Sustainability Report

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SDCS Assignment

A Report on
Sustainable Measures taken by IKEA and NIKE Inc. with
respect to
Physical Environment

Submitted by:
Partha Pritam Sahoo (UM14039)
Sec- A
MBA (2014-16)

Sustainability Management: The IKEA Way
IKEA is world’s largest furniture retailer. It is a multi-national company that is involved in design
and sell of ‘ready to assemble’ furniture products, appliances, small motor vehicles and home
accessories. It owns and operates 373 stores in 47 countries. The company is known for its modern
architectural designs and is now on the fore front for use of sustainable management methods in
its businesses across the value chain.
Various sustainability measures taken by IKEA across its value chain:
In Home Furnishing Products: IKEA uses a proactive risk assessment technique to ensure safety
of products by evaluating, detecting and eliminating potential threats. It pays particular attention
to children products, which are required to meet highly stringent norms and safety requirements.
Also the company strives to avoid use of chemicals in its products and uses only the laboratorytested safe chemicals.
Another pioneering initiative at IKEA is use of the ‘IKEA Sustainability Product Score Card’. This
tool was first introduced in 2010 to move towards more sustainable product development. For a
product or packaging to be termed sustainable, they are required to attain a threshold score on the
scorecard.
Measures on Climate: IKEA is making significant progress in reducing its carbon footprint
throughout the value chain. It aims to power all the IKEA buildings with 100% renewable energy.
The company has made significant investment in solar panels systems and wind turbines to supply
its buildings with renewable energy. National management teams are supported by experts and
facilitators, as well as coordinators at each local points. Managers also coordinate with WWF and
retailers at ERRT to improve energy efficiency.
The company is striving for more efficient methods of goods transport. Trucks and containers are
optimized to maximize fill rates and minimize the number of transport. Product packaging is being
optimized to increase filling rates. Each IKEA trading area has a filling rate coordinator and
analysis tools and training packages are also available.
IKEA has developed a ‘tool box’ is coordination with WWF to spread ideas and solutions for more
environment friendly public transport systems. IKEA workers can make informed choices of local

travel alternatives, to and from IKEA units. On IKEA Intranet along with the transport details, the
CO2 footprint for various alternatives of cars, buses and trains are listed.
Forestry and Cotton Requirements: Forest management in IKEA require the suppliers to have
a certified management plan. The suppliers are required to document the place of origin of the
wood. Compliance with the IKEA requirements are followed with regular audits and reporting.
Forest Stewardship Council (FSC), including Forest Management (FM) and Chain of custody
(CoC) standards are the only standards currently recognized by IKEA. Also IKEA Forestry
Specialists spread knowledge about responsible forestry in the wood supply chain.
IKEA has set out to create large-scale improvements in conventional cotton cultivation together
with international companies, NGOs, various governments etc. It cooperates with WWF and other
local partners to influence main-stream farmers to grow cotton in a more sustainable way. IKEA
is one of the founding member of the Better Cotton Initiative (BCI). IKEA also uses a web-based
traceability system to trace the cotton used in IKEA product all the way back to farm-level as part
of the initiative to source sustainable cotton products.
Water and Waste Management: All IKEA stores and distribution centers measure their water
usage and have implemented ways to reduce water use. New Product Designs have been developed
and are being used at IKEA to reduce water use. A new printing technique Soft Pigment Printing
(SPP) reduces the water usage by 60% as compared to traditional printers.
All stores and distribution centers recycle a large amount of wastes. According to the ‘Waste
Management Manual’ of IKEA, all stores are required to segregate the wastes into most common
categories. Some even divide them into unto 15 categories of wastes. This ensures nearly 90% of
the generated waste is recycled.
IWAY: It is the supplier code of conduct first introduced at IKEA in 2000. It specifies the
requirements that are placed on suppliers of products and services of IKEA. IWAY requires the
products provided by suppliers to meet the social and environmental requirements of the region of
procurement. IKEA supports suppliers to implement waste water treatment processes under
IWAY. It requires suppliers to handle, store and dispatch of wastes in an environment friendly
manner. New suppliers are selected based on the list of IWAY start-up requirements. Also, an
important section of IWAY tries to address the problem of child labor.

NIKE’s answer to Sustainable Business Management
NIKE Brand designs, develops and sells high-performance athletic gears and sports-inspired
lifestyle products including apparel, footwear, equipment and accessories. The main mantra of
NIKE’s sustainability strategy is sustainable innovation. The two areas of – material and
manufacturing are central to their sustainability strategy. NIKE believes, breakthrough innovations
such as entirely new material or process design are answers to the scale of today’s challenges. One
such example is that of NIKE Flyknit Technology which reduces the footwear waste in the upper
by 80% in comparison to traditional tech.
The following is the extensive analysis of the impact of NIKE’s business across the value chain.

From 2013 onwards, NIKE has extended the analysis of its environmental footprint across the
complete value chain – from raw material production through consumer disposal of the product
after use. Other than the overall analysis shown is the above chart, a further more detailed analysis
into each category was done to understand the impacts in detail. For example, in 2013 NIKE
developed a new tool, Business and Environmental Scenario Tool (BEST) which gives the
organization the ability to assess impacts from changes to scenarios such as material used and
changes in sourcing.
To gauge the impact of materials used in the products, NIKE has developed a new index called
NIKE Material Sustainability Index (NIKE MSI). It measures energy and water usage, waste
generation and chemical use in materials.
Another important component of sustainability management in NIKE is manufacturing. Factories
are rated through the Sourcing and Manufacturing Sustainability Index (SMSI) which puts

sustainable consideration on equal footing with quality, cost and on-time delivery and it is the tool
which NIKE uses to select the factories to do business with.
Through footprint and other analysis NIKE has identified few important areas of greatest impact.
Climate and Energy: By the end of FY’ 13, NIKE achieved a per-unit carbon footprint reduction
of 13%. Overall, the use of energy in the value chain fell by 5% and that GHG fell by 2.8% in the
same year. By the end of FY’ 13, NIKE has 33 LEED-certified stores. NIKE’s stores use 30% less
energy per square foot than standard design. Increasing number of contract manufacturers are
participating in NIKE’s energy and carbon continuous improvement programs (41% participation
in the recent years). Also, NIKE produces renewable energy at two major global distribution
centers to expand the use of renewable energy in its value chain.
Chemistry: NIKE has helped set up an industry wide management coalition named Zero
Discharge of Hazardous Chemicals (ZDHC) to reduce the discharge of chemicals to the
environment, of which more than 13 companies are now a member worldwide. To expand the use
of environmentally acceptable chemicals, NIKE has entered into a strategic partnership with
Bluesign, in which Bluesign will provide NIKE supply chain with access to more than 4300
chemical formulations. NIKE along with Sustainable Apparel Coalition has identified material
traceability as an important parameter. The company wishes to have a material traceability of the
apparels all the way to their origin. The company also runs a chemicals management and awareness
training program for the contract factories, material vendors and finished goods factories.
Water: The Company is committed to increase participation in the NIKE Water Program for its
material vendors and contract factories. NIKE has developed a H2O Insight Tool which helps drive
improvement in measurement, monitoring and disclosure of water quality and use in the industry.
Currently more than 100 non-NIKE manufacturing companies are part of the program. NIKE is
also poised to assess the geographic impact of water usage by its supply chain.
Waste: NIKE is continuously reducing the waste release in manufacturing. In Footwear, 85% of
the waste is reclaimed through recycling and energy recovery. Packaging of all NIKE and associate
footwear product are being done with 100% recyclable material with continuous focus on reducing
the weight of the packaging.

References:


The IKEA group approach to sustainability.



IKEA sustainability report 2014



Sustainable business performance summary, NIKE Inc. 2014



http://www.sustainablebrands.com/news_and_views/supply_chain/swoosh-andsustainability-nikes-emergence-global-sustainable-brand

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