IKEA's Environmental Practices: Making Good Business Sense

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"IKEA deserves praise for the work of phasing out hazardous substances in its products. We have also found that the work on forestry issues is pursued with great commitment and know-how." ¹

- Uta Bellion, Greenpeace International, in 2004.

"Done in a sensible way, social and environmental work is good for business. It is good for business because our customers will feel reassured that they are doing business with a company that shares their views and values. And it is good for business because it can also support cost efficiency. Using resources and raw material efficiently, saving energy, improving working conditions at our suppliers and through that getting more motivated people, will have a positive effect on costs and therefore support our business objectives." ²

- Andres Dahlvig, Group President, IKEA Group, in 2005.

"Our ambition is to always strive forward and become better. This also applies to our co-operation with suppliers. All social and environmental activities help us and our suppliers produce more efficiently and profitably." ³

- Andres Dahlvig, Group President, IKEA Group, in 2005.

Introduction

In October 2005, IKEA Systems BV (IKEA), the Sweden-based global furniture giant, showcased 42 products made of unique, environmentally friendly materials. In 2003, IKEA had asked 28 designers to design sustainable products using environmentally friendly, recycled materials. After working on the products for about two and a half years, the designers came up with innovative furniture using fishnets, recycled packing crates, bamboo, Indian newspaper, saw dust, recycled plastic etc.

One such product was the PS ELLAN, a dining chair priced at US$ 39.99, designed by British freelance designer Chris Martin. The chair was made of wood-fiber composite, which is a blend of wood chips and recycled plastic. The chair could be broken down into six parts, so that it could be packed flat while being transported. The chair could be put together without any screws being used. Due to the use of recycled material, the chair was priced significantly low and the flat packaging saved on transportation costs. Another instance in Vietnam showcased IKEA's proactive approach to being environmentally friendly. IKEA received several complaints from customers that the fabrics stored in rattan4 boxes smelled of diesel.

Warehouse employees also reported a smell of diesel when they opened the containers with rattan products. One of IKEA's product technicians set out to find out the reason for this and contacted the technician at Vietnam, from where the products originated. It was found that for over hundred years, it had been the practice to boil rattan in diesel in order to make it flexible and that IKEA's supplier in Vietnam had been following this method.

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1] IKEA, Social and Environmental Responsibility Brochure, 2004.

2] "Social and Environmental Responsibility: President's Message," www.ikea.com, 2005.

3] IKEA Social and Environmental Responsibility Report, 2005.

4] Rattan refers to several species of palms which grow in the tropical regions of Asia, Africa and Australia. The diameter of rattan ranges from few millimeters to seven centimeters. Rattan is widely used in making furniture as it is durable and can be molded.