IKEA CSR study case

IKEA

• 424 IKEA stores in 52 markets

• 194,000 (2017)
• Retail: 89,9%
• Distribution: 6,1%
• Shopping centres: 1,8%
• Other: 2,2%

2018

• Turnover : 34,8 billion $ (= +4,7%)
• +14% in some countries !

• Most profitable market : China
• + 12 new stores, including the first one in India

• Visits on the IKEA website : 2,35 billion (+10%)

Important Events

1951

1945

1943

1956

First IKEA catalogue

Foundation by Ingvar Kamprad

Self-assembly furniture in flat packs is introduced

First IKEA ad in press & mail-order products

Ingvar Kamprad Elmtaryd (home farm) Agunnaryd (parish)

Important Events

1958

1973

1985

1961

1963

First IKEA group store in the U.S.

First IKEA store outside Scandinavia (Switzerland)

First IKEA store outside Sweden (Norway)

First contract with non-Scandinavian suppliers (Poland)

First IKEA store in Älmhult, Sweden

Marianne Barner

• Champion of children's rights
• Graduated of the Stockholm School of Economics
• Career in international business
• Business leader for IKEA carpets
• Mid 1990s, Child Labour prevention in IKEA’s supply chain
• Cooperation with Save the Children Sweden, UNICEF, trade unions, local NGOs, and leading experts
• Marianne retired from IKEA in 2013
• Chair of the Board of Plan International Sweden + member of the Wanås Foundation, Sweden, and Senior Advisor to Global Child Forum, Stockholm

Some facts before The "Wake up" calls

By the mid-1990s:

• IKEA was the world's largest specialized furniture retailer.
• Sales: $4.5 billion
• 98 IKEA stores in 17 countries,
• Catalog, which was printed yearly in 72 million copies in 34 languages.
• IKEA worked with almost 2,300 suppliers in 70 countries, sourcing a range of around 11,200 products.
• 24 trading service offices in 19 countries

Environmental wake-up:

Formaldehyde and bookshelves

Social wake-up call:

child labor and rugs

This chemical was used as a binding glue

DENMARK

GERMANY

• In 1992 German media investigated the Formaldehyde problem
• IKEA’s best-selling bookcase series,had high emissions
• IKEA immediately stopped production and sales of bookcases worldwide
• loses $6 million to $7 million
• discussions with both Greenpeace and WWF
• IKEA established a forestry policy

• In the 80s, Danish authorities defined limits for formaldehyde use.
• some IKEA products emitted more formaldehyde than was allowed.
• sales dropped 20% in Denmark
• In response they quickly established requirements regarding emissions
• Most of its suppliers bought from subsuppliers
• They work directly with the glue-producing chemical companies and, with the collaboration of companies such as ICI and BASF.

IKEA started to apply environmental criteria in other areas:

• They began using chlorine-free recycled paper in its catalogs
• They redesigned the best-selling OGLA chair using waste material from yogurt cups.
• They eliminated the use of PVC.

Ikea's Chocolate Cake Contained Fecal Bacterias

Ikea's Meatballs Contained Horse Meat

Ikea Deleted Women From Its Catalog

Ikea's Founder Has Alleged Nazi Ties

Ikea is the world's third largest consumer of wood

The issues nobody talks about

IKEA released their KUNGSBACKA line of cabinet faces, which are made from 100% recycled materials. Using a blend of both post-manufacturing and post-consumer waste.

SALVEM LA FRESCA

IKEA'S WEB PAGE

Rangan Export Scandal

Background of the new scandal

• Rangan Export: Ikea's major supplier
• Black and white clause added
• 1995: German Documentary Maker want to diffuse a film showing Children working at looms in Rangan's factories

• TV-show invited someone from IKEA to take part of a live discussion about the subject

Confrontational and aggressive approach aimed to attack IKEA

Should IKEA send a representative to the upcomming broadcast of the German video programm or decline the invitation ?

Participate to the Debate

• Explain all the actions that have been taken
• Prepare strong arguments (Partnerships with ILO, UNICEF)
• Clarify the stand of IKEA regarding Child Labor

• A company accountable for its products
• Show a good brand image

• Ambiguous discussions
• Damage to the company image

Do not participate

• Company only care about profit
• Hard to control the situation
• Child Labor Protection Organization against
• Negative brand image
• Lost in market-share in the German /Global market

Our Decision

WE PARTICIPATE!

Alternative:

• Release a Press Statement
• Take all the responsibility
• Everyone can be aware of IKEA's effort regarding Child Labor

What actions should be taken regarding the IKEA supply contract with Rangan Export?

Our decision

Terminate the contract unless

• The supplier corrects its mistake
• Send the children to Schools, IKEA will visit the school
• Maintain order with social and corporate rules
• If further violation ocurr, IKEA terminates all business with the suppliers

Short term strategy

Take legal actions

Fire Rangan Exports

Find new suppliers respecting the company values and ethics

Continue to work with Rugmark Foundation

Monitoring the rest of the suppliers

Work with the CSR department

Our Suggestions

We would continue to source carpets in India!

BUT continue to focus on eliminating the use of Child Labor

- Be precursor in term of Child Labor

- Be an example for other companies

- Create a department within IKEA for companies who want to join the cause

Thank you!

Do you have any question?