A Natural Step Case Study

http://www.naturalstep.org/en/usa/ikea

Benedetta Anghileri

Baseline situationIKEA background

IKEA, a Swedish home furnishings retailer, is known as the world’s largest designer and retailer of well-designed, inexpensive, and functional furniture for the home. IKEA has over 140 million visitors to the 140 stores in 29 countries and distributes over 80 million IKEA catalogues.

IKEA was founded in 1943 by Ingvar Kamprad. The first IKEA showroom/store opened in 1953 in Sweden. Kamprad’s innovative strategy was to design functional furniture that was easy and inexpensive to build, receive it disassembled at stores, and display it on the show room floor with detailed explanation ti-ckets, making salesperson assistance unnecessary.

Baseline situationIKEA environmental problemsIn the mid-1980s, IKEA ran into an environmental problem that had signi-ficant implications on the firm’s furniture line. Tests on some IKEA particle-board furniture products showed that formaldehyde emissions excee-ded the standard specified by Danish environmental law (Reichert, 1996).

Formaldehyde, discovery by a German chemist in 1867, August Wilhelm von Hofmann. It is a colorless gas and it presents several characteristics that make it attractive industrially. Formaldehyde is for example many uses rela-ted to its preservative and biocide action (antimildew).Formaldehyde can be dangerous for people because of its extreme volatility.

In the late 1980s, IKEA and other European retailers were receiving pres-sure, including calls for boycotts from environmental groups, to eliminate the use of tropical rain forest wood in furniture. These pressures made it clear to IKEA-Group Executives that environmental issues would impact the future credibility of IKEA.

Baseline situationIKEA environmental challenge

In 1992, the environmental policy was transformed into an Environmental Action Plan describing concrete and practical measures for the mid-1990s.

TNS offered clear guidance on how the problems involved IKEA and what the company could do about them from both a strategic and operational point of view.

How IKEA met the 4 system conditions

4 sysem conditionMineral resourcesSubstance from Earth’s crust must not increase in nature.

1. IKEA uses only recyclable materials for flat packaging. In addition, using “pure” (nonmi-xed) materials for packaging enables easy sorting/recycling.

2. A version of the IKEA OGLA chair, made from 100% recycled pre-consumer plastic waste.

3. Today, over 80 million IKEA catalogues are printed on non-chlorine bleached paper and use pulp from farmed wood.

4. Several European stores offer free bus transportation from selected city areas to the store, as an alternative to use of private cars.

5. “Trash is Cash” program takes IKEA packaging materials, recyclable office waste, and other store waste and recycles it.

6. Some buildings are experimenting with alternative energy sources.

7. Using flat IKEA packaging that takes up little transport volume.

8. Using railroads for long-distance transportation.

9. Maximizing the efficiency of shipments: reduce the number of transports and the number of empty transports, make maximum use of cargo vehicle space, utilize return transportation, and avoid rush-hour traffic, using transportation units in both directions when possible.

4 sysem conditionSynthetic materialsMen-made materials should not accumulate in nature

1. Polyvinylchloride (PVC) is gradually being phased out at IKEA. It has been replaced in wallpapers, home textiles, shower curtains, lamp-shades, and furniture. PVC has also been eliminated from all packaging and is gradually being phased out in electric cables.

2. Acid curing lacquers have been replaced with alternatives (e.g., ultraviolet (UV)- hardened and water-based lacquers).

3. Recycling of non-renewable materials used to produce home-furnishing products to maximise the use of each resources. Refers to materials such as steel, copper, oil-based plastics...

4 sysem conditionBiological productivityPlants and animals harvested sustainably, biodiversity not reduced

1. IKEA strives to use only wood from known, well-managed sources: forests that re-plant and care for the protection of biological diversity.

2. IKEA has long worked to minimize the use of formaldehyde. Since 1986, IKEA has applied the German formaldehyde requirement, currently the strictest, for all IKEA pro-ducts on all sales markets, even where no limit exists. IKEA has also introduced equiva-lent requirements on textiles in spite of the fact that formal requirements exist only in Ja-pan and Finland.

3. Closed material loops, to minimise the environmental impact of the materials IKEA uses through minimising the amount of products ending up in land-fills or inclineration as well as minimising the use of non-renewable virgin resources.

4. “Water positive”, IKEA contributes to increase availability of clean water in the com-munities where they operate.

5. IKEA take the lead in more sustainable food, serving and selling in their stores.

4 sysem conditionEqualityHuman needs are met fairly for all

1. IKEA recognizes the need to work for a better environment. Efforts in this area in-clude evaluating the environmental impact of property, property enhancements, waste, equipment, and materials.

2. IKEA takes a lead in contributing to a better life for the people and communities im-pacted in their business. They support the realisation of human rights and have a positi-ve impact on people’s daily life.

3. They support and encourage the development of good places to work throughout their supply chain.

4. IKEA believe that their actions should always have the best interests of the child in mind (Children’s Rights).

5. Sustainability at IKEA means ensuring environmental, economic and social well-being for today and tomorrow. It means meeting the needs of people and society, without compromising the ability of future generations to meet their needs, acting in the long term interests of the many people and not just the few.

6. Democratic Design, is the IKEA way fo designing products to meet many people’s wants and needs.

How IKEA applied the principle of Back Casting

1. “Train-the-trainer” principle. In the first step, the trainers are selected from different organizations and then trained at a five-day seminar. In the next step, these trainers are assigned to educate all management teams and all employees.

2. An “ECO-facts” database was created that contains brief descriptions of different to-pical environmental issues with summaries of known facts.

3. It has been necessary to work closely with suppliers to help them understand and adapt to key environmental product specifications. (workshop for suppliers).

4. IKEA, once decided to cut the emissions of formaldehyde, has applied to its production the more rigid level of emissions. This long-term solution proved beneficial: IKEA avoi-ded the costs of litigation and retooling or revamping the product line.

Final resultIKEA goes RenewableSustainability is one of the main drivers of the profitability and competitiveness of IKEA.

“IKEA Goes Renewable” means they will produce more renewable energy than they consume throughout IKEA buildings and operations. IKEA can grow in a way that crea-tes opportunities and improves lives.

“IKEA Group Sustainability Strategy for 2020”That means transform their business, fully understanding the socio-economic impacts. Specific implementation tasks fall into six categories: Management and Personal, Pro-ducts and Materials, Customers, Suppliers (“Suppliers Goes Renewable”), Buildings Equipment and Consumable Materials, and Transport.