Americans demand low prices and giant warehouse stores where they can buy anything they want. We may not like it, but big box retailers are a part of life. But don’t assume that being big is bad. Massive, world-wide retailers can make a difference especially because they are that big. Enter IKEA, a company with stores all over the world. Critics say that IKEA is a landfill-waste generator because they make huge volumes of stuff that doesn’t last. IKEA only started working toward sustainability in 1999, when it published its first set of environmental priorities, but their new slogan is “low price, but not at any price.”
IKEA is pursuing sustainability in a big way. They stopped using plastic bags. They are investing $77 million in clean technology startups like solar. Today, 71% of all IKEA products are recyclable, made from recycled materials, or both. The company recycles 84% of the waste generated in its stores. When a country introduces stricter emissions rules, like when Japan decided to restrict formaldehyde emissions to levels close to zero, IKEA imposes the new restrictions on its global operations. As a result, Ikea’s policy reflects the strictest emissions policies in countries across the world, even though it sometimes drives costs higher.
IKEA’s sustainability initiative focuses on four areas: products and materials, suppliers, climate change and community involvement.
IKEA’s requirements for its suppliers are outlined in their code of conduct, IWAY, which you can read online. The requirements include compliance with national legislation, no forced or child labor, no discrimination, payment of at least the minimum wage and compensation for overtime, a safe and healthy working environment, responsibility for waste, emissions and the handling of chemicals. Suppliers are inspected for compliance by a third party auditor, and more than 1,000 audits are done every year to catch suppliers who break the rules. However, some countries – namely China – have been uncooperative with providing correct information. China is a major source of materials, providing 22% of IKEA’s sourcing. IKEA hopes to increase China’s compliance by making consequences harsher and increasing awareness in China and the western world.
PRODUCTS AND MATERIALS:
IKEA also requires third party audits of its wood suppliers. If you’ve ever been to an IKEA store, you know that they use a lot of wood in their products, especially furniture. IKEA has four levels of requirements for its wood suppliers. Their long-term goal is to source wood from FSC-certified forests, although this is a long way off. Currently, 94% of suppliers meet IKEA’s minimum requirements, but only a small number are FSC-certified.
A new forestry plan for 2009-2012 was approved last year where stronger action and more investment will bring certified volumes up to 35%. In 2012 this would correspond to over 5 million pounds of round wood that is being certified as coming from well managed forests, according to the company.
IKEA wants to limit its use of raw materials like wood and its working on new techniques that will accomplish this. One example is a technique where a core of stiff card is sandwiched between thin sheets of wood, called board-on-frame. IKEA’s global CEO says this and similar techniques will make up all of IKEA’s offerings in the future, and solid wood will be phased out.
IKEA is also addressing its contribution to climate change by examining its carbon footprint in detail and looking at ways to reduce it. In addition to cutting down on business travel and providing public transportation to some of its stores, IKEA has rolled out free bike trailer rentals at some of its stores.
Still, IKEA’s global CEO Anders Dahlvig said at a summit in August: “If we include everything, i.e the extraction of raw material at source, the processing at sub-suppliers, our customers’ transportation to the stores, our customers’ use of our products in their homes (light bulbs, white goods) and of course our own activities at IKEA including our stores, warehouses, all our suppliers, etc., a rough estimate is that our CO2 emissions today amount to around 27 million tones per year”.
But a comprehensive initiative, “IKEA goes renewable,” was launched in 2006 to substantially decrease CO2 emissions. IKEA set the long term objective of powering all IKEA units – stores, warehouses, offices and IKEA owned factories – with 100% renewable energy. IKEA also wants to increase energy efficiency in its units by 25%. As of late 2007, the company was on 42% renewable energy and had achieved a 10% energy efficiency improvement.
For example, the new Karlstad store is the first IKEA store in Sweden heated with a ground source heat pump, reducing heating energy consumption by 80%, which is equivalent to the energy consumption of 150 detached houses per year. The new Spreitenbach store is the first store in Switzerland heated only using wood pellets and sunshine.
At the same summit, Dahlvig summed up IKEA’s efforts this way: “On the one hand I am proud of what we have achieved. However I have some hope that we will be able to speed up our efforts even further in the coming year. We are taking one important new step that we were not ready for until now.
“The environmental agenda has until now been developed as a separate strategy with a top down approach. I believe this was necessary to get us to this point.
“Now, however we have reached a level of maturity in the organization where the sustainability work can be truly integrated in our everyday business agenda and strategies. Sustainability is no longer an activity on its own but it is totally integrated in everything we do. I am convinced that this will make a big difference in the years to come.”
Someone thinks IKEA is doing things right – a more detailed description of IKEA’s sustainability efforts can be found in the Swedish book called Value Based Services for Sustainable Business: Lessons from IKEA.