People and planet positive: case study of IKEA’s Triple Bottom Line strategy. Word count: 1500 Course: Sustainable management Student: Zamira Nurmatova Introduction In the recent years, the sustainability has become the measure of development of businesses. As the world population is increasing, there is a strain put on natural resources and energy. Owing to the fact that more and more emerging makets’ economies are evolving, businesses are required to ensure their activities are sustainable and maintain the minimum waste. There are several incentives for businesses implementing sustainability. The sustainable operations might reduce the operating costs, low resource usage and better brand reputation. As the leading furniture brand, IKEA makes maximum effort to maintain sustainable operations, even though it might be challenging, as it is one of the biggest wood buyer in the world economy. However, whether challenging or not, sustainability is no longer a choice, but a necessity. The company’s conduct of sustainable strategy is exemplary to other businesses, as IKEA help their customers and communities lead a sustainable and healthy life. This paper gives a brief definition of Triple Bottom Line, analyses the three dimensions of TBL in the case-study of IKEA with number of examples, lists out the challenges the company faced, and explains the sustainable strategy IKEA has adopted. The aim of this paper is to review literature on Triple Bottom Line, to make a research on the case of IKEA’s Social responsibility, its branding and marketing as well. What is a Triple Bottom Line? Recently there has been an increase in the popularity of Sustainable development within the society. It may obviously be due to the growth of environmental awareness among people which is caused by the expansion of environmental issues such as global warming, waste disposal and deforestation (Safronova, Y. 2021). The term of Sustainable development was introduced in 1987, in a report of the World Commission on Environment and Development (WCED) and was defined as the integration of social, environmental and economic duties of the companies, or as Triple Bottom Line. (Tang and Zhou, 2012). The definition of the Triple Bottom line (TBL) was introduced in 1990’s and achieved public awareness in 1999 with the publication of the book Cannibals and Forks: The Triple Bottom Line of 21st century Business by J. Elkington (Mattioda et al. 2013). It has proven itself to be an effective concept of practicing sustainable business without ignoring the company’s needs of growing, making profit and achieving success economically (Thorp 2017). The TBL embraces three dimensions which are commonly called three Ps: people, planet and profits. However, calculating them presents a challenge, such as how to measure social welfare or environmental damage. Some suggest to measure it in dollars, by giving theoretical value to wetlands or endangered species, yet finding the right value for them might be another challenge. One more solution to this problem might be calculating the TBL in terms of index, comparing the performance between companies, projects and cities (Slaper, T. S. and Hall, T. J. 2013). Slaper and Hall (2013) indicate some measures according to each dimensions. For instance, job growth, employment distribution by sectors, establishment sizes might be some of the examples for Economic measures. Whereas, electricity consumption, hazardous waste management, sulfur dioxide concentration and etc. are presented as Environmental measures. Social measures include unemployment rate, relative poverty, average commute time to work and etc. However, practicing sustainability has been an issue due to the pressure by stakeholders (Yenimi G. 2013). As it has been believed that sustainable operations mean increased cost of sales, which might negatively reflect on the success of the business. Economic sustainability Economic sustainability is defined as the growth of the company and its financial status, and it is incorporated with a steady cash flow in the company during a global change in the market. The economic sustainability of the company can be assessed in sales performance, innovation, relationships and investments. (Li X. et al. 2022). According to Statista (2023), the annual revenue of the IKEA shows upward trend in the last 20 years, except the years of pandemic, when the company focused on online shopping and did not lose its customers. In 2021, while the company entered two new markets (Mexico and Slovenia) and opened 13 new stores, IKEA continued to expand its business in developing countries and new emerging markets. In order to maintain the economic sustainability, the company actively invests on marketing all around the world. For example, IKEA catalogue is stated out as one of the most widely read publications with the annual circulation of 100 million copies. Those are printed according to the policy of “green catalogue” created by the company. That policy included chlorine-free pulp bleaching process and using the post-consumer paper waste. (Laurin F. and Fantazy K. 2017). Furthermore, public annual reports of IKEA on its sustainable operations was intended to make their intentions and activities transparent, which consequently earned the trust of the public as well as the stakeholders. (Yenimi G. 2013) Healthy and sustainable living IKEA launched “People and Planet positive” sustainability strategy in 2012, which describes the sustainability agenda and ambitions of the company to be accomplished till 2030. (Strategy 2018). The agenda included three main directions: 1. “A more sustainable life at home” – promoting the products for more sustainable life. 2. “Resource and energy independence” – low carbon transportation, renewable energy, energy efficiency. 3. “A better life for people and communities” – social responsibilities to contribute a better life for people. (Safranova Y. 2021) The company has been working hard to be climate-positive by 2030 with the help of increasing the usage of sustainable materials, plant-based foods and renewable energy sources. (Li X. et al. 2022). The last 15 years, the IKEA has been publicly reporting its annual sustainability reports showing the efforts towards being eco-friendly. According to the report of 2020, the company recycles about 75% of its waste, using recycled materials in all countries it operates. (Safranova Y. 2021). In order to reduce waste of energy and water, the IKEA creates energy consuming products, such as INSANDE fridge/freezer that has A++ rating for energy efficiency. As another example serves RINGSKAR tap which, the company states, reduces water use by up to 40%. (Yenimi G. 2013). However, even though IKEA constantly places a great importance to the sustainability, it cannot go along without some issues. According to Financial Times (2021 November), IKEA being one of the world’s largest buyers of wood, to be eco-friendly following the standards might be challenging. Following the reports of the UK based campaign group, the timber from the woods of Russia and Ukraine was entering the supply chain of IKEA that was felled contrary to permits and allowed practices. Contradicting this Handrigan (2013) strongly believes that IKEA selects supply partners considerably on legal operations, buying timber from the forests that are managed sustainably. People friendly Owing to the fact that IKEA considers the development and practice of social responsibility as an essential point, the company keeps refining its ethical business requirements, such as rejecting unfair discrimination according to race, gender, nationality and etc. By implementing IWAY (IKEA WAY) standards which are the set of business ethics and minimum requirements for working conditions and society that suppliers must follow (Lindell, V. and Bishnu, S. 2014). In order to maintain a fair and transparent selection, the company organizes Backpacking program that aims to choose young people for national training. One more example of the company considering the welfare of its workers as a great importance is set of individual benefits offered to workers, besides food, housing and transport benefits. Furthermore, when the International Labor Organization had a call to act to prohibit child labor, IKEA acted immediately. Now it is one of the key criteria of IKEA’s development. For instance, the company has worked alongside with UNICEF to help children in India to get proper education. Additionally, IKEA provides trainings to the women in India, increasing the workforce, at the same time aiming to help them to fight the gender inequality in the country. (Li X. et al. 2022) One more contribution of IKEA to the community was the donation of €43.4 million to the United Nations High Commissioner for Refugees (UNHCR) to help refugees in Africa. This helped to build survival shelters for them. Moreover, the company donated many household items to Libya’s war-torn refugees, aiding them to maintain better daily lives. (Safranova Y. 2021) From general perspective, IKEA’s efforts to maintain equality in the international community can be seen a good example for other companies to copy. Conclusion In 21st century, one of the biggest challenges is how to cope with the emerging issues of climate change, resource scarcity and pollution, at same time creating better life for all. To summarize this paper, the objective of the research was to analyze the ways of the business to be sustainable and how it affects the branding. The qualitative analyses show that sustainability has positive effect on branding that establishes the trust and loyalty of its customers. The stable growth of the company can be the justification for this claim. As for the credibility of the data, the annual reports of IKEA for stakeholders were used as a resource for the research. Through the analyses of IKEA’s three dimensions, it sustainable development was evaluated. Furthermore, the company puts strong efforts to create better ways of analyses its own operations and implement new strategies and technologies to make this business more sustainable than ever. 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