Sustainability Report on IKEA and Its Environmental Policy

Date:  2021-06-18 01:46:18
8 pages  (2089 words)
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Sewanee University of the South
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Activity to be considered:

This sustainability report seeks to establish whether IKEA, a worlds commercially furniture producer is able to sustain good design quality and energy efficient products low cost especially when the number of competitors such as Kmart, Target Corp, Fly in France as well as Japan Nitori is on rise. Whats of great concern is whether its low-cost, high-volume business model implied can be sustained without compromising environmental concerns.

Sustainability strategic plans:

Is the move by IKEA to manufacture energy efficient products and to transport more furniture from its stores at reduced emission levels sustainable especially as the public concerns over the environmental issues to protect environmental resources and handle the public health matters such as toxic materials, landfill management as well as clean water sustainable?

With the challenge of climate change, is the shift into the use of environmentally friendly solar panels and doing away with the light bulbs sustainable?

Lastly, even as the company seeks to offer quality low-priced LED bulbs cheaply, is it cautious to note that customers should not feel too cheap for some products?

Weakness/Strength

This report will focus on enhancing the strengths of IKEA. Some of the key strengths of IKEA company include a strong global brand, a clear vision, strong concept as well as a democratic function, sign, quality and design. Though the company has enjoyed economies of scale, long term relationship with suppliers, increased use of renewable materials as well as its mission of replacing the convectional lightbulbs with energy-efficient solar panels would see the massive reduction in the carbon emission. However, this move is quite questionable as the company continues to stock ordinary light bulbs. Like other manufacturers, IKEA could halt manufacturing less energy efficient or environmentally-friendly goods but even as it does so, it would become more expensive which would in turn lead to loss of customers.

Background information of IKEA

IKEA is a Swedish company founded in 1943 by Ingvar Kamprad. It is renowned with its strategy of putting customers first. Its continue dedication to value and service has always been the delight of customers. The Furniture Company and maker of meatballs is hellbent at improving the lives of customers. Notably enough, many of the furniture companies tend to be of regional status but for IKEA, it has grown to international status and attained global appeal. Its mission of making life better for every consumers has resonated well with the customers it has all along been serving. IKEA is ranked 46th most valuable company in the world with a net worth of $11.9billion and with 345 stores in 42 different countries (Prime, N., 1999). Most of the IKEA stores offer free parking. Majority of the products of the company are flat-packed are easily assembled upon purchase. The organization has both an online and offline store. IKEA is purely meant to offer solutions to furniture and fittings both indoor and outdoor total home improvement. The vision of the company is to better the life of every person. To achieve this vision, the company has established a wide range of well designed, functional home furnishing products at affordable prices. The furniture and finishing company seeks to be energy independent by the year 2020 (Baraldi, E., 2008). Moreover, the company own massive amounts of wind turbines in several countries and has made efforts ensuring that solar panels are availed on its buildings. The company has its stores in Sweden and from its factory in Almhult, leftover scraps of wood are sold to the energy company EON to heat the community. Designers endeavor in errands meant to economize on the amount of foam in sofas using the material only when necessary. Packaging that is easy to recycle is a priority, as is minimizing the amount of air that gets shipped. However, apart from all its efforts, the question on its business is that: is it possible for its business to be sustainable? Ideally, Ikea utilizes only 1 percent of the worlds commercially logged wood. It is difficult to sustain good design quality products at low cost especially when the number of competitors is on rise. Some of the competitors include Kmart, Target Corp, Fly in France as well as Japan Nitori Co in Japan. Nevertheless, IKEA is indebted to wood. IKEA uses almost 1percent of all wood used commercially around the globe. Now, there is where the problem arises. According to the company, wood is used in its products is obtained from suppliers complying with its own Iway code of conduct. Its mission of becoming forest positive by 2020 is another way of saying that its demand for timber will continue to surge. The increased reliance on wood obtained from forests is indeed a great threat to the green cover. Though it seeks to be one of the greater user of certified wood and recycled wood products, it will nevertheless increase its consumption of wood products and the reality of the matter is that this will pose series challenges. While the WWF projects focus on improving forest management, IKEA on the other hand seeks to destroy the very aim of the forest management policies. The overall aim of curbing deforestation conflicts with the forest management practices that it seeks to adopt. Edvardsson, B. and Enquist, B. (2002) posits that though the company has received endorsements from the WWF for its commitments to sustainable forestry practices, IKEA has nevertheless received a cold shoulder from other environmental groups who claim that IKEA is deceiving its clients and hiding behind a flawed certification system. Essentially, there are myriad examples of flawed FSC accreditation. It is thus not conclusive to postulate the fact that IKEA is felling down trees which have been accredited through locally-agreed FSC standards while the system itself does not meet standards.

Sustainability

IKEA prides itself in being a principled and sustainable furniture producer. However, the question is, has its low-cost, high-volume business model implied that it has compromised environmental concerns for money? IKEA is trying its best to manufacture energy efficient products. The flat-packs have made home furniture comfortable, pleasant and excellent. Whats more? The company is in a position to transport more furniture from its stores at reduced emission levels. The brown cardboard, company trumpets have made products cheaper and environmentally friendly. Additionally, the minimalist, lightweight designs manufactured by the company have made the implications that minimal material can be utilized in the fabrication of each item of furniture while in the process lowering the amount of emissions while transporting them. Assembling the furniture at home definitely cuts emissions through the reduction in the number of automated assembly lines utilized by IKEA Lindgardt, Z., Reeves, M., Stalk, G. and Deimler, M.S., 2009). In the overall, costs have been lowered.

The move by IKEA towards powering all its stores towards adopting renewable energy through lowered power consumption levels has brought about controversies especially because the because of its ambitious-sounding sustainability plans. In the year 2010, IKEA officiated the inauguration of the internal tool useful in measuring the sustainability of each product sold on a basis of 11 metrics. In a sustainability report published in 2010, the company said that it was in a move to be more sustainable by the year 2015, a move which could be seen as slightly opaque measure though it also postulate that it was in the move to also lower the amount of energy use in production of white goods as well as the amount of water used in all its products.

Moreover, the company has also been under increased pressure from DIY retailers who are selling more home furnishings. It is true that IKEA is indeed one of the best companies offering quality home furnishes at cheap prices. Even as the company seeks to offer quality products cheaply, it is cautious to note that customers should not feel too cheap for some products. According to Steve Howard, the principal sustainability officer, the company is essentially at the peak stuff in the west though it is a small share of the stuff. The companys sustainability department has put forward all its efforts and indeed undertook the task of installing 342,000 solar panels atop its stores. Moreover, its move of selling only low-priced LED bulbs and to convert all in-store lighting to LEDs has been aimed at maintaining an environmentally friendly atmosphere conducive for both business people as well as enterprises. The companys efforts towards becoming completely energy dependent was the basis of the launching of the campaign dubbed People and Planet Positive. The massive investment in solar and wind projects is a move by the company which will seek the increase in consumption of energy by households through the use of energy efficient solar devices.

IKEA boasts of the fact that its mission of replacing the convectional lightbulbs with energy-efficient solar panels would see the massive reduction in the carbon emission. However, this move is quite questionable as the company continues to stock ordinary light bulbs. Like other manufacturers, IKEA could halt manufacturing less energy efficient or environmentally-friendly goods but even as it does so, it would become more expensive, and this in turn could lead to the loss of customers. As a corporation formed to conduct business, it has consider the balancing act between sustainability and profitability.

Strengths

Some of the key strengths of the company include a strong global brand, a clear vision, strong concept as well as a democratic function, sign, quality and design.Ideally, the organization uses key performance indicators (KPI) in measuring its strengths and achieving its targets. True to its vision, the company has enjoyed economies of scale, long term relationship with suppliers, increased use of renewable materials as well as the use of better and improved versions of raw products. However, even with this in mind, it is important to note that the company stands to gain by adoption of sustainability objectives especially with its growing demand of products from its customers. The formulation of the business plan with an aim of assisting customers improve their everyday life through availing quality products as well as offering highly valued services.

Climate change and Environmental policy

With the challenge of climate change, the company has fashioned its products in such a manner as to make green its products and thus render the best solution to the environmental issues. Its idea of selling solar panels and doing away with the light bulbs is a step towards the right direction. According to the company, it has been in the forefront in selling LEDs in a campaign aimed at saving the energy of the citizens. The shift into the use of environmentally friendly products is in line with the companys missions and objectives. Over the recent past, IKEA has adopted a strong environmental policies and principles provided by the Natural Step (TNS) organization in Stockholm. Consequently, IKEA has developed its own environmental statement, policies for product design, supplier relations as well as operations together with the educational materials of consumers in the retail stores. Public concerns over the environmental issues have been of great concern especially in North America where the local authorities are under constant pressure to protect environmental resources and handle the public health matters such as toxic materials, landfill management as well as clean water. The recent political shifts in the federal government with efforts to lower or abolish environmental controls would not eliminate the issues. More to that, the environmental program of IKEA was characterized with myriad problems. According to German law, formaldehyde emissions obtained from fiberboard ought not exceed the E-1 standard. However, in the early 1980s, IKEAs bookcase Billy was examined and found that it exceeded the standard. It is a sure fact that IKEAs furniture products utilize vast amounts of fiberboard and this aggrevated the enormity of the problem. In the instance that one particle board of one product was considered hazardous, all the rest of the particle board would be declared hazardous.

Nevertheless, IKEA is indebted to wood. IKEA uses almost 1percent of all wood used commercially around the globe. Now, there is where the problem arises. According to the company, wood is used in its products is obtained from suppliers complying with its own Iway code of conduct. Its mission of becoming forest positive by 2020 is another way of saying that its demand for timber will continue to surge. The increased reliance on wood obtained from forests is indeed a great threat to the green cover. Though it seeks to be one of the greater user of certified wood and recycled wood products, it will nevertheless increase its consumption of wood products and the reality of the matter is that this wi...

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