Sustainability of IKEA

Question :

I need this summarized IKEA SUSTAINABILITY REPORT

Answer :

Introduction

The focus of this paper is on understanding the sustainability of IKEA. The paper will help in identifying the extent to which IKEA is sustainable and how it is continuously making effort towards sustainability goals. IKEA is Swedish company and headquartered in the Netherlands. It designs, assembles, and sells different types of furniture, home accessories, and kitchen appliances. The company was founded by Almhult in 1943, and the current CEO of IKEA is Jesper Brodin since 2017.

Materials and sourcing

The company ensures that whatever materials are brought in the company from various sources, the energy utilization for the same should have minimal negative footprint on the environment. The amount of use of particular material and the footprint of each material determine the total climate footprint (IKEA, 2019). The graph below shows the company’s overall footprint of all the materials sourced by the company over the years. 

Figure 1: Climate footprint of materials (IKEA, 2019)

The company is also making efforts to replace the traditional fossil dependent glue with the renewable glue. The graph below shows the weights of the materials used by the company and their respective footprint. 

Figure 2: Material footprint vs weight - Breakdown for 2019 (IKEA, 2019)

It can be seen from the graph that the boards and solid wood makes up to around 70% in weight and has the highest footprint of 24% after metal, which covers 8% of the total material weight consumed by the company. The company is also working towards proper water use so that waste can be reduced.

Production and transport

The company is making continued effort to reduce the production’s footprint by almost 80% (IKEA, 2019). The graph below shows the improvement made by the company in this direction.

Figure 3: Climate footprint of production of IKEA (IKEA, 2019)

It can be seen that in comparison to FY 16, the company has reduced footprint by a few percentage points. The company is aiming to continuously work in this direction and reach 80% by the year 2030. 

Moreover, the company is desiring to achieve 100% dependence on renewable energy. Achieving this goal is likely to pose substantial hurdles to the company because the company is operating in conjunction with various external stakeholders. However, still the company is desirous to at least achieve 46% renewable goal by 2025 as shown in the chart below (IKEA, 2019).

Figure 4: IKEA’s suppliers’ energy breakdown (IKEA, 2019)

As it can be seen from the chart above, the company is willing to consume energy from various renewable sources such as electricity that are generated on site and renewable grid and through biofuels. Moreover, at present the company conducts all its transport activities through the channels that use biodiesel. 

Fair and Equal Policy of IKEA

IKEA strives to be fair and equal, and in order to do so, it focuses on three key aspects. The first is to ensure that the people who work at IKEA are getting meaningful and decent work. The second is to focus on inclusivity throughout the business vertical. The third is to promote equality (IKEA, 2019). The ambition of IKEA is to be a leader in this aspect by 2030. It wants people to feel motivated and respected when working at the company. Providing fair income to every employee is also the focus of the company. Health and safety of the employees have been given importance, whether it is in goods transport or at the retail stores. Moreover, it focuses on developing talent and ensuring that employees stay with the company for a longer period of time. It strives to reduce the gender gap, which is visible in its data. 

IKEA industry had 37% women co-worker in FY 18 and 27% in top management. The company is also working towards involvement of children through the kids’ lab and panel. It has launched a campaign called Let’s Play for Change that focuses on providing benefit to children through play (IKEA, 2019). Moreover, the company has focused on preventing child labor and ensuring that preferences of both, old and young, are kept in consideration when employing. It has also made efforts towards social entrepreneurship and works with local communities. The company has continuously made effort to ensure that the unethical recruitments are prevented, modern slavery is handled effectively at the company, and support to migrant workers are provided. The company has been active in events such as roundtable events at Bangkok and Kuala Lumpur. It is also working with NGOs to achieve a just society for everyone.

Overall Care towards Environment

The company is continuously making efforts to improve wherever possible to achieve its goal of sustainability.  The graph below shows the previous year’s and 2016’s climate footprint status for various supply chain stages (IKEA, 2019).

Figure 5: IKEA’s footprint of climate at different value chain stages (IKEA, 2019)

It can be seen that the company has improved on some ground and went negative at some places. Here, it seems that a holistic effort is needed.

Conclusion

Overall it can be said that the company is making substantial effort on various aspects to become sustainable and with continued effort it can achieve it. However, the need is to constantly strive towards it.

Reference

IKEA. (2019). IKEA Sustainabillity Report FY18.