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Case Code: CLBE027
Case Length: 4 pages 
Period: 2000-2014  
Pub Date: 2017
Teaching Note: Available
Subject : Business Ethics
Price:Rs.100
Organization :IKEA
Industry : Furniture; Retail
Countries : Europe; US

IKEA and Environmental Ethics

 

ABSTRACT

The case discusses the environmental ethics of the world’s largest furniture retailer, IKEA, and the various measures the company took to make a positive impact on the environment. The Sweden-based company took measures to ensure that the materials it used were sustainably sourced and the labor it employed met international labor regulations. Apart from improving its operations, IKEA, in 2000, launched a suppliers’ code of conduct, the ‘IKEA Way on Purchasing Products, Materials, and Services (IWAY)’. Under this, the suppliers were required to comply with applicable laws and regulations related to environmental protection and thereby create a positive impact on the environment.
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Issues:

  • Discuss the issues and challenges for a company on the environmental ethics front.
  • Understand the significance of environmental ethics for a company like IKEA.
  • Analyze the IWAY of IKEA.
Introduction
In 2013, the Tempe outlet of IKEA won the Sustainability Leadership Award for its energy and water efficiency. The building featured a huge one-megaliter tank – installed for the purpose of irrigation, cooling, and toilet flushing – along with other energy efficient procedures such as sensor lighting, skylights, CFL and LED lights, and solar hot water. Analysts felt that the global furniture retail chain had made a lot of progress on the environmental sustainability front. As of February 2014, IKEA had renewable energy sources equivalent to any energy company. It owned 157 wind turbines and 550,000 installed solar panels, which could generate energy of 345megawatts and 90 megawatts respectively.

The iconic IKEA, founded by Ingvar Kamprad in 1943, had grown to become the world’s largest furniture retailer. The Sweden-based company’s business concept in all its markets was to offer furniture of simple designs at affordable prices. Though the company designed its own furniture and other items, it manufactured only a minimal portion; most of the supplies were made through a global network of contract manufacturers. IKEA did not have its own manufacturing facilities. Instead, it used subcontracted manufacturers in different parts of the world for its supplies. IKEA strove hard to project itself as an environmentally conscious, ethical company. It took measures to ensure that the materials it used were sustainably sourced and the labor it employed met international labor regulations. .

Keywords

Environmental ethics; Business ethics, corporate social responsibility; Code of conduct; Supply chain; IWAY



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