IKEA creates a positive impact on people and planet

Mar 03, 2016

Sustainability report outlines achievements

While sustainability for most retailers seems to focus on buzzwords such as solar panels, carbon footprints, LEED certification, etc., proactive retailers such as IKEA have taken it a step ahead by defining sustainability as a concept of reduction in consumption and energy costs in its day-to-day operations. As the world increasingly faces challenges with regard to social and environment concerns, IKEA continuously works across every part of its business to create a positive impact on people and planet. Recently, the retailer released its sustainability report 2015, highlighting its achievement in the past year, while also prioritizing the retailer’s steps ahead.

Overall, the Group has made good progress at putting their sustainability strategy of ‘People & Planet Positive to Work’, by achieving its target to source all of their cotton from more sustainable sources, thus using less water, chemical fertilizers and pesticides, while increasing profits. Currently, cotton is being used in IKEA products such as furnishings, bedding, towels and rugs, using 1 per cent of the world’s annual cotton supply. “Our hope is that one day sustainable cotton will replace all conventional cotton farming. That’s why as one of the founding members of the Better Cotton Initiative, we are working with partners in cotton-producing countries to increase the global supply of sustainable cotton and improve standards across the whole industry not just in our own supply chain,” reveals Pramod Singh, IKEA Cotton Leader, IKEA of Sweden.

In 2015, which has been a critical year for tackling climate change, IKEA Group and IKEA Foundation committed a total of EUR 1 billion for climate change action by 2020. This includes a commitment by IKEA Group of EUR 600 million in renewable energy and EUR 400 million by IKEA Foundation to support communities most impacted by climate change. “Moving to a low carbon economy is critical for the planet and the communities, and it can bring exciting opportunities for innovation and growth for us and our partners. We have been speaking a lot about this, including at the COP21 climate summit in Paris in December 2015,” reveals Peter Agnefjäll, President and CEO, IKEA Group. Since 2012 together with suppliers, the Group has achieved an 18 per cent improvement in energy efficiency and has been encouraging many of its suppliers to switch to renewable energy too.Moreover, the retailer has converted its entire lighting range to energy saving LED – a product that uses up to 85 per cent less energy than traditional incandescent bulbs lasting up to 20 years, offering better functionality, while saving its consumers money. Out of all its lighting products sold last year, 90 per cent of them were LED or compatible with LED bulbs. “No matter how well our products perform, our customers want to buy from us with confidence as we have done the right thing on their behalf. We have to make sure that many people behind our products are treated fairly and can enjoy a good life too. This applies to our co-workers, the people who work for our business partners in our supply chain, and the many people and communities we impact across our value chain,” asserts Steve Howard, Chief Sustainability Officer, IKEA Group.

Few highlights of the sustainability report 2015

* By August 2020, IKEA aims to source 100 per cent of wood, paper and cardboard from more sustainable sources. Currently, the company uses 50 per cent of wood from more sustainable sources.

* More than half of co-workers are women, as are 48 per cent of the Managers and 33 per cent of Group Management.

* The Group has achieved EUR 1 billion online sales across 13 countries and 1.9 billion visits at IKEA.com, which is an increase of 21 per cent compared to the previous year.

* Total sales increased by 11.2 per cent to EUR 31.9 million.

* Every year, IKEA renews its products, launching approximately 2,500 new products, resulting in the count to reach 9,500 products across the IKEA range.

* IKEA has 328 stores in 28 countries at the end of FY15.

Buying these LED bulbs not just reduces energy consumption, but also brings light in the lives of refugees in Asia, Africa and the Middle East through IKEA’s Brighter Lives for Refugees Campaign. For every bulb sold during February and March 2015, the IKEA Foundation donated EUR 1 to the UN refugee agency (UNHCR), generating EUR 10.8 million to light refugee camps with solar lanterns and other renewable energy solutions, making them safer for families and better for the environment. Apart from this, through the Soft Toys for Education campaign which was started in 2003 to build children’s educational projects through partnership with Save the Children and UNICEF, IKEA Foundation has donated EUR 77 million for 99 children’s education projects in 46 countries. Last year alone, the Foundation raised EUR 20.9 million towards the Brighter Lives and Soft Toys for Education Campaign.

Towards the health and safety of its workers and the workers with its suppliers, IKEA realizes that stable income and regular working hours contribute to a sense of belonging and job security. As working hours tends to remain a challenge for suppliers to maintain continual compliance, thereby IKEA plans to introduce compliance rate as a performance indicator alongside overall approvals from 2016 onwards. “One of the big issues we have faced is ensuring that the people at our suppliers are not working too many hours in the week. In China, where long hours are very common in some industries, we’ve required a maximum 60 hours work week, including overtime, but this year we have gone further. Together with our suppliers, we reached working hour limit of 49 hours (including overtime), while maintaining wage levels. This is a major achievement accomplished in just a few years by working closely with our suppliers,” claims Steve.

Meanwhile, the retailer has continuously stressed on sustainability being one of the cornerstones of the Groups business strategy, wanting it to be an integral part of the daily work of all its co-workers. Founded seven decades ago in the farmlands of Småland, IKEA has come a long way in not just its commitment to the people but the planet as well. “Despite our achievements this year, we know we can do better next year and the year after that. It’s the spirit that drives IKEA; striving to create a better everyday life for the many people,” concludes Peter. “We are determined to play our part in making a fairer world for the many people. And we still have much to do to extend our impact throughout our value chain. That’s why we are determined to keep going all-in,” concludes Steve.

Source: APPAREL RESOURCES