Ingka Investments, the investment arm of Ingka Group, is considering its first investment in wood-waste recycling as it looks to expand its circular portfolio beyond plastics, food waste and mattresses. The company sees opportunities to direct more waste wood away from energy production and into recycled material for new products, Lukas Visser, Head of Circular Investments at Ingka Investments, said in an interview on Ingka Group’s Screw It podcast.
Wood is one of five areas covered by the company’s circular investment scope, alongside plastics, textiles, mattresses and food. Ingka Investments currently has exposure to plastics, food waste and mattress recycling but has not yet invested in wood recycling.
Wood waste has primarily been used for energy production over the past 10 years, according to Visser. Ingka Investments sees an opportunity to instead recycle part of that material and use it in new products, extending the period in which the wood remains in material use.
The potential move into wood-waste recycling would form part of Ingka Investments’ Euro 1 billion circular investment ambition. The company started its Circular Investments portfolio in 2017 and focuses on businesses that can process end-of-life materials and expand their operations.
Ingka Investments targets established companies that are at least operationally profitable. It assesses potential investments based on leadership, market position and growth plans, with a preference for businesses that already work at smaller scale rather than operations whose profitability depends on reaching a projected larger scale.
The company also considers regulation when evaluating recycling investments but does not base an investment case on future regulatory changes. Its approach assumes that a business must be able to operate if new recycling regulations arrive later than expected or change.
Existing investments provide a model for the type of expansion Ingka Investments seeks. Recycled-plastics producer Morssinkhof Rymoplast has doubled its output since Ingka Investments invested in the company. It has also developed recycled plastic grades made from household waste, including material used in IKEA’s HÅLLBAR products.
In mattress recycling, volumes have increased about fivefold since Ingka Investments invested. The business has also built a large-scale facility that processes polyurethane foam recovered from discarded mattresses into a building block for new foam, allowing recovered material to replace part of the virgin foam used in production.
Ingka Investments is also monitoring mechanical and chemical recycling technologies for plastics. Mechanical recycling remelts, cleans and purifies plastic for reuse, while chemical processes break polymers into smaller components that can be used to rebuild the material. The company sees chemical recycling as an option for plastics that are difficult to process mechanically.
Textile recycling is another area under consideration. Work in the sector includes recycling polyester-based textiles and blends of materials such as cotton and polyester.
For wood, the immediate opportunity is to find businesses capable of moving waste material from energy use into recycling at commercial scale. Ingka Investments plans to continue investing in established recycling companies and expanding their capacity, with larger operations expected to reduce processing costs and increase the supply of recycled materials.