For a company that sets out its sustainability stall so well on the surface, Ikea’s reporting needs to go much deeper

Readers of Ikea’s latest sustainability report fully can be excused if they set off prepared to buy into the dream. The flat-pack giant has brought inexpensive Scandinavian-designed furniture to homes across the world and with its “low price but not at any price” slogan, claims to do all this without harming the environment.

The report starts promisingly with a clear overview of Ikea’s businesses, geographical locations and other key facts. The chief executive outlines the company’s priorities and acknowledges the scale of the sustainability challenge.

Ikea has identified its key sustainability issues – including its commitment to high standards in its supply chain, its approach to developing its staff and its progress on reducing the environmental impacts of its products and operations. Each section is clearly structured, with a summary of priorities and programmes, an update on progress and comprehensive performance data. Many sections also list future challenges and include quantitative targets. Interesting nuggets, such as the company’s Better Cotton partnership with WWF, reveal an impressive range of activity.

But the report is hampered throughout by a lack of commentary, analysis and detail that makes the information provided hard to interpret. The brief attempt to show how sustainability is aligned to the company’s “low cost” philosophy ducks the key issue of how cheap furniture can possibly be sustainable.

Lacking detail

Take the suppliers section. Ikea doesn’t ignore tricky subjects such as supply chain standards in China – the challenges are listed and data is provided. But it doesn’t give the reader the full picture either and some of the numbers raise more questions than they answer. Ikea requires all its suppliers to comply with its code of conduct, yet only 7% of home furnishing suppliers in China have achieved this. Given that Chinese suppliers make 21% of all Ikea home furnishings the reasons and implications need to be discussed.

The section on Ikea’s forestry policy is worrying. Ikea has set itself an ambitious goal to source all wood for its products from forests certified as responsibly managed. But only 7% of wood came from certified sources in 2008 (down from 12% in 2005) so progress is not in evidence.

Ikea acknowledges that illegal logging is rife in Russia and China, two of the company’s main wood sourcing countries. The report says that auditing in these regions has been increased but there is no information on the findings or how they’re being addressed. Several initiatives and partnerships are mentioned but again their impact is not measured and there appears to be no clear strategy for achieving their goal. This should be a red flag issue but it is handled in the report as a routine data item.

Other gaps include a stakeholder dialogue section that does not contain any stakeholder feedback – despite the long list of interest groups that Ikea engages with and references to customer and employee surveys. A section on diversity does not explain how Ikea intends to reach its goal of 50% women in management. And there is no information to support Ikea’s claims that responsibility is an integrated part of day-to-day business.

The report is also silent on the responsibility issues raised by Ikea’s unusual corporate structure. Ikea is not publicly listed and is owned by a charitable foundation registered in the Netherlands. No mention is made of this or what it means for issues such as the company’s tax policy.

Surprising from such a marketing-savvy organisation are the basic communications mistakes. The design is flat and repetitive, with no case studies, product examples or stakeholder inputs to liven things up. The translation from Swedish to English is often awkward. The 2008 report was not listed on the central corporate website and had to be hunted out on local UK and US sites. More information and copies of Ikea’s codes of conduct are available online, but this is not signposted in the report.

These problems are easily fixed and the company already does a better job in some of its other publications, such as its “People and the environment” brochure or its online “Never-ending list” of more sustainable products. Both are lively reads and full of product examples.

“Being humble by listening to and learning from others” is one of Ikea’s core values. But when it comes to the sustainability report, the company appears to have been a bit insular. Ikea needs to expose itself to external experts now to avoid nasty shocks from the consumer in the future.

Snapshot

Follows GRI? No, but includes a Global Compact Index.
Assured? No, and no stakeholder perspectives either.
Materiality analysis? No, although it’s clear about its priorities.
Goals? Yes
Targets? Yes
Stakeholder input? No
Seeks feedback? Half-heartedly. Doesn’t provide a contact name or email address.
Key strengths? Comprehensive data and clear targets in many areas.
Chief weakness? Lacks detail and analysis for key topics.

Beckie Herbert is a director of Context.
beckieh@econtext.co.uk
www.econtext.co.uk