Ikea case study

Q1/ How would you rank IKEA’s People and Planet Positive sustainability plan? Is the plan likely to help the company transformits business or is it a greenwashing effort? Are the plan’s target too limited, appropriate or too ambitious?

Are the plan’s target too limited, appropriate or too ambitious?

Objective of the plan are not too ambitious because is a long term goal for the company to grow. On the basis of these three key areas, in order to achieve the ultimate goal, many milestones have been created for achieving the goal over the years. It will change all aspects of the company's value chain, including design, selection of sustainably sourced materials, improved working conditions, and production and logistics efficiency.

Q2/ How do you think about the progress IKEA group has made implementing the plan?

In order to respond to new customer needs, Ikea was compelled to modernize its business model in terms of sustainability and respond to the challenges of climate change. The objective is to improve standards by offering quality, environmentally friendly and ecological merchandise while respecting the brand's DNA: offering good quality products at very affordable prices.

Ikea is committed to a truly ecological approach by investing in 5 majors areas for its new phase:

• Owning more forest
• Driving Higher Procurement Targets and standards
• Use more practicable
• Use more recycle wood
• Improve life of people impacted by Ikea

As a result:

They increased the number of certified FSC forests. In 2011 it was 149 million hectares, but in 2013, it increased to 187 million hectares.

They work on renewable energy like wind farms, biomass and solar panels in order to reduce their ecological impact.

Ikea’s plan is not too ambitious because and is coherent with the risk incurred. They have a huge impact on economies and social. It’s a long-term objective. Those objectives are based on the five focus areas, to reach the ultimate goal.

Q3/ How does IKEA's sustainability strategy align with its business model? What are the overlaps? What are the conflicts?

IKEA's business model aims to keep prices very low without compromising on technical quality or product functionality. The goal is to double revenues by 2020.

This strategy is being implemented by standardizing more than 9,500 products across all IKEA stores worldwide and by keeping transportation and assembly costs low as products are sold unmounted in flat packaging to reduce costs .

E-commerce is also taking its place in front of physical stores.

IKEA aims to offer quality products - including IWAY certifications & FSC-certified wood.

The People Planet Positive strategy

People & Planet Positive focuses on three key areas:

- Inspiring and enabling millions of people to live a more sustainable life at home by providing products and solutions that help customers save money by using less energy and water and reducing waste. For example: converting all lighting to LEDs that last 20 years and consume up to 85% less electricity; offering the most efficient appliances on the market at the lowest price; creating low-cost, functional and easy-to-use solutions to sort and reduce waste and use less water in the home.

- Becoming independent in terms of energy and resources, which means producing as much renewable energy as is consumed in the Ikea Group's stores and buildings, building on the 1.5 billion euros allocated to wind and solar projects. It also means improving the energy efficiency of the Ikea Group's operations by at least 20% and encouraging suppliers to do the same. Continuously developing the Ikea range, making products more sustainable by ensuring that all major furnishing materials, including packaging, are renewable, recyclable or recycled.

- Take the initiative to create a better life for people and communities, which includes supporting the development of pleasant workplaces throughout the Ikea Group supply chain, encouraging suppliers to focus not only on compliance but also on shared values. It also means going beyond the immediate scope of the supply chain and helping to support human rights.

This detail makes it clear that IKEA's sustainability strategy is aligned with their business strategies. The focus is on sustainability and energy - IKEA aims to use only renewable energy for its production by having invested in wind turbines, biomass.

The FSC forestry standard is also proof of sustainability and product quality.

Working conditions and environmental protection at IKEA and their suppliers are maintained and certified according to IWAY standards.

Overlaps & conflicts

This strategy is a source of doubt in terms of risk, profit and growth. Overlapping and conflicting aspects of this strategy while maintaining sustainable development is the fact that market acquisition in emerging countries will not be possible with product standardization. Indeed, these markets will only be acquired by personalizing the offer through the customer's needs.

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