Sustainability Reporting Analysis

This assignment requires a critical analysis of sustainability reporting practices, particularly within the context of the Global Reporting Initiative (GRI). Students will examine different perspectives on the effectiveness of GRI-based reporting, considering its influence across diverse industries. The analysis should draw upon provided academic references and potentially include real-world examples like IKEA's sustainability strategy.

Running head: CONTEMPORARY ISSUES IN ACCOUNTING
Contemporary Issues in Accounting
Name of the Student:
Name of the University:
Author’s Note:

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CONTEMPORARY ISSUES IN ACCOUNTING
Executive Summary
This paper has been constructed in order to have an idea about the sustainability values
and the operational activities of IKEA. The products and services that have been offered by the
organization along with the sustainability plan of the company is even assessed in order to have
an extensive idea about the course the company wants to move ahead in the future. The source of
the raw materials and the discrepancies available in the annual report is even assessed and taken
into consideration.

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Table of Contents
Introduction......................................................................................................................................3
IKEA Sustainability.........................................................................................................................4
Products and Services......................................................................................................................6
IKEA Raw Material Source.............................................................................................................7
Annual Report Discrepancies..........................................................................................................7
Conclusion.......................................................................................................................................9
Reference List................................................................................................................................10

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Introduction
In the modern world, there are several industries that are functioning proficiently in
order to make profits and to stay alive in the market. The organizations make use of extensive
strategies and thereby improve their business operations. With the advent of time, organizations
have looked towards different aspects and thereby improve their business functions and one such
aspect has been concentrating on sustainability (Fonseca, McAllister and Fitzpatrick 2014). This
paper would therefore look towards the sustainability aspect of IKEA and the products and
services they offer.
IKEA is a multinational privately held organization which was established in the year
1943 and has its headquarters in Netherlands. The company is mainly focused on designing,
assembling and selling kitchen appliances, furniture and other home accessories. The
organization has been one of the world’s largest retailer of furniture and the organization is
known for their focus on cost management, operational details and sustainable development of
their products (Ceulemans, Molderez and Van Liedekerke 2015). These have been the aspects
with the help of which the company has been able to maintain the prices of their products lower
than the market (Cho et al. 2015). Most of the retail outlets of IKEA is owned by INGKA, which
is one of the healthiest foundations globally.
This report is therefore constructed in order to have an idea about the various products
and services that have been offered by the company and the strategies and the plans that have
been undertaken in accordance to the sustainability aspect. The report would even focus on the
source of the raw materials that are exploited by the organizations in order to gather quality raw
materials at a cheaper price. The paper would even examine and assess the discrepancies that are
existent in the annual report of the firm and thereby take steps to improve the same.

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IKEA Sustainability
IKEA has their vision of establishing a better life for many individuals. The business idea
of the organization has been to blend in the effective forms, quality and functions with a
sustainability that is built in at such lower prices that many individuals would be able to afford
them and thereby would be the foundation towards the contribution to enhanced homes for
individuals having ordinary income. The organization wants to economise their resources as they
do not want stay wasteful and always looks to gain more from the less. This strategy has been
going on from the time when the organization was established when the main objective of the
firm has been to exploit most of the scarce resources at their disposal (del Mar Alonso-Almeida
et al. 2015). This has been influential in the development of the distribution and the range of the
product and the solution for the sales. The idea of the business, vision and the value of the firm
were the initial point for the development of the environmental inventiveness for the company.
IKEA is a business that is driven by value with a culture that is reliant on strong values that dares
to be different and looking to meet the reality. The value and the culture shape the process in
which the company goes through their business activities in order to establish a strong desire to
the correct thing. The firm does their best in order to maintain the best ethical standards and to be
an effective partner in the community.
The sustainability in IKEA looks to ensure the economic, social and environmental
wellbeing for the current and future time period. It explains the means to attain the demand and
need of the community and the individual without sacrificing the capability of the future
generations in order to attain the needs by acting in the long term interests of various individuals
(Junior, Best and Cotter 2014). It talks about the residing within the limits of the globe and

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safeguarding the environment. It explains promoting and advertising a healthy and strong society
where individuals can prosper and develop themselves in order to attain their potential.
IKEA looks to function with the three transformational drivers that will change their business
thereby making them even more sustainable, developing the potentiality of growth, finding out
new opportunities for a business and aids in creating a better day to day life for various
individuals. The drivers are:
1. Enable and inspire customers to have a more sustainable life at home. Hence, the
company takes the initiative of promoting and developing the products and the
resolutions that aids the customers to generate and save energy, sort and minimise the
level of waste at the most lowest price possible (Barkemeyer, Preuss and Lee, 2015).
2. Endeavour for the energy and resource independence by safeguarding the long term entry
to the sustainable raw materials by having a positive effect in the societies from the
where the materials are sourced and making use of these resources within the limitation
of the planet. The company wants to manufacture the optimum level of renewable energy
as the energy that is consumed drives the energy effectiveness in the overall value chain
(Ikea.com. 2018).
3. Taking the initiative in constructing an improved life for the societies and the people that
has been effected by IKEA. Additionally, the company tries to outspread the code of
conduct within the value chain and try to be a good neighbour assist the human rights and
perform for the most effective interest for the children.

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Products and Services
IKEA has the vision of establishing an everyday life for a huge level of people. The
company makes this possible by giving out a huge range of products of a well-constructed,
operational homes furnishing products at very reasonable prices so that most of the individuals
can afford them (Hahn and Lülfs 2014). In order to attain this vision, a well-constructed,
functional and practical furnishing products are delivered in the target market. IKEA has
therefore incorporated a blend of various strategies in their business activities.
IKEA provides a wide extent of product that is related to the furnishing products and has
over 1200 items. This huge level of products have mainly been due to the fact that the company
outsources their manufacturing process. The firm takes assistance of the cheap sources of
manufacturing that are available globally in the market. IKEA has constructed a Strategic Centre
Enterprise where it operates at the core of the alliance network (Ehnert et al. 2016). The database
has the source of various cheap manufacturers who supply IKEA with the required
manufacturing that is essential for all their home furnishing. However, if the manufacturing can
be undertaken at a lower cost to the industry and this will be seen in the overall price of the
finished goods.
IKEA even provides various services to the customers as well like they have their own
home delivery services (Ikea.com. 2018). The company provides home delivery service to the
customers in association to the products that have been bought and thereby satisfying the
customers. The products are flat packed and constructed in such a manner that they can be easily
transported at a lower price from the retail outlet. The products that have been purchased are
even assembled by the company at the location of the customer so that they can make use of the
product effectively without taking the worry of assembling the product at home themselves.

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IKEA even has products that are related to the kitchen and the bathroom and therefore
installation of these products are even provided by the firm. The payment method of the firm is
very simple and easy and thereby payments can be made through various methods. The return
policy of the firm is even very simple and if the customer wants to replace their purchased
product they are given a time period of 15 days within which the return policy will be undertaken
and no extra charges would be applicable.
IKEA Raw Material Source
The company looks to obtain their raw materials from several sources and have a team
that assesses the global market with the help of which they can discover the reasonable and
cheap raw materials so that the prices of their products can be maintained (Pérez‐López,
Moreno‐Romero and Barkemeyer 2015). The company has a unique manufacturing strategy and
therefore outsources the manufacturing process. They have various small manufacturing
companies from whom they outsources their products and thereby maintains a lower price. The
company in some cases provides the raw materials to the manufacturers and in certain cases the
raw material is used by the manufacturer themselves. IKEA has the objective of preserving their
quality and therefore takes the effort of assessing the products that have been manufactured and
only accepting the product that is according to their standard (Calabrese et al. 2016).
Annual Report Discrepancies
IKEA has the aim of maintaining effective operational activities and therefore undertakes
actions in order to mitigate any issues that are available. The company constructs their annual
report in order to provide a declaration about their financial and operational activities to the
stakeholders (Kozlowski, Searcy and Bardecki 2015). The company tries to communicate the
revenues that have been used in order to make the stakeholders aware of the operational

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activities. The annual report has not properly disclosed the dividend per yield to the stakeholders
properly and therefore discrepancies were present. The costs related to outsourcing have not been
represented individually and therefore this creates a fault in the annual report. The stakeholders
therefore do not have knowledge about these expenses and this may create issues in the future.

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Conclusion
The assessment of the operational and the financial activities of IKEA indicates that the
company has been functioning effectively and has been taking various measures with the help of
which they can enhance their business and maintain competitive edge. The sustainability of the
firm plays a key role with the help of which they are able to attract the individuals and the
society and thereby making them loyal to the customers. The product and services that are
offered are unique and raw materials are purchased from the best sources thereby making the
firm one of the leaders in the furniture business.

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Reference List
Barkemeyer, R., Preuss, L. and Lee, L., 2015. On the effectiveness of private transnational
governance regimes—Evaluating corporate sustainability reporting according to the Global
Reporting Initiative. Journal of World Business, 50(2), pp.312-325.
Calabrese, A., Costa, R., Levialdi, N. and Menichini, T., 2016. A fuzzy Analytic Hierarchy
Process method to support materiality assessment in sustainability reporting. Journal of Cleaner
Production, 121, pp.248-264.
Ceulemans, K., Molderez, I. and Van Liedekerke, L., 2015. Sustainability reporting in higher
education: A comprehensive review of the recent literature and paths for further
research. Journal of Cleaner Production, 106, pp.127-143.
Cho, C.H., Laine, M., Roberts, R.W. and Rodrigue, M., 2015. Organized hypocrisy,
organizational façades, and sustainability reporting. Accounting, Organizations and Society, 40,
pp.78-94.
del Mar Alonso-Almeida, M., Marimon, F., Casani, F. and Rodriguez-Pomeda, J., 2015.
Diffusion of sustainability reporting in universities: current situation and future
perspectives. Journal of Cleaner Production, 106, pp.144-154.
Ehnert, I., Parsa, S., Roper, I., Wagner, M. and Muller-Camen, M., 2016. Reporting on
sustainability and HRM: A comparative study of sustainability reporting practices by the world's
largest companies. The International Journal of Human Resource Management, 27(1), pp.88-
108.

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Fonseca, A., McAllister, M.L. and Fitzpatrick, P., 2014. Sustainability reporting among mining
corporations: a constructive critique of the GRI approach. Journal of Cleaner Production, 84,
pp.70-83.
Hahn, R. and Lülfs, R., 2014. Legitimizing negative aspects in GRI-oriented sustainability
reporting: A qualitative analysis of corporate disclosure strategies. Journal of Business
Ethics, 123(3), pp.401-420.
Ikea.com. (2018). Cite a Website - Cite This For Me. [online] Available at:
http://www.ikea.com/ms/en_US/pdf/reports-downloads/sustainability-strategy-people-and-
planet-positive.pdf [Accessed 21 Jan. 2018].
Junior, R.M., Best, P.J. and Cotter, J., 2014. Sustainability reporting and assurance: A historical
analysis on a world-wide phenomenon. Journal of Business Ethics, 120(1), pp.1-11.
Kozlowski, A., Searcy, C. and Bardecki, M., 2015. Corporate sustainability reporting in the
apparel industry: an analysis of indicators disclosed. International Journal of Productivity and
Performance Management, 64(3), pp.377-397.
Pérez‐López, D., Moreno‐Romero, A. and Barkemeyer, R., 2015. Exploring the relationship
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the Environment, 24(8), pp.720-734.