Final Sustainable Enterprise - 2

Varun Parayil Anil Sustainable Enterprise 14466554
1
ASSESSMENT ITEM 2 :
ENTERPRISE
SUSTAINABILITY
ANALYSIS
Subject: LB5203 Sustainable Enterprise

Name: Varun Parayil Anil
Student ID:14466554
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Table of Contents
1. Introduction ................................................................................................................... 4
1.1.IKEA Global Footprint ........................................................................................................4
1.2.Scale of Business ..................................................................................................................4
1.3. Distinctive Characteristics ..................................................................................................4
1.4.IKEA Global Leader in Sustainability.................................................................................5
2. Sustainability In IKEA ................................................................................................... 5
2.1. IKEA Renewable Energy Initiatives and Commitment to Zero Emissions ........................5
2.2.IKEA Minimum Waste Policy: ............................................................................................6
2.3 Efforts to Prevent and Address Child Rights Risks .............................................................7
2.4 Cost and Challenges ..............................................................................................................7
2.4.1.The cost of new technologies ...............................................................................................................7
2.4.2.The challenge of changing supplier practices.......................................................................................7
2.4.3.The Challenge of Communicating Sustainability Initiatives ................................................................8
2.5 Recommendations to Enhance Sustainability in IKEA .......................................................8
2.5.1 Work With suppliers to improve sustainability ....................................................................................8
2.5.2.Educate consumers about sustainability ...............................................................................................8
2.5.3 Sustainable Initiatives ..........................................................................................................................8
3. Sustainability in the Furniture and Home goods sector .................................................. 9

3.1 Sustainability in Industry ....................................................................................................9
3.2 Competitor sustainability practices .....................................................................................9
3.2.1.Optimized Transportation and Logistics ............................................................................................10
3.2.2.Supporting Local Communities..........................................................................................................10
3.2.3.Sustainable Product Offerings ............................................................................................................10
3.3. Overview of Sustainability in the Furniture and Home Decor Industry .......................... 10
3.3.1.Energy and Emissions ........................................................................................................................10
3.3.2 Sustainable Materials .........................................................................................................................11
3.3.3 Circular Economy ..............................................................................................................................11
3.4 Cost and challenges in the industry ................................................................................... 11
3.4.1.Costs and Challenges .........................................................................................................................11
3.4.2 Supply Chain Management ................................................................................................................11
3.4.3. Sustainable Material Procurement .....................................................................................................12
3.4.4. Waste Reduction ...............................................................................................................................13
3.4.5. Energy Consumption .........................................................................................................................13
3.5 Industry recommendations for sustainability .................................................................... 13
3.5.1.Waste Reduction ................................................................................................................................13
3.5.2.R&D Investment ................................................................................................................................13
3.5.3.Product Design ...................................................................................................................................13
4.Conclusion.................................................................................................................... 14
References ....................................................................................................................... 15
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1. Introduction
IKEA is a Swedish multinational conglomerate that designs and sells ready-to-assemble

furniture, kitchen appliances, decorations, home accessories, home electronics, textiles, and
even food services. The brand's universal appeal lies in its ability to offer stylish yet affordable
solutions for a diverse clientele. Founded in 1943 by Ingvar Kamprad, IKEA has been the
world's largest furniture retailer since 2008(Thomsen, 2018).
1.1.IKEA Global Footprint
From its Swedish roots, IKEA has expanded its footprint to over 60 countries around the globe.
Regions include vast swathes of Europe, North America, Asia, Australia, and parts of Africa
and the Middle East. IKEA outlets are sprawling complexes that are often complemented by
play areas for children and restaurants. Today, IKEA has over 460 stores, employs over
210,000 people worldwide, and has been getting around 4-5 billion visits worldwide since
2020.
1.2.Scale of Business
In terms of business size, IKEA is the world's largest furniture retailer. The company has over
1000 suppliers from over 50 countries. IKEA's annual retail sales reached €44.6 billion in fiscal
year 2022, underscoring its substantial market presence and consumer trust (IKEA
Sustainability Report FY22 Highlights – IKEA Global, n.d.). IKEA also has a robust online
presence; its e-commerce platforms serve millions of customers. Its global workforce is another
testament to its size, with hundreds of thousands of co-workers contributing to its vision.
1.3. Distinctive Characteristics
IKEA has been praised for its business model and is known for its innovative marketing and
its commitment to sustainability. IKEA's business model is based on the concept of
"democratizing design" by offering high-quality, planet-friendly functional furniture at
affordable prices. IKEA believes everyone should have access to its products, which are
designed to be simple, practical, energy-efficient, durable, recyclable, and stylish regardless
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of their financial means (Hildebrandt, 1977). IKEA is a significant player in the global
furniture market, and it is likely to continue to grow in the years to come.
1.4.IKEA Global Leader in Sustainability
IKEA has long emphasized sustainability as a core part of its corporate identity. Over the years
leading up to 2022, IKEA has made several notable contributions and changes to its business
model to promote sustainability.
These include several initiatives, such as using renewable energy, using sustainable materials,
increasing energy efficiency in its stores and operations, reducing waste through recycling and
repurposing, being water efficient, employing sustainable modes of transportation,
etc(Sengupta & Dreyer, 2023). Apart from environmental sustainability, IKEA also focuses on
social sustainability. This includes responsible sourcing, ensuring good working conditions in
their supply chain, and engaging in various social and community-based initiatives through
their "IKEA Foundation" platform as well as other charitable arms.
While IKEA has made significant strides in sustainability, like all major corporations, it's not
without its challenges and criticisms. However, the company's proactive approach and
dedication to integrating sustainability into its business model have positioned it as a notable
leader in this space.
2. Sustainability In IKEA
IKEA's sustainability initiatives are a significant part of the company's ethos and business
operations. The company has consistently worked on integrating sustainability into various
aspects of its business. Here are some of the ways IKEA has approached sustainability:
2.1. IKEA Renewable Energy Initiatives and Commitment to Zero Emissions
IKEA has been at the forefront of incorporating efforts to transition to renewable energy and
has been consistent and proactive in its efforts to become climate-positive. The company set a
goal to produce as much renewable energy as it consumes in its operations by reaching a 100%
renewable energy goal by the year 2030. The company has already achieved this goal in some
markets, such as Sweden and Finland, using solar energy and wind farms. As for other markets,
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the renewable electricity share for production in China increased from 32% in FY21 to 64% in
FY22. This increase resulted in the climate footprint of electricity consumption in China
decreasing by 0.22 million tonnes CO2 eq as in Table 1.
Table-1
2.2.IKEA Minimum Waste Policy:
IKEA's ambitious goal is to achieve zero waste to landfill by 2025. This goal implies that no
waste from its facilities will end up in a landfill. Instead, it's either recycled, repurposed, or
converted into energy. The company is working to achieve this goal by recycling more waste,
composting biodegradable/food waste, and reducing the amount of packaging used in its
products.
Food waste in IKEA restaurants is addressed with measures like efficient inventory
management and by turning organic waste into compost or bioenergy(Cicatiello et al., 2017).
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On average, IKEA achieved the goal of reducing food waste from preparing meals for IKEA
restaurants by 50% by the end of 2022 compared to the FY17 baseline(Sengupta & Dreyer,
2023).
2.3 Efforts to Prevent and Address Child Rights Risks
As a part of people-centric social responsibility, child rights and protection are integral aspects
of IKEA's responsible business conduct. As one of the world's leading retailers, IKEA has
established guidelines 'IWAY' for its immediate suppliers as well as extended and deeper levels
of its supply chain(Mayorova, 2021).
During FY22, IKEA's 'Fair & equal' focus area of its sustainability strategy had strengthened
its commitment to children. During FY23, IKEA had set new strategic goals to ensure they
reached their commitments. They are working actively with 'The Centre for Child Rights and
Business' (an affiliate of 'Save the Children' platform), which works with companies to address
child rights issues in supply chains. The pilot project aims to understand the risks and impact
on children in the natural fibers supply chain and help prevent them.
2.4 Cost and Challenges
IKEA is a large and complex organization, and implementing sustainability initiatives can be
challenging. Some of the costs and challenges that IKEA faces include:
2.4.1.The cost of new technologies
In 2021, IKEA invested €1.8 billion in sustainability initiatives. This investment mainly
included developing new sustainable products, financing technological development in solar
and wind power, and developing new packaging made from recycled materials. These
investments are costly but necessary to achieve IKEA's sustainability goals(IKEA
Sustainability Report FY22 Highlights – IKEA Global, n.d.).
2.4.2.The challenge of changing supplier practices
IKEA's suppliers are located worldwide, and ensuring they engage in sustainable practices can
be a difficult and stretching task. In 2016, the company was criticized for sourcing wood from
forests that were being logged illegally. IKEA has since taken steps to improve its supplier's
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wood-sourcing practices. However, maintaining oversight and ensuring supplier compliance

continues to remain a challenge.
2.4.3.The Challenge of Communicating Sustainability Initiatives
IKEA needs to communicate its sustainability initiatives and vision to its employees,
customers, and other stakeholders. This is a challenge, as it can be difficult to get people's
attention and time to explain complex sustainability concepts.
2.5 Recommendations to Enhance Sustainability in IKEA
Some recommendations for further enhancing sustainability in IKEA include:
2.5.1 Work With suppliers to improve sustainability
IKEA can work with its suppliers to improve their sustainability practices. These efforts could
include setting sustainability standards for suppliers, providing training and support, and
auditing supplier's operations.
2.5.2.Educate consumers about sustainability
IKEA can educate consumers about sustainability through its website and social media
channels or by conducting in-store/ online workshops on sustainable living, upcycling, the
company's sustainability initiatives and how consumers can make more sustainable choices.
2.5.3 Sustainable Initiatives
IKEA can also incorporate various other sustainability practices in its operations, such as:-
a) Diversifying Material sources- IKEA uses wood as its primary material, but they can
consider using alternate sustainable sources such as bamboo and hemp, which are fast-growing
resources.
b)Engage with Indigenous and Local Communities-Collaborate with indigenous and local
communities when sourcing materials to ensure their rights are protected and to tap into
traditional ecological knowledge (Muñoz-Pascual et al., 2019).
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c)Localized Manufacturing- By establishing more localized manufacturing hubs, IKEA can

reduce the environmental impact of transporting products over long distances.
d)Digital Technologies and AI:- Using AI to optimize supply chains can lead to reduced waste
and more efficient use of resources. Augmented Reality (AR) can be expanded in showrooms,
reducing the need for physical display items(Muñoz-Pascual et al., 2019).
As with any sustainability recommendations, successful implementation requires a thorough

assessment of feasibility, potential impact, stakeholder engagement, and alignment with the
company's broader goals and vision.
3. Sustainability in the Furniture and Home goods sector
3.1 Sustainability in Industry
IKEA is committed to sustainability and integrating it into its business.The company

emphasizes eco-friendly sourcing, waste minimization, and a steadfast commitment to
renewable energy, aiming to produce as much renewable energy as it consumes in its
operations.
IKEA also promotes circularity by designing products for longevity, introducing repair and
recycling initiatives, and continuously innovating to reduce its overall environmental footprint.
The company's social sustainability initiatives are committed to ensuring ethical labor practices
across its supply chain and staunchly supporting and protecting human rights.
IKEA's approach to economic sustainability revolves around efficient operations, adaptation to
changing market conditions, and a commitment to offering value to its customers. By
integrating these practices with its environmental and social initiatives, IKEA aims to ensure
its longevity and positive impact in the global market.
3.2 Competitor sustainability practices
Wayfair is the biggest competitor to IKEA and is predominately an e-commerce company.

Initially focused on the U.S. market in 2002, Wayfair has expanded its operations to Canada,
the United Kingdom, Germany, and other regions, positioning itself as an international player
9
in the furniture and home goods sector. As of 2021, it offers millions of products from over
10,000 suppliers and has garnered over $14.15 billion in annual revenue(“Wayfair Inc.,” 2020).
Noteworthy sustainability practices of Wayfair include:-
3.2.1.Optimized Transportation and Logistics
Wayfair's Castlegate platform offers warehousing and shipping solutions that help consolidate
shipments. This medium leads to fewer trips, less associated costs, optimized delivery routes,
and reduced carbon emissions.
3.2.2.Supporting Local Communities
Wayfair has partnerships with organizations for community upliftment. These associations
support housing charities and contribute to the creation of stable, sustainable living
environments for vulnerable populations.
3.2.3.Sustainable Product Offerings
Wayfair has a curated selection of eco-friendly products. This allows consumers to find
products that are made from sustainable materials, have a lower environmental impact, or carry
certifications indicating they were produced sustainably.
As consumer's demand for sustainable products and business practices grows, Wayfair, like
other companies, might be expected to increase its commitment to sustainability.
3.3. Overview of Sustainability in the Furniture and Home Decor Industry
3.3.1.Energy and Emissions
(a)IKEA:
Invests in renewable energy sources for its operations and aims for climate positivity by
reducing more greenhouse gas emissions than the IKEA value chain emits.
(b)Wayfair:
While not as advanced as IKEA in this domain, Wayfair is conscious of its carbon footprint,
focusing on optimizing logistics to reduce transportation emissions.
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3.3.2 Sustainable Materials
(a)IKEA:
Known for using sustainable and recycled materials in its products, IKEA has set ambitious
targets for sustainable sourcing. For instance, they aim for all their wood to come from more
sustainable sources by 2030.
(b)Wayfair:
Offers a selection of eco-friendly products made from sustainable materials.
3.3.3 Circular Economy
(a)IKEA:
Emphasizes designing products with a longer lifespan and offers services in certain locations
that promote the circular economy, like furniture leasing or refurbishing.
(b)Wayfair:
Mainly focuses on efficiently using materials in products and packaging, reducing waste
throughout the product lifecycle.
3.4 Cost and challenges in the industry
3.4.1.Costs and Challenges
IKEA invested €1.8 billion in sustainability practices, while Wayfair contributed nearly $7.8
million USD for sustainable initiatives.
3.4.2 Supply Chain Management
(a) Global Sourcing:

Both large players like IKEA and other industry actors often source materials globally.
Ensuring that every step in this extensive chain adheres to sustainability standards is
challenging.
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(b) Ethical Labour Practices:

Monitoring labour conditions, particularly in countries with less stringent regulations, is
essential but challenging. Almost all big players in this sector have a large labour force
spanning across various countries(Mayorova, 2021).
3.4.3. Sustainable Material Procurement
(a) Over-reliance on Wood:

The furniture industry heavily relies on wood, leading to deforestation and ecosystem
destruction concerns. Ensuring wood is sustainably sourced, e.g., from FSC-certified forests,
is a significant task Refer Table 2..
(b) Use of Harmful Chemicals:
Traditional furniture production might use chemicals that can harm the environment.
Transitioning to greener alternatives without compromising product quality is challenging.
Table 2
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3.4.4. Waste Reduction
Production: Manufacturing processes generate waste. Minimizing and effectively managing

this waste is a persistent challenge across all companies in this industry(Sengupta & Dreyer,
2023).
3.4.5. Energy Consumption
(a)Manufacturing: The production processes in the furniture industry can be energy-intensive,

with a substantial carbon footprint.
(b)Transportation: Transporting bulky furniture items across large distances contributes
significantly to carbon emissions.
(c)Retail Outlets: Large stores, like IKEA's massive warehouse-style outlets, can consume vast
amounts of energy for lighting, heating, and cooling.
3.5 Industry recommendations for sustainability
3.5.1.Waste Reduction
Reduce furniture returns through better and more accurate product design lifecycles and
develop recycling programs for damaged or unsellable items.
3.5.2.R&D Investment
Invest in research and development for innovative, sustainable materials like bio-based plastics
and alternative sustainably sourced textile materials(Muñoz-Pascual et al., 2019).
Develop digital tools like virtual showrooms or AR fitting tools like Wayfair to reduce the need
for physical samples and returns, thus minimizing waste and transportation impacts.
3.5.3.Product Design
Prioritize modular and adaptable designs that can be easily repaired, upgraded, or repurposed.
Use non-toxic finishes and dyes to reduce indoor pollution and environmental contamination.
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4.Conclusion
The information required for the next part of this assessment will be compiled through an
extensive information-gathering approach. Data will be collected by referring to the corporate
website, corporate sustainability reports from different financial years, and journals offering
insight into this industry's best sustainability practices. Relevant news articles and industry-
related publications will also be reviewed for further understanding. In addition, I will survey
customer feedback on various IKEA products and services and combine it with visits to the
facility nearby to make first-hand observations and impressions.
The implementation plan will be based on company audits and international standards such as
ISO 9001. The monitoring plan will be based on the company guidelines in tandem with the
standards. In the event of an inability to procure IKEA's plan, which may be held confidential
by the organization, an implementation and monitoring plan can be designed and suggested for
IKEA.
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References
Corporate Responsibility Report. (2023, July 31). About Us.
https://www.aboutwayfair.com/cr-report
Cicatiello, C., Franco, S., Pancino, B., Blasi, E., & Falasconi, L. (2017, October). The dark
side of retail food waste: Evidences from in-store data. Resources, Conservation and
Recycling, 125, 273–281. https://doi.org/10.1016/j.resconrec.2017.06.010
Hildebrandt, H. (1977, February 1). Discount furniture—the Swedish way. Retail and
Distribution Management, 5(2), 61–61. https://doi.org/10.1108/eb017890
IKEA Sustainability Report FY22 highlights – IKEA Global. (n.d.). IKEA.

https://www.ikea.com/global/en/our-business/people-planet/sustainability-report-highlights/
Mayorova, E. (2021). Corporate Social Responsibility of Retailers: A Review of the

European Studies. Social Entrepreneurship and Corporate Social Responsibility, 2(2), 89–
112. https://doi.org/10.18334/social.2.2.112341
Muñoz-Pascual, L., Curado, C., & Galende, J. (2019, March 20). The Triple Bottom Line on
Sustainable Product Innovation Performance in SMEs: A Mixed Methods Approach.
Sustainability, 11(6), 1689. https://doi.org/10.3390/su11061689
Sengupta, S., & Dreyer, H. (2023, June). Realizing zero-waste value chains through digital
twin-driven S&OP: A case of grocery retail. Computers in Industry, 148, 103890.
https://doi.org/10.1016/j.compind.2023.103890
Thomsen, S. (2018). Foundation Ownership at IKEA. SSRN Electronic Journal.

https://doi.org/10.2139/ssrn.3243347
Thorisdottir, T. S., & Johannsdottir, L. (2020, November 4). Corporate Social Responsibility
Influencing Sustainability within the Fashion Industry. A Systematic Review. Sustainability,
12(21), 9167. https://doi.org/10.3390/su12219167
Wayfair Inc. (2020, January 14). Corporate Philanthropy Report, 35(2), 5–6.
https://doi.org/10.1002/cprt.30507
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Varun Parayil Anil Sustainable Enterprise 14466554

Subject: LB5203 Sustainable Enterprise

3. Sustainability in the Furniture and Home goods sector .................................................. 9

IKEA is a Swedish multinational conglomerate that designs and sells ready-to-assemble

1.1.IKEA Global Footprint

1.3. Distinctive Characteristics

1.4.IKEA Global Leader in Sustainability

2.1. IKEA Renewable Energy Initiatives and Commitment to Zero Emissions

2.2.IKEA Minimum Waste Policy:

2.3 Efforts to Prevent and Address Child Rights Risks

2.4 Cost and Challenges

2.4.1.The cost of new technologies

2.4.2.The challenge of changing supplier practices

wood-sourcing practices. However, maintaining oversight and ensuring supplier compliance

2.4.3.The Challenge of Communicating Sustainability Initiatives

2.5 Recommendations to Enhance Sustainability in IKEA

Some recommendations for further enhancing sustainability in IKEA include:

2.5.1 Work With suppliers to improve sustainability

2.5.2.Educate consumers about sustainability

2.5.3 Sustainable Initiatives

c)Localized Manufacturing- By establishing more localized manufacturing hubs, IKEA can

As with any sustainability recommendations, successful implementation requires a thorough

3. Sustainability in the Furniture and Home goods sector

3.1 Sustainability in Industry

IKEA is committed to sustainability and integrating it into its business.The company

3.2 Competitor sustainability practices

Wayfair is the biggest competitor to IKEA and is predominately an e-commerce company.

3.2.1.Optimized Transportation and Logistics

3.2.2.Supporting Local Communities

3.2.3.Sustainable Product Offerings

3.3. Overview of Sustainability in the Furniture and Home Decor Industry

3.3.1.Energy and Emissions

3.3.2 Sustainable Materials

3.3.3 Circular Economy

3.4 Cost and challenges in the industry

3.4.1.Costs and Challenges

3.4.2 Supply Chain Management

(a) Global Sourcing:

(b) Ethical Labour Practices:

3.4.3. Sustainable Material Procurement

(a) Over-reliance on Wood:

3.4.4. Waste Reduction

Production: Manufacturing processes generate waste. Minimizing and effectively managing

3.4.5. Energy Consumption

(a)Manufacturing: The production processes in the furniture industry can be energy-intensive,

3.5 Industry recommendations for sustainability

IKEA Sustainability Report FY22 highlights – IKEA Global. (n.d.). IKEA.

Mayorova, E. (2021). Corporate Social Responsibility of Retailers: A Review of the

Thomsen, S. (2018). Foundation Ownership at IKEA. SSRN Electronic Journal.

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