THE ETHICAL PERCEPTION AT IKEA

Submitted to:
Prof. Saikat Banerjee
Assistant Professor

Submitted by: Group 09

Name Student ID
Shrawani TR 20A1HP106
Souparno Sinha 20A1HP030
Saptak Basu 20A3HP635
Himani Muppalla 20A1HP048
Darpan Panwar 20A1HP007
Shreya Dalal 20A3HP626
Sravani Tenneti 20A1HP088
Nanditha Saleesh 20A1HP047
 Introduction

IKEA’S ETHICAL CONDUCT

The vision of IKEA is to make everyday life better for their customers. Their business model
supports this vision by offering various well-designed, functional home furnishing products at low
prices.
Ikea’s core values are : There are 10 core values

I. IKEA’S DATA AND PRIVACY PROMISE

Companies have been gathering customer information, generating intelligence on it, and extracting
values from it. Customers need to read a lengthy legal text in order to comprehend what is going on,
then at the end of it, give up their rights with just single click.
 IKEA’s User-centric approach:
IKEA adopted a user-centric approach and has redesigned from the perspective of privacy
and data ethics.

 IKEA's Collaboration:
IKEA and Work & Co are collaborated to create on the new digital tools to increase data
transparency and allow customers to control how their data is collected, stored, and used.
Customers can decide whether the company can use their information or not, like their
browsing, purchase history, and product preferences for product recommendations in its app.

 Introduction of Centralized data Control panel (starting from April 2020):

IKEA has set a vision to change how the company view, collect, and manage data. The first
step of this vision is achieved by introducing a tool to aware the customers about their data
control and decision-making abilities.

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Features of control panel: Three key features are
1. Control over your data:
Customer can control how, when and where your information can be used.

2. Understand how data is used:

This is done by making everything clear and straightforward.

3. Getting benefit from sharing your data:

By sharing information, the customers can get more personalized shopping experience. It will
save the time of customer as well inspired them to live a more sustainable life.

II. AGE DISCRIMINATION AT IKEA

IKEA routinely violated the Age Discrimination in Employment Act (ADEA) by discriminating
against older employees and having a "corporate culture of age bias," according to 48-year-old IKEA
employee Brandon Paine in a class-action lawsuit (Paine v. IKEA Holding US, Inc. et al., No. 19-cv-
00723 (E.D. Pa. Feb. 21, 2019)). At least five present and former IKEA workers have filed lawsuits
against the company, alleging age discrimination, since February 2018.
Despite having Paine fill the role on a temporary basis, IKEA promoted four young workers — all in
their late 20s — for a post it had earlier rejected, according to the lawsuit. Several months later,
IKEA reportedly demoted Paine, lowering his pay by $10 per hour as part of "a reorganisation of
work roles and tasks." IKEA made the decision as part of a strategy to "prize younger employees
over older employees by providing younger people better employment with more remuneration,"
according to Paine.
Despite positive performance assessments, IKEA did not promote Paine because of his age. When
Paine inquired as to why he had been turned up for another promotion, an IKEA management
explained that the position he had applied for was new and required an outside applicant who could
come up with "fresh and inventive ideas."

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 Claims have been made that IKEA has routinely discriminated against older workers based on their
age, with four previous complaints filed in the last year alleging age discrimination being cited as
examples. For the time being, the cases' fact-specific concerns remain unresolved, but the charges
they make serve as a reminder to businesses seeking to avoid litigation.
Employers, too, should keep an eye on their language. Managers, supervisors, and leaders may
utilise idioms and adages that would not arouse suspicion of age discrimination outside of the
workplace. However, using an age stereotype to characterise an ideal candidate — or the sort of
applicant who would be refused — might indicate prejudice.

III. ETHICAL POLITICAL PRACTICES AT IKEA

When it comes to IKEA's political practices, there has been a lot of speculation. The biggest source
of criticism directed against IKEA comes from their taxation practices. For example, between 2009
and 2014, IKEA was accused of evading roughly $1 billion in corporate taxes. Green Party ministers
in the European Parliament produced these reports. IKEA allegedly dodged taxes by utilizing
onshore European tax havens, according to the investigation. IKEA's taxes procedures do not appear
to have changed as a result of the allegations. As of 2019, IKEA was still being accused of dodging
taxes by using tax-haven holding companies. As a result, IKEA does not appear to be a ethical
corporation when it comes to taxation.

IV. IS IKEA ENVIRONMENTALLY CONSCIOUS?

Illegal logging
IKEA is the world's largest retailer of furniture. It is also one of the largest consumers of wood, using
21 million cubic meters of wood in 2019.
Before 2021, IKEA used to procure some of their wood, i.e., pinewood from Siberia. Some of
IKEA's products, like the children's furniture, used pine wood that was procured from the Russian
logging companies in Siberia that repeatedly violated Russian environmental laws designed to
protect the vast boreal forests.
The Boral Forest or Taiga Forest is considered to be one of the protected forest areas in Russia. Boral
Forest, along with the Brazilian Amazon, are considered a vital lifeline for the Earth.
With past records, we have observed that massive wildfires have destroyed a large portion of the
total forest area and have thereby released record levels of greenhouse gases. Illegal logging makes
the forest areas more vulnerable to wildfires. In 2019, there was a wildfire in the Siberian Forest
area, which produced apocalyptic clouds of ash and soot, triggering a state of emergency.
These illegal loggings were done by the Russian companies that are referred to as the ExportLes
group, and they are controlled by a local politician in Siberia's Irkutsk Oblast province, Evgeny
Bakurov.
Bakurov's companies have often presented their operations as legal as they would cut those trees that
are infected or dead. But the Russian court records showed that they have operated in the protected
areas. Earthsight reviewed the allegations and confirmed that they had violated the laws governing
logging and leases of forest land via satellite imagery and visits to the logging site.

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IKEA gets most of the wooden logs from Bakurov's company as they ship their wooden logs faster
than they can transfer money.
When Earthsight produced their findings to IKEA, they acknowledged that they have been using
Bakurov's wood in their products and mentioned that they have been procuring wood from Bakurov's
on the pretext that they have been legally harvested.
Soon after a few months, the Swedish company decided to drop Bakurov's company as the supplier
and cited the reason that it was due to the concern in their practices without any elaboration.
On the face of it, IKEA had denied any wrongdoings as they were unaware of the Bakurov's
practices. When they were made aware of the illegal misconduct of Bakurov, they banned the wood
from the companies that were affiliated with the Bakurov's.
Even though IKEA would never have been prosecuted for any misconduct as they were not directly
involved in the felling of trees in the protected area. They still did not want to be affiliated with any
organization that had been a part of any illegal activity.
High levels of formaldehyde emission
In the early 1980s IKEA was confronted with another ethical issue. The issue was with respect to
high levels of Formaldehyde in their products. Their products had a high level of Formaldehyde
which was more than the permissible limit set by the legislation. It was not only harmful to people
but the environment as well. Negative perception because of this issue caused the sales to decline by
20% in Denmark.
When the company began to find a solution to combat this problem, they decided to work directly
with the glue-producing companies to reduce the usage of Formaldehyde in their products.
Later in 1992, the German newspaper found out that few products in IKEA still had emissions
greater than the allowed limit. This time IKEA stopped the production of this product completely,
thereby incurring a cost of $7 million.
Even though it had a negative impact on the company, IKEA still valued its ethical practices over
money.
IKEA not only promises to reduce CO2 emission but also attempts to create synergies with the
stakeholders like suppliers and subcontractors. IKEA is working with various organizations like
Green Peace, World fund for nature, and hired inspectors to set new standards for the suppliers.
This shows that IKEA is looking out for ways to improve its business process instead of ignoring the
ethical issues.

V. UNFAIR WAGES & UNIONS

IKEA has always strived to improve the lives of all its stakeholders, which includes its customers,
employees, suppliers, and community members. It accomplishes this by implementing ten
fundamental values, a compelling vision statement, and a supplier code of behaviour. IKEA's values
have always been guiding the company's actions.

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IKEA has a total of 10 fundamental values of which 3 of these are focused on its Workforce &
Labour; they are:
● Leadership by Example: The managers at IKEA act according to the values shared and
constantly try to create an atmosphere of well-being and expect the same of IKEA co-
workers. The leaders at IKEA lead by example and promote integrity in the workplace.
● Togetherness and enthusiasm: IKEA have been promoting Togetherness and Enthusiasm
amongst its workforce and bringing in shared values throughout its organizational structure.
It also believes that: Together, we have the power to solve seemingly unsolvable problems.
We do it all the time.
● Accept and delegate responsibility: IKEA’s worker promotional practices are growth and
work oriented where IKEA promotes co-workers with potential and stimulates them to
surpass their expectations.
Apart from these Fundamentals, IKEA also has an Ethics Training Program for its employees, which
encourages the employees to raise awareness of codes and policies to be followed leading to
guidance of ethical conduct in the organization. Its values are Simplicity, Humility, Thrift, and
Responsibility and during the recruitment process as well, IKEA looks for people who can share its
values and vision.
Even at the minutest level, IKEA has framed policies which lead to a greater change: One such
example is the fact that IKEA designates its Employees as a Co-Worker: irrespective of their
position in the company. Company also organizes various events for its co-workers; also, IKEA has
provided its co-workers with Yellow Polo T-shirt Uniforms for free of cost, this ensures that
employees are driven towards uniformity and oneness amongst each other.
IKEA wants to learn more about the employees and their perspectives on the workplace. VOICE, a
co-worker survey, is conducted by an independent third party to ascertain employee perspectives and
contentment with the firm's business operations.
The majority polled think that IKEA is doing a good job in terms of sustainability, and recognizes
the importance of assisting employees in understanding their sustainability goals, which led to the
development of sustainability training tools for co-workers.

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IKEA has also created an anti-corruption policy called Rules of Prevention of Corruption, as well as
an inquiry policy that outlines what employees should do if they witness suspicious behaviour. It has
also developed a trust line via which co-workers can report any issues to the company.

Drawbacks: There are also a few setbacks which IKEA faces due to its unethical business conduct.
 Labour Issues
A recent claim has arisen which revealed certain dubious actions which dated back more than
30 years involving the Communist leadership. The company stated that some of its furniture
components were built with the help of East German political detainees during this time.
Refusing to participate in the program resulted in a penalty. This revelation has tarnished
IKEA's human rights record, even though it took place many years ago. The fact that it
admitted its error and revised its principles on topics like jail labour, on the other hand, is a
strong sign that the company wants to avoid any repetition of similar behaviour in the future.
 Spying on Employees
IKEA has also been framed for violating the privacy of its own co-workers or employees and
trying to spy on them as it allegedly conducted private investigations on certain employees. It
also allegedly terminated various employees at different level.

VI. ETHICAL PRACTICES OF IKEA - IMPLEMENTING FOR THE FUTURE

IKEA has SMART (Specific, Measurable, Achievable, Relevant, Time-bound) goals and plans for a
more ethical and sustainable future -
· The Swedish furniture store made commitments to recycle plastics, reduce water usage,
decrease greenhouse gas emissions, ethically source wood, ethical cotton supply, and
efficient energy use.
· By the year 2030, IKEA aims to become climate positive by decreasing the greenhouse gas
emissions to be less than what the company emits now.
· Another plan in the works is to proceed to be a circular business. Their products are
repurposed, repaired, reused, resold, recycled. At some branches of IKEA, this circular
business is already in practice

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 · In Japan, an IKEA store offers a buy-back service, where customers can exchange unwanted
furniture for a voucher used to buy new things in the store. IKEA then refurbishes the
furniture and sells it at a discounted price
· This buy-back service allows products to be recycled, which avoids unnecessary waste
· IKEA plans to implement this plan in all of its branches in the future, which will significantly
impact waste reduction and allow products to have a second life.

Circular Hub in an IKEA store in South Korea. (Source: IKEA)

IKEA’s sustainability ambitions for 2030:

· Healthy and Sustainability living - To inspire and to enable more than 1 billion humans to
live a better life every day within the boundaries of Mother Earth.
Ø Commitments – To create a movement in society around better living – living healthier,
more sustainable lives. Promoting circular and sustainable consumption

· Circular & climate positive- Proceed as a circular and climate positive business and
regenerate resources while improving IKEA’s business too.
Ø Commitments- Becoming climate positive by transforming into a circular business.
Regenerating resources, protecting ecosystems, and improving biodiversity.

· Fair & equal - Create positive social impact across the IKEA value chain.
Ø Commitments- Provide and support dignified and meaningful work across the IKEA value
chain. Being an inclusive business by promoting equality

VII. IS COTTON FROM IKEA ETHICALLY SOURCED?

IKEA widely uses cotton in its rugs, apparel, and other goods. IKEA has taken a step toward more
ethical cotton sourcing by adopting the Uzbek Cotton Pledge, limiting cotton produced through
forced labour in Uzbekistan. IKEA is also a member of the Better Cotton Initiative, having acquired
at least 75% of its cotton in 2018. Given the amount of cotton IKEA uses yearly, this has a
substantial beneficial environmental impact.

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Cotton is one of its most significant raw ingredients. The organisation uses one per cent of the
world's cotton supply. Despite being a natural, biodegradable fibre, conventionally grown cotton has
substantial environmental and social consequences.
When cotton is cultivated conventionally, vast amounts of pesticides and water are used, posing
substantial health risks to farmers, as well as soil erosion and water scarcity.
Cotton is typically farmed in third world nations, where farmers struggle to earn a profit. This results
in increased expenses.
Along with WWF and other like-minded organizations, the company founded the worldwide Better
Cotton Initiative (BCI) about a decade ago to help alter the way cotton is produced. "At first, they
worked with 500 farmers in Pakistan, who were adamant about not changing the way they farmed
cotton or their agricultural practises. Nevertheless, after a year of teaching, support, and giving them
with the tools they need to make the changes, those farmers have really stood up and taken
ownership." Since its start, the Better Cotton Initiative has offered training and information to around
110,000 farmers, assisting them in improving cotton production and learning sustainable agricultural
practices.
Through this effort, farmers have been able to reduce expenses, improve agricultural practises, and
use fewer pesticides and water, resulting in increased income and the ability to provide a better
quality of life for their families and kids.
Most of IKEA's cotton was sourced from "more sustainable" sources. This implies that the cotton is
recycled or cultivated with less water, chemical fertilizer, and pesticide, increasing their profit
margins. The long-term objective is to change the global cotton market entirely.
However, at present, there is no mention of using organic cotton. It boils down to costs and long-
term supplies, as with any business choices. Organic cotton is unlikely to meet either of these criteria
in the case of IKEA. Still, organic agriculture is hailed as the most people- and planet-friendly, and if
IKEA is serious about sustainability, being certified organic should be the goal.
Benefits to employees:
To curb the negativity it is facing, IKEA has implemented an ethical framework where it is
concentrating on the following areas to create an ethical approach to human rights in their working
environment
· Equal opportunities: No discrimination should be made based on race, gender, religion,
sexual orientation, disability, nationality, etc. It strives to promote the fundamental rights of
its workers.
· Good working environment: IKEA wants to create an environment that is best suitable for
its workers. They tend to provide an environment where it is both healthy and safe for
workers to perform their duties.
· Non-tolerance of harassment: It doesn’t intend to tolerate any sort of harassment in its
workplace. Harassment may include discrimination, racism, intimidation, sexual harassment,
or bullying, and also includes threatening or violence.
· Right of association: IKEA respects the rights of all its workers in terms of their freedom of
association or preference within the company. Such rights include rights to form, join, or not
join an association without having to fear harassment, intimidation, or interference.
· Non-acceptance of alcohol and drug abuse: It doesn’t tolerate abuse of any kind, use of
drugs, or distribution of illegal drugs. It is in the best interest that no worker should work

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 under the influence of any illicit substances or alcohol, which will prevent them from
performing their duties safely.
REFERENCES

 How sustainable is IKEA, really? (2020, February 15). Eco Warrior

Princess. https://ecowarriorprincess.net/2018/03/how-sustainable-is-ikea-really/

 IKEA address ethical and social responsibility challenges. (n.d.). Enjoy free comfortable
tools to publish, exchange, and share any kind of documents
online!. https://docplayer.net/27701268-Ikea-address-ethical-and-social-responsibility-
challenges.html

 IKEA age discrimination class action moves forward. (2020, January 28). Top Class
Actions. https://topclassactions.com/lawsuit-settlements/employment-labor/ikea-age-
discrimination-class-action-moves-forward/

 (n.d.). IKEA Foundation. https://ikeafoundation.org/wp-content/uploads/2019/05/IKEA-

Foundation-Ethical-Framework.pdf

 IKEA gives users big promises on privacy and data ethics · Dataetisk Tænkehandletank.
(2020, February 19). Dataetisk Tænkehandletank. https://dataethics.eu/ikea-gives-users-big-
promises-on-privacy-and-data-ethics/

 IKEA hit with 5th lawsuit alleging age discrimination. (2019, February 27). HR
Dive. https://www.hrdive.com/news/ikea-hit-with-5th-lawsuit-alleging-age-discrimination/
549155/

 IKEA kids' furniture may be tied to illegal Russian logging, report says. (2021, July 14).
NBC News. https://www.nbcnews.com/science/environment/ikea-likely-sold-furniture-
linked-illegal-logging-forests-crucial-earth-n1273745

 Lau, A. (2020, August 13). Is IKEA ethical and

sustainable? Medium. https://medium.com/discourse/is-ikea-ethical-and-sustainable-
6121b334e77e

 Sustainability at IKEA. (n.d.). About IKEA. https://about.ikea.com/en/sustainability

 Is IKEA ethical in 2021? (Cotton, furniture, employees + more). (2021, August 19).
QuerySprout. https://querysprout.com/is-ikea-ethical/

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