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Monday, March 11, 2013

Strategic CSR - Ikea

The article in the url below reports on Ikea’s recent announcement that it intends its operations to be “forest positive” by 2020. This means that:
“… despite its continuing high demand for timber, it intends its business to have an overall positive effect on the world's forests. Integral to this approach is the commitment that it will be growing at least as many trees as it uses to make products by 2020.”
This commitment is part of a broader strategy, titled People and Planet Positive, that the firm announced in 2012:
“Not content with becoming one of our most ubiquitous brands, the company has announced its intention to become one of the world's most sustainable businesses as well. [In 2012] the company announced an ambitious new strategy … ; effectively a global sustainability roadmap, it sets out how the company will conduct its future business using a wide range of targets concerning renewable energy, recycling, waste management and ‘green’ product sourcing.”
This is important for no other reason than Ikea is now a very large, global company:
“Launched in 1943, the Swedish business has grown to become the world's biggest furniture company. In the last financial year, 655 million people flocked to its stores, of which it currently owns 298 in 26 countries.”
As the article’s headline indicates, however, there are a number of challenges that lay ahead and suggest that Ikea’s claim is aspirational as much as it is realistic. These challenges revolve around two key issues. The first issue is how the firm intends to become forest positive. The scale of this challenge is indicated by the amount of wood Ikea uses in a given year and the gap between this amount and the amount of certified wood currently available for any firm to use:
“Ikea is deeply indebted to wood. This year it used 13.56 million cubic metres of solid wood and wood-based board materials, not including paper and packaging, meaning Ikea alone uses almost 1% of all wood used commercially around the world. … However the company actually failed to meet is 2012 targets of 35% of all solid wood to be sourced from "preferred sources". Ikea says this was because of a significant shortage of [Forest Stewardship Council, FSC]-certified wood on the global markets.”
The second issue relates to the rest of the People and Planet Positive slogan. Although wood is a huge part of their business, even if they are able to meet their ambitious goals in this respect, there are many other aspects to becoming a socially responsible (positive impact) company than sourcing key raw materials sustainably. And, given the criticism the firm is facing for its operations in the Karelia forest in Russia by the activist group Protect the Forest, it is not clear that the little it is doing today reflects industry best-practices:
“Ikea has received public endorsements by groups such as WWF for its scaling up of its commitments to sustainable forestry practices. However, it has also been receiving less welcome attention from other environmental groups who are claiming that Ikea is willfully deceiving its customers and hiding behind a "flawed" certification system. … The company's claims that it is operating a responsible forestry management programme in Karelia are denied by Protect the Forest, who have launched a campaign to stop Ikea's operations in this part of north-western Russia.”
Given the controversy Ikea generated last Fall with its Saudi Arabia catalog, it needs to be careful that it isn’t accused of greenwashing instead of being heralded for the ambitious and progressive goals to which it is now committed.
Take care
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Ikea to go ‘forest positive’ – but serious challenges lie ahead
By Annie Kelly
December 14, 2012
The Guardian
Late Edition – Final