Faculty of Management Studies, Delhi

6301: Business Ethics and Sustainability

Company Selected- IKEA

Industry Selected- Furniture Industry
Time Period under consideration- 2017-2030

Group 2
Rohan Bhagat Pulkit Singh Sabita Singh

rohan.b22@fms.edu pulkit.k22@fms.edu sabita.s22@fms.edu

153 149 216

8120297873 8077624050 9759042783

Section- A Section- A Section- A

Circular Economy:

Introduction
The European Union produces more than 2.5 billion tonnes of waste every year. It is currently
updating its legislation on waste management to promote a shift to a more sustainable model
known as the circular economy.
In March 2020 the European Commission presented, under the European Green Deal and in
line with a proposed new industrial strategy, the new circular economy action plan that
includes proposals on more sustainable product design, reducing waste and empowering
consumers (such as a right to repair). Specific focus is brought to resource intensive sectors,
such as electronics and ICT, plastics, textiles and construction.
In February 2021, the Parliament adopted a resolution on the new circular economy action plan
demanding additional measures to achieve a carbon-neutral, environmentally sustainable,
toxic-free and fully circular economy by 2050, including tighter recycling rules and binding
targets for materials use and consumption by 2030.

What is the circular economy?

The circular economy is a model of production and consumption, which involves sharing,
leasing, reusing, repairing, refurbishing and recycling existing materials and products as long as
possible. In this way, the life cycle of products is extended.

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In practice, it implies reducing waste to a minimum. When a product reaches the end of its life,
its materials are kept within the economy wherever possible. These can be productively used
again and again, thereby creating further value.
This is a departure from the traditional, linear economic model, which is based on a take-make-
consume-throw away pattern. This model relies on large quantities of cheap, easily accessible
materials and energy.
Also part of this model is planned obsolescence, when a product has been designed to have a
limited lifespan to encourage consumers to buy it again. The European Parliament has called for
measures to tackle this practice.
Based on the Ellen MacArthur Foundation – one of the most important in the field of circular
economy – it has four basic pillars:

● Eco design : product designed with a low environmental impact throughout its life cycle.
● Reverse logistics : connect the end of the supply chain (returns or waste) to start a new
supply chain to convert it into raw material or put it back on sale.
● Circular business models : product rental
● Organizational boundaries

Another arduous task of the circular economy is to fight against programmed obsolescence by
manufacturers whose main intention is to reduce the life cycle of a product and that the user
must acquire a new one. This linear cycle is not sustainable

About the Company:

IKEA is a conglomerate that designs and sells ready-to-assemble furniture, kitchen appliances
and home accessories, among other goods and home services. Founded in Sweden in 1943 by

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17-year-old Ingvar Kamprad, IKEA has been the world's largest furniture retailer since 2008.

The group is known for its modernist designs for various types of appliances and furniture, and
its interior design work is often associated with an eco-friendly simplicity. In addition, the firm is
known for its attention to cost control, operational details, and continuous product
development that has allowed IKEA to annually lower its prices by an average of two to three
percent.

Vision: ‘To create a better everyday life for the many people impacted by our business’

Mission: ‘To offer a wide range of well-designed, functional home furnishing products at prices
so low that as many people as possible will be able to afford them’

Fig: Circular loop

Circular Loops Circular loops is how IKEA will transform from a linear to a circular business,
impacting all aspects from how and where we meet our customers, how and what products and
services we develop, how and what materials we source, to how we develop the IKEA supply
chain. It is how we define reuse, refurbishment, remanufacturing, and recycling as a means to
retain as much value as possible and extend the life of resources, products, parts and materials
for our customers and IKEA

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Reuse Once customers acquire a product, the product enters the first circular loop of reuse.
Reuse is how we describe the customer use of the product, and includes all aspects of normal
product use and care such as maintaining its condition and adapting them to the evolving needs
of life. This also includes passing on of products and enabling second hand markets.

Refurbishment It is the process by which used, damaged, or non-compliant products are

restored to ‘like-new’ condition with limited improvements. This includes repairs and upgrades
made by customers or an after-market service in their home or at another location. Through
refurbishment products are evaluated, cleaned and/or repaired, can be upgraded, recertified,
and eventually released back into the market.

Remanufacturing of products is a process by which usable parts from dismantled products are
utilized in production of new products, increasing resource recovery and potentially lowering
the cost of the final product.

Recycling is the process by which parts from products are transformed into new raw material,
which can then be utilized within IKEA or external supply chains. This is the last step for every
product part. The pre-requisite for a product part to reach this stage in its life cycle, is that
when relevant all possibilities to go through the reuse, refurbishment, or remanufacturing loops
have been considered

Ikea’s Circular economy:

IKEA on several occasions have asked its customers about how they feel bad about throwing
things away? Maybe they want to repair, reuse or recycle, but lack the time, knowledge or
energy to do so. IKEA is constantly looking for new ways to make circularity — the elimination
of waste and the continuous use of resources – more convenient and relevant for you. They're
always trying to save you time, money, and effort by extending the life of the things you buy
and the way you buy them. For example, they are testing the potential for more circular
solutions such as furniture leasing, take-back and buy-back schemes, and helping customers
repair, reuse and recycle old furniture or give it a second life through reselling.

In 2017, IKEA created its first design for circularity guide, defining how circular design can
enable IKEA products to be reused, refurbished, remanufactured, and recycled, and what
demands it placed on the product design process.

In their excursion towards turning into a round business by 2030, they have focused on:

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• Enabling our clients to acquire, care for, and pass on items circularly

• Producing 100% circular products (raw materials – recycled – remanufactured – refurbished –

reused)

• Using just sustainable and reused materials

• Taking the lead and uniting with others in accomplishing a round economy through
promotion, cooperation, and business organizations

Making from what we as of now have

• Waste can be significant – it very well may be an asset. Have you at any point attempted to
construct something new out of things you found around your home? That is the thing that we
attempt to do when we foster another item.

• Looking for manners by which we can be economical by utilizing either extras from different
creations or reused materials, is an interesting issue in our plan interaction. The outcome is that
you can purchase items produced using 100% excess or reused materials. At the end of the day,
our present items become our material banks for what's to come

Ikea On their way

• Using assets cautiously, making more from less, and improving tasks, are generally activities
that are inserted in the IKEA DNA. We're not there yet, however we are well en route to turning
into a round business.

• SKOGSTA Bench$69.99

The SKOGSTA bench is made from solid acacia wood. This natural material is known for its
durability and water resistance. It can be recycled or used for energy recovery.

• In the financial year 2019 IKEA successfully gave 47 million products a second life, 38 million

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products were resold through the As-Is specialty shop, and more than 9 million products have
been repacked back to the shelf.

Did you know?

More than 60% of the IKEA product range is based on renewable materials, like wood and
cotton, and more than 10% contains recycled materials.

A zero waste mindset

IKEA ponders the manner in which they work, from how they pick materials, to how they
configure, produce, transport, sell and what befalls their items toward the finish of their life
cycle.

They are continually hoping to discover better approaches to utilize re-established and reused
assets as materials, and constantly re-plan the creation of existing items to make it more
reasonable. Also, they began to make items that can be reused, fixed, reassembled and reused
by their clients by 2030. They additionally over and again intend to save however much energy
as could reasonably be expected in their tasks. Adjusting items to new uses is one approach to
make them last more.

Spreading circularity across the planet

They are making and fortifying a roundabout development each market in turn:

• They are trying repurchase and exchange administrations in various business sectors all
throughout the planet

• In the Netherlands, Sweden, and Switzerland we are testing renting as an instalment choice

• They ran a circularity crusade, running occasions to urge guests to reuse, share, reuse, upcycle
and fix things, alongside discusses round standards in Russia

Going circular in the supply chain

IKEA works with providers for non-home outfitting materials like bundling, IT gear and
development materials to discover more asset cognizant and roundabout arrangements,for
example-

Shutting the circle so a large number of huge loads of waste cardboard at 24 IKEA stores in
China are sent back for reusing by the paper industrial facility that provides IKEA bundling.

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Reusing more than 10,000 IT items that were renovated and exchanged or somewhat
recuperated, rather than squandered, along with IT providers.

Investigating a roundabout economy approach for associate regalia. Purchasing more

sustainable materials to supplant single-utilize plastic things in IKEA Eateries and Bistros.

IKEA is rolling out affordable home solar offers, switching to 100% electric vehicle home
deliveries, offering a new veggie hot dog with 15% of the carbon footprint of a hot dog made
with meat, testing circular business models like furniture leasing.

Circular economy in furniture industry:

Introduction:

The European furniture industry is as of now confronting an assortment of monetary,

administrative and natural difficulties. Expanding worldwide rivalry with assembling
development in developing business sectors, further developed coordinations and declined
levies on unfamiliar exchange squeezes EU-based organizations. In the homegrown market,
expanded interest for minimal expense things makes it hard for organizations zeroing in on
dependable and quality items to contend. In addition, expanded crude material, work and
energy costs inside the EU likewise challenge the same old thing rehearsed. To confront these
current dangers, new practices and out of the box beliefs are expected to restore the area and
make it more feasible. The round economy gives a promising road to make more worth in the
area by tending to all the while asset limitations, buyer worth and benefit difficulties. The
progress from direct to round anyway requires critical changes at miniature, meso and full scale
levels, from development at plan of action and worth chain level to the presentation of
supporting approach measures. This report gives an outline on how the roundabout economy is
as of now being carried out inside the furniture area. By zeroing in on existing practices,
difficulties and openings at the miniature level, the principal objective of this report is to
recognize the essential abilities and skills expected to help the change of furniture organizations
towards a roundabout economy.

1. The EU furniture industry in a nutshell

Production and Consumption:

EU Member States produce 28% of furniture sold around the world – addressing a €84 billion
market, utilizing roughly 1 million European specialists. The greater part of the organizations in
the area are SMEs. Italy (€17.5 billion), Germany (€14.5 billion), UK (€8.8 billion) and Poland

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(€7.1 billion) are the main furniture makers by esteem. The main exporters are Germany (€9.5
billion), Italy (€9.2 billion) and Poland (€8.7 billion), while the biggest shippers are Germany
(€11.8 billion), UK (€6.6 billion) and France (€6.0 billion). European Member States are
significant purchasers of furniture, assessed at €68 billion every year, with the EU28 being a net
exporter. The biggest purchasers by esteem being Germany (€16.8 billion), UK (€14.2 billion),
Italy (€10.2 billion), France (€9.0 billion) and Spain (€4.4 billion). This compares to an EU28
utilization of ~10.5 million tons of furniture for every annum. A huge extent of utilization
incorporates wooden furnishings, kitchen units and sleeping cushions. The homegrown area
represents 82% of furniture utilization, with the leftover 18% related with B2B (business to
business) utilization. In view of an absolute EU28 utilization of €68 billion, and utilization of
~10.5 million tons of furniture for each annum this would be comparable to: €55.8 billion and
8.6 million tons of homegrown furniture utilization p.a. what's more, €12.2 billion and 1.9
million tons of business furniture utilization p.a.

Waste generation and treatment:

As indicated by European Federation of Furniture Manufacturers (UEA) measurements,

furniture squander in the EU represents over 4% of the all out city strong waste (MSW) stream.
Squander emerging from business sources is accepted to contribute 18% of complete furniture
squander age across the area. Absolute yearly EU28 furniture squander likens to 10.78 million
tons. As per European Federation of Furniture Manufacturers (UEA) insights, 80% to 90% of the
EU furniture squander in MSW is burned or shipped off landfill, with ~10% reused. Reuse action
in the area is viewed as low. Where reuse happens, it is for the most part through business
recycling shops, social undertaking organizations or noble causes. Around 7 furniture things are
additionally traded by means of free and paid trade stages (like eBay), however the quantity of
things exchanged this way is hard to evaluate. Regarding remanufacturing, the size of the
European area is assessed to be €300 million turnover, utilizing 3,400 European laborers (under
0.1% of the complete furniture industry).

2. Circular economy in the furniture industry: challenges and current issues

Existing challenges of the circular furniture industry

The European environment bureau has identified the main challenges faced by the sector to
move from a linear to a circular economy.

Materials and design challenges

Lower quality materials and poor design – the move away from solid wood and metal furniture
to cheaper materials, which restricts the potential for a successful second life. Weak product
design and specification drivers – in relation to recycled content, reuse of components, product

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durability, and design for disassembly/reassembly, repair, reuse, remanufacture and recycling,
the drivers for improvement are weak or absent.

REACH Regulation (on Registration, Evaluation, Authorisation and Restriction of Chemicals) –

inheritance perilous substances present difficulties and extra expenses for recyclers, along with
an absence of data on synthetics contained in items and on ways to manage them suitably.

Demand-side challenges

Poor consumer information purchasers are once in a while given direction on the most
proficient method to keep up with and fix furniture, to delay and expand the item life
expectancy.

Availability of spares – An absence of accessibility of extra parts supports the acquisition of

new furniture over roundabout customer designs.

Weak demand for second-hand furniture - the value differential between new furniture
against the expense of second-life furniture, isn't adequately huge to drive more reasonable
buying conduct. This is combined with a helpless consciousness of the accessibility and
advantages of economical furniture alternatives, for both homegrown and business purposes.

Poor demand for recycled materials - end markets for reused materials, post deconstruction,
are immature, and sometimes, effectively soaked, with these related market disappointments
confining further interest in recuperation.

Closing the loop challenges

Limited collection and reverse logistics infrastructure –

High cost of repair and refurbishment – in numerous parts of the EU, transport and work costs
are high, making any huge fix and repair exorbitant, especially where reupholstery is required.
By and large, economies of scale and financial motivations are expected to make fix and
renovation suitable.

Policy challenges

Weak overarching policy drivers – commonly furniture isn't overseen as per the waste order,
with reuse neglecting to be focused on over reusing, burning and landfill. Underinvestment in
reuse, fix and 11 remanufacturing framework restricts the potential for furniture being
overseen as per the standards of the waste order or the roundabout economy.

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Opportunities to make the furniture industry more circular

Roundabout economy mediations can possibly assist with countering the overall difficulties
recognized in the area, with fix, repair and remanufacture permitting esteem recuperation,
monetary development and occupation creation inside the European furniture industry. While
reusing rates in the EU have worked on through the presentation of strategy instruments like
the Landfill Directive, there is negligible movement in higher-esteem round asset streams, with
remanufacturing representing under 2% of the EU fabricating turnover. As far as furniture
specifically, while reuse of furniture is normal, this will in general be on a limited scale and in
view of nearby friendly objectives instead of bigger scope of natural and financial ones. To help
the change, diverse supporting components could be advanced. The European furniture
ventures confederation EFIC upholds a bit by bit approach, to allow a continuous, reasonable
and practical progress to the roundabout economy standards and where ecological
supportability standards are offset with monetarily manageable rules. As the greater part of the
organizations in the area are SMEs, supporting measures ought to be adjusted to the size and
size of these organizations. Instructive (attention to effective organizations cases, centered
preparing programs) and conservative help (for example monetary inventive tasks, public
motivations and specialized help, round tenders advancement) are key to help the change of
organizations. All the more definitely:

● Production phase: supporting motivating forces measures targeting expanding asset

proficiency through expanded item life time, repairability, recyclability, effective
utilization of material.
● Use phase:measures to elevate data and attention to help customer decisions towards
more dependable items, with an emphasis on materials maintainability data.
● Disposal phase: harmonization of Extended Producers Responsibility schemes that
promote incentives for producers to take into account environmental considerations
along the products' life, from the design phase to their end-of-life.
● Circular procurement: Public authorities at the National and European can boost
circular economy principle in practice through public tendering. Green and circular
criteria, as well as the promotion of novel business models (such as leasing of furniture)
should be promoted.

Examples of circular furniture cases

● Green furniture – Sweden

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 Green Furniture Concept makes sustainable design for public interior areas.
Configurably winding, seamless seating and acoustic lighting from Green Furniture can
be found in places like Dublin Airport, Topanga Mall (LA) and Stockholm Central Station.

● Arcadia Design - Italy

The organization plans EASYDiA + EASYoLo a bunch of measured seats and tables for
youngsters from year and a half as old as 10 years, which offer space for customization
and are planned under circular economy standards. Their measured design animate
reuse, change, customisation and imagination,that grown-ups and youngsters can share:
collecting the pieces when they get the pack, modifying or supplanting modules after
some time, dismantling their seat or table when at this point not required and giving
them a fresh start, making one new proposed items or concoct new ones.

● BRÜHL - Germany

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 With durable, sustainably manufactured furniture made from eco-friendly materials,
Brühl is making a contribution to the conservation of our planet’s finite resources. The
company intends to make furniture “lighter” in terms of overall resource consumption
and wants to make sure that it “can be used for longer and in a better way”. All
manufacturing steps throughout the entire product life-cycle take ecological,
sustainability and health-related aspects into account.

References:

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https://ikea.jobs.cz/en/vision-culture-and-values/

https://www.europarl.europa.eu/news/en/headlines/economy/20151201STO05603/
circular-economy-definition-importance-and-benefits

https://www.statista.com/topics/1961/ikea/

https://www.forbes.com/sites/walterloeb/2012/12/05/ikea-is-a-world-wide-wonder/
#37fcbb136f42

http://www.businessinsider.com/ingvar-kamprad-10th-richest-2016-1

http://protecttheforest.se/en/pressmeddelanden/26-pressmeddelanden/1364-pm-ikea-
skoevlar-urskog

Circular economy in the retail sector - SB Shopping Basket

How retailers can compete using circular economy principles | Greenbiz

Circular economy: futur's commitments in the retail sector

https://www.ellenmacarthurfoundation.org/circular-economy/what-is-the-circular-economy

https://www.fastcompany.com/90512150/can-the-furniture-industry-end-waste-by-gong-
circular-ikea-wants-to-find-out

https://circulareconomy.europa.eu/platform/sites/default/files/circular-economy-in-the-
furniture-industry.pdf

https://www.greenfc.com

https://www.arcadiya.net

: https://bruehl.com/

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