmental footprint. 

Ingka has bonified environmental chops. But it really gained my admiration by the way it responded to changes in its commodity costs. When the raw material costs soared last August, the company had to pass on some of that to consumers. 

After the prices came back down, some companies continued to gauge consumers. Kraft-Heinz, which makes Oscar Mayer, Jell-O, and Kool Aide, saw its fourth quarter 2022 profits rise 450% over 2021. In contrast, Ikea cut its prices as its raw material prices came back down.

That’s exactly what a good community member should do. 

And the company’s latest effort continues in the same vein. The company is expanding its mattress recycling. Right now, it’s cheaper to incinerate mattresses, rather than recycle them. Ikea is leading an effort to move Europe to recycle mattresses. That’s difficult because many countries still incentivize incineration. 

Ikea’s parent company is ready to roll out mattress recycling across several countries. It’s that kind of leadership in the circular economy that makes Ikea and its parent company stand out. And while we can’t invest in Ikea, because it’s private, they will get my business for the foreseeable future.

Sincerely,
Matt Badiali 

Numbers to Know

38 Million

The US accounts for almost 36 million mattress sales annually. (The Round Up)

50,000

More than 75 percent of a mattress can be recycled into other products, diverting valuable resources from local landfills. More than 50,000 mattresses are discarded in the U.S. every day

26 Years

The average person spends about 26 years sleeping in their life which equates to 9,490 days or 227,760 hours. That’s one third of our entire lives spent sleeping. Surprisingly, we also spend 7 years trying to get to sleep — a total of 33 years or 12,045 days! (Dreams)

What’s New in Sustainable Investing

Cutting Carbon Through Bond Investing

Calvert Impact Climate is issuing asset-backed securities that finance energy-efficiency improvements in commercial, industrial, and multifamily buildings. (Barrons)

Battery Boom: $154B invested, 166K jobs planned in US as EV rollout intensifies

New data shows the massive impact the electric vehicle buildout is already making on manufacturing and infrastructure spending in America — so far a big win for the Biden administration. (Yahoo Finance)

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