IKEA year in review
The Inter IKEA Group result is closely connected the IKEA retail sales performance.
Below we describe the key elements of our human rights due diligence approach and how we work to address our human rights risks and impacts as Inter IKEA Group.
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The IKEA Sustainability Strategy, covers the entire IKEA value chain, including the IKEA franchise system. Our ambition is that the IKEA business will play our full part in contributing to a fair and equal society, by respecting and promoting human rights across the IKEA value chain and contributing to resilient societies. We have set a strategic commitment within our sustainability strategy to respect human rights and operationalize our commitments to the UN Guiding Principles on Business and Human Rights (UNGPs) and the Children’s Rights and Business Principles (CRBPs). We are establishing strategic goals for our Fair & Equal section of the sustainability strategy and will further develop our framework to measure progress.
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The Inter IKEA Group Management Team is the responsible governing body for the Human Rights Due Diligence approach in Inter IKEA Group. The total IKEA sustainability agenda is decided by the Strategic Sustainability Council. The CEO of Inter IKEA Group is the chair of the Strategic Sustainability Council. The council consists of members from Inter IKEA Group and invitees representing the IKEA franchisees. The Inter IKEA Sustainability Management team includes the sustainability managers from the different parts of the Inter IKEA Group businesses. The group is responsible for aligning and developing sustainability ambitions and commitments and reporting on performance.
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Globally, the IKEA business is continuously working to ensure decent and meaningful work and respect for the human rights of people across our supply chain through close co-operation and dialogue with our suppliers. We do this based on IWAY - the IKEA way of responsibly procuring products, services, materials and components. The IWAY Standard, which is the IKEA supplier code of conduct, includes requirements for suppliers and is built around 10 environmental and social principles. Topics covered include, among others, children’s rights, business ethics, fundamental labour rights, health and safety at work, working and living conditions, environmental aspects, resource optimisation and animal welfare. With its roots in the IKEA culture and values, and the United Nations Sustainable Development Goals, IWAY principles and requirements are founded on internationally recognised standards and principles (such as the UNGPs, the Ten Principles of the UN Global Compact, the ILO Centenary Declaration for the Future of Work, ILO labour standards), as well as regional and national laws and regulations.You can read the IWAY documents here.Inter IKEA Group secures compliance with IWAY by:
- requiring all its direct suppliers to comply with the IWAY Standard.
- requesting direct suppliers to communicate the mandatory IWAY requirements (IWAY Must and IWAY Basic) to their own suppliers. In addition, critical sub-suppliers of direct suppliers must confirm that the mandatory IWAY requirements are adhered to.
- ensuring due diligence and audits, both announced and unannounced, of the supply chain by IKEA IWAY auditors and independent third-party auditors to verify compliance against the IWAY Standard and other standards.
- taking steps for continuous improvement or ultimately phasing out a supplier if the supplier fails to fulfil the IWAY requirements within the given time frames.
The latest edition of IWAY was launched on 1 September 2020 after an extensive revision involving many IKEA co-workers, suppliers, other multinational companies and non-governmental organisations. One important change is a shift in the focus of efforts from audits only to a combination of audits and proactive implementation support to suppliers and service providers. This shift strengthens the collaboration with suppliers, which in turn supports our aim to reach beyond direct suppliers and service providers to implement IWAY more deeply and create a truly sustainable IKEA value chain.IKEA Supply AG (a part of Inter IKEA Group) has seven Purchasing & Logistics Areas (PLAs) spread around the world that are responsible for developing, leading and securing an optimal support structure for all business units (suppliers) in their respective area. Other PLA responsibilities include leading and securing risk management and compliance to laws and requirements and verifying quality and sustainability compliance on site in the supply chain.Copy link Copied Link Successfully copied link
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The IWAY System is designed to ensure that sustainability impacts, including human rights risks, are identified before any supply agreement is entered and then continuously identified, monitored and managed over time. As part of the supplier selection process, potential suppliers are risk-assessed against social and environmental aspects, including protection of human rights aspects such as workplace health & safety, wages, working hours. The following steps are included in the pre-risk assessment:
- The supplier answers the IWAY questionnaire
- The answers from the questionnaire are reviewed by a Sustainability Compliance Auditor
- The answers from the questionnaire, the location (country) of the supplier unit and category risk are assessed in the IWAY Risk Tool against external advisory data and internal performance data
Depending on the risk level defined as above, the potential supplier may be subjected to an IWAY Gap Analysis, which has two purposes: (1) to assess if the supplier has the capability to implement the IWAY requirements within the defined timeframe, and (2) verification that all IWAY Must requirements are complied with, before start of business. Based on the results of the risk assessment and the IWAY Gap Analysis, when applicable, the Supplier Council decides whether to enter into an agreement with the supplier or not. To manage the risks associated with subcontracting and outsourcing, we require our direct suppliers to communicate IWAY requirements with their suppliers.Based on a comprehensive internal review conducted in FY21, we are working to strengthen our systematic approach to identifying, prioritising and mitigating our salient human rights risks at an Inter IKEA Group level in alignment with the UNGPs and OECD guidelines. We recognise the gaps and are working with human rights due diligence experts to strengthen the methodology and approach.Copy link Copied Link Successfully copied link
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The broader IKEA learning offer is available to the entire IKEA franchise system through our own learning platform. It is a mix of physical and digital learning solutions and experiences. New training activities have been added to include an introduction to anti-bribery and corruption, an introduction to circularity and an updated introduction to sustainability. The sustainability training is now mandatory in many countries. We are also developing an introductory course on human rights and due diligence that will become available to all Inter IKEA Group co-workers during FY22.
We have collaborated with the International Organization for Migration (IOM) to provide training programmes for IKEA co-workers and IKEA business partners in Thailand, Vietnam, Malaysia, Philippines, Singapore and Australia. The programmes focus on international standards, national laws, how to effectively act on unfair treatment, and the increased risks of labour exploitation due to pandemics.
The IWAY global learning offer is available to all IKEA co-workers involved in the IWAY process. The global IWAY learning solutions are complemented with local training activities that address IWAY topics specific to regions, industries and/or business setups.Copy link Copied Link Successfully copied link
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IConduct is the IKEA franchisee code of conduct. This is a key tool for how we set requirements to manage human rights risks in our franchisee system. It includes business requirements for people and society, planet, product quality and safety, business ethics, information handling, health, safety and security and business relations. IConduct applies to all IKEA franchisees. IKEA franchisees are responsible for ensuring that the requirements described in IConduct are implemented and communicated to all their co-workers.
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The IKEA Responsible Wage Practices - created in FY21 - is the IKEA approach to addressing the subject of wages holistically by placing equal focus on equality at work, pay principles, competence, facilitating dialogue and a living wage. IKEA has a long history of working on the topic internally and across the supply chain. Our new approach is building on the work that started with piloting Fair Wage Network’s 12 dimensions of wage management across retail markets, suppliers and our own Industry Group units. The Framework and Assessment Methodology aim to create a wage system that is fair, inclusive and for the many and to enable people and families in the IKEA value chain to live a decent life. Inter IKEA Group is conducting baseline assessments throughout the group and will provide different IKEA companies with the means to define baselines from which to set goals, to initiate pilots and to implement activities of the framework.
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We are committed to addresses relevant root causes of negative impacts on people, society and the environment. However, we do not hold all the answers and need to work together with others to influence meaningful change and contribute to systemic improvements. We are also committed to taking our responsibility to remediate any negative impacts we cause or contribute to on people, society and the environment. We recognise that remediation should be effective and meaningful in each context and tailored to the needs of specific vulnerable groups. Our approach to remediation, including which impacts we prioritise for remediation, depends on how we are connected to the impact as well as the nature and severity of the impact in question.To remediate potential negative impacts occurring through our suppliers, we set requirements in IWAY. We recognise the need to strengthen our approach to provide remedy to affected stakeholders beyond our direct business partners in alignment with the UNGPs.In cases where IKEA is indirectly connected to a negative impact caused by one of our suppliers, we work together and through the supplier to provide access to meaningful remediation with the support of experts or an independent partner or organisation, when necessary. This also means we set clear expectations on how specific negative impacts on people, society and the environment are to be handled by our suppliers, e.g. through our IWAY Guidelines on responsible recruitment, the process for how to handle cases of child labour or forced labour and forestry.Outside the scope of our own value chain impacts, we use our leverage via multi-stakeholder initiatives to advance the dialogue around sectoral or global human rights issues. Read more about our efforts in the “Advocacy” section below.
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Inter IKEA Group promotes a culture of inclusiveness: everyone is encouraged and should feel empowered to come forward, in good faith, to raise any concerns they might have. We believe that raising concerns, no matter how big or small, are key to sustaining a safe and secure work environment, our reputation, business success and license to operate. We hope everyone connected to our value chain sees it as their responsibility to raise a concern and feels the courage to do so.
We encourage anyone who observes or experiences misconduct in a work-related context involving Inter IKEA Group co-workers to come forward and raise their concern. Our raise a concern channel is available to everyone: co-workers, suppliers, partners, former co-workers, future co-workers, consultants, NGOs, volunteers, etc. Read more about our approach here.
In addition, we request all our suppliers, via IWAY, to put a grievance mechanism in place that is known to their workers and enables workers to raise complaints or concerns without fear of /retaliation. When requested, we provide guidance and support.Copy link Copied Link Successfully copied link
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Key sustainability objectives, such as our human rights due diligence efforts as well as our efforts to address negative human rights impacts, are monitored and reported on annually in the IKEA sustainability report and in alignment with local legal requirements.
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An essential part of reaching the IKEA sustainability goals is working together with others. When we work together, we can drive and support change, learn and inspire each other and find the best solutions. You can read about our stakeholder engagement here.
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Growing awareness of human rights risks has put renewed emphasis on the need to move from voluntary action to mandatory requirements for companies throughout value chains, including raw materials and services. Inter IKEA Group supports well-designed, harmonised legislation on human rights and environmental due diligence to protect people and the planet. In FY21, Inter IKEA Group and 11 other companies – all members of the Nordic Business Network for Human Rights (NBNHR) – signed a statement supporting and encouraging European Union (EU) legislation on mandatory human rights due diligence for all businesses operating in the EU. Due diligence processes are intended to help businesses identify, prevent, mitigate and account for how they address the negative impacts of their business activities. Good regulation can support companies in integrating respect for human rights into their business and improve human rights throughout global value chains.
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In FY21, Inter IKEA Group completed a human rights baseline assessment of each core business and group function, which involved consulting more than 100 internal stakeholders. The baseline resulted in a comprehensive analysis of how due diligence, as described by the UNGPs, is already integrated into business processes and where the systematic approach can be strengthened. We have started to address the identified gaps by, for example, updating our internal human rights policy, investing in due diligence competence development across the IKEA businesses and developing new ways of working to address our most salient human rights risks. We are committed to working with key stakeholders in a collaborative way, being transparent and strengthening our due diligence systems to mitigate any potential negative impacts from our business operations.
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We are committed to addresses relevant root causes of negative impacts on people, society and the environment. However, we do not hold all the answers and need to work together with others to influence meaningful change and contribute to systemic improvements. We are also committed to taking our responsibility to remediate any negative impacts we cause or contribute to on people, society and the environment. We recognise that remediation should be effective and meaningful in each context and tailored to the needs of specific vulnerable groups. Our approach to remediation, including which impacts we prioritise for remediation, depends on how we are connected to the impact as well as the nature and severity of the impact in question.
To remediate potential negative impacts occurring through our suppliers, we set requirements in IWAY. We recognise the need to strengthen our approach to provide remedy to affected stakeholders beyond our direct business partners in alignment with the UNGPs.
In cases where IKEA is indirectly connected to a negative impact caused by one of our suppliers, we work together and through the supplier to provide access to meaningful remediation with the support of experts or an independent partner or organisation, when necessary. This also means we set clear expectations on how specific negative impacts on people, society and the environment are to be handled by our suppliers, e.g. through our IWAY Guidelines on responsible recruitment, the process for how to handle cases of child labour or forced labour and forestry.
Outside the scope of our own value chain impacts, we use our leverage via multi-stakeholder initiatives to advance the dialogue around sectoral or global human rights issues. Read more about our efforts in the “Advocacy” section below.Copy link Copied Link Successfully copied link