The furnishings giant demonstrates sustainability leadership

Having refurnished my office with Ikea products during the past year, I appreciate at a very personal level the Ikea message that it aims to create a better everyday life for people. Making good-looking products accessible, affordable and easily transportable really does make life easier and greener. At the same time, Ikea is driving sustainability through its supply chain systematically and transparently. Ikea, with 328 stores in 28 countries, 771 million store visits a year, 155,000 employees and €31.5bn in turnover, has become a leading light in sustainability. The FY2015 Sustainability Report is a testimony to that. Using Ikea’s established format, it’s clear, well-written, balanced and very interesting.

The “going all-in to tackle climate change” message from Ikea in this report does the job. This year, Ikea has decided to commit big across a range of environmental impacts. Whether this means pledging €1bn in funds to mitigate climate change, promising 100% renewable energy by 2020, achieving a fourfold increase in sustainably manufactured products by 2020, completing the switch of Ikea’s entire lighting range to LED lighting, committing to 100% sustainable cotton sourcing by 2015, with similar commitments for palm oil, wood, seafood and leather, or recycling 90% of waste, there is a step-change in Ikea’s approach.

At the same time, Ikea’s commitment on climate change focuses on a small part of the supply chain impact. Ikea’s direct Scope 1 and 2 emissions (730,000 tonnes of CO2e) are a mere 2% of Ikea’s total all-scopes emissions (38m tonnes CO2e). Scope 3 emissions increased by 5m tonnes in 2015, dwarfing consistent emissions reductions since 2010 normalized by products sold. Despite the massive complexity in this global supply chain, and Ikea’s life-cycle assessment of emissions to focus performance improvement activities, even if Ikea achieves 100% renewable energy in its direct operations as committed, this barely dents the level of Scope 3 emissions reported by the Group. The real opportunity for Ikea to mitigate climate change is Scope 3. While Ikea acknowledges the challenges in this area and describes progress made and planned, tangible commitments of Ikea’s People and Planet Positive strategy sidestep this significant area of impact.

Stakeholder voices

A great feature of Ikea’s report is the inclusion of external stakeholder perspectives, which put a range of “challenges” to the Ikea team, including decoupling growth from environmental impact, discouraging a throwaway culture and combating child labour deep in the supply chain. Senior Ikea voices respond to these challenges, offering the reader a focused perspective on sustainability dilemmas and demonstrating that Ikea is connected to the burning issues of sustainable business.

On the other hand, the “Why do you work at Ikea?” piece is a little forced. Eight carefully selected “diverse” employees each offers one insight about working at Ikea. It’s nice to see their faces, and hear that they appreciate diversity, opportunity and positive culture. I did wonder, however, if these are all full-time employees. Ikea’s 155,000 workforce includes of 53% part-time employees of whom 36% work less than 34 hours per week, 17% less than 20 hours. Not much is said about the reason for this high level of part-time working (voluntary or obligatory?) or the difference in benefits across these groups. For example, Ikea provides recognition and tangible additional benefits for employees through the One Ikea Bonus programme and loyalty programme – but benefits appear to be for full-time employees only. On the other hand, in a section on “the right to decent work”, Ikea acknowledges the need for consistent standards on minimum hours of work for part-time workers and describes plans to develop these.

Looking to 2030

Ikea is an early adopter of the UN Sustainable Development Goals framework and includes an index of its sustainability activities aligned with the 17 goals, hyperlinked to the relevant sections in the report. This is another example of how Ikea has enhanced its global sustainability leadership – quietly moving from an underdog positioning of cheap, consumerist and low-quality to positive and purposeful impact. Ikea’s report does not apply Global Reporting Initiative (GRI) guidelines but uses them to “inform our reporting”, preferring to stay with Ikea’s own strategy and KPI framework while demonstrating consistency in practice against multi-year targets alongside participation in industry initiatives to improve sustainable practice.

Alongside this, while we could always demand more, Ikea is demonstrably leveraging its scale and reach to change consumer behaviour and awareness around sustainability through its core offerings and commitment to transparency as well as driving its suppliers and suppliers’ suppliers to comply with sustainable standards.

CR report review  sustainability leadership  supply chain  transparency  sustainability  emission  sustainable business