IKEA's CSR and Sustainability: An External Stakeholder Analysis

This report provides an external analysis of IKEA's Corporate Social Responsibility (CSR) and sustainability initiatives, utilizing Carroll's CSR Pyramid model to evaluate IKEA's economic, legal, ethical, and philanthropic responsibilities. It identifies key stakeholders and assesses IKEA's efforts in areas such as donations to organizations like UNICEF and Save the Children, the reduction of environmentally unfriendly substances, and the implementation of sustainable practices. The analysis also raises issues like the limited scope of CSR donations and incomplete elimination of harmful substances, suggesting improvements such as expanding donation support and enhancing tree planting initiatives. The report concludes that IKEA's strong financial performance is partly attributable to its CSR practices, contributing to its position as a leading global company. Desklib offers a variety of study tools and solved assignments for students.

An External Analysis
of IKEA’s CSR

About IKEA
• IKEA is a furniture manufacturing multinational that was started by a 17-
year old Swedish carpenter called Ingvar Kamprad
• The name IKEA was created as a result of the combination of the initials for
founder Ingvar Kamprad, his farm Elmtaryd and hometown Agunnaryd
• IKEA is the biggest manufacture and distributor of the home accessories,
kitchen appliances, and furniture
• IKEA currently has a total workforce of 208,000 employees spread in over
40 countries in which the multinational operates

Scope of the External Analysis:-
CSR:-
• CSR is a strategy that IKEA has been using to ensure that it conducts its
activities in ethical manner, sustainable to the environment, and beneficial to
all its stakeholders
Sustainability:-
• IKEA is very concerned about the sustainable use of the resources. It has got
several environmental policies that helps it to sustainably utilize the
environment

Model Used for CSR analysis of Telstra:-
Caroll’s CSR Pyramid Model:-
Four layers used:
1. Layer 1:Economical Responsibility
2. Layer 2: Legal Responsibility
3. Layer 3: Ethical Responsibility
4. Layer 4: Philanthropic Responsibility

Model Used for CSR analysis of IKEA:-
Caroll’s CSR Pyramid Model:-
(Dudovskiy, 2012)

IKEA’s CSR Analysis:-
Four main steps applied in the CSR analysis:-
1. Economical Responsibilities of IKE
2. Legal responsibilities of IKEA
3. Ethical responsibilities of IKEA
4. Philanthropic responsibilities of IKEA

IKEA’s CSR Analysis:-
Step 1:- Identification of Stakeholders:-
IKEA has many stakeholders that should be identified as:
• Investors
• Board of Directors
• Management
• Employees
• Clients
• Suppliers
• Community
• Union
• Government
• Media

IKEA’s CSR Analysis:-
Step 2: Analysis of IKEA’s Economic Responsibilities.
• IKEA has economic obligations as part of its CSR
• It has been doing this by giving out donations and financial assistance to certain entities
such as the United Nations Children’s Education Fund (UNICEF) and Save the Children
• In 2013, it donated $2.6 Million to the UNICEF in aid of the children who were hit by the
disaster (Arnold, 2017)

IKEA’s CSR Analysis:-
Step 3: Analysis of IKEA’s Ethical responsibilities
• IKEA has ethical obligations
• It has been implementing a number of ethical programs like the eradication of Polyvinylchloride
(PVC) and the reduction of the use of formaldehyde, chromium, and introduction of the use of
recyclable materials instead (Galan-Ladero & Galera-Casquet, 2019)
• All these were meant to enhance environmental ethics and conservation

IKEA’s CSR Analysis:-
Step 4: Analysis of IKEA’s Philanthropic responsibilities
• At IKEA, there is a donation policy that has been in use for years
• IKEA has been donating millions of dollars to the charitable organizations like Save the
Children and UNICEF
• Today, IKEA is almost topping the list of the most philanthropic corporations in the world.

IKEA’s Sustainability Analysis:-
• IKEA is concerned about environmental sustainability and sustainable growth
• In 1990, IKEA introduced the Natural Step framework to help in spearheading its
environmental plan
• It has led to many changes such as the eradication of Polyvinylchloride (PVC) and the
reduction of the use of formaldehyde, chromium, and introduction of the use of
recyclable materials instead

Issues Raised:-
• The following issues were raised during the analysis:
1. Environmental Conservation
• IKEA has not completely stopped, but only reduced the usage of environmental unfriendly substances like formaldehyde,
chromium
2. Biased CSR Activities
• IKEA only gives many donations, but only to a few organizations-Save the Children and UNICEF only

Suggestions for IKEA:-
1. IKEA should extend its CSR donation support to many other organizations. It
should not only restrict it to UNICEF and Save the Children alone
2. IKEA should add tree planting to its environmental protection and sustainability
initiatives. IKEA should sponsor the planting of more trees especially in the
developing countries where its manufacturing pants

CONCLUSION:-
• IKEA currently operates on revenue of €52.35 billion and a net income of €2.25 billion
• Such kind of marvelous performance has made the INGKA Holding-owned to be ranked
as one of the top 40 richest company in the world
• Such successes are attributed to the brilliant managerial strategies that have been
adopted by the multinational
• It is also attributed to good practices such as CSR initiatives that have been enabling the
organization to succeed in all its operations

References:
Arnold, M. F. (2017). Competitive advantage from CSR programmes. In Innovative CSR (pp.
102-130). New York: Routledge.
Galan-Ladero, M. M., & Galera-Casquet, C. (2019). Corporate Social Responsibility and Digital
Tools: The Cause-Related Marketing Case. In Handbook of Research on Entrepreneurship and Marketing for Global Reach in the Digital Economy (pp. 1-16). IGI Global.
Johansson, D., Stenkula, M., & Wykman, N. (2018). The Rise of Private Foundations as
Owners of Swedish Industry: The Role of Tax Incentives 1862–2018 (No. 1245).
Leat, D. (2016). From charity to change, Brussels to Beijing. In Philanthropic foundations,
public good and public policy (pp. 35-52). London: Palgrave Macmillan, London.
Leat, D. (2016). From charity to change, Brussels to Beijing. In Philanthropic foundations,
public good and public policy (pp. 35-52). London: Palgrave Macmillan, London.
Morsing, M., & Roepstorff, A. (2015). CSR as corporate political activity: Observations on
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Schlegelmilch, B. B. (2016). Global Marketing Ethics and CSR. In Global Marketing Strategy
(pp. 195-220). Cham: Springer, Cham.
Thomsen, S. (2018). Foundation Ownership at IKEA. Available at SSRN 3243347.