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IKEA
IKEA
Too Big To Change? Think again.
IKEA's sustainability transformation provides valuable lessons for other organizations looking to integrate sustainability into their supply chains.
In the world of global retail, few names stand as tall as IKEA. Known for affordable, stylish furniture and Swedish meatballs, IKEA has become a household name. But behind the scenes, another story has been unfolding- one of sustainable supply chain management.
Background
At the turn of the millennium, businesses worldwide faced increasing pressure from stakeholders ot adopt sustainability practices. One such pressure extends beyond individual companies to encompass entire supply chains. Sustainable Supply Chain Management (SSCM) emerged as a concept aiming to improve not only economic performance, but also environmental and social outcomes. IKEA, with its global reach and large environmental footprint, found itself ready to take on the challenge.
The Challenge
So, how does a global company with a vast, far-reaching supply chain integrate sustainability practices across all tiers of suppliers while maintaining its commitment to affordable products and continued economic growth? Stakes were high. Failure could mean loss of consumer trust, regulatory issues, and a significant hit to the brand's reputation. Success, on the other hand, could position IKEA as a leader in sustainable business practices and potentially reshape an industry.
"Caring for people and planet is one of our values. They're not just words written on the wall," Weng shared. "From the very start, in our new hire orientation, we make our co-workers understand the sustainability agenda."
Weng Manalaysay, Country Manager, IKEA Philippines
The Outcome
IKEA's commitment to SSCM yields impressive results. The company successfully integrated sustainability practices across its supply chain while maintaining strong economic performance, and it continues to innovate and improve.
IKEA experienced increased market share and growth, demonstrating that sustainability and profit go hand-in-hand.
The company's retail sales reached EUR 44.6 billion in FY23, a 56% increase from the previous year.
There continue to be positive environmental impacts.
There were improved social impacts, both with IKEA's own operations and throughout its supply chain.
IKEA experienced enhanced reputation as a leader in sustainable business practices.
To learn more, see the article Sustainable supply chain management: a case study at IKEA by Francine Laurin and Kamel Fantazy from the Univeristy of Winnipeg
IKEA tracks participation in sustainability training programs for co-workers, with 92% of employees having completed this training in recent years.
IKEA conducts annual global surveys to understand employee perspectives on sustainability and their satisfaction with the company's efforts. (read more)
IKEA's global quit rate dropped from 22.4% in August 2022 to 17.5% in April 2024, indicating improved employee retention.
IKEA's focus on sustainability efforts has enhanced its employer brand significantly, making it a preferred workplace for individuals passionate about environmental and social issues.
The Details: Key Strategies
The Details: Key Strategies
IKEA took a holistic approach to sustainability, focusing on all three pillars of the triple bottom line: environmental, social and economic sustainability.
The company implemented sustainable practices across its entire supply chain, from inbound functions like purchasing and procurement to operations and production, and outbound functions like packaging, marketing, and reverse logistics.
Extending sustainability requirements to second- and third-tier suppliers, ensuring a comprehensive approach.
IKEA implemented IWAY, its supplier code of conduct, which sets strict standards for environmental, social and working conditions. The company works with over 1,600 direct suppliers and their sub-suppliers across more than 50 countries. (read more)
Implementing sustainable design and manufacturing to reduce environmental impact.
IKEA aims to use only renewable or recycled materials by 2030.
The company has increased its use of FSC (Forest Stewardship Council) certified wood, with more than 98% of the wood used for IKEA products being either FSC-certified or recycled. (read more)
Focusing on sustainable packaging and reverse logistics to minimize waste.
Balancing social responsibility with economic performance, maintaining affordability while improving working conditions and community impact.
IKEA extended its responsible wage practices framework to franchisees in FY23.
The company has partnerships with 12 social businesses, employing over 11,000 people from vulnerable and marginalized groups in IKEA production. (read more)
Leveraging partnerships. IKEA partners with the following organizations which guide, advise, work with and learn from the company to implement sustainable practices:
Intel
Intel
Even in an industry known for environmental challenges (semiconductor manufacturing), it's possible to make massive strides towards sustainability.
"We could all use a little more of that positive outlook. It's all too easy to sit back and feel that these problems are simply too daunting to address. But one thing I've seen proven time and time again over my decades at Intel is that human ingenuity has yet to meet its match."
Pat Gelsinger, CEO of Intel
The tech industry has faced increasing scrutiny over its environmental impact. Semiconductor manufacturing, in particular, is known for its high energy consumption and use of potentially hazardous materials. Against this backdrop, Intel recognized the need to not only reduce its own environmental footprint, but to set a new standard for the entire industry.
The Challenge
Intel's challenge is multifaceted: how can they dramatically reduce their environmental impact while continuing to innovate and grow in a highly competitive industry? The stakes are high. Success would mean reimagining every aspect of their operations, from energy use to chemical processes.
Intel's operational sustainability goals. Source: intel.com
The Approach
Intel created a comprehensive strategy called RISE (Responsible, Inclusive, Sustainable and Enabling). Key elements include:
Setting ambitious goals: Intel committed to 100% renewable eletricity globally by 2030, net-zero Scope 1 and Scope 2 greenhouse gas emissions by 2040, and net-zero upstream Scope 3 emissions by 2050. (read more)
A focus on sustainable manufacturing and sustainable chemistry.
Intel collaborates with industry players to develop greener chemical processes and reduce high global warming potential gases like fluorinated compounds. (read more)
Circular economy practices are implemented for approximately 63% of manufacturing waste streams, with a goal of zero waste to landfill by 2030. (read more)
Collaborating within the industry.
Intel engages over 130 suppliers on decarbonization efforts, and hosts collaborative efforts to align sustainability practices in the semiconductor chain. (read more)
The Outcome
Renewable energy: By 2023, Intel has already achived 93% renewable electricity use across its global operations.
Water conservation: The company has conserved over 44 billion gallons of water since 1998.
In 2023 it restored approximately 3.1 billion gallons through watershed projects in regions like the US, Mexico, Costa Rica and India.
Waste management: Intel has achieved zero waste to landfill status at multiple facilities globally.
Industry leadership: Intel's efforts have positioned it as a leader in sustainable manufacturing.
Intel reduced Scope 1 and 2 GHG emissions by 43% from the 2019 baseline, while maintaining growth in manufacturing output. (read more)
Employee engagement: Intel reports numerous examples of employee-led sustainability initiatives, like wetland habitat restoration in Oregon and beach cleaning in Malaysia.
The Details: Key Strategies
The Details: Key Strategies
Intel’s approach to sustainability is defined by a multi-pronged strategy that addresses every aspect of its operations, supply chain, and product lifecycle. Here’s how Intel has operationalized its sustainability commitments.
Water Stewardship
Conservation and Restoration. In just 2023, Intel restored about 3.1 billion gallows of water through watershed projects. They aim to restore more water than they consume by 2030. (read more)
Industry Collaboration
Intel is a founding member of the Semiconductor Climate Consortium and a sponsor of the Catalyze program, which accelerates renewable electricity adoption in the semiconductor supply chain.
Sustainable Product Design
Intel continuously evaluates the energy efficiency of its microprocessors and platforms, directly reducing the Scope 3 emissions associated with product use. Each new generation of products delivers increased performance and lowered energy consumption. (read more)
Decarbonizing Operations and Manufacturing.
Transitioning to Renewable Energy. In 2022, Intel achieved 100% renewable energy use in the US, EU, Israel and Malaysia. They are making rapid progress towards their goal of 100% renewable electricity use across their entire worldwide operations. (read more)
Intel's Climate Transition Action Plan lays out a map to achieve net-zero Scope 1 and 2 GHG by 2040, and upstream Scope 3 emissions by 2050, including working with over 130 suppliers and industry partners. (read more)
Electrification and Facility Upgrades. The company is installing emission-reducing equipment at stores and offices, in their vehicle fleet and facility systems. (read more)
Sustainable Manufacturing
Green Chemistry. Intel collaborates across the semiconductor industry to develop and implement greener chemical processes by replacing gases with high global warming potential like fluorinated compounds and nitrous oxide. They do this at both ends of the product lifecycle: by developing tools that minimize chemical consumption and less harmful ways of disposing of the chemicals. (read more)
Circular Economy and Waste Management. By 2030, Intel will very likely reach zero waste to landfills. 67% of Intel's waste streams use strategies that prioritize reuse, recovery and recycling. (read more)
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