IKEA's Sustainability Initiatives

This assignment examines IKEA's comprehensive approach to sustainability. It delves into the company's business model, highlighting how it integrates design, affordability, and resource efficiency. The analysis also explores IKEA's efforts to minimize its environmental footprint, including initiatives related to energy consumption, water usage, deforestation, and renewable materials. Furthermore, the assignment discusses IKEA's alignment with the United Nations Sustainable Development Goals (SDGs) and its role as a model for other multinational corporations in promoting sustainable practices.

Project: Sustainable Development
Goals
Course: Economics
Company: IKEA
Prepared By: IZZATI YUSOF
AMESHA
IHAAB ANWAR
KHAN(b1801551)
DALVINDER SINGH
M.A.ASHMAN (B1801315)
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Table of Contents
Sl No. Topic Page #
1 Sustainable Development Goals 3
2 IKEA 6
3 Initiatives 10
4 Success of Initiatives 13
5 Conclusion 15
6 References 16
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1.0 Sustainable Development Goals
The Sustainable Development Goals addresses the global challenges the nations face and
is the road map to obtaining a brighter and more sustainable future for everyone involved.
These goals are interwoven with each other and it is vital that it is accomplished by the
year 2030. Below are some of the 17 Sustainable Development Goals.
1.1 Affordable and Clean Energy
Energy is vital to every single human activity and opportunity available. Presently, a
little less than1 billion people are surviving without electricity with 50%coming from
Sub-Saharan Africa. Global access to energy, better energy organisation and increased
use in renewable energy will help overcome environmental problems. Targets:
 Safeguard opportunities to reasonable, dependable, sustainable and
progressive energy for all
 Significantly double the use of renewable energy globally
 Increase the worldwide rate of advancement in energy efficiency
1.2 Decent Work and Economic Growth
This goal encourages comprehensive and sustainable economic development,
employment as well as decent jobs for all. Quality jobs that accelerate the economy
while not destroying the environment needs to be created in order to attain
sustainable economic growth and more than 400 million jobs are still needed in the
labour market worldwide.
Targets:
 Accomplish increased levels in economic productivity
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 Encourage growth-orientated strategies and establishments of small-sized
businesses
 Ensure unbiased and productive jobs with equal value for work pay for all no
matter the gender, age or disabilities.
 Enforce employee rights and encourage safe and dependable employment
environments
1.3 Responsible Consumption and Production
This goal aims to do better and more with less resources, degradation and pollution in
order to improve the quality of life. It is estimated that if by 2050 the universal
population has increased by 9.6 billion, nearly three equal planets would be needed to
sustain current lifestyles.
Targets:
 Accomplish sustainable organisation and efficient use of natural resources
 A 20-year-outline of agendas is imposed on sustainable consumption and
production
 Reduce universal food waste and losses and post-harvest losses
 Significantly decrease waste production through deterrence, reduction,
recycling and reuse
1.4 Climate Action
Climate change is a challenge that all countries are now facing. Without action, the
global standard surface temperature may exceed 3 degrees Celsius this century.
Nations have adopted the Paris Agreement in November 2016 to strengthen the
worldwide reaction to climate change.
Target:
 Ease climate-associated dangers and natural disasters by reinforcing
flexibility and adaptive abilities
 Include measures for climate change into national policies, strategies and
planning
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 Encourage the increase of quota for successful climate change-associated
organising and management in least developed countries and small
developing islands
1.5 Life on Land
Over 30% of the Earth’s surface is covered by forests. However, the world has lost
3.3 million hectares of forest areas between 2010 and 2015 only. Not just that, but
22% of the 8300 animal species known, are in danger of extinction. This goal aims to
sustainably regulate forests, fight desertification, stop and undo land degradation and
stop biodiversity loss.
Target:
 Safeguard the preservation of mountain bionetwork and biodiversity
 Safeguard the survival of endangered species
 Take critical efforts to eliminate poaching and trafficking of safeguarded
species and tackle the demand and supply of prohibited wildlife commodities
(United Nations Sustainable Development, 2018)
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2.0 IKEA
2.1 Company Origins: Corporate History
IKEA is a global home furnishing retailer that was founded in 1943 by Ingvar
Kamprad in Sweden. To begin with, IKEA primarily sold accessories such as
wallets, jewellery, and watches, followed by picture frames and table runners
(Mazzei, 2015). As the brand expanded, locally made furniture was sold.
The company grew into an international brand when stores were opened in
Denmark, Switzerland, and Germany in 1969, 1973, and 1974 respectively.
Mazzei (2015) states that by the end of the 1990s, IKEA carried 50,000
employees and 158 stores in twenty-five nations worldwide. As of 2015, IKEA
has 315 stores in over 25 countries worldwide (Kevin, 2015).
2.2 Sales and Revenue
In 2017, the global IKEA revenue totalled to 36.3 billion euros.
IKEA understands the purchasing factors that influence customers to buy their
products and implements practices to prompt that decision. IKEA offers low
prices and a vast range of home furnishing products like easily assembled cabinets
and beds (“Statistics and Facts, 2018). IKEA has obtained an extensive amount of
customer knowledge that understands needs and wants which has ultimately
boosted its sales.
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Figure 1.0 The total revenue of IKEA from the years 2001-2017 in billions (euros).
2.3 Employee Mix
According to “IKEA” (2018), the IKEA Group has 123,000 co-workers spread
across functions such as purchasing, distribution, whole-sale, range, retail,
support functions.
2.3.1 Recruitment and Selection
Abiding by their policy, IKEA strives to maintain positive
relationships with their employees on a personal and professional level.
In order to achieve this, internal recruitment of employees is preferred
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when a job is vacant. In the case that no eligible employee is found
within the organisation, the Human Resource department recruit
candidates externally.
IKEA officials recruit candidates rich with knowledge on their values,
skills, and motivation to improve themselves for the growth of the
company (“IKEA Recruitment and Selection” 2017)
Figure 1.1 The spread of IKEA workers throughout the globe.
Figure 1.2 The number of workers throughout IKEA’s operations.
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2.4 Business Operations
2.4.1 Product Design
Each IKEA product has to meet four criteria: affordability,
sustainability, attractive design, and functionality (Amime, 2015).
Amime (2015) states that the process starts by setting up a price for the
product followed by the design, raw materials, and production
methods. IKEA has a standardised production process and uses the
same base design for several products
2.4.2 Production and Distribution
IKEA relies on strategic planning to efficiently and effectively balance
production volumes across its connections of manufacturing teams.
2.4.3 Retail
Customers play a vital role in IKEA’s low-cost strategy as customers
are responsible for transporting and assembling purchased products.
This saves IKEA from additional labour, and delivery costs.
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3.0 Initiatives
3.1 Affordable and Clean Energy
The largest household expense of people living in cold climate countries would be
on energy as it takes up a lot to warm up a house. IKEA’s product development
division has created several products that would able consumers to conserve
energy along with reducing consumption. A product that significantly stands out
in saving energy is their LED light bulbs. According to Peterson Lai, IKEA’s
sustainability ambassador, IKEA aim to sell 500 million LED light bulbs in 5
years. This will result in saving energy that can power Paris and London annually.
3.2 Decent Work and Economic Growth
IKEA’s code of conduct includes the employees working environment under a
safe condition while ensuring no discrimination between home-based and
immigrant workers. Being one of the prominent world leaders which operate in
countless countries, IKEA celebrates its workers diversity and cultural differences
alongside opening new opportunities for changes in employment and culture.
IKEA also presents challenges for integration and inclusion.
3.3 Climate Action
IKEA has participated in COP21 Climate Conference Paris in December 2015
which marked a new change in limiting climate change. The conference discussed
about key issues in tackling climate change and encourages companies to set goals
leading towards low carbon economy. In the commence of COP21, at the UN
Framework Convention on Climate Change (UNFCCC) in 2015 in Bonn, IKEA
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Foundation and IKEA group pledged to invest a total EUR 1billion where EUR
600million will be invested into renewable energy and the remaining EUR400
million is to support communities most affected by climate change. (Doyle, 2015)
3.4 Life on Land
IKEA’s source of raw materials for productions can affect local ecosystems and
communities as most of its materials are wood and cotton. In cases where wood is
involved, IKEA targets to achieve 100% source of wood, paper and cardboard
products from a more sustainable sources for an example recycled wood by 2030.
In the current timeline, IKEA has accomplished 77% of sustainable sources for
wood and paper in Financial Year (FY) 17 as shown in Figure 1.3.
Figure 1.3 Woods Sourced from Sustainable Sources
Some of the actions taken by IKEA to achieve its target is by eliminating
deforestation while promoting solutions to protect, restore and regenerate forests.
IKEA also joins venture with NGOs to improve the global supply of wood from
sustainable sources. IKEA has ventured with WWF in several occasions. In
addition, IKEA also worked with smallholder farmers with new materials such as
bamboo and rattan to increase the production from a sustainable source.
IKEA used 145 000 metric tonnes of cotton which is around 1% of the total
world’s supply in FY17. IKEA products that are made from cotton are gained
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through more sustainable sources. Some of the responses taken by IKEA is to
achieve sustainability is through improving farmers’ incomes and cutting down
negative environmental impacts. Besides, IKEA worked with partners such as
Better Cotton Initiative (BCI) to make global cotton production better for the
environment, production and future (About Us, n.d). IKEA is a founding member
of BCI and world’s largest users of Better Cotton.
3.5 Responsible Consumption and Production
IKEA is transforming its business to be more circular that impacts the entire value
chain. IKEA focuses on 3 important areas. The first focus is products and service
whereby products must use materials that are recyclable, recycled or renewable
and originates from a sustainable source while giving customer the best value. The
second key area is the buildings and transport, thus, working with suppliers and
partners across distribution such as reducing or eliminating waste to strive for zero
waste goal. Last focus area is meeting customers where IKEA enable customers to
be part of the solution.
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4.0 Success of Initiatives
As mentioned, generally all initiatives taken by IKEA have been proven to be a success;
however there were several obstacles faced.
4.1 Affordable and Clean Energy
Having clean energy means to have the lowest CO2 emission level as possible. After all
the initiatives taken to achieve this goal, IKEA can proudly announce that in FY16, they
achieved the emissions level of only 17.5kg CO2 per m3 of product sold in all of their
centres. This is lower compared to FY10, where they emitted 32.8kg of CO2 per m3 of
product sold (Lars Petterson, 2015).
Moreover, IKEA has invested heavily in purchasing wind and solar power equipment in
order to be less dependable on energy produced from fossil fuels. As a result, 71% of
energy used in production comes from renewable energy sources such as wind turbines,
solar panels, biomass and geothermal energy (Antonio Cavalli, 2015). However, there are
few challenges when it comes to using renewable energy as it cannot be used on site. It
has been a difficult task to store the energy and use it when needed. IKEA solved this by
using portable lithium-ion cells with high storage capacity which allows for smooth
output of the supply and energy demand while providing flexibility to the grid.
4.2 Decent Work and Economic Growth
Human rights are crucial for IKEA as it’s a part of its codes, policies, and
standards. It also provides guidance to suppliers and customers to comply with
these rules in order to prevent any negative human rights impact associated to
IKEA. When a risk of human right infringement is detected, IKEA will take
action to remedy the problems, thus eliminating the problem before it starts.
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As for migrant and local workers in every country, IKEA has planned a detailed
strategy for the employees’ benefits. Human Resource department has gathered
data about migrant and local workers across different parts of the business,
collaborated with International Organisation for Migration (IOM) to carry out
further mapping projects, plans to revise IKEA WAY (IWAY), documentation
and training to strengthen and clarify their requirements with respect to migrant
and local workers.
4.3 Climate Action
IKEA also assisted to form We Mean Business, a group of organisations that lead
businesses and organisations to step up actions on climate change. IKEA join
RE100 where it is a global initiative to unite over 140 prominent businesses
pledged to use 100% renewable energy (Peter Agnefjäl, CEO). In short, IKEA has
played a large part in taking initiatives and actions alongside global leaders on
climate change issues.
4.4 Life on Land
From 50% in FY15 to 64% in FY16, IKEA is moving closer to their 2020 target
of completely sourcing wood from sustainable sources. However, reaching this
goal will be a challenge. Although all wood sourced fulfils the IWAY Forestry
Standards. There are still some limitations as woods used by IKEA must come
from sustainable forests. Hence, the IWAY Forestry Standards sets limits of FSC
certified wood made available in the market where IKEA gets their supply from.
This is evident during the big push in FY16. With current global availability,
IKEA’s predictions could hit 80% by 2020.
4.5 Responsible Consumption and Production
In FY17, IKEA redefined the definition of customers’ happiness and sustainability
(especially waste reduction). Instead of throwing away damaged products, IKEA
will find local partners and small entrepreneurs to repair the damaged products
and replace any missing components. With this policy, IKEA dispatched 1.3
million repair kits to customers, which is 155,000 more than in FY15.
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5.0 Conclusion
As one of the world’s largest furniture sellers with 313 stores in 38 countries, IKEA has
the responsibility to ensure that sustainable development goals are consistently achieved
step-by-step. This case study shows how IKEA’s vision and mission are both in line with
developing a forward thinking strategy with the overall aim of making the life easy for
consumers.
IKEA’s strategies for success are:
 Affordably priced
 Conveniently located
 A large and spacious store and cafeteria
 Strong Trademark Personality
 Content Marketing
IKEA has the strategy to think beyond profitability. IKEA responds to both interior and
exterior issues in a forward and competent manner by using its weakness as strength.
Through this IKEA is able to maintain a firm identity in the market. IKEA combines
design, low prices, economical use of resources along with its responsibility towards the
people and the environment. IKEA’s vision 2030 focuses on consumption of less
electricity, water, deforestation as well as improving the environment. IKEA’s has
ensured that its future is aligned with the sustainable development goals and is taking
steps in this direction through its various initiatives like sources its raw materials from
renewable sources and reducing the carbon emissions. Its huge businesses like IKEA’s
that act like role models for other multinational corporations and conglomerates that will
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eventually help us in fulfilling the sustainable development goals, as they are not only
implementing these changes but are successful in achieving their targets.
References
 About the Sustainable Development Goals - United Nations Sustainable
Development. (n.d.). Retrieved September 26, 2018, from
http://www.un.org/sustainabledevelopment/sustainable-development-goals
 Mazzei, M. (n.d.). Off Campus Database Access. Retrieved September 26, 2018, from
http://ezproxy.help.edu.my/login?url=http://search.ebscohost.com/login.aspx?
direct=true&db=ers?&AN100259261&site=eds-live
 Facts & Figures - IKEA. (n.d.). Retrieved September 26, 2018, from
https://www.ikea.com/ms/en_AU/about_ikea/facts_and_figures/
 Number of employees of the IKEA Group worldwide 2017, by function | Statistic.
(n.d.). Retrieved September 26, 2018, from
https://www.statista.com/statistics/241825/number-of-employees-of-the-ikea-group-
worldwide-by-function/
 Essays, UK. (2013, November). IKEA Recruitment and Selection Process. Retrieved
September 26, 2018, from https://www.ukessays.com/essays/commerce/ikea-and-
human-resources-commerce-essay.php#citethis
 Kevin. (2015, December 6). IKEA: World's Most Successful Furniture Retailer.
Retrieved September 26, 2018, from https://rctom.hbs.org/submission/ikea-worlds-
most-successful-furniture-retailer/
 Amine, M. (2015, December 9). IKEA's Business and Operating Models: A Match
Made in Heaven. Retrieved September 26, 2018, from
https://rctom.hbs.org/submission/ikeas-business-and-operating-models-a-match-
made-in-heaven/
 Doyle. A (2015, June 4). IKEA Pledges 1 billion euros to help slow climate change.
Thomson Reuters. Retrieved September 26, 2018, from https://www.reuters.com
 About BCI. (n.d.). Retrieved September 26, 2018, from https://bettercotton.org/about-
bci/
 B.V., I. H. (n.d.). IKEA Group – Communication on Progress | UN Global Compact.
Retrieved September 26, 2018, from
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