People IKEA SUSTAINABILITY & Planet Positive REPORT FY18 2 | IKEA SUSTAINABILITY REPORT FY18 In this report
People &. Healthy &. Circular. Fair &. Planet Positive. sustainable. & climate. equal. 44 living. 12 positive. 21
Introduction 3 Inspiring and enabling Transforming into a Providing and supporting The IKEA business in FY18 4 people to live healthier, circular business 22 decent and meaningful work 13 46 Sustainability highlights and challenges more sustainable lives Becoming climate positive 27 across the value chain in FY18 5 Promoting circular and Regenerating resources, Being an inclusive business 51 sustainable consumption 16 Letter from Torbjörn Lööf 7 protecting eco-systems Promoting equality 57 Creating a movement in society around and improving diversity 37 Letter from Lena Pripp-Kovac 8 better everyday living 18 This is IKEA 9 Becoming People & Planet Positive 10 Sustainability governance 11 SDG Index. 58
IKEA veggie hot dog, with a climate footprint seven times less than the classic meat hot dog, see page 15. 3 | IKEA SUSTAINABILITY REPORT FY18 | PEOPLE & PLANET POSITIVE
Introduction
We always think long term, innovating to ensure that our actions to meet people’s needs today do not compromise the ability of future generations to meet their needs. This requires us to rethink and inspire changes in lifestyles and consumption, and to transform our way of working – from linear to circular, from consuming to regenerating resources. Our culture and values will lead us to be even more inclusive, respecting and encouraging diversity, promoting equality and decent meaningful work across the IKEA value chain.
Together with our co-workers, customers, suppliers and partners, we are determined to use our size and influence to make a positive difference. We are committed to succeeding – to secure the success of our business while contributing to a sustainable future.
Currently there are some 600,000 people working for our tier-one suppliers and millions more in our extended value chain. We all share the same ambition: to contribute to a sustainable business built on our vision to create a better everyday life for the many people. 4 | IKEA SUSTAINABILITY REPORT FY18 | PEOPLE & PLANET POSITIVE
The IKEA business in FY18
422. 1,000. 208,000. IKEA stores in more than 50 markets. home furnishing suppliers. IKEA co-workers. in more than 50 markets.
9,500+. 957 million. 40. products in the IKEA range. visits to IKEA stores IKEA Industry production units. in 10 countries. 2.5 billion. visits to IKEA websites
EUR 38.8 billion. IKEA retail sales
19. new IKEA stores opened around the world 5 | IKEA SUSTAINABILITY REPORT FY18 | PEOPLE & PLANET POSITIVE
Sustainability highlights in FY18
Healthy &. Circular. Fair &. sustainable. & climate. equal. living. positive. PROMOTING EQUALITY AND DEVELOPING NEW USING MORE SUPPORTING PRODUCTS RENEWABLE AND DECENT WORK PÅTÅR WHITE NILE COFFEE 1 RECYCLED MATERIALS MISTELN mist nozzle, Almost 20 years of IWAY being developed with start-up OFFERING HEALTHIER 60% of the IKEA range is – our code of conduct for COLLABORATING Altered, can reduce water use AND PLANT-BASED based on renewable materials suppliers – securing good WITH SOCIAL by more than 90%. REDUCING FOOD FOOD and 10% contains recycled working conditions throughout ENTREPRENEURS WASTE GUNRID air purifying materials. The ambition is the supply chain. 1 million veggie hot dogs 100% renewable and Launch of three collections curtains1 – being developed 1,400 tonnes of food, Introducing Iconduct sold in Europe within first recycled materials by 2030. in partnership with social with universities in Asia and equivalent to 3 million meals, for franchisees. two months of launch. enterprises, such as single- Europe, IKEA suppliers, and saved since the start of Food is origin PÅTÅR White Nile innovators – made from a TOFTLUND Precious initiative in late 2016. DESIGNING CIRCULAR coffee, available in fabric that reduces indoor made from recycled PRODUCTS PET bottles 25 countries. air pollutants. SOURCING Designing products from RESPONSIBLY IMPROVING SOCIAL the very beginning to be LUSTIGT 100% of cotton and repurposed, repaired, CONDITIONS FOR 85% of wood from more reused, resold and recycled. DRIVERS sustainable sources. Ensuring drivers in the IKEA ENCOURAGING 94% of fish and seafood supply chain have good and fair certified to MSC or ASC MORE PLAY! working conditions. standards. Launch of the LUSTIGT BECOMING CLIMATE INCLUSION OF YOUNG collection and Real Play POSITIVE WORKERS Coalition to encourage Empowering young workers to children and adults to play 18,240 solar panels develop skills with our suppliers more, with products such installed on IKEA Industry in Southeast Asia. as colouring sheets and production unit in Paços de skipping ropes. Ferreira, Portugal – enough to power 2,700 homes.
JOFRID Using dyes made from agricultural waste 1 Launching FY20. 6 | IKEA SUSTAINABILITY REPORT FY18 | PEOPLE & PLANET POSITIVE
Sustainability challenges in FY18
ADDRESSING IMPROVING WORKING UNSUSTAINABLE CONDITIONS CONSUMPTION Decent working conditions are Inspiring and enabling more than fundamental for doing good 1 billion people to make sustainable business, so we are increasing our choices within the limits of the efforts throughout our extended planet. See pages 13-15. supply chains. See pages 46-57.
REMAINING INCLUDING VULNERABLE AFFORDABLE GROUPS IKEA is for the many people, so To create better possibilities for we must ensure IKEA remains inclusion in areas of the world that accessible to those with thin wallets. need it the most, we are working with partners who employ women TACKLING CLIMATE and marginalised groups. See pages 51-56. CHANGE Decoupling greenhouse gas (GHG) REPORTING ON emissions from growth takes time. OUR VALUE CHAIN The climate footprint of the IKEA value chain increased by 2.8% The IKEA People & Planet Positive between FY16 and FY18, and we strategy sets commitments for the expect it will take a few more years IKEA value chain and franchise before emissions start to decrease in system and this is the first report absolute terms. See pages 27-36. on our progress against the updated strategy and where we begin to SOURCING RECYCLED cover the complete IKEA business. MATERIALS We are developing a performance framework to ensure transparent There is a shortage of clean, and consistent future reporting recycled materials and we are across the value chain and franchise working to increase global system. availability – see page 38 – for example, by partnering with WWF in India to source recycled paper for our packaging. 7 | IKEA SUSTAINABILITY REPORT FY18 | PEOPLE & PLANET POSITIVE
The IKEA vision is to create reduce waste, save energy and conserve a better everyday life for the natural resources. For example, the MISTELN mist nozzle, being developed together with many people. the start-up Altered, can cut water usage by more than 90%. Our vision guides us every day. Around the world, we continue our efforts to inspire IKEA is transforming into a circular business by people with affordable and sustainable making products more repairable, reusable and products and solutions. And we are committed recyclable. We will go beyond selling products, to creating a positive impact for people, to offer services that extend the relationship society and the planet. with IKEA customers, supporting them to consume in different ways, and prolong the life People & Planet Positive – the IKEA of their products. sustainability strategy – embodies this commitment. We want to enable more people The “many people” in our vision include the to live sustainable lives within the limits of the people and communities connected to the IKEA planet. We want to reduce greenhouse gas value chain. We want to become an even more emissions in the atmosphere. And we want inclusive business. In FY18, we expanded our to create opportunities for people to take partnerships with social enterprises, creating better care of themselves, their families and jobs for more than 15,600 people, while communities. creating unique product collections for sale in IKEA stores. In FY18, IKEA attracted 2.5 billion website visits and 957 million visits to 422 IKEA stores Despite our reach, we know we cannot realise in more than 50 markets. This included stores our vision alone. We will continue to invite in India and Latvia, new IKEA markets. And customers, suppliers, corporations, start-ups, soon a new partner – Falabella – will bring IKEA governments, NGOs and other stakeholders products to Chile, Colombia and Peru. to be part of our journey. Together we will continue to co-create solutions that enable As we continue to grow and expand, we have positive changes for people, society and the the potential to make life better for even more environment. of the many people. To meet this challenge, People & Planet Positive sets ambitious goals We are just at the beginning, and most things for the entire IKEA value chain. For example, remain to be done. But I am optimistic and by 2030 we aim to reduce greenhouse gas excited about the future – we will together emissions by more than the entire IKEA value make this world a better place to live. chain emits. We will innovate across the value ”We are committed to. chain – from the raw materials we use to how products are used in people’s homes, and how TORBJÖRN LÖÖF the materials can be re-used in the future. CEO, Inter IKEA Group creating a positive impact. We are also working to inspire and enable people to live more sustainably, through products and solutions that make it easy to for people, society and. the planet.”. 8 | IKEA SUSTAINABILITY REPORT FY18 | PEOPLE & PLANET POSITIVE
Every year, the sustainability Similarly, our commitment to reduce our challenges facing our world climate impact goes well beyond the production of our home furnishings. It requires sourcing become more visible. different kinds of materials, working closely together with our suppliers and inspiring and FY18 was a critical year. The IPCC Special enabling IKEA customers to change the way Report emphasised the need for urgent action they live and consume. It will take time to see to keep global warming below 1.5OC. And the results of our work. through greater awareness of single-use plastic, we’ve seen important steps to tackle Throughout all of this, we will strive to make the wasteful use of resources and negative the IKEA business more accessible and impact of pollution. One example is our own affordable for the many people. We know that commitment to phase single-use plastic out today, the sustainable choice is often a luxury of our range by 2020. for the few. IKEA was based on the ideas to make more from less, to reach the many not We have an optimistic view of the future the few, and to inspire better ways of living. and we are committed to achieving our vision That remains our ambition as we become for positive change. We know more people people and planet positive. are looking to improve their lives within the limits of the planet. And we will use our We can only achieve this by working together scale to reach the many people with the to create the future we want to see. Our inspiration, products, solutions and services ambition is also to be a leader in creating a fair for better living. and equal society that benefits the many. I’m fortunate to work alongside so many passionate To solve global challenges such as air pollution and talented co-workers, driven by a strong and water scarcity, we need to go beyond IKEA, entrepreneurial spirit. And I’m excited by the co-creating and innovating, sharing ideas and potential of what we can achieve. ”Already, more than 60% . inspiration, and making the IKEA business more inclusive. Only by working together can we tackle some of the greatest challenges LENA PRIPP-KOVAC facing the planet and our business. of the range is based on . Head of Sustainability, Inter IKEA Group As part of our transformation to a circular business, we are committed to using only renewable or recycled materials to make our renewable materials” . products by 2030. Already, more than 60% of the range is based on renewable materials, like wood and more sustainable cotton, and nearly 10% contains recycled materials. But today there are not enough sources of recycled material to reach our goal. We will work together across the IKEA business, and beyond, to build the infrastructure to achieve our ambitions.
PARTICIPATING in discussions on sustainable consumption at the UN High Level Political Forum, New York, July 2018 9 | IKEA SUSTAINABILITY REPORT FY18 | PEOPLE & PLANET POSITIVE
This is IKEA
IKEA: one brand – many companies About this report The IKEA Sustainability Report is The IKEA business is operated through a franchise issued by Inter IKEA Group, consisting system. That means many people and companies with of Inter IKEA Holding B.V. and all its different owners work under one IKEA Brand. subsidiaries. It summarises the approach At the end of FY18 there were 11 franchisees operating and performance against the IKEA IKEA stores in more than 50 markets. During the year, sustainability strategy – People & Planet a new memorandum of understanding was signed with Positive – during FY18, and covers the Falabella regarding franchise rights in Chile, Colombia entire IKEA business, which is referenced and Peru, with the first store expected to open in 2020. as “we” and “our”. Ingka Group, formerly IKEA Group, is the largest IKEA This is the second Sustainability Report franchisee and a strategic partner with 367 IKEA stores in to be issued by Inter IKEA Group, 30 markets, and 158,500 co-workers. The name Ingka is and the first to begin covering the based on its founder’s name, Ingvar Kamprad. entire IKEA value chain and franchise Together, the companies in the IKEA franchise system system. It will take time to achieve develop and improve how people discover and interact comprehensive reporting across the with IKEA and IKEA products and solutions. franchise system. We have set a three- year plan for this, starting in FY18. Inter IKEA Systems B.V. is the IKEA franchisor, This report includes information from responsible for continually developing the IKEA Concept franchisees where possible, setting a and ensuring its implementation in all markets. IKEA strong foundation for future years. franchisees meet IKEA customers and ensure a high- quality customer experience. The financial year 2018 (FY18) of the Find out more about the IKEA franchise system here. IKEA business is from 1 September 2017 to 31 August 2018.
Inter IKEA Group For more information on the IKEA Inter IKEA Group is the group of companies that connects business, see IKEA facts & figures. IKEA franchisees with range development and suppliers, For more information about the IKEA and aligns the overall IKEA strategic direction, all to Retail business of the franchisee Ingka create a better everyday life for the many people. The Group, see the Ingka Group Annual & Group consists of three core businesses. Sustainability Summary Report. Some of the information from this report is n Inter IKEA Systems B.V. is the owner of the IKEA integrated into the IKEA Sustainability Concept and is the worldwide IKEA franchisor. Report FY18. n IKEA Range & Supply is responsible for developing and supplying the IKEA range. n IKEA Industry manufactures IKEA home furnishing products, producing around 10-12% of the total range. Find out more here. 10 | IKEA SUSTAINABILITY REPORT FY18 | PEOPLE & PLANET POSITIVE
Becoming People & Planet Positive
The IKEA vision is to create a The IKEA Direction outlines three roads forward We worked closely with our stakeholders across better everyday life for the many for the entire business – affordability, accessibility, the IKEA value chain and beyond to develop the and sustainability. People & Planet Positive is our strategy, taking their input and advice. people. That remains as true today sustainability strategy. It ensures that the IKEA Throughout this report you will find their input, as it was 75 years ago when IKEA business is sustainable, and has a positive impact challenging us to stretch ourselves. Based on People was created. In this time a lot has for everyone throughout our value chain, and for our consultations, we mapped and prioritised changed, and the IKEA business will the planet while we continue to grow. challenges and identified how and where we can have the greatest impact. & Planet continue to work to become even The IKEA vision and values guide us in how we work. That includes caring for people and more relevant, meeting the needs Our focus areas the planet. Making more from less and finding Positive and dreams of the many people new, creative ways to deal with limited resources Together, we have identified three major around the world. are part of the IKEA way of working. Today, this is challenges that are critical to our business: more important than ever as society faces huge climate change, unsustainable consumption challenges such as climate change, increasing and inequality. We will tackle them through inequality and unsustainable consumption. working on three focus areas to fulfil our vision and become people and planet positive. Developing the IKEA sustainability 1. Healthy & sustainable living: Our ambition strategy for 2030 is to inspire and enable more than People & Planet Positive was first launched by 1 billion people to live a better everyday life the franchisee Ingka Group in 2012, well before within the limits of the planet. See page 12. the IKEA range, supply and production activities 2. Circular & climate positive: Our ambition were acquired from Ingka Group by Inter IKEA for 2030 is to become climate positive and Group in August 2016. It included ambitious goals regenerate resources while growing the to transform the IKEA business, the industries IKEA business. See page 21. in the IKEA value chain and life at home for people around the world. We’ve made significant 3. Fair & equal: Our ambition for 2030 is to progress. But the world is changing rapidly, and create a positive social impact for everyone today it calls for even more ambitious goals, across our value chain. See page 44. and urgent action. These are big ambitions. To take the lead we will In FY18, we relaunched the IKEA People & go beyond setting commitments and be open Planet Positive strategy, covering the entire about the challenges we face and our successes IKEA value chain and franchise system with and failures along the way. We don’t have all the ambitions leading to 2030. It defines a common answers, and we will join forces with others to be sustainability agenda and ambitions for everyone part of a wider conversation to find new solutions. in the IKEA franchise system and value chain, See the full IKEA People & Planet Positive building on the success of the IKEA business strategy here. to date, input from our stakeholders, and our ambition to contribute to achieving the UN’s Sustainable Development Goals. 11 | IKEA SUSTAINABILITY REPORT FY18 | PEOPLE & PLANET POSITIVE
Sustainability governanceOverview of the IKEA franchise system
Sustainability across the n compliance with and requirements for Overview of the IKEA® franchise system sustainability goals through IWAY, the IKEA value chain IKEA supplier code of conduct. IKEA franchisor Inter IKEA Systems B.V. is the owner of the The Strategic Sustainability Council meets twice IKEA franchisees Franchise agreements IKEA Concept and the worldwide IKEA franchisor. a year, where representatives from Inter IKEA Inter IKEA Systems B.V. Ingka Dairy Farm House Market Group and the franchisees join to describe 1 store 367 stores 10 stores 7 stores We are committed to working together across Assignments and beyond the IKEA franchise system in a and follow up on our collective sustainability collaborative way, being transparent about ambitions. The Managing Director of each of the Ikano MAPA Al-Sulaiman companies are members of the Council. 7 stores 7 stores 5 stores what we learn and always improving. IKEA assignments All franchisees are obliged to comply with Sustainability working groups IKEA of IKEA IKEA Sarton Al-Futtaim Northern Birch Sweden AB Communications Supply AG 5 stores 4 stores 4 stores specifications for working with the IKEA Brand AB and Concept, and general business requirements, Experts on specific topics from Inter IKEA and outlined in IConduct – the IKEA code of conduct franchisees meet in working groups to share best Al-Homaizi Miklatorg Falabella 3 stores 3 stores for franchisees. The IKEA People & Planet Positive practice and build knowledge through the IKEA Supply agreements sustainability strategy outlines the ambitions and value chain. The working groups discuss and align Catalogue agreements commitments, creating a common agenda for the strategic initiatives and plans to fulfil the IKEA IKEA franchise system leading to 2030. sustainability strategy.
Each part of the IKEA business is setting goals, THE IKEA BUSINESS is operated The list above refers, in a simplified way, to companies/groups targets and roadmaps to deliver on the strategy. of companies operating IKEA retail businesses in one or more Sustainability at Inter IKEA through a franchise system. Inter markets. The listed names do not represent the legal company This allows for locally tailored and relevant IKEA Systems B.V. is the owner of the Thename list aboveof the refers, franchisee in a simplified companies way, to thatcompanies/groups have entered of companiesinto operating IKEAfranchise retail businesses agreements in one with or more Inter markets. IKEA TheSystems listed names B.V. do not represent the legal IKEA Concept and the worldwide IKEA implementation and activities as we strive Group FY18 company name of the franchisee companies that have entered into franchise agreements franchisor. with Inter IKEA Systems B.V. to make sustainability a part of everyone’s The Inter IKEA Sustainability Management Group daily work. includes the sustainability managers from various Strategic Sustainability Council Inter IKEA Group entities. It is responsible for developing the IKEA sustainability strategy 5 | Inter IKEA Group Financial Summary 2018 The Strategic Sustainability Council, founded and reporting on performance, and providing in February 2017, ensures that we share the recommendations on strategic business decisions same positions across the IKEA franchise system with environmental and social impacts, and for and that we align future developments and convening the Strategic Sustainability Council. commitments, while respecting the independence During FY18, the members of the Inter IKEA of the companies in the IKEA franchise system. Sustainability Management Group were: Policy It focuses on: & Compliance Manager, Inter IKEA Group; Sustainability Manager, Inter IKEA Systems n the IKEA Brand’s role in society B.V.; Sustainability Manager, IKEA Industry; n sustainability strategies and ambitions across Sustainability & Health Manager, IKEA Food; the franchise system, such as our ambitions to Sustainability Manager, Transport; Sustainability become a circular and climate positive business Manager, IKEA Range & Supply (Chair). that respects human rights 12 | IKEA SUSTAINABILITY REPORT FY18 | HEALTHY & SUSTAINABLE LIVING
One of the biggest opportunities for the IKEA business is to enable healthy and sustainable living for the many people. Our ambition is to inspire and enable more than Healthy &. 1 billion people to live a better everyday life within the limits of the planet, by 2030.
To make healthy and sustainable living accessible to the many people, it should be sustainable. desirable, easy, comfortable, and affordable. At IKEA, we are in a unique position to make a positive difference. IKEA co-workers meet many millions of people around the world, and we can use our knowledge of life at home to inspire and support people to make living. positive lifestyle changes and consume in more sustainable ways. This includes designing our products and services to be circular, sustainable and promote good health.
Our commitments
Inspiring and enabling Promoting circular Creating a movement people to live healthier, and sustainable in society around better more sustainable lives 13 consumption 16 everyday living 18 13 | IKEA SUSTAINABILITY REPORT FY18 | HEALTHY & SUSTAINABLE LIVING | INSPIRING AND ENABLING PEOPLE TO LIVE HEALTHIER, MORE SUSTAINABLE LIVES
Our commitment Healthy and sustainable living
USTAIN Every year, we launch around 2,000 new IKEA more sustainable lives. They enable customers Inspiring and enabling S AB – IL products, contributing to a total range of more to generate renewable energy, save energy and Y I than 9,500 products. All IKEA products and water, purify the air in their homes, cut waste, people to live healthier, T T I Y solutions are designed with sustainability in and encourage healthy behaviours such as L – mind. This includes how they are made – such healthy eating, play, movement and rest. more sustainable lives. A as the materials we use – and in some cases F U The following are some healthy and sustainable
O how they are used – such as functions that
Q living product highlights.
Democratic R enable people to save water or energy. To –
IKEA is committed to enabling the many M achieve this, we follow the five dimensions of
design Reduce food waste
E
people to live a good life within the limits our design approach Democratic Design: form, –
C Around a third of all food produced globally
I function, quality, sustainability and a low price. 1
of the planet. We have a big opportunity F for human consumption is lost or wasted. R U
P
N
to make a positive difference – in FY18 The IKEA products with specific sustainability We are working on solutions to store food at
C
W
T functions empower people to live healthier and home and to transport meals and snacks when O
I we welcomed 957 million visitors to L O
N – 422 IKEA stores in more than 50 markets, and 2.5 billion visitors to the IKEA website.
To inspire and enable people to live a better everyday life, we start by understanding how Democratic design people live. We’re passionate about life at home Every product is designed according to the five and connect with thousands of people every year dimensions of Democratic Design. to learn what life at home looks like all over the world, through home visits and surveys. See, for FORM example, the IKEA Life at Home report 2018. Products that make customers feel good while making the world a more beautiful place. We will continue our journey to develop better, even more affordable products for healthy and FUNCTION sustainable living. This includes our food range, Products that work well and make everyday life where healthier and more sustainable options will easier and more meaningful. be delicious and affordable, even for people with thin wallets. And we will go beyond our products QUALITY to offer the services, inspiration and knowledge for High-quality and long-lasting products that people to make sustainable living a reality. weather the wear and tear of everyday life.
SUSTAINABILITY Products made in ways that are good for people and the planet, and which can enable people to live healthier and more sustainable lives at home.
LOW PRICE Products that are affordable and accessible to the many people.
Learn more about democratic design behind the scenes on the IKEA Today microsite. 365+ Food storage platform
1 http://www.fao.org/save-food/resources/keyfindings/en/. 14 | IKEA SUSTAINABILITY REPORT FY18 | HEALTHY & SUSTAINABLE LIVING | INSPIRING AND ENABLING PEOPLE TO LIVE HEALTHIER, MORE SUSTAINABLE LIVES
Save water Defining healthy & sustainable products LUSTIGT is all about play, for children and adults Around one tenth of the world’s water is To encourage the development of innovative consumed in people’s homes.3 The MISTELN products and solutions with an even bigger mist nozzle, launching in FY20, and developed positive impact on people and the planet, we together with start-up Altered, fits onto existing have strengthened the criteria for products taps to cut water use by more than 90%.4 to be categorised as enabling healthy and sustainable living. Now, they will provide Generate renewable energy a better sustainability solution than what’s Home solar allows customers to generate already on the market, or be more affordable. renewable energy using the roof of their homes. Today, Home Solar is offered to 5 customers in six markets. By 2025, the aim MEASURING OUR PROGRESS is to make it available across 30 markets.5 In Our focus has long been on developing FY18, the franchisee Ingka Group expanded and offering affordable products and the clean energy offer by adding services like solutions that enable customers to save battery storage, which allows homeowners to and generate clean energy, be resource use more of the electricity generated by the and water efficient, reduce waste and solar panels. live more healthily. We have assessed By storing their excess power rather than our performance based on the number exporting it to the grid, customers can save of these products sold. We are proud of even more money on their energy bills. Ingka these products and their reach, and Group is also testing combined systems for will continue to develop and market solar panels and heat pumps in Switzerland, them. For example, in FY18, 91 million and making it possible for people in the UK who LED bulbs and 10.7 million rechargeable don’t have home solar to switch to a 100% batteries were sold. renewable electricity tariff with the Big Clean Now we want to go beyond the sales Switch. In the future, the aim is that as many figures, understanding the impact that people as possible can join the clean energy we have on people’s lives and the planet. on-the-go. Our research found that people movement, with a little help from IKEA. We’ll consider the use of products at waste less food when they can see what is in HOME SOLAR is offered to customers in six markets home, the materials in them, and how their fridge, and when food storage containers Play we inspire and enable a new mind-set are flexible in their use. Based on our insights, We have conducted some of the world’s largest for healthy and sustainable living. This in FY18 we launched a new food storage research studies on the importance of play way we can enable a bigger shift in platform, IKEA 365+. The platform includes – see page 52. Our findings have helped to society and across the IKEA business. standardised containers and lids that can be develop our new range, LUSTIGT – Swedish for used interchangeably, making it easy to add fun. LUSTIGT is all about play, for both children We are developing a performance to the collection. Find out about how we are and adults. There’s something for everyone: framework to track our progress. It leading by example by reducing food waste in colouring sheets, a puzzle, skipping rope, will be based on our product range and our own operations on page 25. weaving loom, boules with soft balls and much service offer, its impact in homes around more. The toys can be used in many different the world, and people’s perception of the Purify air ways, stimulating the imagination. IKEA brand. Nine in ten people live in places where air pollution exceeds safe limits,2 and it is often
worse indoors than outside – see page 20 for our research on clean air. We are working on 2 https://www.who.int/news-room/detail/02-05-2018-9-out-of-10- 4 Depending on household water flow, local water pressure and how people-worldwide-breathe-polluted-air-but-more-countries-are- nozzle is used. solutions to purify air in homes using household taking-action. 5 Through the IKEA Retail business of Ingka Group. Six markets 3 Food and Agriculture Organization of the United Nations, The State cover IKEA Retail Belgium, IKEA Retail Netherlands, IKEA Retail surfaces that reduce pollutants, like our air of the World’s Land and Water Resources for Food and Agriculture Germany, IKEA Retail Italy, IKEA Retail Poland and IKEA Retail purifying curtain, GUNRID, launching in FY20. (SOLAW), http://www.fao.org/nr/solaw/solaw-home/en/. Switzerland. 15 | IKEA SUSTAINABILITY REPORT FY18 | HEALTHY & SUSTAINABLE LIVING | INSPIRING AND ENABLING PEOPLE TO LIVE HEALTHIER, MORE SUSTAINABLE LIVES
Healthy and sustainable Safer life at home food Safer homes chemicals used in, or for making IKEA products In FY18, 680 million people experienced the should be safe for customers, co-workers and We want to inspire and empower customers IKEA Food offer, either in our Restaurants, the environment, and take into account the to make their homes safer using our home Swedish Food Markets or Bistros. We want to lifecycle of the product. For many years, IKEA furnishing knowledge. That’s why we launched inspire food choices that are good for people has engaged with research on chemical safety. the Safer Homes pilot project. Using an app, and the planet. We’re making progress, but Our chemical standards often go beyond legal in-store workshops and information on the are just at the beginning. requirements, phasing out chemicals that website, we are targeting parents with children are suspected of being harmful in advance of up to age seven, and raising awareness Food offer legislation. For example, in FY18 we phased of safety improvements to make at home. out benzophenone in our surface coatings and Products in the IKEA Food range are also The app provides information on children’s plastic (polymeric) materials. developed with high attention to the five development and room-specific safety tips dimensions of Democratic Design (see tailored to children’s ages. The project started The IKEA Chemical Strategy is updated page 13). Our Balanced Meal Norm supports in Iceland in FY18, and will pilot in Australia regularly to reflect changing demands and new us to develop meals and snacks that contribute during FY19. Insights will be used to develop evidence. We want to create safe and healthy to a balanced diet with good nutritional quality. and roll out the project to more markets in the products through five strategic objectives. IKEA Food product developers and local chefs near future. n Increasing information on chemical in the markets will use this tool to assess the content in products. ingredients used in products and meals to VEGGIE HOT DOG Our products n understand their nutritional value. made from plant-based Assessing all IKEA products for Product safety is always a top priority for ingredients chemical safety. We want to make more sustainable and healthy IKEA. When developing products, we conduct eating desirable by creating a delicious and risk assessments and testing to ensure new n Phasing out substances that could affordable food range for the many. In FY18, products meet our high standards. If we learn cause harm. we launched the veggie hot dog at IKEA SAFER HOMES that existing products could pose a safety risk, n Ensuring suppliers share IKEA values Bistros. It is made from plant-based ingredients PILOT APP we take corrective action, which can include on chemical safety and compliance. including carrots, ginger, kale and red lentils, recalling a product. Details of product recalls in n Increasing awareness among co-workers, and its climate footprint is around seven times each market are available on IKEA websites. less than that of the classic meat hot dog. consumers, and key stakeholders. Furniture tip-over incidents are an industry- Within two months of the launch, IKEA stores In FY18, we increased our transparency on wide problem. We are working hard to raise in Europe had already sold one million veggie chemical safety. Information about chemicals awareness among customers about how to hot dogs. By offering more delicious plant- can now be found on specific products – such prevent tip-overs. Attaching furniture to the based alternatives like this, we hope to reach as chrome-free leather sofas in IKEA US – and wall is key. We supply tip-over restraints with more of the many people – both those who some IKEA country websites. IKEA products, and anyone who has misplaced don’t eat meat and those who are curious theirs can pick up a new one from any IKEA about plant-based options. Next, we plan Chemical safety is key as we transition to a store, free of charge. We are continuously to launch a plant-based soft ice and there circular business and use more recycled and working hard to raise awareness about tip-over will be more plant-based options to come in secondary materials in IKEA products. We prevention, urging customers to follow the the future. do not accept that recycling happens at the assembly instructions carefully. expense of chemical safety, and we will ensure Sourcing a toxic-free circulation of chemicals. To achieve Chemicals this, we conduct chemical risk assessments We work to source the raw ingredients for the before a product containing recycled material is Chemicals are useful in many ways – they IKEA Food range from responsible and more introduced to the IKEA range. bring colours and texture to materials, glue sustainable sources, meeting animal welfare, parts together, and can provide a protective environmental and social standards, and using layer to make products last longer. Safety is third-party certifications where relevant. Find always the priority when using chemicals. All out more on pages 42-43. 16 | IKEA SUSTAINABILITY REPORT FY18 | HEALTHY & SUSTAINABLE LIVING | PROMOTING CIRCULAR AND SUSTAINABLE CONSUMPTION
Our commitment Designing for circularity PLATSA is a highly flexible storage system that can Transitioning to a circular business affects every part of developed material roadmaps to achieve our circular Promoting circular be adapted to changing life our value chain, including how we design our products. ambitions. We found that recycling rates differ between situations. Parts can be easily Circular products will be designed from the very countries and materials, with paper and metal being added and taken away, and and sustainable beginning to be reused, refurbished, remanufactured, the most highly recycled materials. Two-thirds of waste sizes are standardised consumption and recycled – extending their lifespan for as long as is municipal, and a quarter of waste comes from US to enable refurbishment. possible. They will also be material banks for the future, and China combined. meaning we can take them apart when they are no Developing new products from new materials takes longer working or wanted and reuse the raw materials. time, and we know that designing all of our products People’s attitudes to their possessions We have developed the nine circular design principles to according to the nine principles will not happen straight are changing. They have less space guide how we design circular products (see below). away. We are learning and making progress by doing, and more knowledge about the In FY18, we assessed the global availability of recycled and have already started to implement the design impacts of consumption on the planet. materials, such as plastic, textiles and wood, and principles for some products; see two examples, right. They are interested in new ways of consuming – without waste, owning fewer things and valuing what they The nine circular design principles have. Our products and services will 1. DESIGNED FOR AN EXPECTED LIFESPAN 6. DESIGNED FOR ADAPTABILITY AND cater for these changing needs in a Customers want to replace some products regularly, UPGRADABILITY way that is affordable, convenient, while others they want to last a lifetime, such as Needs and desires change over time. We want our a beautifully designed sofa. Product durability and products to be easy to update and upgrade to cater and good for people and the planet. materials will match the expected lifespan. for change.
Our ambition is to see all IKEA products as 2. DESIGNED FOR THE USE OF RENEWABLE OR 7. DESIGNED FOR CARE AND REPAIR raw materials for the future, and to design RECYCLED MATERIALS We want customers to be able to enjoy our products them all to have circular capabilities that Sustainable materials make sustainable products, so for a long time, so they will be easy to maintain and help to prolong their lives. We will extend we will design products from the beginning to use repair. our relationship with customers throughout renewable and/or recycled materials. a product’s use and end-of-life to enable 8. DESIGNED FOR DISASSEMBLY AND them to repair, reuse, resell and recycle 3. DESIGNED FOR RECYCLING REASSEMBLY IKEA products. We will provide and promote The materials in products often last longer than People rarely stay in one home their whole life. services, solutions and knowledge for customers use the products for. Our products will be We want our products to accompany our customers circular and sustainable consumption, such designed so that materials can be recovered easily wherever life takes them, so they should be easy KUNGSBACKA is a beautiful kitchen front as furniture takeback services. and given second lives (and third, and fourth…). to put up and pack away. made from recycled Becoming a circular business is a great 4. DESIGNED FOR PRODUCTION 9. DESIGNED FOR AN EMOTIONAL PET bottles and recycled wood. opportunity and a tremendous challenge. Products will be designed to minimise waste in their CONNECTION We are just at the start and don’t have production, for example materials, chemicals, water When customers have an emotional connection with all the answers. We are committed to and energy. a product, they’re less likely to throw it away and joining forces with expert partners and more likely to repair it if it breaks. our customers to achieve our ambitions. 5. DESIGNED FOR STANDARDISATION AND COMPATIBILITY Our products will follow standard measurements allowing interchangeability, enabling better production and remanufacturing, and compatibility with other brands. Read about our approach to becoming a circular business on page 22. 17 | IKEA SUSTAINABILITY REPORT FY18 | HEALTHY & SUSTAINABLE LIVING | PROMOTING CIRCULAR AND SUSTAINABLE CONSUMPTION
Circular services Extending life of products Along with IKEA franchisees, we are exploring through care and repair how the IKEA business can support the transition to a circular economy and provide IKEA repair services enable customers to prolong new services that enable customers to the life of their products by offering spare parts prolong the life of IKEA products and pass and fittings for all products. In FY18, IKEA them on in a convenient way when they are provided more than a million spare parts to no longer wanted. customers.
Passing on and reselling products
We will enable customers to pass on or sell products when they are no longer wanted, giving them a second life. Already, second-hand products have been sold in some stores, refurbished where necessary. We see big potential in this service and are exploring how to scale it globally, while developing our supply chain to make use of these second-hand resources.
IKEA Retail Japan,6 for example, offers a buy- IKEA JAPAN back service for IKEA furniture that’s still in Buy-back service good condition but no longer needed. Customers can exchange their unwanted furniture for a voucher to spend in store. The furniture is then Moving towards renewable and refurbished and sold at a reduced rate to a new recycled materials customer. More than 3,400 items were sold back Our ambition is to only use renewable or recycled to IKEA Retail Japan during FY18. In June 2018, material in our products by 2030. Today, more it launched a buy-back scheme specifically for than 60% of the IKEA range is based on renewable new parents so they could buy baby furniture, materials, and nearly 10% contains recycled already knowing how much they will receive materials. back when they return it. Many other markets, including Australia, Canada, Norway, Sweden We are rethinking what materials should go into and Switzerland tested similar buy-back schemes our products to achieve our ambitions. Plastic, during FY18. for example, is one of the biggest challenges of our time. We are developing plastics that are made from renewable or recycled sources, and working to scale up these innovations beyond the lab. We also look to partner with others to collect plastic before it enters oceans and incorporate it into products – find out more here and on page 41. See page 23 for information on how we are phasing out single-use plastic and for more about our products made from
6 Operated by the franchisee Ingka Group. renewable materials. 18 | IKEA SUSTAINABILITY REPORT FY18 | HEALTHY & SUSTAINABLE LIVING | CREATING A MOVEMENT IN SOCIETY AROUND BETTER EVERYDAY LIVING
Our commitment Co-creating a better world CO-CREATE IKEA To inspire people with solutions for a Co-create IKEA Creating a sustainable and healthy life, we need to Co-create IKEA aims to include the many collaborate with others. We will seek out new people in our Democratic Design process and movement in partners with unique perspectives and insights, product development (see page 13 for more and work together to scale ideas and creative society around on Democratic Design). Together, we will solutions for positive change. We have already passionately challenge conventions and create made progress with two initiatives: IKEA better everyday capabilities for a sustainable future and a Bootcamp and Co-create IKEA. living circular economy. IKEA Bootcamp Gathering input from a bigger, more diverse group brings us closer to people’s needs and We see an opportunity in working with dreams. This makes our products more relevant Our ambition is to lead a transition entrepreneurs to solve the big problems, than ever. In FY18, we worked with 6,000 for people as well as our planet. IKEA towards a new definition of a better co-workers to gather their input on products Bootcamp was a three-month start-up everyday life – one that supports in development. Now, we plan to expand the accelerator programme run in collaboration health and well-being, and is within community beyond co-workers to invite people with Rainmaking, a global cooperative of around the world to share ideas on how to the means of the many people and entrepreneurs. It scouted start-ups with an improve their everyday life at home. the limits of the planet. We will idea that has a positive impact. In September work to understand what better 2017, ten start-ups were selected from 1,300 Our Co-create IKEA labs help us strengthen applicants. They were mentored by IKEA co- connections with our communities, creating living means for people around the workers, Rainmaking and other successful mutual benefits from their insights. In FY19, world and how we can best apply entrepreneurs. We are now considering we will open the first Co-create IKEA lab in our resources and knowledge. This collaborating with some of these participants. Älmhult, Sweden. In this lab, we will work with the community to bring our ideas into early means working together with our We will run another IKEA Bootcamp in FY19. product prototypes. customers and our expert partners, Find out more here. Find out more on the Co-create IKEA microsite. to co-create solutions and advocate for change.
IKEA BOOTCAMP “We’re inviting customers, designers, engineers and others to join our new Co-create IKEA community. Together we can contribute to the daily development and long-term innovation of the IKEA product range.”
TORBJÖRN LÖÖF CEO, Inter IKEA Group 19 | IKEA SUSTAINABILITY REPORT FY18 | HEALTHY & SUSTAINABLE LIVING | CREATING A MOVEMENT IN SOCIETY AROUND BETTER EVERYDAY LIVING
Advocacy DEMOCRATIC DESIGN DAYS Stakeholder To create a movement around sustainable living, we will go beyond our own programmes and challenge: operations to advocate global action. Here are Julian Hill-Landolt, a few examples from FY18. World Business Council for Children’s right to play Sustainable Development In FY18, the IKEA business7 – together with the LEGO Foundation, Unilever and National To achieve our ambition of inspiring Geographic – created The Real Play Coalition and enabling 1 billion people to make to advocate and raise awareness of the healthier and sustainable choices, we importance of play. must go beyond our own business Learn about our research on play on page 52 to work with others, listening to and by looking at how they live, rather than and our products that encourage play on learning from them. We asked Julian the impacts of their lifestyles. Focusing on page 14. Hill-Landolt, Director, Sustainable impact reductions often leads to us asking Lifestyles at the World Business Council people to give things up. We need to flip Democratic Design Days for Sustainable Development (WBCSD): our approach. We must provide products Every year, we open our doors to give people a how can the IKEA business best and services that offer an aspirational behind-the-scenes glimpse of the IKEA business. contribute to sustainable consumption quality of life, with a fraction of the impacts. In FY18, we invited 300 journalists to the heart and lifestyle choices? In business terms, we need to create a of IKEA in Älmhult and asked them to spread the market for more sustainable lifestyles, message that we want more people to join our and the products and services that make “Population growth, increasing urbanisation, mission for a better everyday life within the limits it possible. social and environmental pressures, the of the planet. We shared the new IKEA People nature of work and new technologies are People are already looking for ’better’ & Planet Positive strategy, including our plans all combining to change people’s daily lives, options that help them to enjoy aspirational to phase out single-use plastic in stores and to and their needs, hopes and dreams. Around and happy lifestyles with their family and become a circular business. Find out more here. the world, people from across the socio- friends. Businesses just need to nurture economic spectrum are questioning what this emerging opportunity, going beyond United Nations a ’good life’ looks like today. meeting current demand to shape the In July FY18, Inter IKEA Group participated future for the better. in the UN High Level Political Forum in New Better. That’s where the future lies. Not York. We used the platform to collaborate with more, not less, just better. You can almost IKEA has set ambitious goals to do exactly representatives from communities, businesses and see it in an IKEA advert! And, of course, that – creating a movement around better academia on achieving Sustainable Development it is an important pillar of the new IKEA everyday living, inspiring and enabling Goal 12 – ensuring sustainable consumption strategy: ’Creating a movement in society people to live healthier, more sustainable, and production patterns. We discussed how to around better everyday living’. Business has resource-efficient lives. Exploring what make sustainable living easy and accessible for a huge opportunity to shape the way better people can, rather than can’t, do. everyone, and how to mobilise youth. We also (sustainable) lifestyles are made possible Succeeding will require unwavering focus. discussed chemical safety and social impact. and desirable. It’s always easier to give people what they Part of shifting people’s aspirations will want. But lasting long-term success be changing the perception of sustainable comes from shaping what people want. living. Doing this demands a new approach We wish IKEA, and those that it will inspire to the way we offer people ’sustainable’ and lead, every success in shaping our options. To understand how we can truly future towards healthier, more sustainable, make people’s lives better, we need to start aspirational lifestyles.”
7 Through the franchisee Ingka Group. 20 | IKEA SUSTAINABILITY REPORT FY18 | HEALTHY & SUSTAINABLE LIVING | CREATING A MOVEMENT IN SOCIETY AROUND BETTER EVERYDAY LIVING
Stakeholder challenge: Simon Holmström, ReGeneration 2030, the Nordic and Baltic Sea youth movement for realising the UN’s Agenda 2030
Listening and learning from It is hard to make responsible our stakeholders helps us stay consumer choices today. How do focused on the issues that we know if a sofa is sustainable REGENERATION 2030 SUMMIT matter most, explore new ideas or not? How can we ascertain ÅLAND, AUGUST 2018 and co-create a better world. that the new bed is not made We asked Simon Holmström, of unsustainable fabrics? representative of ReGeneration Businesses are often quite bad at ReGeneration 2030 Youth Summit Swedish and Japanese governments. and creating solutions for purifying air 2030, what he and his peers communicating about this. But we In August FY18, Inter IKEA Group led Inter IKEA Group is a member of the in homes (see page 14). expect from leading sustainable care, and we want transparency of a workshop at the ReGeneration 2030 SLE programme’s Multi-Stakeholder businesses. This is his call production chains and information Summit on how to make sustainable Advisory Committee. Find out more here. World Economic Forum to action: about the products in the stores. living more inspiring and accessible. In recognition of our progress in Clean Air Survey transforming into a circular business, ReGeneration 2030 is a movement of This requires a radical system shift Clean air is one of the biggest health IKEA received the World Economic teenagers and young adults from the “We live as if our planet’s resources of our society. This requires new challenges of our time, and we want to Forum’s Circular Economy Award in the Nordic and Baltic Sea Regions to make were infinite. As young people business models where new values play our part in finding solutions. multinational category, in January 2018. the United Nations 2030 Sustainable in society, we are concerned guide how we use materials. Supply Development Goals (SDGs) a reality. The IKEA Clean Air Survey explores and realise that this has to end. chains have to be redeveloped. Climate positive Find out more here. how people around the world relate Therefore, we are taking part in Hazardous components have to By 2030, we want to be a climate positive to air pollution and how it affects their movements towards zero waste, be phased out. Products have business, and we will go beyond our own The 10 YFP/One Planet Network, daily lives. developing new apps towards a to be designed in ways that operations to create positive change. Sustainable Lifestyles and more circular economy, and buying facilitate durability, movability and It found that people around the Education Programme We will be an advocate for a low-carbon stuff in a radically new way. recyclability. world underestimate the threat of air The 10-Year Framework of Programmes society, for example by participating pollution in their homes, even though Now more than ever, we are Because the thing is, we do not on Sustainable Consumption and in global events such as the UN’s it causes more premature deaths demanding easy, affordable ways want to buy stuff so much anymore. Production (10YFP) is a global Climate Week. than outdoor pollution. It also found to make sustainable choices. It Rather, we want to collaborate commitment to accelerate the shift people were encouraged to change The IKEA Climate Action Research will should not be more expensive to in designing new behaviours. We towards sustainable consumption and their behaviour when shown data from help us understand how to inspire and be climate smart. It should not be want more play, better sleep, more production through six programmes. a pollution sensor and up-to-date air enable IKEA customers to take action on difficult to know whether a product hanging around with friends and The framework was adopted in 2012 pollution information. climate change. We will share the findings is free from hazardous chemicals. stunning life experiences, for us at the World Summit on Sustainable so that other businesses, policymakers, It should not be laborious to find and future generations. Development. In FY18, we shared our findings to campaigners and the media can also the eco-products. create better awareness of the problem. We want future-oriented businesses The Sustainable Lifestyles and Education mobilise climate action. like IKEA to understand us better. (SLE) programme is one of the six We are reducing air pollution in our See page 27 for more on our ambition to So, let us discuss more sustainable programmes and a global platform own operations by phasing out the use become climate positive and pages 26, living together.” to promote and scale up sustainable of fossil-based fuels (see pages 32-36) 41 and 57 for more examples of IKEA lifestyles world-wide. It is co-led by the and certain chemicals (see page 15), advocacy work. 21 | IKEA SUSTAINABILITY REPORT FY18 | CIRCULAR & CLIMATE POSITIVE
By 2030, our ambition is to be a circular business built on renewable energy and regenerative resources, decoupling material use from our growth. Circular.& climate. We aim to end our dependency on virgin fossil materials and fuels, and we will reduce greenhouse gas emissions in absolute terms while positive. growing the IKEA business. This is how we will contribute to limiting global temperature increases to well below 2°C, aiming towards 1.5°C, by the end of the century.
Our commitments
Transforming Becoming Regenerating resources, into a circular climate positive protecting eco-systems and business 22 27 improving biodiversity 37 22 | IKEA SUSTAINABILITY REPORT FY18 | CIRCULAR & CLIMATE POSITIVE | TRANSFORMING INTO A CIRCULAR BUSINESS
Our commitment Transforming into a Renewable, recycled and circular business recyclable materials More than 60% of the IKEA product range is based on renewable materials, like wood and The IKEA business idea is to offer a wide cotton, and nearly 10% contains recycled range of well-designed, functional home materials. We have a long way to go to reach our goal of 100% renewable or recycled furnishing products at prices low enough material by 2030. Finding enough clean that as many people as possible will be recycled materials is a challenge. We are able to afford them. To continue doing working closely with our industry partners this in a world of limited resources, we will to increase the availability of renewable and recycled materials. The situation should move away from the linear model of ‘take, improve as we, together with others, transition make, waste’, to a circular system where to a circular business and our products become nothing is wasted and old products become material banks for the future. Read about how new resources. This will affect everything we work to source renewable materials from more sustainable sources on pages 37-40. we do: from how we design products and services and develop the IKEA supply In FY18, we completed our mapping of the global availability of ‘waste’ materials (our chain, to how and where we meet our To become a circular business, we will: future feedstock) and developed models for customers. We have set four commitments 1. DESIGN 100% OF OUR PRODUCTS 3. DEVELOP NEW WAYS FOR CUSTOMERS sourcing waste wood, plastic, paper, metals to guide our approach (see box). ACCORDING TO OUR CIRCULAR DESIGN TO ACQUIRE, CARE FOR AND PASS ON and textiles. We will build on this by developing PRINCIPLES BY 2030. THEIR PRODUCTS. partnerships and collaborations to transform We’re just at the beginning of our transformation the industry and improve supply. For example, Every product will be designed from the The transformation to a circular business to become a circular business. We know that rapid we’re partnering with WWF on a recycled very beginning to be reused, refurbished, means we need to find new ways to meet progress will not happen straight away but we’re paper project in India. A two-year WWF study remanufactured and recycled (see page 16), our customers. We will provide convenient testing new ways of working and planning what is of Indian waste paper management explored generating as little waste as possible. This services that enable them to be part of necessary to achieve our goal. the lifecycle of waste in the country from means that products will be designed to last as the solution, based on research about how generation and collection to segregation, long as they are needed, and at the end of their customers acquire, care for and pass on their processing and disposal. WWF prepared a risk life the materials can be used as resources for belongings (see page 17). identification and mitigation register and draft new products. procurement guidelines for recycled paper. 4. TAKE THE LEAD AND WORK TOGETHER This highlighted challenges in existing waste 2. USE ONLY RENEWABLE OR RECYCLED WITH OTHERS. MATERIALS TO MAKE OUR PRODUCTS paper recovery systems and potential methods BY 2030. We cannot achieve this transformation alone. for improvement. Now we are supporting We will partner with businesses, NGOs, WWF to pilot the procurement guidelines We will source materials from renewable sources governments and customers to change the with our packaging suppliers in India. With (see page 24) and aim to eliminate virgin fossil global agenda (see page 26). Together, we can WWF, we hope to increase the availability of materials from our products (see page 23). make a lasting impact on a large scale. the materials used to make paper packaging We are efficient with resources and see waste and reduce the need for imported virgin raw as a valuable resource. Our aim is to send materials. As well as helping us to improve our nothing to landfill (see page 25). own waste paper supply chains, we will use our findings to inform broader recommendations for the waste paper industry. 23 | IKEA SUSTAINABILITY REPORT FY18 | CIRCULAR & CLIMATE POSITIVE | TRANSFORMING INTO A CIRCULAR BUSINESS
We have already developed several products from recycled materials – including TOMAT spray bottles, The handmade KNIXHULT JOFRID SKRUTT desk pads, TJENA boxes and KUNGSBACKA lamp is made from parts using dyes made kitchen fronts. In FY18, we launched: of bamboo that are usually from agricultural thrown away. This not only waste, such as n TOFTLUND rugs, which are made from recycled reduces waste, but uses a nut shells and PET bottles but look and feel like sheepskin. material that is renewable, orange peel grows quickly and doesn’t n JOFRID curtains, throws and cushion covers require fertilisers, pesticides made from a mixture of more sustainably sourced or irrigation. cotton and linen made from flax (a much less resource-intensive material than cotton). We also used a new way of colouring textiles with dyes made from agricultural waste, such as nut shells and orange peel.
”We recognise that single-use plastic can pollute ecosystems, such as oceans and waterways, and harm wildlife, when it is not disposed of responsibly. We are determined to play our part and take responsibility in the areas where we can make a difference.”
CAROLINE REID TOFTLUND Sustainability Development Manager, IKEA rugs made from recycled PET bottles Phasing out single-use plastic products There is a global movement to tackle plastic waste. We are phasing out all single-use plastic products. “The planet’s resources are By 1 January 2020, single-use plastic products limited, and we need to start will be removed from the IKEA home furnishing using them more wisely. For range globally. This includes products like SODA and SÖTVATTEN drinking straws, FÖRNYBAR me, designing for circularity freezer bags, ISIGA ice-cube bags and FÖRSLUTAS is about being able to look garbage bags, as well as plastic-coated paper plates my children in their eyes in and cups. We want to replace these with more the future and say that I did sustainable alternatives. But we don’t yet know exactly how we will replace each single-use plastic something to ensure that product. This may mean that in some cases, we there is a planet left for are not able to offer an alternative immediately. them in the future.” We are also phasing out single-use plastic items in IKEA Restaurants, Bistros and Cafés, and looking ANNA GRANATH for more sustainable replacements. Product developer, IKEA 24 | IKEA SUSTAINABILITY REPORT FY18 | CIRCULAR & CLIMATE POSITIVE | TRANSFORMING INTO A CIRCULAR BUSINESS
n Development of new materials Plastic from renewable and recycled materials. SUPPLIER CATEGORY AREAS Together with our innovation partner, we have We are always looking for new, more sustainable developed an injection moulding technology that materials to make our products. For example, we allows us to use low-grade recycled plastics in aim to eliminate virgin fossil-based plastics from our the core of a product and only use virgin fossil- range by developing and using renewable and recycled based plastics for the outer layer. Injecting two alternatives – working towards our commitment to use materials into a product at the same time is not only renewable or recycled materials by 2030. new but using recycled material as one of the two Key achievements for new materials in FY18 include: materials is a breakthrough. The next step is to use n Recycled PET. In FY18, 24% of the polyester we renewable plastics for the outer layer while keeping recycled materials at the core. used came from recycled PET (rPET), compared COMFORT ELECTRONICS FLATLINE IKEA FOOD with 10% in FY17. rPET is now used in products Mattresses and Appliances, lighting Products made from Global range for including bedding, curtains, roller blinds and sofa Circularity in our supply chain upholstered or filled and home electronic particleboard and IKEA Restaurants, covers, as well as some rigid plastic products. To become a circular business, we will work closely products. products. fibreboard (MDF, HDF, Bistros and Swedish hardboard). Food Markets. n Biodegradable fire retardant that enables with our suppliers, sharing knowledge and ideas and us to use more recyclable materials. learning from each other about the best ways to Every IKEA product must meet strict fire transform secondary materials and create new ones. regulations, which has until now involved using We focus our efforts on the environmental and social fossil-based fire-retardant treatments on some of challenges of each supplier as well as the materials our furniture. Together with an innovation partner, we use. We have created Material Roadmaps for each we’ve developed a biodegradable alternative that material to identify areas for development to achieve is free from harmful chemicals. This has two main our 2030 circular goals. benefits: we can replace fossil-based fibres with cellulose-based fibres, and the fibres treated with the new fire-retardant will be recyclable.
METAL, PLASTIC SPECIFIC HOME TEXTILES WOOD & FIBRES & FLOAT GLASS FURNISHING Fabrics, home textiles, Range made from IKEA catalogue Products containing BUSINESS furniture covers, carpets, materials such as these materials. Small household blinds, curtains and hardwood (like acacia, The IKEA catalogue is the world’s largest items such as candles, textile storage solutions. birch, eucalyptus), 1 Forest Stewardship Council™ (FSC™) certified ceramics, frames, softwood (such as pine publication, with 185 million copies printed in green plants and toys. and spruce) and bamboo, FY18. We work with seven paper suppliers and 39 paper and natural fibres (including rattan). printers across 51 countries to reduce its climate footprint each year.
To keep it up to date with the latest product launches, in FY18 we tested publishing the catalogue twice a year in France, Japan, Singapore and Sweden. Despite producing twice as many in these markets, we aim to maintain or reduce our absolute climate footprint from all catalogues published globally. We will do this by using uncoated and semi-uncoated paper, reducing the number of pages and working with suppliers that use mainly renewable energy in their operations.
1 FSC licence code: FSC-N001972. 25 | IKEA SUSTAINABILITY REPORT FY18 | CIRCULAR & CLIMATE POSITIVE | TRANSFORMING INTO A CIRCULAR BUSINESS
Eliminating waste ”The initial results are very Our ambition is to eliminate waste from the IKEA It also sells refurbished products with a big promising. All the stores that business and value chain by applying the principles discount in the ‘As-Is’ area in stores. In FY18, of the circular economy. 35 million products were given a home with a have implemented the solution customer through As-Is – that’s 2 million more show a significant decrease Transitioning to the circular economy will be products saved from being wasted than in FY17.3 challenging, requiring us to develop our supply in food waste after only a During the year, more than 200 stores benefited chains and explore different ways of interacting few months. That is a great from a better system for co-workers and customers with our customers. We have an important role to motivation for us to continue to find spare parts more easily and quickly, play, and we can only achieve our ambitions by enabling them to repair products. the roll out of the initiative, working together with others. working together with IKEA Retail Food co-workers all around We want to reduce food waste in IKEA Waste generated in IKEA stores is partly the world.” Restaurants, Bistros and Cafes, and in people’s due to products getting damaged in transit before homes (see pages 13-14). MICHAEL LA COUR they reach the store. Inter IKEA Group works with Managing Director, IKEA Food Services AB franchisees at each stage of a product’s journey The Food is Precious initiative, launched in FY17, to identify the risks and improve reporting. This is aims to cut food waste in our kitchens by 50% by vital for implementing new solutions and packaging the end of August 2020. Bins in the kitchens in that protects our products. IKEA stores are placed on top of scales attached to touch screens. Co-workers weigh the waste In Singapore, the industry recycling average is and log the reason for it through the system. The around 8%, but IKEA Alexandra2 has achieved data collected helps us identify ways to prevent more than nine times that, and received an award food waste. The key to success is enthusiastic from Singapore’s National Environment Agency co-workers motivated to reduce food waste one in recognition. bin at a time. Nearly half of IKEA stores have The IKEA franchisee, Ingka Group, has dedicated implemented the solution, saving more than 1,400 ‘Recovery’ teams in each store that repair and tonnes of food – equivalent to more than 3 million repack damaged products to go back on the shelf. meals! We are proud of the success so far, but we In FY18, the teams repacked 8.7 million IKEA know we still have a lot to do to reach our goal. products, a million more than in FY17.
WASTE DISPOSAL RATES IN FY18 WASTE PRODUCED AND % OF TOTAL WASTE RECYCLED OR (% OF TOTAL) INCINERATED FOR ENERGY RECOVERY
Unit Recycled Incinerated Sent to Incinerated Unit Total waste % of total waste for energy landfill without produced FY18 recycled or incinerated recovery energy (tonnes) for energy recovery recovery FY18
IKEA Industry4 83.6 12.7 3.7 0 IKEA Industry4 47,363 96.3
IKEA Components5 90.2 9.4 0.4 0 IKEA Components5 4,059 96.6
IKEA home furnishing IKEA home furnishing 2 Operated by the franchisee, Ikano. 6 75 20 4 1 6 1,042,300 95.0 suppliers tier one suppliers tier one 3 Through the IKEA Retail business of Ingka Group. 4 IKEA Industry figures exclude wood waste. 7 7 Retail operations Retail operations 5 Data covers two IKEA component production units in Slovakia (Franchisee Ingka 73.2 13.0 13.3 0.5 (Franchisee Ingka 504,274 86.2 and China. Group only) Group only) 6 IKEA direct home furnishing suppliers. 7 Data represents the IKEA Retail business of Ingka Group but does not include data from other franchisees. We aim to include data Total (average) 1,597,996 92.3 from other franchisees in the future. 26 | IKEA SUSTAINABILITY REPORT FY18 | CIRCULAR & CLIMATE POSITIVE | TRANSFORMING INTO A CIRCULAR BUSINESS
IKEA Industry Advocacy IKEA Industry units, which manufacture Our focus is on preventing waste. IKEA To transform into a circular business, we will associated member. EFIC represents more around 10-12% of the IKEA range, use mainly Industry is exploring how to reduce waste, go beyond our own value chain and advocate than 70% of the European furniture industry. wood. If the sawdust, chips and bark produced working across units to better understand global change. For example, we can only IKEA of Sweden is also an active participant can’t be used as a material for new products, what waste is generated and how to prevent transition to renewable and recycled materials in the EFIC workgroup that aims to promote they are usually used as biofuel to produce it. This involves working with suppliers on for all our products if the infrastructure exists the vision of a circular economy in the heat or electricity. In FY18, IKEA Industry the packaging materials they use. As well as to ensure a reliable supply. We will take the furniture sector. generated 1,278,218 tonnes of wooden finding recycling solutions, IKEA Industry units lead and join forces with others, seeking residues, of which only 0.2% went to landfill. are working to find a second life for some platforms to share our ideas and learnings, and materials in the shape and format they’re Excluding wood, IKEA Industry generated working for wider change across the industry. already in, for example by returning some 47,363 tonnes of general waste in FY18, In FY18, we received an award from the World packaging materials to suppliers to be reused. and recycled 83.6%. Of this, 12.7% was Economic Forum in recognition of our work to Partnerships, such as our collaboration with sent for energy recovery and 3.7% to landfill. become a circular business, see page 20. the University of Porto, Portugal (see below), Half the units recycled more than 80% of show the value of waste materials. In 2018, IKEA of Sweden joined the European the waste generated. Furniture Industries Confederation (EFIC) as an
Upgrading materials with the University of Porto
In 2018, students in industrial and product design from the University of Porto, Portugal, were challenged to develop new designs from 90% IKEA Industry waste wood and packaging materials.
The aim was to demonstrate the value of waste materials as a resource. And the students did just that!
Taking inspiration from IKEA Democratic Design days (see page 19), the students created designs including toys, shelves, lamps and ornaments. The best products were exhibited at the IKEA Mar Centre in Portgual in early FY19, and inspired visitors with solutions for the circular economy. 27 | IKEA SUSTAINABILITY REPORT FY18 | CIRCULAR & CLIMATE POSITIVE | BECOMING CLIMATE POSITIVE
Our commitment Becoming climate positive
The IKEA climate footprint is calculated and estimated to be 26.9 million tonnes CO2e8 – accounting for 0.1% of the world’s greenhouse gas (GHG) emissions. This includes our entire value chain: sourcing and extracting raw materials, manufacturing and transporting products, our stores, the customer travel to stores, product use in customers’ What does climate positive mean for IKEA? homes and product end-of-life. We have a responsibility, and Climate change is no longer a distant threat, but n Striving towards 100% renewable energy GOING BEYOND THE IKEA VALUE CHAIN a visible reality. It is already impacting people and throughout the entire IKEA value chain a great opportunity, to make a n Addressing a footprint larger than the IKEA societies, our planet and the IKEA business. (see pages 32-36). positive impact. value chain. For example, by working with our Through the Paris Agreement, world leaders n Becoming truly circular and designing products direct suppliers to reduce their total footprint We are committed to becoming climate committed to limit the average global temperature from the very beginning to be repurposed, across their entire factories, we will together positive by 2030 – reducing more increase to well below 2°C, aiming towards 1.5°C, repaired, reused, resold and recycled (see address a footprint around four times larger greenhouse gas emissions than the IKEA by the end of the century. page 16). This will reduce the need to extract than that caused by the manufacturing of value chain emits, while growing the and process raw materials – the biggest IKEA products (see page 34). We are committed to doing our part to fulfil this IKEA business. This will be achieved contributor to our footprint (see page 29). commitment, which is why we aim to become n Inspiring and enabling our customers, visitors without purchasing carbon offset climate positive – reducing more GHG emissions and the many people to live a better life within certificates. We will reduce GHG emissions STORING AND CAPTURING CARBON than are emitted across the IKEA value chain. the limits of the planet, including saving energy from across our value chain in absolute n Developing and improving practices to capture and generating renewable energy at home terms, using a science-based approach We will do this by: (see page 14). and working together with our partners, and store carbon through carbon sequestration within the IKEA value chain, for example suppliers and customers around the world. CUTTING TOTAL EMISSIONS ACROSS through even better forest management TAKING THE LEAD AND ENGAGING WITH THE VALUE CHAIN, WHILE THE BUSINESS (see pages 37-39). OTHERS TO INSPIRE ACTION TOWARDS GROWS A LOW-CARBON SOCIETY n Reducing GHG emissions by at least 15% across n Advocate policy changes to support the the whole IKEA value chain, in absolute terms, transition to a low-carbon society. by 2030 (compared to 2016). Accounting for our estimated growth over the same period, this n Partnering and collaborating with peers,
is equivalent to cutting the average climate governments, NGOs, and others to tackle 8 CO2e (carbon dioxide equivalent) is a standard unit for measuring amounts of different greenhouse gases. For footprint per product by 70%. climate change. any quantity and type of greenhouse gas, CO2e signifies the amount of CO2 which would have the equivalent global warming impact. 28 | IKEA SUSTAINABILITY REPORT FY18 | CIRCULAR & CLIMATE POSITIVE | BECOMING CLIMATE POSITIVE
In FY18, the climate footprint of the IKEA value chain was calculated and estimated to be Stakeholder challenge: 26.9 million tonnes of CO2e – a 2.8% increase Stefan Henningsson, Senior Adviser, Climate, Energy & Innovation, from FY16 due to the growth of the IKEA business. Decoupling our growth from GHG WWF Sweden emissions will take time, and we expect our emissions to increase for a few years before Becoming climate positive will be a huge 3. Set strict procurement criteria for carbon- decreasing. The goals thoughout the IKEA challenge for IKEA. We will only achieve intensive sectors and materials that IKEA uses value chain are based on scientific data, to it by joining together with others and a lot of, like food, steel and textiles. Develop ensure that we play our role in limiting the listening to feedback from our stakeholders ambitious decarbonisation road maps for these global temperature increase in line with 9 on how to improve. We asked Stefan critical materials and work with others to the Paris Agreement. Henningsson, Senior Adviser Climate, co-develop and co-invest in new technology. Energy & Innovation at WWF Sweden: Ensure sustainability criteria for energy use that how can we improve, to achieve our benefits climate and biodiversity. We face three key ambition to become climate positive? 4. Advocate for stronger government policies on challenges in becoming energy efficiency, renewable energy, food and climate positive: climate change. And engage with others in “Keeping the global temperature increase n REDUCING OUR RAW MATERIAL initiatives focused on high-impact innovations below 1.5OC is vital to prevent even more rapid FOOTPRINT – 36.4% OF OUR and investments for a low-carbon future, like biodiversity loss and limit the impacts of climate CLIMATE FOOTPRINT the Mission Innovation Solution Framework. change on vulnerable communities. This is a huge (see page 30). challenge that will require us to halve 5. Work with suppliers to develop more ambitious n REDUCING EMISSIONS FROM global emissions by 2030. targets and action plans in line with science, CUSTOMER TRAVEL TO STORES aiming to at least halve the emissions of The IKEA business must play its part: – 15% OF THE TOTAL IKEA smaller suppliers by 2030. cutting emissions across its direct control CLIMATE FOOTPRINT and supply chains, advocating for change among 6. In addition to striving to become climate (see page 36). politicians, and encouraging customers to consume positive within the IKEA value chain, invest in n TRANSFORMING TO RENEWABLE sustainably and become agents of change. sustainable development activities in poorer HEATING AND FUELS – A SECTOR communities affected by climate change to Here are seven things that IKEA could do in its THAT IS EXPERIENCING SLOW improve resilience, health, jobs and economic ambition to become climate positive: PROGRESS GLOBALLY development, as well as agricultural and (see pages 32-36). 1. Implement its goals and consider stretching forestry practices for capturing and storing them to be in line with the latest report from carbon. the Intergovernmental Panel on Climate 7. Externally assure reporting on progress towards Change (IPCC), that states what we must your climate positive targets, and share do to keep the global temperature increase learnings with other companies that face similar below 1.5OC. challenges in their sustainability work.” 2. Go beyond its own business by encouraging a more sustainable life at home for the many people – minimising use of resources, and promoting healthy, low-carbon dietary choices and opportunities for circular consumption, like reusing, reselling and refurbishing products.
9 Targets cover scopes 1 and 2 for 30 markets (operated by the franchisee Ingka Group) and entire scope 3. 29 | IKEA SUSTAINABILITY REPORT FY18 | CIRCULAR & CLIMATE POSITIVE | BECOMING CLIMATE POSITIVE
BECOMING CLIMATE POSITIVE
CLIMATE FOOTPRINT AT EACH STAGE OF THE IKEA VALUE CHAIN HOW THE IKEA BUSINESS WILL BECOME CLIMATE POSITIVE BY 2030 (% OF CO2e EMISSIONS) REDUCING GHG EMISSIONS BY MORE THAN IS EMITTED ACROSS THE IKEA VALUE CHAIN
Designing products to Using renewable and Storing and capturing RAW MATERIALS 36.4% enable repurpose, repair, recycled materials, carbon through forest reuse, recycle, page 16 pages 22-24 management, pages 37-39
Introducing more plant- Cutting food waste, FOOD Sourcing food ingredients based food options, page 25 INGREDIENTS 3.9% sustainably, page 42 page 15
10.4%10 Suppliers (1st tier home furnishing, Generating and using Increasing energy food, components and catalogue) PRODUCTION renewable energy, efficiency, page 33 11.9% 1.5%10 Own operations (IKEA Industry and IKEA Components) pages 32-36
Replacing fossil fuels, Using new low-emission PRODUCT Reducing shipments, pages 35-36 transport options, TRANSPORT 3.9% page 35 pages 35-36
10 0.1% Scope 1 & 2 from Inter IKEA operations (offices, buildings & store) Using and generating RETAIL & 2.0%10 Scope 1 & 2 from franchisee operations (offices, buildings & stores) Improving energy OTHER OWN 2.7% 0.2%10 Business travel renewable energy, THE IKEA VALUE CHAIN OPERATIONS11 efficiency, page 32 0.5%10 Co-worker communting page 32
CUSTOMER Enabling low-carbon TRAVEL & HOME 15.5% customer travel and home DELIVERIES deliveries, page 36
Offering smart solutions to PRODUCT USE AT HOME 22.2% enable customers to save and generate energy, page 14
Providing services to give PRODUCT products and materials END-OF-LIFE 3.5% a second life, page 17
TOTAL EMISSIONS FROM MAIN IKEA OPERATIONS ENERGY EFFICIENCY MAIN INTER IKEA OPERATIONS SCOPE 1 AND 212 (TONNES CO2e)13 (% IMPROVEMENT IN RELATIVE TERMS15 AGAINST BASELINES)
FY16 FY17 FY18 Unit Baseline year FY16 FY17 FY18
IKEA Industry 473,211 564,572 396,977 IKEA Industry Divisions Flatline FY10 –15.5% –14.0% –12.8% and Solid Wood IKEA Components 1,596 1,009 1,138 IKEA Industry Division Board FY10 –10.9% –15.1% –14.2% Retail & Other Own Operations 15,133 19,273 19,248 (Offices, Buildings & Store)14 IKEA Components FY13 –64.3% –58.5% –52.5%
Total 489,940 584,854 417,363 10 Percentage of the total IKEA value chain. 11 Includes all stores, warehouses and retail specific operations run by IKEA franchisees. (% change from FY16) – +19% –15% 12 Scope based on Science Based Targets definitions. 13 Figures for FY16 and FY17 have been restated to include transmission & distribution losses, and reflect an improved data collection methodology. 14 Includes store, offices, warehouses and a hotel operated by companies in Inter IKEA Group only. Excludes franchise stores. 15 T otal energy consumption in kWh/m2 produced furniture (Flatline and Solid Wood) or/m3 produced boards (Boards). 30 | IKEA SUSTAINABILITY REPORT FY18 | CIRCULAR & CLIMATE POSITIVE | BECOMING CLIMATE POSITIVE
IKEA products
Raw materials & food ingredients can innovate, find low-carbon alternatives or improve practices in the supply chain. We Becoming a circular business, and decoupling also look for alternatives to carbon-intensive business growth from additional raw material materials, and are making changes across extraction (through reuse, repair and our whole range, including the food offer. For refurbishment of products, for example), will example, our new veggie hot dog has a climate help us to reduce the IKEA value chain climate footprint seven times less than the classic meat footprint. For the remaining raw materials we hot dog, see page 15. still need, we are focusing on scalable solutions, lightweight constructions and sourcing Around 70% (by weight) of the materials used materials with a lower climate footprint and to make IKEA products are wooden, wood- less impact on land use change, produced based,16 paper or other natural fibres. But they where possible using renewable energy. For only make up 27% of the raw material climate example, glue is a key component in the footprint. Plastic and metal materials are used production of particle board, which is in many less in IKEA products – plastic constitutes only of our products, and accounts for 6% of the 5% (by weight) – but account for around 40% total IKEA climate footprint. We, together with of the footprint. By moving towards recycled partners, are developing a new renewable glue and renewable materials such as wood and with a much lower impact that will contribute to recycled plastic, along with building lightweight reducing our climate footprint. constructions and promoting renewable energy in raw material production processes, we can Sourcing and extracting raw materials for our significantly reduce the climate footprint and home furnishing products and ingredients for other environmental impacts. our food products accounts for the largest share of our climate footprint – 40% in FY18. Since FY16, IKEA Industry has planted poplar We always work to make the most efficient plantations near Malacky, Slovakia. These POPLAR PLANTATION use of resources and avoid waste. For many plantations will supply a significant share of Malacky, Slovakia years, we’ve been working with suppliers to the raw materials needed to make lightweight source our key materials, such as cotton and boards used in IKEA products. Poplar is wood, from more sustainable sources that are a fast-growing, renewable material that period, which provides four harvests from the better for the planet and the people who grow requires fewer chemicals and less machinery same root system over a 20-year period, help them (see pages 37-40). We are integrating than many other crops, and it can capture a to regenerate the soil. The plantations are on climate impact into our strategies for sourcing significant amount of carbon. The limited use agricultural land classified as low to medium materials we use, to identify areas where we of machinery and a five-year crop rotation fertility, minimising interference with the growth of other crops. From FY16 to FY18, the climate footprint of raw materials and food ingredients increased by & 10%, in line with the growth in sales. We have P ( EGATONNES CO2e) only just started to transform the raw material Raw materials Food ingredients footprint, and it will take some time for the impacts to be visible. We are finalising our work 9.1 0.8 to integrate climate into our material directions, after which we hope to make faster progress. 9.4 895,8920.8 LISABO an example of using a 16 W ood-based materials also includes glue, which is not yet lightweight construction 9.8 1.1971,634 renewable. This is why not all wood-based materials are classified as 100% renewable materials. 31 | IKEA SUSTAINABILITY REPORT FY18 | CIRCULAR & CLIMATE POSITIVE | BECOMING CLIMATE POSITIVE
Product use at home both energy efficiency and the availability of P P renewable energy in the electricity grids to P INCLUDING TRANS ISSION & P Use of IKEA products in customers’ homes is DISTRIBUTION LOSSES ( EGATONNES CO2e) ( EGATONNES CO2e) reduce the footprint in absolute terms. calculated and estimated to contribute 22.2% to Lighting Appliances Candles (<0.1) the total IKEA climate footprint. This comprises Read more about how we are inspiring and enabling people to live more sustainable lives energy-efficient LED lighting (16%), appliances 5.0 1.4 (5%) and the burning of candles (<1%17). We on pages 13-15. 895,892 design our products to be as energy-efficient as 4.7 1.4 895,892 possible, to cut the climate footprint and save Product end-of-life energy costs for our customers. Around 3% of the total IKEA climate footprint 4.5 1.4 Depending on the country, the footprint of comes from product end-of-life – similar to that the electricity grid differs significantly, and of our retail operations or goods transport. we advocate 100% renewable electricity in This footprint includes products that are all our markets. IKEA customers should be incinerated or sent to landfill,19 but not products 971,634 able to generate and use renewable energy that are recycled since these are accounted for at home too. Today, Home Solar is offered to by IKEA as raw materials or by the company customers in six markets and will be introduced that uses the raw material. 18 in more markets in the coming years, see Our ambition to become a circular business more on page 14. (see page 22), including the circular design The most significant improvement is in IKEA principles (see page 16), will help us to lighting, largely due to the developments in eliminate the climate footprint from product energy efficiency of our LEDs – improving end-of-life. by 19% in lumens per watt since FY16. The footprint for appliances has stayed flat. This is because dramatic growth in sales was 17 Close to 1% when including the raw material footprint of candles. counteracted by fast progress in energy Candles have low emissions at home, but a larger raw material efficiency across the range, especially in hobs, footprint from sourcing wax. 18 Through the IKEA Retail business of Ingka Group. where the average improvement since FY16 19 As part of the waste management system of the respective was 17%. Further improvement is needed in country.
CANDLES LED LIGHTING 32 | IKEA SUSTAINABILITY REPORT FY18 | CIRCULAR & CLIMATE POSITIVE | BECOMING CLIMATE POSITIVE
IKEA operations
We strive towards 100% renewable energy 100% renewable energy in each market. Retail operations P P ( EGATONNES CO2e)27 for electricity, heating and cooling, and high For example, the franchisee Ingka Group is IKEA stores, operated by franchisees in 20 energy efficiency in IKEA operations, including a member of RE100 – an initiative bringing different markets, play an important role in franchisees, and at direct suppliers. We together more than 100 businesses committed our ambition to become climate positive. They promote on-site renewable energy generation to 100% renewable electricity, to increase are where customers meet the IKEA Brand and new installations, making more renewable demand for and availability of renewable and values, and where we can demonstrate 895,892 energy available to the many people. energy. our ambition to lead by example, through the Already, 74% of the energy consumption in Electricity makes up around half of the climate services and products we offer. 21 IKEA operations is from renewable sources. footprint from retail operations and production, The franchisee Ingka Group has set a goal In just one year, the project has cut energy We aim to increase this to 100% by investing as well as almost the entire product use at to reduce the footprint from its stores and consumption by 15% for all stores – saving in on-site renewable energy installations, home. Rapid progress is happening in the other operations by 80% in absolute terms by 883 tonnes of GHG emissions. including photovoltaic panels, heat pumps, renewable electricity sector globally, and 2030, compared to 2016. Today, 65.9% of the biomass boilers or combined heat and decreasing prices mean we can invest in and energy consumed in its retail operations is from As part of the aim to reach 100% renewable power plants. install more wind and solar power systems. renewable sources, such as photovoltaic panels heating and cooling, IKEA businesses are However, it is not the same for renewable The share of renewable energy used at IKEA and wind turbines. More renewable electricity investing in renewable technology for heating heating and fuels. This presents a challenge Components22 has more than doubled since is also added to the grid as Ingka Group is and cooling such as ground and air source to transitioning to 100% renewable heating FY16, and at IKEA Industry, it has increased generating wind and solar power, aiming to heat pumps and biogas and biomass boilers. as quickly as we would like. And as most by almost 20 percentage points since FY17. generate as much renewable energy as it For example, all building projects at Ingka renewable heating and fuels rely on sourcing consumes across all its operations by 2020. Group that are approved from 2020 onwards It is usually only possible to generate on-site from forests and agricultural crops, we need will include renewable heating and cooling 10-40% of electricity needed depending on IKEA Retail Iceland24 has installed the largest to ensure that the fuels are sourced in a systems. There are also initiatives to bring the the operations, and the remaining renewable solar power plant in the country, generating responsible way – minimising the climate IKEA voice to critical conversations on issues energy needs to be purchased from the grid. enough energy to power all the electric vehicle footprint from land use change and other such as renewable energy, electric vehicles and This is not yet possible in every country, but we charging points for its co-workers. impacts on biodiversity, air quality, social emissions reduction. For example, Ingka Group are working together with others to advocate 25 issues and water. In January FY18, IKEA Alexandra in Singapore is a member of coalitions like RE100, EV100 installed solar cooling. The system converts and the We Mean Business coalition. thermal heat into chilled water for air- conditioning in the store, cutting electricity TOTAL RENEWABLE ENERGY (ELECTRICITY, HEATING & COOLING) PRODUCED AND BOUGHT (%) consumption by around 24%, and saving more than EUR 5,000 (SGD 9,000) a month. IKEA Components Following a successful pilot in IKEA Dubai, IKEA Industry 26 IKEA stores in Abu Dhabi, Egypt and Qatar have launched a project to cut energy consumption by:
n measuring and benchmarking energy use Retail operations23 n installing insulation n upgrading the heating, ventilation and 20 IKEA Operations refers to Inter IKEA Group operations, air conditioning (HVAC) and building franchisees’ retail operations and other IKEA related operations. management (BMS) systems 21 The Greenhouse Gas Protocol (scope 1 & 2 emissions). Tier 1 home furnishing suppliers 22 Pro vides components and materials to IKEA suppliers and sub- suppliers that are used in IKEA home furnishing products. n converting to LED lighting 23 Includes all stores operated by IKEA franchisees. n installing infrared sensors in toilet facilities 24 Operated by the franchisee Miklatorg. 25 Operated by the franchisee IKANO. to control water consumption. 26 Operated by the franchisee Al-Futtaim. 27 Includes all stores, warehouses and retail specific operations operated by IKEA franchisees. 33 | IKEA SUSTAINABILITY REPORT FY18 | CIRCULAR & CLIMATE POSITIVE | BECOMING CLIMATE POSITIVE
IKEA Industry ”We strive to make our IKEA Industry is the world’s largest manufacturer of wooden furniture, with over operations even more 19,000 co-workers at 40 production units efficient when it comes to in 10 countries.28 Already, 86.7% of IKEA responsible use of resources Industry’s heating and 81.1% of its electricity and energy. We want to make are from renewable sources. In total, this is a unit increase of nearly 20 percentage points a positive contribution to the from last year, mainly due to the purchase of economic, environmental, and electricity from wind power in Poland (read social development of the more below). Heating comes mainly from communities where we operate, biomass boilers, while electricity is mostly purchased from renewable sources with a small starting with more than 1,300 amount generated from on-site solar panels IKEA Industry co-workers in and one biomass-powered steam turbine. Paços de Ferreira.” The flatpack sofa of the future Renewable electricity JORGE FERREIRA IKEA Industry aims to install solar panels Manager, IKEA Industry We might be famous for flat pack, but we’ve never wherever technically and financially possible Paços de Ferreira, Portugal cracked the flat pack sofa. Until now. by the end of FY25, and is focusing on Our new sofa frame, SMÅTORP, launched in China in FY18, assessing the suitability for installation at sites has just 13 parts – around a tenth of what goes into our in Central Europe, where renewable energy regular sofas. That’s not just good for the people who put infrastructure is not yet well-established. it together – it’s good for the planet too! In Poland, IKEA Industry purchases 100% of site is from renewable sources – up from another important tool, providing guidance Fewer parts mean simpler and quicker production, cutting its electricity from wind farms owned by the 35% – which is estimated to cut greenhouse to co-workers on how to improve energy water and energy consumption. And thanks to the flat franchisee Ingka Group. It secures the source gas emissions by around 45,000 tonnes efficiency. The manual will be rolled out at all pack it fits in a smaller box, making it easier to transport of the energy through Guarantees of Origin, a year. IKEA Industry units by the end of FY19. with fewer trucks. and a unique set-up where the utility company matches wind farm generation with IKEA This isn’t just a flat pack sofa – it’s a circular sofa too. IKEA Industry invested EUR 9 million to build Industry consumption on an hourly basis. a new pellets factory at the Stalowa Wola When customers get it home, it’s easy to assemble, In the production unit in Paços de Ferreira, sawmill in Poland, which will supply renewable disassemble, and reassemble. We know circumstances Portugal, it completed one of the largest energy for the European market from FY19. change, and people move home. Now your sofa can self-consumption solar panel installations in Wooden residues from the sawmill feed bio- come too. Europe. The 18,240 panel installation covers based boilers which generate heat, and a And at the end of its life it can be easily dismantled and 70,745 m2, generating energy equivalent to the turbine generates renewable electricity. the different materials separated for recycling. consumption of more than 2,700 homes and P SCOPE 1, SCOPE 2, avoiding 2,358 tonnes CO2e each year. Energy efficiency TRANS ISSION AND DISTRIBUTION LOSSES ”IKEA embraces circularity by making our sofas in a way IKEA Industry works to create awareness, ( EGATONNES CO2e) that minimises the impact on the planet. By offering sofas Renewable heating share good examples, and build competence in separable parts and with smaller, lighter and flatter In FY18, the site in Novgorod, Russia, around energy saving. This will include holding packaging we can offer more long-lasting and recyclable opened an energy plant with a capacity of workshops at its own factories and pilot products,” says Malin Nordin, Development Leader 87.5MW. The plant supplies all heat needed workshops at suppliers’ factories during Circular IKEA, IKEA of Sweden. at the site. The wood-drying process is FY19, to share IKEA Industry’s experience particularly heat-intensive. The dryer dries with other parts of the IKEA supply chain. See page 16 for more about how we are designing our up to 60 tonnes of wood per hour, using energy A typical workshop identifies energy savings products to enable a circular economy. generated from biomass instead of natural of 4-8% with a payback time of less than two
gas. Now, 85% of the energy used at the years. The Energy Management Manual is 28 As of FY18. 34 | IKEA SUSTAINABILITY REPORT FY18 | CIRCULAR & CLIMATE POSITIVE | BECOMING CLIMATE POSITIVE
Supplier production Air pollutants The climate footprint of production at direct In December 2017, we began working with suppliers has changed little since FY16, despite a solar panel manufacturer and a renewable As well as being harmful to the environment, sourcing higher volumes from our suppliers. energy advisory company to help Chinese air pollution is the single largest health risk, This is due to an increase in energy efficiency suppliers convert to renewable energy. Through according to the World Health Organization. and in the share of renewable energy from our partners, suppliers can plan and install Nine out of ten people live in places where 29 30% to 31%. However, some industries, such renewable energy at a discounted price, and air pollution exceeds safe levels. We as textiles, are not developing as fast. get rooftop solar panel purchasing agreements are committed to reducing emissions of as a group. The aim is for at least 20 suppliers air pollutants across our value chain and We work with direct suppliers across to install solar panels by the end of FY19. contributing to a world with clean air by their entire factories – not just the part 2030, by: manufacturing IKEA products. This allows us Supplier Sustainability Index to address a footprint around four times larger We use our Supplier Sustainability Index (SSI) Reducing the use of fossil-based fuels. than that created in the production of IKEA to track the impact of our supplier development The burning of fossil fuels for energy is a products. and identify opportunities to work with significant source of outdoor air pollution. More IKEA suppliers are joining the movement suppliers to improve performance. This goes The IKEA business has committed to strive From air pollution to new materials towards 100% renewable energy, by beyond the compliance to our Code of Conduct, towards 100% renewable energy and to phase The air in New Delhi, India, can get so polluted that purchasing it from the grid, generating it on- IWAY, and focuses on four areas. out fossil fuels. breathing it is compared to smoking 40 cigarettes a day.30 site, or both. In FY18, eight suppliers achieved n Strategy and management systems. During October and November each year, smoke from zero climate footprint from electricity, heat Moving away from biomass combustion the rice fields surrounds the capital as farmers burn rice and internal transport use by converting to n Sourcing and procurement of energy, water, towards biomass gasification. Using straw, a rice harvesting residue, to make space for renewable energy. These include a Swedish chemicals and materials. biomass rather than fossil-based fuels is a wheat crops. supplier of assembly parts and accessories good first step. But it can still release harmful n Manufacturing processes and resource use. and a flatline supplier in Poland, where there particles into the environment. Gasification is But as Helene Davidsson, Sustainability Manager n is little renewable electricity available from the Non-utilised resources including waste, a much cleaner process for converting biomass Purchasing & Logistics, South Asia, watched the burning grid. Both invested in wind turbines, generating chemicals, materials and water. to energy, which will help to significantly reduce straw together with her colleagues, they had an idea: more energy than they consume to have a big particle pollution. “How could that waste become a resource for new impact on climate. products?” Developing solutions to reduce indoor air Several other suppliers have reached 100% pollutants. In some places, air pollution can This inspired her to create the Better Air Now initiative, renewable energy, but still have a climate be worse indoors than outdoors. In FY18, we which will launch in early FY19, looking for ways to make footprint from emissions of GHGs other than announced that we are developing air purifying rice straw into new materials that could be used to make CO2, for example from burning wood waste. curtains and devices to help clean the air in IKEA products. The aim is to start selling products at people’s homes. IKEA Retail India in 2019-2020, and if successful, in more markets after that. PP P Raising awareness among our customers. Not only will the Better Air Now initiative reduce pollution P HO E FURNISHING, CO PONENT, The IKEA Clean Air Survey identified that many CATALOGUE AND FOOD SUPPLIERS INCLUDING TRANS ISSION from burning, it will also contribute to our ambition to use people are not aware of the health impacts of & DISTRIBUTION LOSSES ( EGATONNES CO2e) more renewable materials and will provide farmers with air pollution, and the risks associated with air an additional income from selling the straw. pollution in their homes. By sharing knowledge and insights with our customers about some Initially, the project will focus on Northern India, home easy changes to keep air clean – like closing to nine of the world’s ten most air-polluted cities, but it windows during rush hour traffic or swapping a could be rolled out to other polluted megacities around gas stove for an induction hob – we can inspire the world. Our ambition is to contribute to eliminating healthier homes. rice straw burning, by working together with businesses, NGOs, state governments in India, suppliers and farmers, the UN and universities.
29 http://www .who.int/news-room/detail/02-05-2018-9-out-of-10-people-worldwide-breathe-polluted-air-but-more-countries-are-taking-action. 30 http://berk eleyearth.org/air-pollution-and-cigarette-equivalence/. 35 | IKEA SUSTAINABILITY REPORT FY18 | CIRCULAR & CLIMATE POSITIVE | BECOMING CLIMATE POSITIVE
Product transport 29
Around 3.9% of the total GHG emissions A new consolidation point in South China is with the Green Freight Asia (GFA) Ambassador GHG EMISSIONS FROM IKEA TRANSPORT & LOGISTICS SERVICES from the IKEA business were from product helping to reduce transport distances. It is Award. The company was also awarded the transport in FY18. GHG emissions per shipment closer to suppliers, and goods travel from Green Freight Asia Label Achievement Award Product transport efficiency FY17 FY18 decreased by 2%. But absolute emissions from the site by electric trucks and then barges. for getting GFA Labels for 10 countries of (goods per shipment) product transport increased due to the overall Avoiding the use of diesel trucks saves operation – the widest geographical coverage Net cubic metres of transported goods per growth of the IKEA business. To meet the 650 tonnes of CO2 per year. The consolidation for any GFA member. 56.9 57.0 shipment emissions reduction goals of the 2030 strategy, point has also enabled different suppliers to IKEA Transport & Logistics Services is building combine goods in the same container instead Ocean transport Increase in cubic metres of product per a roadmap for the future. of using separate containers, reducing wasted Ocean transport accounts for around 40% shipment compared with the previous year 0.5 0.1 space and unnecessary emissions. of product transportation emissions. Over (%) The focus is on: time, new and bigger vessels with more Product transport efficiency FY17 FY18 n Reducing the climate footprint by making Replace efficient engines, travelling at slower speeds, (climate impact) every shipment as efficient as possible. Alternative fuels are important to our strategy have helped to reduce emissions from each and we are working with others to drive change container, but the rate of reductions has CO2 emissions per product volume and n Replacing fossil fuels with alternatives and 3 0.0038 0.0037 transported distance (kg CO2/m km) increasing use of intermodal options – the and influence the market in the long term. now slowed. transportation of goods in large containers, In the Pune area in India, two transport Ships have a long operational life which means avoiding the need to handle goods when service providers are using a biodiesel blend it takes a long time to fully realise the benefits SHARE OF GHG FROM OCEAN AND LAND TRANSPORT – changing between modes of transport. made from non-edible oil sources.30 This is of newer, lower-emission technologies. That’s FY18 (%) n Rethinking to integrate innovation the first time biofuels have been used for why it’s important to take a leading role for through new technologies, equipment and commercial freight transportation in India. In long-term, industry-wide improvements – partnerships. By innovating and collaborating the U.A.E., IKEA Transport & Logistics Services for example, through our membership of the pioneered the use of a similar fuel for freight Clean Cargo Working Group, which looks for to find new methods, we are heading OCEAN towards decarbonised transport. transportation in cooperation with a transport ways to reduce shipping emissions. 40.4 service provider. All domestic deliveries to In FY18, we implemented a tool to improve the store in Dubai are now operated with a Reduce the accuracy of emission calculations for IKEA biodiesel blend. Where possible, IKEA product developers product transportation. Data is taken from the design products for easy transportation – Using intermodal options31 means the freight transport systems and emissions are calculated LAND for example, by flat-packing or stacking can be easily moved between different modes according to the weight of goods transported, 59.6 them. More products per shipment means of transport. This makes it easier to use the distance travelled, the mode of transport lower emissions. Since FY14, the volume of transport options such as trains and ships, and the fuel used. This allows for more precise transported goods per shipment has increased which can carry large volumes, with lower measurements that will help us analyse and 3 by 1.5 m , saving around 83,000 shipments GHG emissions compared to the equivalent develop IKEA Transport & Logistics Services’ in FY18. volumes transported by diesel trucks. We are roadmap for decarbonisation. continually working to increase the share of See page 46 for more about our work to intermodal transport. improve conditions for truck drivers. MOTOR INTERMODAL 83% TRANSPORT Rethink 17% P P To achieve the bold ambitions of our 2030 P ( EGATONNES CO2) strategy we will go beyond reducing and replacing, and rethink our approach. We are
open to new ideas and work with others to 29 IKEA Transport & Logistics Services is responsible for the drive innovation. transport of our products from factories to stores via distribution centres. Last mile delivery to customers is run by franchisees. 30 This means that the sources of the biofuel come from waste oils In FY18, IKEA Transport & Logistics Services’ that are unfit for human consumption. commitment to promoting sustainable supply 31 T ransportation of goods in large containers, which does not require any handling of the goods themselves when changing chain practices in Asia-Pacific was recognised between modes of transport. 36 | IKEA SUSTAINABILITY REPORT FY18 | CIRCULAR & CLIMATE POSITIVE | BECOMING CLIMATE POSITIVE
Customer and co-worker Home deliveries travel to stores Last mile deliveries, where products are delivered to customers’ homes, are handled Customer and co-worker travel to stores by the respective IKEA franchisee. accounts for 15% of the total IKEA climate footprint. Most stores are outside city centres Committing to electric and other zero emission so often it is necessary to drive to get there. vehicles is critical in order to eliminate the We always consider local public transportation climate footprint from customer deliveries. The routes when planning new sites for stores. franchisee Ingka Group has set the target to And our franchisees are working to reduce go all-in to secure 100% zero-emission home the climate impact of customer travel by: deliveries by 2025, starting with major cities like Amsterdam, Los Angeles, New York, Paris n opening more city centre stores and and Shanghai by 2020. It has already deployed pick-up points electric vehicles in Australia, China, France and n improving the home delivery offer India to name a few, with more zero-emission n advocating wider use of electric vehicles and vehicles on the way in many markets. providing charging points at stores. There is still a lot to do, which will require strong collaboration – both internally and In FY18, more than 65% of the total IKEA externally. In September 2017, Ingka Group stores had electric vehicle charging points and became a founding member of EV100 – 75% of the stores operated by Ingka Group. a global initiative committed to accelerating Some examples from FY18 include: the conversion to 100% electric vehicles. n IKEA Retail Germany32 trialled new trailers that customers can pull by bike or by hand to take products home from 12 stores. They loved it – 93% of customers that used it were happy. n IKEA Retail UK32 ran a sustainable travel campaign to inspire co-workers to try new green friendly travel options to get to and from work at the Nottingham store. All IKEA Industry sites have committed to installing electric vehicle charging points if co-workers request them.
32 Operated by franchisee Ingka Group.
P ( EGATONNES CO2e) P ( EGATONNES CO2e)
37 | IKEA SUSTAINABILITY REPORT FY18 | CIRCULAR & CLIMATE POSITIVE | REGENERATING RESOURCES, PROTECTING ECO-SYSTEMS AND IMPROVING DIVERSITY
Our commitment Becoming forest positive
Wood is long-lasting, renewable, recyclable, Regenerating durable and beautiful. We use more of it than any other raw material – 18 million m3 of resources, protecting roundwood equivalent (RWE) in FY18. eco-systems and Considering our size, we can make a big difference. By contributing well beyond our own improving biodiversity needs we aim to transform the industry and make responsible forestry the norm. Forests sustain ecosystems and biodiversity, mitigate As IKEA becomes more resource the effects of carbon emissions and provide shelter and livelihoods to millions of people. efficient and transitions to a circular It’s vital that we help to protect them. business, we still need raw materials for our products and food. We will Making more from less always strive for renewable, responsible We design our products to make smart use of sources, ensuring that we have a resources and cut the wood to minimise waste, positive impact by regenerating making more from less. In FY18, the amount of wood we used, including for paper, increased resources, protecting ecosystems by 1.5 million m3 RWE, due to the growth of and improving biodiversity. WOOD FLATLINE our business. used in IKEA products We have already made good progress on the Read about how we aim to increase the materials we use the most – cotton and wood. proportion of recycled materials we use in our BECOMING FOREST All of the cotton and 85% of the wood we use is products as part of our transition to a circular POSITIVE from more sustainable sources.33 We are always business on pages 22-24. working to improve our responsible sourcing agenda for all materials – developing standards that include environmental, social and animal welfare criteria – to make responsible sourcing the norm across the IKEA business and beyond. We are focusing on becoming forest and water positive. Both resources are vital to our business and the planet. By applying our expertise and global influence beyond our own supply chain, we can play a leading role in improving the health of our planet. P ( ILLIONS m3 RWE)
33 More sustainable sources for wood includes Forest Stewardship Council™ certified or recycled wood. More sustainable sources for cotton includes cotton grown to the Better Cotton Standard; by farmers working towards Better Cotton, recycled cotton and more sustainable cotton from the USA (such as the e3 Cotton Program). 38 | IKEA SUSTAINABILITY REPORT FY18 | CIRCULAR & CLIMATE POSITIVE | REGENERATING RESOURCES, PROTECTING ECO-SYSTEMS AND IMPROVING DIVERSITY
Securing sustainable sources Paper and packaging All of the wood used in IKEA products is sourced Becoming forest positive means going beyond The largest quantity of paper-based materials our corrugated packaging to meet the criteria in compliance with the Forestry Section of the the reach of our own value chain. We are used across the IKEA business is in our for more sustainable sources and we started IKEA IWAY Standard. It sets out the minimum already reaching the limits of FSC certified packaging materials. We are committed to to track our performance for packaging from environmental and social standards expected wood in the countries we source from. To sourcing these materials sustainably. Around more sustainable sources by requesting regular from our suppliers, including compliance meet our 2020 target, we are working to 75% of our paper-based packaging is made reports from our suppliers. Our target is to with local laws. In FY18, we extended the make certification more accessible to small from recycled material, but we want to ensure source 100% of our paper-based packaging IWAY Forestry Section to include paper-based forest holders and increase the amount of that any virgin wood fibre we use is FSC from more sustainable sources by 2020. materials, bamboo in non-industrial application, certified forest. certified. We have transformed the majority of rattan and wood-plastic composites. For more Through our partnership with WWF we are about IWAY, see pages 46-47. In addition, we working across 15 countries in nine different WOOD SOURCES – FY18 (WOOD SOURCED %) aim to source 100% of the wood we use from projects to combat illegal logging and promote Rounded to nearest whole number. more sustainable sources – Forest Stewardship responsible forestry. Find out more about Council™ (FSC™) certified or recycled. In the partnership here. In FY18, we completed FY18, we sourced 85% of our wood from these RUSSIA a decade-long project to develop a publicly sources, up from 77% in FY17. Working with our 8% accessible database on high conservation value SWEDEN suppliers and indirect suppliers, and our long- 6% forests in Russia. Now that we have identified standing partnerships with WWF, FSC and others these areas, we can work together with partners LITHUANIA helped us to achieve this. In high-risk countries, POLAND 5% to ensure that they are protected or managed accounting for around 23% of the wood we 32% ITALY in accordance with FSC standards. Find out source, we require all wood to be from more 5% more here. sustainable sources. Nearly all of our suppliers CHINA are FSC Chain of Custody certified and we 5% encourage the remainder to obtain certification. (% WOOD SOURCED) GERMANY We audit suppliers based on the standards they 5% use. In FY18, we successfully passed another OTHER BELARUS EUTR (European Union Timber Regulation) audit. COUNTRIES 5% 16% During FY18, one supplier in China was found to be in violation of the IWAY Forestry ROMANIA 4% requirements, failing to source wood from SLOVAKIA 3% more sustainable sources (using non-FSC FRANCE 3% certified wood) in Russia. However, the CZECH REPUBLIC 3% supplier was compliant with the IKEA IWAY Must minimum requirements: the wood was TYPES OF WOOD SOURCED - FY18 (%) not sourced illegally, from high conservation AUDITS OF OUR WOOD SUPPLY CHAIN value forests, conversion of natural forests, genetically modified trees or from areas of social FSC Chain of Custody certification FY18 SOLID conflict. According to our working methods, PAPER USED WOOD IKEA suppliers that are FSC Chain of Custody certified (%) 81 IN PRODUCTS we stopped shipments during the investigation 39% 4% and conducted additional audits of the supplier Total wood volume from FSC Chain of Custody certified 99 and supply chain. Corrective measures were suppliers (%) taken, and thereafter it was decided that the products would still be sold. It was agreed IWAY Forestry Section audits FY18 WOOD-BASED with the supplier that the profits from these Number of IKEA audits – under IWAY Forestry Standard and 212 BOARDS AND OTHER BAMBOO products would be invested in projects focused IKEA wood supply chain audits COMPOSITES 1% on sustainable forest management. We are now 56% Wood volumes that underwent an IKEA audit that comply exploring suitable projects and partnerships 99 with IKEA Forestry Standards (%) in Russia. 39 | IKEA SUSTAINABILITY REPORT FY18 | CIRCULAR & CLIMATE POSITIVE | REGENERATING RESOURCES, PROTECTING ECO-SYSTEMS AND IMPROVING DIVERSITY
Communicating the impact of FSC down these barriers, encouraging more smallholders and medium-size private forest To increase uptake of FSC certification for owners to work towards certification and forests, it is vital that businesses and forest increase the volume of FSC certified materials owners understand the benefits. In FY18, we available (see box). completed the Value and Impacts Analysis (VIA) project, launched in FY14 in partnership In FY18, we began a new partnership with with ISEAL, Tetra Pak, Kingfisher, and others. the FSC as part of their New approaches to Through the project we established a model to smallholder certification programme. It aims better evaluate and communicate the impact of to apply FSC’s vast knowledge and experience FSC and other certification standards. This has to become more relevant to this vital group helped to identify key messages to illustrate of suppliers. The experience from our existing the success of FSC. Find out more here. partnerships to improve the practices of smallholder farmers, such as that with WWF in Including smallholders and private Thailand and Rainforest Alliance in Indonesia, forest owners in our supply chain feeds into the development of these new approaches in Asia. Small forest holders are a vital source of the many types of wood and other materials In Portugal, we’re partnering with Forestis, we use, such as bamboo and rattan. the Federation of Private Forest Owners, our Traditionally, these groups have not been industrial partner Sonae Arauco and WWF to sufficiently included in FSC certification due improve forestry practices and support FSC certification of private forest owners growing to the complexities and costs and a lack of Certifying private land owners in Lithuania understanding of the benefits and the process maritime pine. to become certified. We are working to break “I knew that FSC certification would help me to of the group. Forest owners like Andrius are manage my forests in a more sustainable way and seeing the benefits. to sell my wood to more buyers. I’ve been looking “The support of VšĮ Darnūs Miškai made it much to do this for the last five years, but the extra more achievable to certify the forests. And because costs and time needed were always a big barrier,” there’s such a high demand for certified wood, it’s says Andrius Bajorūnas, a private forest owner easier to sell too. Some companies even pay more,” of 2,286 ha in Lithuania. explains Andrius. The same is true of many private forest owners in There are still some challenges, though. Forest Lithuania, where nearly half of forests are privately owners must leave dead wood and set aside more owned, and from which we sourced a total of trees to protect biodiversity, beyond what is required 1.07 million m3 RWE in FY18. That’s why we by legislation in the country. Where the forest is partnered with suppliers there to establish a group next to open landscape, they must also leave narrow forest management scheme – VšĮ Darnūs Miškai forest buffer zones that help to protect soil, air and (Public Institution Company Sustainable Forests). water quality. This wood could otherwise be sold. Groups like this have been introduced by FSC to But, as Andrius says, “the market need for FSC simplify the certification process and lower the costs wood will only increase.” for small forest owners, though it’s never been done before on this scale in Lithuania. The group arranges The members of VšĮ Darnūs Miškai aren’t obliged internal audits of its members’ forests, and then to supply the IKEA business, but we expect some an FSC accredited certification body annually audits of the certified wood to end up in our supply chain. a sample of forests from the group. That’s part of our forest positive approach – going beyond our own direct supply chain to improve By the end of FY18, 47,102 ha of forest, owned forest management across the industry. by 114 members, had been FSC certified as part 40 | IKEA SUSTAINABILITY REPORT FY18 | CIRCULAR & CLIMATE POSITIVE | REGENERATING RESOURCES, PROTECTING ECO-SYSTEMS AND IMPROVING DIVERSITY
Cotton
Since FY16, all the cotton used to make IKEA SOURCES OF COTTON – FY18 the cotton we used was from recycled sources. products has come from more sustainable (COTTON SOURCED %) We are always exploring ways to increase this sources,34 contributing to improving farmers’ without compromising the functionality, quality, livelihoods, yields and incomes, and reducing touch and feel of the product. Working with negative environmental impacts. We used our suppliers, we are trialling new blends of about 0.7%35 of the world’s total supply of recycled and virgin cotton, and other materials. cotton – 155,000 tonnes – in FY18. And by CHINA Read about our work to develop new textiles working with others to go beyond our own 21% on pages 23-24. value chain, we have a big opportunity to PAKISTAN 32% Through our ‘boll to bale’ project in Pakistan, transform the industry for cotton growing we are working to map the cotton supply and production. chain, including picking, handling, storage and We’re a founding member of the Better transportation. This will help us to ensure that INDIA Cotton Initiative (BCI), whose ambition is 19% the cotton from this region is produced more to make global cotton production better for sustainably and is of higher quality, by cutting the people who produce it, the environment waste and contamination at each stage. it grows in, and the sector’s future. We fully support BCI’s aim to make 30% of the world’s BRAZIL USA Using technology to improve cotton production Better Cotton by 2020, 8% 12% agricultural practices and we want to go beyond Better Cotton’s The IKEA business has partnered with WWF baseline requirements. TURKEY 4% for many years, to train and support cotton their experience. We aim to organise more We train our suppliers and sub-suppliers OTHER COUNTRIES 4% farmers in India and Pakistan. Now, the meetings between experts and farmers to on requirements for sustainable cotton and focus of the partnership is on technological collect detailed data and help generate even methods to meet them, and audit throughout innovations to tackle agricultural challenges more accurate advice. the cotton value chain. In FY18, we trained (% COTTON SOURCED) and improve practices. ”I used to randomly spray pesticides on 25 internal auditors and more than 50 n In the Jalna region in the state of my saplings, using strong pesticides as per audits were performed in our cotton supply Maharashtra, we have reached 6,500 cotton availability and advice from the shopkeeper. chains. We encourage knowledge-sharing and farmers across 60 villages, supporting them Now I get environmental information from collaboration. For example, since FY16 we have to overcome water scarcity. The initiative the app, such as weather conditions. This worked with WWF to take textile suppliers on uses remote-sensing and geo-tagging enables me to water my plants accordingly. trips to the fields where cotton is grown in technology to provide information to farmers I have learnt what my plants require during India and Pakistan to meet farmers and learn about when to water crops and how much different stages of development. The alerts about the challenges they face. they need. This avoids excess irrigation, on my phone tell me when to give more Climate change causes changing weather conserving a precious resource in a water and when to give less and if I should patterns with longer spells of drought and TARGET drought-prone area. apply pesticides, as a last option.” shorter rainy seasons. This has huge impacts Gopal Bhai Patel, cotton farmer from n Together with the Gujarat Green Revolution for cotton production. We are supporting Kasampur village. Company (GGRC), an arm of the Gujarat agricultural research and working with farmers management. We are also investigating more state government in India, we developed the to develop new systems and adaptation drought resilient cotton solutions, and working Cotton Doctor App in FY17. The app helps processes, and to implement new technologies. to improve and preserve the quality of cotton Gujarati farmers to maximise their cotton With WWF, the Indian Agriculture Research fibres from ‘farm to gin’, a stage of the value production by sending weather updates Centre, the Agriculture Science Centre in India chain where cotton is often contaminated with and assisting farmers in making informed 34 That includes recycled cotton (15%), cotton grown to the Better and the Central Cotton Research Institute waste or other substances. Cotton Initiative (BCI) standard (80%), and farmers working decisions on cotton growing. One year on, towards Better Cotton or other more sustainable cotton, such as in Pakistan, we are collaborating to develop We aim to replace virgin cotton with recycled around 60,000 farmers have access to the the ‘e3 Cotton Program’ in the USA (5%). solutions to challenges such as water scarcity, materials wherever possible. In FY18, 15% of app and meet for training and to share 35 Calculation based on data from the International Cotton Advisory improving biodiversity and agricultural residue Committee report. 41 | IKEA SUSTAINABILITY REPORT FY18 | CIRCULAR & CLIMATE POSITIVE | REGENERATING RESOURCES, PROTECTING ECO-SYSTEMS AND IMPROVING DIVERSITY
Water
We aim to become water positive, by being WATER USE BY IKEA UNIT (m3) Retail good water stewards and helping to increase the availability of clean water in our own operations FY15 FY16 FY17 FY18 During FY18, the franchisee Ingka Group continued its efforts to use harvested, reused or recycled and our supply chain. We work to use water IKEA Industry 1,494,951 1,480,354 1,597,197 1,895,343 efficiently and ensure that the water we discharge water wherever possible, prioritising sites in is at least as clean as when it was extracted. We IKEA Components 8,010 9,331 17,044 16,07536 current and future water-stressed areas, using are also helping customers to reduce their use of best available techniques and technologies. Water Purchasing 25,692,285 24,904,176 23,331,230 25,177,868 water by developing and promoting innovative and use increased in absolute and relative terms, due to adding new buildings, including expansion in affordable products (read more on page 14). And 6,009,12537 Retail operations - - - (Franchisee Ingka countries with higher water consumption, better we collaborate with others to create the conditions Group only) that provide sustainable clean water supplies for data reporting as well as external factors such as people and communities. Total 33,172,052 32,895,810 31,474,345 33,098,411 higher temperatures in the northern hemisphere.
There is a common approach to water stewardship Ocean plastics throughout the IKEA business, guided by the Water Already, 40% of IKEA Industry sites face medium to Encouraging water stewardship in the Working Group, comprising leaders from across high water stress. This is due to local environmental supply chain In FY18, we investigated the causes and impacts the business. WWF is a partner on specific projects. and climate conditions as well as overconsumption of ocean plastic and the role the IKEA business can Becoming good water stewards is not just about The IKEA approach to water stewardship is guided by the private sector, agriculture and communities. play. We are determined to become a leader and improving water-efficiency in our own operations. by the WWF Five Water Stewardship steps: Climate change is making it worse, and smart have committed to eliminating single-use plastic We work across the whole value chain, supporting solutions are needed to conserve current water from the IKEA product range and food outlets by n Create awareness of the water situation. suppliers to become good water stewards too. supplies and secure future ones. 2020 (see page 23). In early FY19, we will join Understanding global water challenges such In FY18, a dyed yarn supplier became our fifth NextWave, a coalition of companies exploring ways as dependence on freshwater and exposure to The IKEA Industry Water Manual details internal supplier in India to achieve zero liquid discharge to intercept plastic before it enters waterways and water-related risks. requirements and information on different types of (ZLD), a water treatment process in which all waste oceans and turn it into a valuable commodity. This water supply and waste water, as well as examples n Knowledge of impact. Understanding the water is purified and recycled, eliminating discharge. will help stem the flow of plastic into the ocean of how to treat, reuse or recycle waste water prior impact of the IKEA value chain on river basins The supplier was the first organisation in the region while increasing the supply of recycled material. to sending it to the recipient or external treatment and water sources. to achieve this and is now helping neighbouring dye Together, we can reverse the current trend towards companies. The Manual’s Water Positive Matrix sets suppliers adapt to the technology. there being more plastic than fish in the world’s n Internal actions. Taking action to optimise out specific actions to improve water stewardship in oceans by 2050.38 water use and report on water quality and all areas at each site, with annual goals. We’ve partnered with the Sweden Textile Water quantity. Initiative (STWI) in China since 2015, supporting The aim is for all IKEA Industry sites to achieve Advocacy three textiles suppliers to improve water and energy n Collective actions. Working with others to these actions by the end of FY25. IKEA Industry efficiency and chemical management. We provided Advocating better water stewardship beyond the share knowledge and find common solutions. will achieve this through internal training and the funding for STWI to deliver technical support IKEA value chain is key to becoming water positive knowledge-sharing and setting minimum standards n Influence governance.Using the reach of the and training, and share best practice, focusing on by 2030. We take every opportunity to collaborate for all new buildings (including rainwater harvesting IKEA business to advocate more sustainable activities such as: with others and share our learnings about how to water management via multiple platforms. and use of drainage water). It will also share become better water stewards. In FY18, Inter IKEA n reclaiming water used for cooling technologies and co-operate with local governments, Group spoke at World Water Week for the second NGOs and water utilities to support local water- IKEA Industry n installing more water and energy year in a row, urging companies to take action cycles and biodiversity. efficient machinery on water, and participated in a panel on ocean During FY18, water use at IKEA Industry increased. A particle board factory has invested in technology plastics. The theme of this year’s event was ‘Water, This was largely due to two factors: n recovering heat from wastewater to harvest and use rainwater in its gas treatment ecosystems and human development’. n Improvements in our measurements for at least systems, reducing the use of tap water. In Slovakia, n eliminating hydrogen peroxide and reducing one factory, replacing estimates that were found IKEA Industry is working with local NGOs to find caustic soda used in dyeing and pre-treatment. to be significantly lower than actual usage. better ways to manage rainwater, helping to During calendar year 2017, the partnership saved 36 Data covers two IKEA component production units in Slovakia and China. n Our Division Board running at full capacity to recharge the ground water in constructed wetlands 75,027m3 of water, 668,992 kWh of electricity, 37 R etail does not include Ingka Group retail stores that are integrated into and prevent flooding. shopping centres. meet demand. 12,335 tonnes of steam and 1,030 tonnes of 38 https://www .ellenmacarthurfoundation.org/publications/the-new- chemicals. plastics-economy-rethinking-the-future-of-plastics-catalysing-action. 42 | IKEA SUSTAINABILITY REPORT FY18 | CIRCULAR & CLIMATE POSITIVE | REGENERATING RESOURCES, PROTECTING ECO-SYSTEMS AND IMPROVING DIVERSITY
Food
In FY18, almost half of the IKEA Food range sources through Round Table on Responsible branded chocolate bars, and the biscuits and was sourced centrally by IKEA Food. The Soy (RTRS) certification and credits. By pastries in the KAFFEREP range. EGENTID high-quality remainder is individually sourced by IKEA engaging with suppliers at the farm level and certified leaf teas n Tea: 96% of our tea products are now franchisees, while upholding our commitments collaborating across the soy industry, with sourced according to recognised sustainability to responsible sourcing. When sourcing the indirect and direct users, we can have an certifications. In FY18, we launched EGENTID, ingredients used to make our food, we focus on impact beyond our own business. a series of high-quality leaf teas that are human rights, environmental impact and animal In October 2017 we joined other companies either UTZ certified or a combination of UTZ welfare. We have started to go beyond our and NGOs in signing a letter of support for the and Union for Ethical Biotrade (UEBT). Some direct suppliers to ensure that the feed for the Cerrado Manifesto, with the ambition to halt are also organically grown according to EU animals we source is sustainably produced too. deforestation and native vegetation loss in the standards. We plan to introduce tea bags with Meat production can be land and resource- Cerrado, Brazil. The statement of support aims the same sustainability credentials as EGENTID intensive, and is a contributor to global to promote more resilient agriculture and land- during FY19. greenhouse gas emissions. As part of our planning practices in the region. n Coffee: 98% of all IKEA coffee is UTZ ambitions to source ingredients responsibly, certified and we’re working to close the become climate positive and offer healthier and Round Table on Responsible Soy gap. Our complete PÅTÅR coffee range is more sustainable food options, we continue to (RTRS) credits UTZ certified and certified organic according introduce more plant-based food to the range, All soy used in salmon feed is certified as to EU standards. Using standards means such as our veggie hot dog launched in FY18. more sustainable. For other soy supply chains, that we can secure high standards for both See page 15. where we have not yet been able to fully map the people who grow the coffee, and the risks, we will start to purchase RTRS certified environment where it’s grown. In FY18, Soy credits. This means we can contribute to the we launched a special edition product in production of sustainable soy equivalent to Soy is a protein-rich plant-based food source the PÅTÅR range, in partnership with a our own soy use. used mainly for animal feed. But it’s been social enterprise in the White Nile region linked to deforestation, especially in areas like of Uganda. Read more about this product Cocoa, coffee and tea the Amazon rainforest and the tropical savanna and our other partnerships with social of Cerrado in South America. We want to offer products that are made entrepreneurs on pages 55-56. with care for people and the environment Most of the soy we use is in animal feed, where at affordable prices. We use a range of Fish and seafood Smakrik we face three main challenges: certifications, including UTZ and organic. We’re determined that the fish and seafood In the summer, many fields in Southern Sweden are n Segregated, certified soy is not yet available n UTZ supports producers to implement we source do not to contribute to depleting yellow, growing rapeseed.39 Now we’re pleased to be in every country. better farming practices and farm fish stocks. We are committed to only using this traditional Swedish crop in our new range of n Identifying the amount of soy used management. It generally leads to larger sourcing fish and seafood certified by the organic oils – SMAKRIK, Swedish for tasty. throughout food supply chains is challenging yields, higher incomes and better living Aquaculture Stewardship Council (ASC) or All SMAKRIK rapeseed oils are pressed mechanically and and often relies on high-level estimations. conditions for farmers and workers, while Marine Stewardship Council (MSC), with full filtered without any use of chemicals. The leftover seeds protecting the environment. chain of custody verified to IKEA stores. n In more complex supply chains, such as are used as feed for livestock. Around 94% of fish and seafood at IKEA is pork, beef and dairy, where it is more n Organic farming methods take care of either MSC or ASC certified. The range includes oils for frying or baking and cold- challenging to trace the soy in animal feed, natural resources such as water, soil and pressed oils in three flavours: thyme, wild garlic and dill. it can be difficult to influence the feed used air. This supports biodiversity on farms Rapeseed oils, when cold pressed, are rich in omega-340 by farmers. and reduces negative impacts on the and good fats,41 making this new range a healthy option. Despite this, we are making progress. In environment. 39 R apeseed oil is also known as canola oil. FY18, we developed a position on soy which These are used across our range of cocoa, 40 SMA KRIK contains 0.68 g omega 3 per 10 ml. An intake of 2 g See pages 13-15 to read about how we’re inspiring supports the development of sustainable soy. coffee and tea products. of omega 3 per day contributes to maintenance of normal blood cholesterol levels. healthier living, and watch the video to learn more We are completing soy footprint estimations n Cocoa: 100% UTZ certified cocoa, 41 SMA KRIK is high in unsaturated fatty acids. Replacing saturated about SMAKRIK. for our dairy and meat supply chains and we fats with unsaturated fats in the diet contributes to the segregated or mass balance, in IKEA maintenance of normal blood cholesterol levels. will continue to source from more sustainable 43 | IKEA SUSTAINABILITY REPORT FY18 | CIRCULAR & CLIMATE POSITIVE | REGENERATING RESOURCES, PROTECTING ECO-SYSTEMS AND IMPROVING DIVERSITY
Animal welfare by more general animal welfare standards that works with the food industry to address supply chains. We welcome this update, and as part of our update to the supplier code of global issues in leather production and supply RSPO’s upcoming guidelines on improving We believe that efforts to improve animal conduct, IWAY, see page 47. All animal welfare chains. conditions for smallholders, who are key to the standards that we work with are guided by the sustainable production of palm oil. In FY19, we welfare must prioritise good physical and In FY18, we continued to focus on securing Five Provisions and Welfare Aims43 – principles will support projects that focus on smallholder mental health and enable the expression of chain of custody verification routines and social, on animal welfare with a focus on minimising inclusion and human rights, in addition to our natural behaviours. This is true at all stages of environmental and animal welfare standards. an animal’s life and at all points in the supply negative emotional states and experiences and ongoing ambition to eliminate deforestation. chain – farm, transport, and slaughter. We promoting positive ones. continue to develop and implement animal Palm oil In FY18, we published our Better Chicken Conflict minerals welfare standards across the major species Programme, including a roadmap and timelines. used within our supply chain. In FY18, we used around 41,700 tonnes of From FY19 we aim to announce roadmaps for Conflict minerals are natural resources palm oil – mostly in candles, and 8% in IKEA Already, we do not allow practices such Better Programmes for other species. extracted in conflict zones. They are often branded and non-IKEA branded food products. as cloning, force-feeding, live-plucking, or sold to perpetuate armed fighting and finance Franchisees sourced 89% of their whole, We are committed to responsible sourcing mulesing42 within our supply chain. We are rebel movements in some regions, in particular fresh or liquid eggs in FY18 from free-range and are always looking for new and more also working on other areas and by 2025, the Democratic Republic of the Congo and or cage-free sources in line with our laying sustainable materials. we aim to phase out the following practices hen commitment – aiming for 100%. We are adjoining countries. The most commonly mined Palm oil from Roundtable on Sustainable across all species: mapping egg ingredients with the aim to move conflict minerals are tantalum, tin, tungsten Palm Oil (RSPO) certified, segregated sources n extreme confinement (stocking densities entirely to cage-free or free-range. and gold (the 3TG). is classified as being more sustainable. that compromise the behavioral or physical The 3TG minerals are mainly used in the We support the strengthening of the needs of the animal, or the cage and Down and feathers production of electric and electronic goods RSPO Principles and Criteria in relation to crate systems) We use down and feathers to fill some comfort and components, as well as in the production deforestation, development on peat and products, such as KORNVALLMO pillows and process of some other products. These n routine physical alterations human rights. The majority – 99% in FY18 – HÖNSBÄR duvets. We only use duck feathers minerals are indirectly sourced by the IKEA n of our palm oil comes from more sustainable routine use of antibiotics as there is a much greater risk of live-plucking business in relatively small volumes and are sources. This includes 100% of the palm oil n in goose feather supply chains. The duck present in electrical products and products use of growth promoters. in IKEA candles, and 89% of the palm oil in feathers we source are from the duck food that contain digital functions. We engage with NGOs and work closely with industry. food products. Securing the remainder from suppliers, internal and external experts, and segregated sources is challenging, and requires To reaffirm our commitment to ensure a To ensure animal welfare and secure IWAY multi-stakeholder forums to improve practices a focus on the sourcing of food at the market conflict-free supply chain, in FY18 we joined compliance throughout this critical supply in our own supply chain and beyond. level. Palm oil can be used as an ingredient in the Responsible Minerals Initiative (RMI), chain, we updated our requirements for duck a large variety of food products, but often in an international organisation that supports n We are a founding member of the Global farms, transportation and slaughterhouses with very small quantities, making it difficult to companies to make informed decisions about Coalition for Animal Welfare (GCAW). social requirements across labour, safety and map. We purchase certificates for this small responsibly sourced minerals in their supply n We collaborate with the Food Animal environmental protection. Between FY16 and percentage, which generate a premium for chains. We have also set formal requirements Initiative (FAI). FY18, we audited the entire supply chain to the suppliers working to RSPO standards, even and are working together with our direct farm level in China. if the palm oil itself is not segregated. suppliers to identify their main mineral n We consult with Compassion in World sources, while setting actions for the future. Farming and World Animal Protection. We aim to ensure fully traceable supply Leather The main objective is to develop a sustainable, chains for the palm oil in IKEA products. We n We are on the Advisory Group for the We source leather for our home furnishing transparent and conflict-free supply chain are working with an external partner to test Responsible Wool Standard. products from just 11 tanneries. This helps to across our business and operations. ensure traceability and high animal welfare batches of candles, investigate the reliability of the chain of custody systems and verify Beef, pork, chicken, eggs and dairy standards, while minimising social and traceability. And we are mapping our supply We’re developing and implementing the ‘Better environmental risks. Since FY16, none of the chains and completing on-the-ground human Programmes’ for each of the major species in leather we source has been produced using rights assessments in compliance with our our food supply chains – beef cattle, broiler chrome, a toxic chemical sometimes used to sourcing guidelines. chickens (for meat), dairy cattle, laying hens, soften leather. 42 The removal of strips of wool-bearing skin from around the pigs, and salmon. The Better Programmes breech of a sheep to prevent flystrike. We are a member of the Responsible Leather During FY18, RSPO strengthened its criteria are species-specific and will be complemented 43 https://www .ncbi.nlm.nih.gov/pmc/articles/PMC5082305/. Initiative, a Textile Exchange Working Group, to reflect human rights challenges in palm oil 44 | IKEA SUSTAINABILITY REPORT FY18 | FAIR & EQUAL
With IKEA stores, suppliers and digital presence covering more than 50 markets, our value chain touches millions of lives. This is a huge responsibility. We want the Fair &. IKEA business to be an inclusive place where everyone can expect the same fair treatment, whoever and wherever they are. equal. Our ambition is that, by 2030, IKEA will be a leader in creating a fair and equal society that benefits the many. We will do this by growing our business in an even more inclusive way, respecting and encouraging diversity and promoting decent and meaningful work across our value chain, enabling people to provide a good life for themselves and their families. Being inclusive is about engaging with others in the work they do and inviting them to participate in our work.
Our commitments
Providing and supporting Being an inclusive Promoting decent and meaningful work business 51 equality 57 across the value chain 46 45 | IKEA SUSTAINABILITY REPORT FY18 | FAIR & EQUAL
The IKEA People Strategy Business ethics
The IKEA People Strategy defines clear Our values guide everything we do, including all of our business points of view on who we are, how we interactions. We are committed to being a meaningful and trusted want to do business and how we create brand, and we strive to be honest, respectful and fair. We share these a positive impact for people. Its focus expectations with all co-workers in our value chain, setting consistent is to develop competence, leadership, standards through our codes of conduct (see below left) and the Inter innovative ideas and working together IKEA Group Policy and Rule on Anti-Corruption.1 – starting with IKEA co-workers and All Inter IKEA Group co-workers take part in Code of Conduct training, extending to our entire value chain. which includes anti-corruption. Co-workers in the IKEA purchasing organisation within IKEA Range and Supply receive additional comprehensive business ethics training.
We promote a culture of openness and encourage co-workers to raise concerns with individuals and their managers if they think something is wrong. If they feel uncomfortable raising issues in person, co-workers can do so via the Inter IKEA Group Raising Concern Line, or via (anonymous) email direct to Inter IKEA Systems. In FY18, 34 concerns relating to breaches of the Inter IKEA Group Code of Conduct were reported to the Inter IKEA Group Raising Concern Line.
Inter IKEA Group takes a consistent approach to internal investigations through the Inter IKEA Group Rule of Investigation. In FY18, around 80 co-workers in the Inter IKEA Group human resources and risk functions received training to raise awareness and understanding of the rule. In FY19, further practical training will be provided for co-workers who carry out the investigations. IKEA franchisees are also expected to have dedicated routines in place to manage and resolve concerns.
1 The Inter IKEA Group Policy and Rule on Anti-Corruption applies to all Inter IKEA Group co-workers.
Codes of conduct
n The Inter IKEA Group Code of Conduct communicates our expectations of all Inter IKEA Group entities and their co-workers.
n IConduct is our code of conduct for all IKEA franchisees, introduced in FY18. It describes our expectations of franchisees, with specific sections covering: people and society; planet; health, safety and security; business ethics; and information handling.
n IWAY is our long-standing supplier code of conduct. The IWAY programme communicates our minimum requirements on social, environmental and working conditions to IKEA suppliers. 46 | IKEA SUSTAINABILITY REPORT FY18 | FAIR & EQUAL | PROVIDING AND SUPPORTING DECENT AND MEANINGFUL WORK ACROSS THE VALUE CHAIN
People are at the centre of the IKEA culture. TOP HOME FURNISHING PURCHASING Our commitment COUNTRIES (% OF TOTAL, FY18)3 We embrace the values of respect and Improving social conditions for togetherness in every part of our business drivers in the IKEA supply chain Providing and and work to respect human rights through our everyday actions. This approach requires In Europe alone, more than 11.4 million people work in supporting decent us to set clear and consistent expectations transportation – accounting for around one in 20 jobs.4 and meaningful across the entire IKEA value chain. The CHINA Competition has increased in the industry and sub- Inter IKEA Group Code of Conduct and 27% OTHERS contracting and complex cross-border chains are common. work across the IConduct include sections on human rights. 34% IWAY, the IKEA supplier code of conduct, Truck drivers who transport IKEA products are employed value chain includes a strong focus on labour standards by independent service providers, who sometimes for workers in the IKEA value chain. We sub-contract transportation. Inter IKEA Group does work together with suppliers to develop and not own trucks or directly employ drivers. POLAND continuously improve the IWAY programme. By providing decent2 and meaningful 19% We are determined to ensure that the drivers transporting our products enjoy good and fair working conditions. work, we can play our part in We also monitor the implementation of these codes of conduct and track emerging issues ITALY Through our supplier code of conduct, IWAY, we put strict creating a fair and equal society, 7% and risks to strengthen our human rights demands on our transport service providers with respect SWEDEN to wages, benefits and working conditions. We welcome while contributing to a vibrant due diligence. Where needed, we take action 4% IKEA value chain where people feel to remedy any potentially negative impacts, clearer and stricter regulations across the EU, alongside Our largest home furnishing GERMANY and we work with others to influence positive improved monitoring and control. IConduct requires that respected, are motivated to do their sourcing region is Europe. 4% change across the IKEA value chain and beyond. Working with suppliers close IKEA franchisees provide appropriate facilities for service best work, and able to provide a to our customers and raw LITHUANIA providers, with a particular focus on truck drivers. better everyday life for themselves. The IKEA business and our suppliers work in material sources improves 5% many diverse parts of the world, and we are transport efficiency. In FY18, Inter IKEA Group Transport & Logistics Services: sensitive to the social and cultural differences Our workplaces should be safe and n conducted almost 250 unannounced, voluntary and where we operate. Wherever a person lives, contribute to the healthy development anonymous interviews to seek feedback on working they should expect high standards of treatment of people. Our aspiration is that every conditions directly from drivers IKEA co-worker and every worker when working in an IKEA company or at an at IKEA suppliers has access to decent IKEA supplier. n limited land transport sub-contracting to one tier,5 employment with a fair income. to achieve increased transparency and visibility and ensure compliance with our requirements Securing good conditions in n rolled out a Sub-Contracting Chain Management the IKEA supply chain Programme (SCCM) to embed sustainability deeper into the IKEA supply chain. IKEA suppliers are an essential part of our business. They make and transport our n organised a roundtable in Brussels to discuss key products and components, provide the food questions, thoughts and topics related to social for our restaurants and the IKEA catalogue conditions in the EU transportation industry – for our customers, and deliver essential alongside stakeholders from other companies, services at IKEA companies. the transportation industry, the EU political spectrum, Millions of people work in the IKEA supply transport unions and NGOs. chain. Currently, Inter IKEA Group partners with around 1,600 direct suppliers – including 1,000 home furnishing suppliers – covering 4 https://ec.europa.eu/transport/facts-fundings/infographics_en. more than 50 markets, and IKEA franchisees 5 Sub-contractors to IKEA transport providers are not permitted to themselves 2 The ILO (International Labour Organisation) definition work with many more. We try to understand sub-contract the work to another provider. The one-tier requirement (with of decent work: http://www.ilo.org/wcmsp5/groups/ the exception of extraordinary capacity constraints) is now part of our frame public/---dgreports/---exrel/documents/publication/ the specific local contexts and challenges in agreement with land transport service providers and will continuously be rolled wcms_172609.pdf. each location, and take a consistent approach out and implemented. 3 Data numbers to nearest whole number. to securing good social, environmental 47 | IKEA SUSTAINABILITY REPORT FY18 | FAIR & EQUAL | PROVIDING AND SUPPORTING DECENT AND MEANINGFUL WORK ACROSS THE VALUE CHAIN
and working conditions. IWAY auditors and sustainability developers ensure that we The next step in our IWAY journey have a local presence in our purchasing and logistic areas. For nearly 20 years, IWAY has formed the foundation of our relationships with IKEA suppliers. But the world is IWAY, the IKEA supplier code of conduct, is the changing. It is time to re-evaluate IWAY to meet foundation of our approach. It communicates our the new realities of today and our big ambitions minimum requirements on social, environmental for tomorrow. and working conditions, and is the basis for developing dialogue, shared values and We want to continue to challenge ourselves and our expectations with IKEA suppliers. suppliers to do better, focus our resources where they will make the most difference, and make IWAY more Launched in 2000, IWAY is updated regularly to inclusive of our whole value chain – from suppliers to The average length of take account of emerging issues. Over the past collaboration with our IKEA franchisees to sub-suppliers. In FY18, we started 18 years, we have developed additional suppliers is 11 years. updating the IWAY Standard and System. The work is requirements for certain parts of the supply chain ongoing, and to help set our future direction we are: or to clarify our position on specific topics such INTER IKEA GROUP SUPPLIERS6 as the prevention of child labour and support for n engaging with stakeholders inside and outside young workers. the IKEA value chain SUPPLIER TYPE NUMBER OF DESCRIPTION % IWAY APPROVAL IN We believe in building long-term relationships SUPPLIERS IN n revising IWAY content, including – among others – IWAY SCOPE FY16 FY17 FY18 with our suppliers and place a strong emphasis new content on animal welfare and requirements on supplier development. The average length of on continual improvement Home furnishing Make our home furnishing 1,000 97 98 98 collaboration with our suppliers is 11 years. We suppliers products. work together with suppliers to improve their n redefining arisk-based approach to IWAY verification capacity to meet our requirements and, ultimately, and audits, alongside new KPIs for IWAY process Transport Transport our products 90 to become more sustainable businesses. and performance suppliers – land 339 to stores and distribution 97 98 (land only) and ocean7 centres. Inter IKEA Group monitors compliance rates n establishing a new governance structure, strengthening for each supplier category area. This provides our approach to business consequences for suppliers Provide the food and a picture of how well suppliers meet IWAY not meeting our requirements, and incentivising ingredients for the core Global food requirements over time. The IWAY Training 158 range in IKEA Bistros, 63 87 96 strong performance. supply sites8 Restaurants and Swedish Programme supports efforts to continually We are examining how IWAY can capture more holistic Food Markets. improve IWAY-related competence, ensuring all issues such as responsible wage practices, sustainable IKEA co-workers involved in the IWAY process sourcing and biodiversity. Ultimately, we want IWAY to Provides components and can effectively communicate with suppliers and facilitate more than the meeting of basic requirements. materials to IKEA suppliers support with IWAY implementation when needed. IKEA Components 201 and sub-suppliers that 97 99 98 We want it to enable suppliers to achieve continual are used in IKEA home We are re-evaluating IWAY to ensure it is up to improvements above and beyond the minimum, and to furnishing products. date (see box right). reward suppliers that achieve more for their businesses,
their workers and the environment. Supplies solid wood, board 6 Includes Inter IKEA Group suppliers. Does not include suppliers to IKEA on frame and board-based retailers. We plan to roll out our updated IWAY Standard and IKEA Industry 5149 furniture to IKEA and 38 60 6410 7 No airplanes are used in our goods supply chain, unless in exceptional System in 2020, engaging with suppliers to all IKEA companies in the IKEA circumstances. 8 Refers to individual sites producing food for the IKEA core range, rather companies (including franchisees) and IKEA co-workers supply chain. than supplier level as for other organisations. 9 Direct material suppliers. Excludes traders, distributors and IKEA to communicate expectations. Industry own units. All IKEA Industry own units are IWAY approved. Provide the pulp, paper IKEA Catalogue 10 IKEA Industry is on target to achieve IWAY compliance for all suppliers 51 and print services for the 80 63 80 sites11 by FY23, in line with the goal set in the IKEA Industry IWAY roadmap. printed IKEA catalogue.12 11 R efers to individual sites, rather than supplier level as for other organisations. 12 D oes not include digital suppliers. Approval with IWAY Must requirements at critical 99 91 93 13 IW AY Musts are the requirements that IKEA suppliers must meet home-furnishing sub-suppliers13 before a contract can be signed – critical home-furnishing sub- suppliers are audited against these requirements. 48 | IKEA SUSTAINABILITY REPORT FY18 | FAIR & EQUAL | PROVIDING AND SUPPORTING DECENT AND MEANINGFUL WORK ACROSS THE VALUE CHAIN
Health, safety and wellbeing at work
Every IKEA company should provide a healthy IKEA INDUSTRY and safe environment for our co-workers LOST TIME ACCIDENT RATE (PER MILLION HOURS WORKED) and customers. FY16 FY17 FY18 We clarify our requirements on health, safety and security through the Inter IKEA Group IKEA Industry 3.3 3.9 4.9 Code of Conduct, IConduct and IWAY. IKEA sustainability teams work closely with 14 TREND suppliers to develop health and safety systems and processes in our supply chain, focusing 153 on worker health and safety, emergencies and fire prevention, and chemicals. 112 Health and safety at IKEA Industry 135 There is a higher risk of injury at IKEA Industry operations, due to machinery, heavy traffic and 176 chemicals handling. IKEA Industry is committed to building an even stronger safety culture, securing that all co-workers and visitors to production sites stay safe and healthy. The sustained focus on incident reporting and best practice has resulted in reduced accidents in P 15 previous years. (THOUSANDS)
In FY17 and FY18, the rate of lost time accidents14 at IKEA Industry increased. IKEA Industry sadly also reported two fatal accidents in FY18, for which it takes responsibility. Thorough investigations were Health and safety at IKEA retail carried out to examine how and why these operations tragic accidents happened, and subsequent The health and safety of co-workers is key to actions have been taken. the IKEA business and is monitored closely. IKEA Industry has set phased goals between Accidents and incidents are occurring mainly in now and 2025, covering machine and traffic the logistics and food areas of the retail stores, safety, health at and outside work, safety and in the customer fulfilment distribution units. culture, and fire safety. All managers will They are mostly occurring when using hand receive training in safety leadership to embed tools or in material handling in general, and a strong safety culture. This began in FY18 the focus is always on trying to reduce the and will continue during FY19. number of incidents. For FY18 health and safety data from franchisees, refer to the Annual Reports of individual franchisees.16 We are investigating how to include this data
going forward. 14 Accidents requiring one or more days of absenteeism. 15 Unsafe conditions, unsafe acts and near misses, that could have led to an accident. 16 F or data from the franchisee Ingka Group, see the Ingka Group Annual & Sustainability Summary Report. 49 | IKEA SUSTAINABILITY REPORT FY18 | FAIR & EQUAL | PROVIDING AND SUPPORTING DECENT AND MEANINGFUL WORK ACROSS THE VALUE CHAIN
Talent development Stable employment An engaged, empowered value chain
IKEA co-workers are the foundation of our Work should be a place where people feel We want to ensure that everyone in our refugees and women who have been out of uniqueness and our success. Our values-based valued, whatever their circumstances or stage value chain has a voice and is engaged and the workplace. The goal is to have skills for recruitment approach leads us to work with of life. We strive to offer stable and predictable empowered to play an active role in their employment programmes in all 30 Ingka Group people who will enrich our culture, and who employment conditions that enable co-workers workplace. We stand up for those working in countries by 2025, building partnerships in bring a curious and down-to-earth attitude to to feel supported and able to make life plans our value chain who are not usually heard – local communities to tackle unemployment, their everyday work. with confidence. In times of change, our including marginalised groups employed by especially for people experiencing poverty and ambition is always to respect people and we companies working under the IKEA trademark, inequalities. The IKEA People Strategy guides our approach strive to find good solutions. and migrant and homeworkers employed in The skills for employment programmes,18 for to learning and development. We offer exciting our supply chain. Through relevant codes of conduct,17 we clearly example, give refugees the chance to gain work job journeys, structured learning opportunities communicate our expectations that IKEA experience and develop their language skills – and mentorship. Our online system – My IKEA co-workers co-workers and workers at IKEA suppliers preparing them for future employment either Learning – provides all IKEA co-workers with are treated fairly and legally with respect to IKEA companies work with those who face as an IKEA co-worker or with another company, access to common face-to-face and digital working hours, overtime and time off. barriers to finding or maintaining employment, while enabling them to actively contribute to learning solutions. enabling them to develop essential skills and their new communities. Welcoming refugees Across the IKEA value chain, the aim is to In FY18, we launched the IKEA Job portal. This find work in the retail industry. is not charity. The programmes offer a chance offer fair, decent and competitive employment is a place where candidates can search for job to have a positive impact on individual lives packages, and tailored support or benefits For example, the franchisee Ingka Group opportunities, find inspiration and get new and local communities, while also benefiting for co-workers at different life stages. For has skills for employment programmes, insights about IKEA. We are working to extend from more diverse skillsets within the business. example, the Southeast Asia IKEA franchisee, which focus on young people, people with coverage to include all IKEA jobs – currently In FY18, 11 countries ran refugee inclusion Ikano Group, has introduced one-month paid disabilities, people over 50 years old, migrants, opportunities in Inter IKEA Group and several programmes, compared with eight in FY17. paternity leave to enable new dads to stay franchisees16 are listed. home during the first few weeks of fatherhood. The new Inter IKEA Group recruitment solution, SmartRecruiters, is used by all businesses and countries within Inter IKEA Group. Available Responsible wage on both desktop and mobile devices, it enables practices candidates and hiring teams to meet and collaborate via a range of different channels. We have formed an internal project group Currently, around 67,650 candidates and to develop an approach to responsible wage 2,200 recruiters and hiring managers actively practices valid across our value chain, building use the solution. on the work undertaken since FY16 with the Fair Wage Network. IConduct and IWAY include requirements on wage practices. We are extending and enhancing these requirements to develop a comprehensive responsible wage practices framework applicable to the whole IKEA value chain. We have established a governance approach, leadership group and project team. We plan to work with internal and external stakeholders on fair wage methodology and living wage definitions, as well as an external partner 16 Al-Futtaim, Al-Homaizi, Al-Sulaiman, Ingka Group, IKANO specialising in wage practices. Our vision is for Retail and Miklatorg. 17 Inter IKEA Group Code of Conduct, IConduct and IWAY. everyone working in the IKEA value chain to 18 Programmes run by Ingka Group. access a fair income. 50 | IKEA SUSTAINABILITY REPORT FY18 | FAIR & EQUAL | PROVIDING AND SUPPORTING DECENT AND MEANINGFUL WORK ACROSS THE VALUE CHAIN
In FY18, the IKEA franchisee, Al-Homaizi Homeworkers Group, began the Jobs for Dignity programme, The global natural fibre supply chain provides which provides access to work in IKEA a livelihood for workers who earn money from Retail Morocco for people with mental or weaving at home. While homeworking offers physical disabilities, while promoting inclusive flexibility, it also risks poor working conditions behaviours within IKEA stores. and low incomes. Responsible recruitment We’re committed to improving conditions for the homeworkers in the IKEA wood and fibres In many countries, workers are bearing the supply chain. Currently, 888 people in the IKEA burden of recruitment – for example, they may wood and fibres supply chain work in dedicated be required to hand over their passports for local weaving centres in Indonesia and China, long periods or pay high fees or costs prior to alongside 9,373 homeworkers across China, starting a new job. Migrant workers, seeking Indonesia and Vietnam. The weaving centres new opportunities away from home, are provide regular work in a safe environment, particularly vulnerable. with legal, regulated wages based on piece We’re committed to responsible recruitment, rate. Workers can choose when they work and but we know we cannot tackle it alone. We are for how long, enabling flexibility for holidays a founder member of the Leadership Group and time off. for Responsible Recruitment and we support In FY18, we finalised the new IWAY Guidelines the Employer Pays Principle, which states that Weavers in the IKEA supply chain and Preconditions for both homebased workers no worker should pay for a job and that the and workers at weaving centres, which clarifies One IKEA supplier in Vietnam works with around 4,500 costs of recruitment should be borne by the relevant expectations for our wood and fibres weavers in 170 villages. The weavers work only for the employer. The IKEA Guidelines on Responsible supply chain. The guidelines take account supplier, are paid above the minimum wage, and are Recruitment communicate our expectations of internal and external stakeholder input, managed via a dedicated training and communication regarding recruitment practices for IKEA including workshops with suppliers in China, centre. All weavers must comply with the company’s code suppliers. Indonesia and Vietnam. of conduct on home weaving management, and receive labour supply chains, so that we can learn In FY18, we started to roll out the IKEA benefits such as accident and medical insurance. Next, we will refine the guidelines further Guidelines on Responsible Recruitment, starting even more about the risks associated with based on more testing and research, for Each year, the company holds a home weaving village with internal training to raise awareness of their cross-border recruitment example in Indonesia. summit, attended by around 800 weavers (15% of its content. We also started work on: n undertaking external engagement and total homebased workforce) representing all of the local advocacy work. n developing an internal way of working to weaving villages. The meeting enables attendees to learn make sure our overall approach and all IKEA franchisees are making progress in this about their rights and benefits, while building stronger activities relating to responsible recruitment area. For example, in FY18, the Southeast relationships between the supplier and the home-based and modern slavery risks are consistent Asia IKEA franchisee Ikano Group confirmed workforce. across the IKEA business no supplier to IKEA Southeast Asia would hold n enhancing the requirements related to foreign workers’ passports, and completed recruitment as part of a revision of our work to ensure all security and cleaning service supplier code of conduct, IWAY suppliers to IKEA Southeast Asia offer equal wages to local and migrant workers. n finalising ourresearch into the labour supply chains of IKEA home-furnishing suppliers, conducted in coordination with the International Organization for Migration n identifying further opportunities to map 51 | IKEA SUSTAINABILITY REPORT FY18 | FAIR & EQUAL | BEING AN INCLUSIVE BUSINESS
Our commitment Being an inclusive business
Every person has the right to fair and equitable treatment. We believe in growing our business while providing opportunities for the many. Our culture is centred on the value of togetherness, and we strive to build a diverse, inclusive Diversity and inclusion Gender equality the Inter IKEA Group function, currently 70% of workplace where everyone feels all co-workers and 40% of leaders are women. comfortable being themselves. Diversity should be celebrated. It helps Gender equality should be a reality, not an The gender split for both co-workers and us to understand our customers and each aspiration. We actively pursue gender diversity managers at IKEA Range & Supply remained
other, driving new ideas, innovation and within the IKEA business, including at the fairly consistent in FY18. There was a decrease entrepreneurship. Our co-workers and suppliers leadership level. We focus particularly on in the proportion of female co-workers at Inter bring a range of backgrounds, experience, areas where we have traditionally had fewer IKEA Systems B.V., and an increase in the skills and thinking. We want all of them to feel female co-workers. For example, the IKEA proportion of management positions held by welcomed and valued. Through our inclusive Industry Female Potential programme supports women at IKEA Industry. Currently, 49.4% of culture, we promote equal opportunities and and prepares female candidates to take Ingka Group leaders and 54% of Ingka Group togetherness. management positions. co-workers are women. The focus is on integrating diversity in The Inter IKEA Group Management Board We recognise we still have some way to go all areas of work processes and business (consisting of two people) and the Supervisory to achieve diversity and equality at all levels practices. In addition, the franchisee Ingka Board had no female members in FY18. Within across all IKEA businesses. Group signed a number of commitments during FY18, for example: CO-WORKER GENDER DIVERSITY IN FY18
n Stonewall, a non-profit organisation 19 Data represents BUSINESS % WOMEN: ALL CO-WORKERS % WOMEN: MANAGEMENT operations at dedicated to improving the lives of LGBT+ franchisee Ingka FY17 FY18 FY17 FY18 Group, but does people in workplaces all over the world not include (Lesbian, Gay, Bisexual, Transgender, data from other Inter IKEA Group function - 70 - 40 franchisees. plus people of all sexual orientations and We hope to report this in gender identities) the future. Inter IKEA Systems B.V. 56 52 50 50 n the Women’s Empowerment Principles (WEPs) IKEA Range & Supply 50 51 45 45 n all 18 Ingka Group markets in the IKEA Industry 37 37 24 27 European Union signed national Diversity Charters, making a commitment to promote Retail operations19 - 54 - 49.4 equal opportunities in the workplace and (Franchisee Ingka Group only) in society. 52 | IKEA SUSTAINABILITY REPORT FY18 | FAIR & EQUAL | BEING AN INCLUSIVE BUSINESS
Children’s rights Involving children in our product development We have a long-standing commitment to children’s rights, based on our belief that We want children to know IKEA stands for their rights, and this means actively children are the most important people in the involving and listening to children all over the world. In FY18, Children’s IKEA SAGOSKATT world. We are committed to ensuring children’s led a number of activities to engage with and learn from children: rights are integrated into everything we do. The Children’s Rights and Business Principles and the UN Guiding Principles on Business and Human Rights are the foundation of our approach. In FY18, led by Children’s IKEA – the product development department for our children’s range – we worked to develop a deeper understanding of the many ways our business impacts children. In partnership with Save the Children Centre for Child Rights and Business, we engaged people across the IKEA value chain and reviewed key documents from a child rights perspective. Interviews and workshops with stakeholders provided further insight. Kids Lab In FY19, we will use the recommendations from Small groups of children are invited development process rather than this work to help integrate children’s rights to attend workshops with or without waiting to test finished products, and across every part of our business. their parents, to provide insights on ultimately better meet their needs. All co-workers and suppliers involved in a specific challenge or topic. This lets developing IKEA products for children must us hear directly from children about Kids designing for kids attend Children’s School training, which ensures how they live at home, so we can Each year, as part of the Let’s Play safety, quality and the needs of the child develop products based on their real- for Change campaign,21 Children’s stay at the heart of the product development life needs, not our adult perspectives. IKEA invites children from around process. In FY18, around 2,000 people Following pilots in Finland and China the world to draw the soft toy of attended Children’s School. in FY17, we held Labs in Sweden their dreams, turning the five most during FY18. And in FY19, we plan unique creations into a limited edition Encouraging play to host even more. collection – SAGOSKATT. Find out more about the FY18 SAGOSKATT Play is a critical part of every child’s Kids Panel range. development. It contributes directly to This closed forum digital panel seeks health and wellbeing, cognitive development, input from advisors aged 8-14 from In FY18, Children’s IKEA developed self-esteem and skills building. And it is fun! around the world. The children and a Guide for Child Participation and But around the world, children are spending their parents respond to questions Safeguarding of Children, to ensure less and less time playing, and the nature sent to them every two weeks by every interaction with children is of play itself is changing. Today, 61% of an experienced research company, responsible and ethical. All Children’s children say they don’t know how to play which provide a unique perspective IKEA co-workers attend training without using technology.20 to the work of Children’s IKEA. Kids ahead of any engagement with Panel provides immediate access to children, and we are planning to children’s views, so that we can take scale this approach to the wider 20 From the ‘Play in Balance’ report commissioned by Persil, as part of the Dirt is Good campaign. The report polled 12,000 parents account of their feedback during the IKEA business. worldwide. 21 A global campaign delivered by all IKEA franchisees. 53 | IKEA SUSTAINABILITY REPORT FY18 | FAIR & EQUAL | BEING AN INCLUSIVE BUSINESS
Every child needs space and support to grow, learn and develop to their full potential. Stakeholder challenge: Through the Let’s Play for Change campaign,22 Malin Dahlberg Markstedt and Sara Persson, IKEA aims to enable more children to benefit from play. Save the Children Sweden In FY18 the IKEA business23 – together with the LEGO Foundation, Unilever and National The IKEA business has a long history of standing Many companies share the same challenges, Geographic – created The Real Play Coalition, up for children and their rights across our value such as upholding decent working conditions with the following aims: chain. For example, we work to prevent child for employees at every stage of the value chain, n Raise awareness of the importance of play. labour, support young workers to access decent including their own operations. You must assess: work, and develop safe products that support n Create a plan to increase play opportunities n Can your employees, and those of your children’s development. We know that our business in schools and cities. suppliers, be present parents and caregivers as touches the lives of children – both directly and well as successful employees? n Examine the impact of play on cognitive indirectly – and we are ready to take the next step development and socioeconomic status. to strengthen children’s rights. n How do the working conditions and wages of parents and caregivers impact children? The coalition plans to invite more organisations, We asked Malin Dahlberg Markstedt, Manager, Child NGOs, political, corporate and academic leaders Rights & Business Department and Sara Persson, n What risks are there to children and young MALIN DAHLBERG MARKSTEDT to create a movement in society around play. Thematic Advisor Child Rights and Business at Save people further down your supply chain, in the Manager, Child Rights & Business The coalition will continue to advocate the the Children about the key child rights issues that second and third tiers? Department, Save the Children Sweden companies need to consider in the future, and importance of play and support research on the what it takes to be a business with a positive n What can we do to mitigate these risks – value of play. In FY18, Children’s IKEA began a impact on the lives of children. supporting better conditions for families further collaboration with LEGO to enable more throughout the value chain? play in the home. Watch the launch here. “A third of the world’s population are children. Integrating their rights into every decision is the Lastly, business must reinforce community and ultimate way to become a sustainable business – government efforts to protect and fulfil children’s ensuring wiser decisions and contributing to rights wherever they operate. Considering long-term business success. your global presence and position, we strongly encourage IKEA to take an even more active role IKEA has worked to strengthen children’s rights in advocating for the rights of children.” for many years. But today the world is changing, bringing new challenges. IKEA must stay ahead. For example, with your renewed focus on becoming a digital business, you must consider the risks associated with children in the digital space and the role you can play in protecting them.
SARA PERSSON Thematic Advisor Child Rights and Business, Save the Children Sweden
22 A partnership between Children’s IKEA, Range & Supply, Inter IKEA Group, the franchisee Ingka Group and The IKEA Foundation. 23 Through the IKEA franchisee, Ingka Group. 54 | IKEA SUSTAINABILITY REPORT FY18 | FAIR & EQUAL | BEING AN INCLUSIVE BUSINESS
Opportunities for younger and older people Inclusion of young workers in the IKEA supply chain An age-smart organisation Preventing child labour and Young people are finding it harder to access supporting young workers in meaningful and stable work.24 And older our supply chain people can find it challenging to change jobs Children should never be engaged in work that or re-enter employment due to prejudice, deprives them of their right simply to be a limited reskilling or a lack of support for their child. This includes any work that is potentially stage in life. dangerous, interferes with a child’s education We recognise the value younger and older or development, or is offered to children below people can bring to our business. We want to the legal working age in a particular country. be a truly age-smart brand, where different We promptly investigate and follow up on any generations are welcomed equally, treated suspected cases of child labour within the IKEA fairly, and enabled to develop to their full supply chain. Our investigations always focus potential. on the best interest and safety of the child, Many young people enter the job market as taking account of specific circumstances such a co-worker at an IKEA store, and the Student as whether the child has access to education. Development Academy at IKEA Industry In FY18, there were no suspected cases of child Lubawa (below) enables young people to labour at IKEA first tier suppliers. develop essential knowledge and skills with the The IKEA Way on Preventing Child Labour potential to become IKEA Industry co-workers. and Supporting Young Workers – part of our Classes cover a range of technical and soft supplier code of conduct, IWAY – communicates skills, as well as IKEA history, values and our position on child labour and clarifies our safety culture. position on young workers. We believe young In many parts of the world, children under the are supported to continue running the programme people under the age of 18 who are legally age of 18 but above the legal working age25 lack into the future, while the workers are provided with able to work should have access to decent access to further education, and may seek work mentors to boost learning and increase retention. to help provide vital income for themselves and and appropriate jobs that enhance their At the start of the programme, only one of the five their families. These young workers can be at risk development in a safe and secure environment. factories involved was hiring young workers. At the of working in hazardous conditions, due to lack of Read more about IWAY on page 46. end of the first year, 88 young workers had been access to decent job opportunities. hired across the five participating factories, with In Southeast Asia, only a quarter of people aged 68 intending to stay in their jobs for 1-2 years. 15-24 can find formal employment, which would For example, a 17 year old school drop-out from offer them job stability and wages 45% higher Vietnam got a second chance at education and skills than informal work. Many factories avoid hiring building. Watch more here. workers under the age of 18 due to worries about unintentionally engaging in child labour, and We are compiling data on the outcomes and will those that do often have trouble keeping their use this to explore scaling up the programme. 24 UN: Global youth unemployment rate was at 13.1 per cent in 2016 http://www.un.org/youthenvoy/2016/08/global-youth- younger workforce. unemployment-rise/ 25 Internationa lly, this is 15 years in most countries, and 16 years in In partnership with the Centre for Child Rights and some countries such as China. 26 26 An affiliate of Save the Children. Corporate Social Responsibility, IKEA Purchasing 27 W orkers under 18 years of age, but above the legal minimum & Logistics South East Asia is working with working age. suppliers to change this. The aim is to empower 50-100 young workers27 to develop the life skills, work skills and knowledge, and to access long-term work at one of five supplier factories. The factories 55 | IKEA SUSTAINABILITY REPORT FY18 | FAIR & EQUAL | BEING AN INCLUSIVE BUSINESS
Social entrepreneurship initiative Social entrepreneurs Social entrepreneurs are often innovative Several of these partnerships also contribute to in numbers leaders, challenging the social and economic our ambition to become a circular business by forces that allow inequality and exclusion repurposing used materials and products. Read to exist. more about our ambition to become a circular + business on page 22. 6 15,000 We invest in existing social enterprises, INTERNATIONAL JOBS CREATED businesses and entrepreneurs who are already In FY18, we expanded our global and local PARTNERSHIPS successful but are ready to deliver impact partnerships with social enterprises:
on a bigger scale, and those who facilitate 62,000 n We confirmed that one of our international LIVELIHOODS the creation of jobs. Our belief is that social 20 partnerships – Rangsutra in India – will LOCAL IMPROVED entrepreneurs can better contribute inside, and supply textile products to the global IKEA PARTNERSHIPS outside, the IKEA value chain and have a bigger range. They are the first of our partners to impact on the people who need it the most. make the transition from limited collections 84% Through our social entrepreneurship initiative, to global supply. 15 OF ARTISANS we partner with enterprises that employ COUNTRIES ARE WOMEN n We launched three international limited- women or other marginalised groups for whom edition collections, reaching 180 stores in access to work may otherwise be a challenge. 25 countries. Our single-origin White Nile 23 We work with social entrepreneurs on coffee is available globally from February COLLECTIONS two levels: 2019. There are now 12,960 farmers CREATED contributing to the production of PÅTÅR SINCE 2013 n International partnerships. Centrally ARTISAN White Nile coffee. In 2017, when IKEA sourced limited-edition collections and Rangsutra started the engagement, about 8,000 products available to IKEA customers in farmers participated in the project. several countries, in the craft and food NEIRE KERIMOVSKA COFFEE BEANS n value chains. The TILLTALANDE collection, in partnership artisan, Yalla Trappan for our single origin with the Jordan River Foundation, launched n Local partnerships. Limited-edition White Nile coffee in two stores: Amman, Jordan and Brooklyn, collections of upcycled IKEA textile waste USA. The partnership has so far created sourced and supplied within specific IKEA jobs for around 150 women,28 enabling local countries or stores, store-based sewing and Jordanians and refugees from Syria to work upcycling services, or supply of local food. side by side. In FY19, the collection will be All local partnerships are audited for IWAY Must made available in additional stores in Europe requirements and all international partners are and the Middle East. Watch more here. IWAY approved – read more about IWAY on We have received interest in our model from page 46. other organisations and companies, and will The partnerships are based on business continue to look for new enterprises to work principles. The enterprises grow while with to extend the reach of the programme. enhancing their ability to export products through increased knowledge of quality and supply chain principles. Their employees receive regular, stable income to build better lives for themselves and their families. We can offer a more diverse range of handcrafted products and services, with strong stories of economic empowerment that appeal to our customers. We have started measuring social
impact for some partnerships. 28 As of end of October 2018. 56 | IKEA SUSTAINABILITY REPORT FY18 | FAIR & EQUAL | BEING AN INCLUSIVE BUSINESS
In FY18, we created IKEA Social additional funds via sponsored activities Entrepreneurship B.V. With a focus on during their FY18 Health Week. The Mechai livelihoods, equality and inclusion, this new Viravaidya Foundation turns schools into entity aims to grow and support the global lifelong learning centres that act as a social entrepreneurship movement by: community hub for social and economic advancement. Students take classes in maths, n providing financial support through grants, reading and agri-business, alongside learning loans and impact investments essential life and leadership skills. n enabling and sharing skills training and Other community engagement activities at knowledge support through accelerator IKEA franchisees in FY18 included the following: programmes and co-worker engagement n Co-workers at IKEA Retail Jordan29 shared n facilitating scale-up and marketplace access the Ramadan Iftar meal in store with children by working worldwide with social enterprises aged 4-15 from two local orphanages. both outside and closely connected to the IKEA value chain n As part of the Let’s Play for Change campaign, IKEA Retail Kuwait29 hosted a n developing a framework to monitor social series of breakfasts for children with autism and business impact across all social or mental disabilities. enterprise partnerships, using learning from our pilot social impact assessments of n During Ramadan, IKEA Retail Morocco29 existing partnerships. delivered 2,745 baskets to vulnerable families in rural areas and distributed IKEA Social Entrepreneurship B.V. spans the 110 meals per day to people living in the space between philanthropy and business, Casablanca streets. with the aim of reaching vulnerable and marginalised people, both inside and outside The IKEA Industry Community Involvement the IKEA value chain. Manual sets out a standardised approach to community engagement for IKEA Industry We are defining the first steps, piloting early units. In FY18, 15% of IKEA Industry co- partnerships, and recruiting our core team workers participated in 208 community to lead this new initiative. We will report on IKEA JORDAN engagement activities. For example, IKEA progress in future years. Industry Danville, USA, provided furnishings for a community centre in a low-income neighbourhood. IKEA Industry Malacky, Our local communities Slovakia, celebrated Earth Day by teaching children from four local schools about water Each IKEA company is part of many unique and waste management. communities. We work to understand the needs and challenges of each of our local communities, so we can have a positive impact. IConduct includes requirements for IKEA franchisees to motivate and empower co-workers to actively participate in community engagement activities, and to set and measure social impact objectives. For example, the Southeast Asia IKEA franchisee Ikano Group has committed EUR 5 million to support the innovative Mechai Bamboo School in Thailand. Co-workers raised 29 Operated by franchisee Al-Homaizi Group. 57 | IKEA SUSTAINABILITY REPORT FY18 | FAIR & EQUAL | PROMOTING EQUALITY
Our commitment Promoting equality
Being a leader in creating a fair and equal society requires us to actively engage with others, have difficult conversations where needed, understand our own impacts, and share and celebrate our Responsible recruitment Social entrepreneurs Gender equality achievements. We stand up for our As a founding member of the Leadership As our work with social entrepreneurs has In FY18, addressing gender equality and ambitions, values and beliefs, and Group for Responsible Recruitment (LGRR), grown, other companies and organisations making the workplace better for people of all we are an advocate for change. we recognise that systemic, long-term change have expressed an interest. In FY18, we: genders has been a priority for the franchisee in global practices requires open dialogue Ingka Group – particularly for the IKEA South We look for opportunities to work n shared our approach with a global with governments, suppliers and recruitment East Europe (SEE) region. To put focus on with others and create partnerships clothing company agencies. Recruitment processes are complex, how companies can work together to better that contribute to global progress. often spanning multiple borders and involving n discussed the potential for training contribute to promoting gender equality in many parties. Unless there is pressure to programmes with two international NGOs society, IKEA SEE organised three multi- Examples of advocacy and engagement change from all directions, there is a risk n stakeholder conferences in three capital cities, activities to promote equality in FY18 held early-stage discussions about that unacceptable practices continue to go launched a communication campaign and appear throughout this report. Here, repurposing ocean plastic and repurposing unnoticed or unchecked. promoted messages on equality in IKEA stores we share some other prominent examples textile waste from other companies. for International Women’s Day. of our efforts to contribute to a fairer, We are committed to speaking up on the issues more equal society through dialogue of unethical recruitment, migrant workers and collaboration. and modern slavery. In FY18, we attended and spoke at several events along with other members of the LGRR, including: n Government and Business Dialogues for Collective Action on Driving Responsible Recruitment (Bangkok and Kuala Lumpur): unique opportunities for government representatives, NGOs and multinational companies to engage in constructive dialogue on the Employer Pays Principle. n Roundtable events (Bangkok and Kuala Lumpur): bringing companies, suppliers and recruitment agencies together to discuss possibilities and challenges. The discussions were productive, and we are looking to engage in similar events in the future. 58 | IKEA SUSTAINABILITY REPORT FY18 | SDG INDEX SDG Index.
The United Nations Sustainable Development Goals with our partners. And we recognise that we have Find out more about our contribution to each of (SDGs) provide an inspiring framework for collective an important role to play in contributing to achieving the goals in the table below. action to tackle global issues such as poverty, gender the SDGs, using the global influence of the IKEA Brand equality and climate change. We use them as a guide as and value chain. we develop our business, set new ambitions and engage
SUSTAINABLE DEVELOPMENT GOAL HOW IKEA CONTRIBUTES SUSTAINABLE DEVELOPMENT GOAL HOW IKEA CONTRIBUTES
End poverty in all its Providing and supporting decent and meaningful work across Ensure availability and Supporting IKEA suppliers to improve water management and water treatment practices, page 41. forms everywhere the IKEA value chain, pages 46-50. sustainable management of water and sanitation Reducing the amount of water used across the IKEA value chain, Working with social entrepreneurs to promote and enable social for all page 41. change, pages 55-56. Working with WWF to develop a broader collaborative approach on water stewardship, page 41. Sharing technologies and co-operating with local governments, NGOs and water utilities to support local water-cycles and End hunger, achieve food Offering healthier and more sustainable food options, page 15. biodiversity, page 41. security and improved Minimising food waste in IKEA Restaurants, Bistros and Cafés, Advocating better water stewardship beyond the IKEA value chain, nutrition and promote page 25. page 41. sustainable agriculture Providing products and solutions that enable customers to cut food waste, pages 13-14. Ensure access to Investing in renewable energy through new installations, and striving affordable, reliable, for 100% renewable energy across the IKEA value chain, pages 32-34. sustainable and modern Improving energy efficiency in Inter IKEA operations,pages 32-33. Ensure healthy lives and Advocating and enabling healthy and sustainable living, pages 19-20. energy for all Promoting renewable energy beyond the IKEA value chain and promote well-being for Creating a safe and healthy workplace for co-workers, and supporting supporting IKEA suppliers to install and purchase renewable energy, all at all ages our suppliers to do the same, page 48. page 34.
Supporting children’s right to play, see pages 52-53. Offering products and services to enable the many people to generate renewable energy at home, such as the Home Solar offer, page 14.
Ensure inclusive and Building and promoting a diverse, inclusive workplace, pages 51-57. Promote sustained, Providing and supporting decent and meaningful work across the equitable quality IKEA value chain, including 208,000 co-workers working under the Supporting children’s right to play, see pages 52-53. inclusive and sustainable education and promote economic growth, full and IKEA Brand, pages 46-50. lifelong learning Providing work opportunities for younger and older people, and productive employment Improving environmental and social standards in the supply chain opportunities for all supporting our suppliers to do the same, page 54. and decent work for all through IWAY, the IKEA supplier code of conduct, pages 46-47. Taking a values-based recruitment approach and offering ongoing Developing a comprehensive approach to responsible wage practices, learning and development opportunities to co-workers, pages 49-50. page 49. Extending our commitment to responsible recruitment, page 50. Supporting good working conditions for homeworkers in our supply Achieve gender equality Building and promoting a diverse, inclusive workplace, pages 51-57. chain, page 50. and empower all women Partnering with social enterprises that employ artisans – mostly and girls Building and promoting a diverse, inclusive workplace, pages 51-57. women who live in rural areas – and empowering them to develop Partnering with social enterprises that employ vulnerable groups, sustainable incomes, pages 55-56. so they can create independent and sustainable incomes, pages 55-56. 59 | IKEA SUSTAINABILITY REPORT FY18 | SDG INDEX
SUSTAINABLE DEVELOPMENT GOAL HOW IKEA CONTRIBUTES SUSTAINABLE DEVELOPMENT GOAL HOW IKEA CONTRIBUTES
Take urgent action to Creating products and solutions to enable customers reduce their Build resilient Working with IKEA suppliers to improve resource and energy combat climate change climate impact and to live a more sustainable life at home, pages 13-15. infrastructure, promote efficiency, page 34. and its impacts Offering products and services to enable the many people to generate inclusive and sustainable renewable energy at home, such as the Home Solar offer, page 14. industrialisation and Advocating policy change to enable a low-carbon society, page 20. foster innovation Working to become climate positive by reducing more GHG emissions Co-creating solutions for a sustainable future, for example partnering than are emitted across the IKEA value chain while growing the IKEA with entrepreneurs who share the IKEA vision, see page 18. business, pages 27-36.
Investing in renewable energy and improving energy efficiency and promoting on-site renewable energy generation and new installations, Reduce inequality within Respecting human rights, including supporting specific groups in our pages 32-34. and among countries extended supply chain, such as migrant workers, homeworkers and Developing and improving practices to capture and store carbon, social entrepreneurs, pages 51-56. pages 30 and 37.
Developing a comprehensive approach to responsible wage practices, Developing a circular supply chain that reduces the need for raw material extraction, page 27. page 49.
Integrating children’s rights across the IKEA value chain, pages 52-53. Conserve and sustainably Sourcing the fish and seafood for IKEA Bistros, Restaurants and use the oceans, seas Swedish Food Markets responsibly, from ASC or MSC sources, and marine resources for page 42. sustainable development Phasing out single-use plastic products and working to divert plastic Make cities and human Reducing waste and becoming circular, page 25. from oceans and waterways, pages 23 and 41. settlements inclusive, safe, resilient and Developing products and solutions to enable and inspire people to live sustainable a more sustainable life at home, pages 13-15. Protect, restore and Sourcing key raw materials, like cotton and wood, from more promote sustainable sustainable sources including working in partnership with WWF, Reducing air pollutants in the communities around IKEA operations, use of terrestrial pages 37-40. page 34. ecosystems, sustainably Becoming forest positive, for example by promoting sustainable manage forests, combat forest management to eliminate forest degradation and deforestation, Designing our products with safety as a priority, page 15. desertification, halt and pages 37-39. reverse land degradation and halt biodiversity loss Using only FSC certified paper to produce the IKEA catalogue – the world’s largest print run ever to be produced using 100% Ensure sustainable Creating products and solutions that enable sustainable living, and FSC certified paper,page 24. consumption and inspiring co-workers and customers to live more sustainable lives at production patterns home, pages 13-15. Promote peaceful and Committing to becoming a leader in creating a fair and equal society inclusive societies for that benefits the many, page 44. Transforming into a circular business, supporting the transition to sustainable development, Ensuring an ethical approach to the way business is done, a circular economy, page 22. provide access to justice pages 51-56. for all and build effective, Providing services for customers to recycle products or give them accountable and inclusive a second life, page 17. institutions at all levels
Using renewable, recycled and recyclable materials in IKEA products, pages 22-24. Strengthen the means Advocating positive change in society around healthy and sustainable of implementation living, see pages 19-20. and revitalise the Collaborating to increase the global availability of renewable, Advocating a fairer, more equal society, page 57. recyclable and recycled materials, page 38. global partnership for sustainable development