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IKEA: The quest to make Circularity applicable and achievable

Last updated: Sep 27, 2022

Summary

ABOUT IKEA

IKEA is one of the largest furniture companies in the world. Founded in 1943, its vision is to create a better everyday life for many people by offering a wide range of well-designed, functional home furnishing products at affordable prices. The IKEA Group consists of a highly integrated industrial ecosystem of suppliers, franchisee retailers and manufacturers.

Currently, there are 474 IKEA franchise stores across 64 markets, and as of 2021, there were 225,000 IKEA workers around the world. One of the first franchise stores in the world was launched by IKEA Netherlands (NL) at the end of the 1970s. Now, 40 years later, IKEA NL has 13 stores across the country. The international training centre, ‘Ikea Business College' for all franchisees is located in Delft, the Netherlands, yet it is owned and operated by IKEA Global.

IKEA Global sets the new strategic direction for the company through its People & Planet Positive strategy. The strategy describes the sustainability agenda for the whole IKEA value chain and outlines its sustainability ambitions and commitments in line with the UN Sustainable Development Goals. By 2030, IKEA’s ambitions will be operationalised across three main areas: healthy and sustainable living, becoming a circular and climate positive business, and ensuring fair and equal work across the IKEA value chain.

OPPORTUNITIES FOR HRM IN IKEA

1. The next step for IKEA is to reinvent and elevate HR functions and involve HR as strategic leaders and active partners in shaping the circularity agenda. HRM has an important function in shaping new job profiles to meet the needs of new circular business models. Including HR as active partners in shaping the sustainability strategy can go hand-in-hand with creating long-term strategies for talent development—whilst promoting new circular HRM practices to upskill and train employees in developing circular competencies.

2. The IKEA global organisation offers e-learning modules, which are often theoretical. There is a greater opportunity to enhance the training modules, integrating more hands-on-training parallel to shop floor employees and build a strong link between theory and practice.

3. With IKEA’s increasing number of circular propositions including recycling mattresses, taking back old IKEA furniture and more, a growing number of partners are interested in working with IKEA. The company has a huge potential to streamline this momentum and capitalise on this opportunity by continuing to unlock partnerships with organisations to build synergies, contributing to further success.

Solution

IKEA'S CIRCULAR JOURNEY

In 1993, IKEA was amongst the founding members at the Forest Stewardship Council® (FSC) Founding Assembly and has since been including the sourcing of FSC materials into its sustainable sourcing strategy and investing in increasing FSC certified forests. In 2000, sustainability became integrated in the core of the company’s strategy and operations, as the IKEA Way, or IWAY. This entails a supplier code of conduct for purchasing, materials processing, and services—setting minimum requirements for environmental and social standards, and working conditions.

More recently, to inspire and guide decision-making and goal setting, IKEA has seen the need to upgrade its sustainability approach to strategically consider circularity as the way forward to implement its People and Planet Positive (PPP) strategy - which was launched in 2012 and provides a roadmap to outline a strong, common long-term agenda for the entire IKEA value chain and franchise system. As IKEA is a highly vertically integrated business and has developed strong relationships with the suppliers along its value chain, the company has been able to set the tone and direction for how products are designed, produced, transported and sold. For example, as the company has moved towards using 90% recycled polyester, IKEA and its suppliers have collaboratively adapted and innovated to follow the company’s commitment to circularity by 2030.

IKEA NL started its circular journey by adapting its business operations, focusing on extending product lifetimes and increasing product recycling rates. Consequently, its 30-year old resale or refurbished items 'Bargain Corner' (Koopjeshoek), was upgraded to become the Circular Hub, offering returns from its buyback service and refurbished products, selling spare parts, and providing repair ideas for some of its products, at in-person or online stores. The products that are not sold in the Hub are now donated to the thrift store Het Goed. Two other noteworthy IKEA NL collaborations are with Renewi: via Ingka Investments (the investment arm of Ingka Group, the largest IKEA Retail operator) with Renewi they have jointly invested in Dutch mattress recycler RetourMatras, which creates secondary products by recycling mattresses and recycled materials for new mattresses, and Ikea’s collaboration with MUD Jeans, a start-up that produces and leases 100% recycled jeans. This has resulted in the development of a new KLIPPAN cover, made from recycled IKEA materials.

‘There is a large, often untapped, group that could very well support the circular transition, and they are not yet working! At Het Goed you have beautiful work by people with a distance to the labor market – they are growing very quickly. It really is a shared responsibility of companies and the government.’

- Hanneke van de Vijfeijke – Country Sustainability Manager IKEA Netherlands