IKEA

RATING

SECTOR

Retail

WEBSITE

CONTACT

Olof Palmestraat 1, 2616 LN  Delft, Netherlands

Tel: 020 3645 0000

STOCK EXCHANGE

N/A

LISTING

  • #31 World’s Best Employers 2020
  • #40 World’s Most Valuable Brands 2020
  • #171 Best Employers for Diversity 2020
  • #121 Best Employers for Women 2019

EMPLOYEES

217,000

CHIEF SUSTAINABILITY OFFICER

Lena Pripp-Kovac

AWARDS

  • The Accenture Strategy Award for Circular Economy Multinational 2018
  • The Dieline Award 2017
  • Red Dot award 2018 for Product Design

CONTENT SOURCE

FURTHER READING

Report created by Maribel Sabino

IKEA

SECTIONS :  Sustainability    Evaluation  •  Progress  •  Watch  •  Overview

Company Activity

Ingka Group (Ingka Holding B.V. and its controlled entities) is one of 12 different groups of companies that own and operate IKEA retail under franchise agreements with Inter IKEA Systems B.V.

Ingka Group consists of three business areas, IKEA Retail, which consists of 374 IKEA stores across 30 markets, and counting, Ingka Centres and Ingka Investments.

IKEA is a leading company known for home-furnishing and low-price furniture. The company sells ready-to-assemble furniture, kitchen appliances and home accessories, among other useful goods and occasionally home services.

IKEA operates 422 stores in more than 50 markets. IKEA’s vision is to create a better everyday life for the many people while sustainably sourcing materials, advocating for human rights and incorporating democratic design.

Company Sustainability Activity

The IKEA Group is committed to creating products and services that inspire and support people to make positive lifestyle changes, consume more sustainably and live better everyday lives within the limits of the planet.

IKEA is dedicated to combining good form, function and quality with built-in sustainability, at prices so low that as many people as possible can afford them.

Sustainability is becoming an integrated part of their  business and is one of the strategic cornerstones in the IKEA Group direction “Growing IKEA Together”. Sustainability at IKEA means ensuring environmental, economic and social well-being for today and tomorrow while living within the limits of the planet and protecting the environment.

As a way to address sustainability and climate change, IKEA launched their sustainability strategy, People & Planet Positive, in 2012 with ambitious goals to transform the IKEA business, the industries in the IKEA value chain and life at home for people all across the world.

Additionally, the IKEA sustainability direction, launched in 2013, sets a common framework for all IKEA trademark companies and this People & Planet Positive strategy compliments that direction.

The updated IKEA People & Planet Positive strategy for 2020 describes the sustainability agenda and ambition for everyone in the IKEA franchise system and value chain aligning the company’s sustainability ambitions and commitments for 2030 with the UN Sustainable Development Goals.

Highlights

Ambitions for 2030

    • Inspire and enable more than 1 billion people to live a better everyday life within the boundaries of the planet 
    • Become climate positive and regenerate resources while growing the IKEA business 
    • Create a positive social impact for everyone across the IKEA value chain

Targets

Resource and energy dependence

  • By August 2020, IKEA aims to source 100% of their wood, paper and cardboard from more sustainable sources.
  • By August 2020, 90% of Ikea’s home furnishing products will be more sustainable with documented environmental improvements.
  • By August 2020, the IKEA Group will produce as much renewable energy as they consume in their operations.
  • Become 30% more energy efficient in their own operations by August 2020.
  • Reduce transport-related carbon emissions by 30% and by August 2020.

A better life for people and communities

  • Maintain 100% IWAY approval of all suppliers of home furnishing and other key products and services.
  • Secure 100% IWAY approval for all national IKEA Food, Indirect Material and Services and retail suppliers within the scope of IWAY
  • Continuously identify and develop setups for home based workers to improve working conditions, protect labour rights and prevent child labour.

Responsible sourcing of materials

  • Before August 2020, become forest positive.
  • By August 2020, IKEA aims to source 100% of their wood, paper and cardboard from more sustainable sources.
  • By August 2020, contribute to FSC certification of 15 million hectares of forest in priority areas – which is equivalent to more than double the total area needed to supply IKEA.
  • By August 2020, become water positive by promoting water stewardship throughout their value chain.

Recycling 

  • By August 2020, all plastic material used in IKEA’s home furnishing products will be 100% renewable and/or recycled.
  • By August 2020, 30% of the wood used by the IKEA Industry Group will be recycled.

Waste

  • By August 2020, close at least two material loops (material loops not currently existing in a region) for post-consumer waste.
  • Prevent and minimize waste generated from own operations and ensure that as much as possible is recycled. Strive for zero waste to landfill wherever possible.
  • By August 2020, reduce waste from store operations by 10%.
  • By August 2020, 90% of the waste from their own operation will be recycled or energy recovered, of which 80% of the waste from stores and distribution centers and 90% from IKEA Industry Group will be material recycled.
  • By August 2020, 90% of the total sales value will come from home furnishing products classified as more sustainable.

Healthy and Sustainable Living

  • By 2030, IKEA will inspire and enable people to make healthier and more sustainable choices
    • Creating a movement in society around better everyday living 
    • Inspiring and enabling people to live healthier, more sustainable lives 
    • Promoting circular and sustainable consumption 

Circular and Climate Positive

  • By 2030, IKEA’s ambition is to be a circular business built on clean, renewable energy and regenerative resources, decoupling material use from their growth.
  • IKEA aims to end their dependency on virgin fossil materials and fuels.
  • Ikea will reduce greenhouse gases and contribute to limiting the global temperature increase to 1.5°C by the end of the century.
    • Reduce more greenhouse gas emissions than the IKEA value chain emits, while growing the IKEA business. This includes halving the absolute net greenhouse gas emissions from the total IKEA value chain by 2030 by drastically reducing GHG emissions across the IKEA value chain by at least 15%, and achieving the remaining part by removing CO2 from the atmosphere and storing it through better forest & agriculture management within the IKEA value chain, and prolonging the life of IKEA products and renewable materials.
    • Striving for 100% renewable energy (electricity, heating, cooling and fuels) across the IKEA value chain.
    • Promoting on-site renewable energy generation and new installations to make more renewable energy available to the many.
    • Regenerating resources, protecting ecosystems and improving biodiversity: continuing to secure and develop responsible sourcing standards that include environmental, social and animal welfare criteria.
      • Becoming forest positive, promoting sustainable forest management to eliminate forest degradation and deforestation.
      • Using innovative approaches to forest management, protection, restoration and regeneration.
      • Leading regenerative projects on degraded land, deforested areas and agriculturally cultivated areas.
      • Becoming water positive by leading and developing water stewardship programs.
      • Leading regenerative projects to clean polluted waters and protect biodiversity, specifically focusing on leading projects to clean plastic pollutants from oceans.
      • Sourcing wood, cotton, food, and other raw materials from more sustainable sources.

Fair and Equal 

    • By 2030, IKEA will be a leader in creating a fair and equal society
      • Providing and supporting decent and meaningful work across the IKEA value chain.
      • Being an inclusive business.
      • Promoting equality.

Progress

Sustainable home

  • Enable customers to take climate positive actions in their homes
  • Energy consuming products have been, on average, at least 50% more efficient than their  range was in 2008 by August 2015.
  • By September 2016, all electric hobs were made be energy efficient induction hobs.
  • By September 2015, entire lighting range switched to LED offered at the lowest price.
  • By September 2017, the most energy efficient home appliances at the lowest price has been offered.
  • Offered leading water and energy saving solutions in their range of taps, showers sink accessories and dishwashers by September 2016.

Renewable energy

  • In 2013, IKEA produced renewable energy equivalent to ⅓ of their total energy consumption. 
  • The company has currently installed around 550,000 photovoltaic panels on more than 100 stores and other buildings in nine countries.
  • IKEA has 96 wind turbines in operation in seven countries; they have committed to own and operate wind turbines in ten countries.
  • 82% of the heat energy used by IKEA Industry Group comes from biomass.

Responsible sourcing of materials

  • IKEA banned PVC from their products and lead in mirrors, dramatically reduced formaldehyde from lacquers and glues, and they never use optical brighteners in IKEA textiles.
  • The company phased out incandescent bulbs in favor of more energy efficient compact fluorescents in 2010.
  • By August 2015, all cotton used has been sourced from more sustainable sources, such as Better Cotton.
  • By August 2015, all home furnishing materials, including packaging, had been made from renewable, recyclable or recycled materials.
  • By August 2017, at least 50% of their wood has come from more sustainable sources
  • By August 2017, 100% of IKEA’s wood from priority areas came from more sustainable sources.
  • By December 2015, all palm oil, currently used in home furnishing products such as candles or as a food ingredient, came from certified segregated sustainable sources or be replaced by more sustainable raw materials.
  • By August 2017, all of the leather the company uses full chain of custody and be produced according to standards that help protect forests and respect human rights and animal welfare.

Sustainable diet 

  • In August 2015, the IKEA restaurant offered vegetarian meatballs.
  • Reduced the levels of salt, sugar, fat, artificial additives and allergens in meals and products by developing and implementing guidelines for salt, sugar and fat levels in product development.
  • Ensured that ingredients subject to social and environmental concern come from more sustainable sources and/or third party certifications.
  • All coffee and tea served in the IKEA restaurants as well as cocoa in IKEA chocolate bars came from more sustainable sources, such as UTZ certification
  • All seafood served in the IKEA restaurant and sold in the Swedish Food Market are ASC or MSC certified. 
  • All IKEA restaurants are MSC and ASC certified
  • All eggs served in the IKEA restaurant came from free range hens with outdoor access by August 2015.
  • Develop and start implementing higher welfare standards for pigs by August 2016 and for beef cattle by August 2017.

Recycling and waste

  • By August 2015, all IKEA main home furnishing materials, including packaging, are either made from renewable, recyclable or recycled materials.
  • By August 2016, reduced IKEA packaging waste in customer’s homes by 10%.
  • By August 2017, 50% of the non-renewable materials used in their home furnishing products came from recycled sources.

Certificates

United Nations Sustainable Development Goals

United Nations SDGs Compliance

The following section aligns current company-wide sustainability initiatives with the UN Sustainable Development Goals.

SDG 5

  • In 2019, IKEA launched a new global Equality Plan, which outlines the company’s goals for gender equality FY20-22. 
    • The goals include achieving equal pay for work of equal value by the end of 2021, as well as reaching 50/50% gender balance in every unit, level, board and committee

SDG 12

  • IKEA’s ambition is to becoming a circular business that is climate positive. The company is dedicated to the responsible sourcing of materials. 
  • All IKEA main home furnishing materials, including packaging, are either made from renewable, recyclable or recycled materials 

SDG 13 

  • The IKEA group conducted climate action research in different countries to understand how IKEA can help people take climate action in their everyday lives.
  • In 2018, IKEA published the Climate Action Starts at Home report, giving an overview of findings from research conducted with 14,000 people in 14 countries.
  • In 2020, the group published an A3 infographic handout of further research, this time with 31,000 people across all 30 IKEA retail countries where Ingka Group operates.

IKEA has incorporated a sustainability strategy within its business model. While they are committed to promoting sustainability through their research and sustainability reports, specifically their People & Planet Positive strategy, IKEA lacks transparency and major information such as clear SDG initiatives and KPIs.

Despite their progress in reducing carbon emissions, incorporating renewable energy, sustainable sourcing of materials, and obtaining some industry certificates; IKEA has few awards and listings.

For these reasons, IKEA has been given a rating of C.

Analyst Outlook: Neutral

While IKEA’s intentions of becoming more sustainable are clear, their scale in which they operate makes them difficult to be fully transparent. 

As the world’s largest consumer of wood in the world, IKEA is supplied wood from various countries around the world, including Ukraine. A recent investigation led by Earthsight, a non-profit organization that uses in-depth investigations to expose environmental and social crime, injustice and the ties to global consumption, exposes illegal logging carried out by VGSM, a Ukrainian furniture and timber company. VSGM is one of Ukraine’s largest suppliers to IKEA. The investigation concluded that the illegal wood being supplied to IKEA was found in a range of IKEA products.

Despite the issues within IKEA’s supply chain, IKEA has dedicated 600M euros towards companies, solutions, and operations to transition to a net-zero carbon economy.

Key Points

  • IKEA aims to transform to a circular business by prolonging the life of products and materials, using resources in a smarter way and meeting customers in new ways. There are no clear steps or targets to reach this goal.
  • The company does not indicate which sustainable sources and third party certifications the ingredients in food products will have. 
  • Ingka Group, including the entity IKEA, will accelerate its sustainability investments in order to meet the IKEA overall commitment to becoming climate positive by 2030. The company has committed to invest an additional 600M EUR (more than $700M) into companies, solutions and its own operations to transition to a net-zero carbon economy. This increases its overall investments into sustainability to 3.8B EUR (more than $4.5B).
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