IKEA’s low prices on modern, quality furniture attract millions of customers each year, particularly the younger generations moving into their first home or apartment.
Because IKEA sells thousands of pieces of furniture, you may be curious whether or not IKEA is an ethical company when it comes to employment and factory practices.
Here is everything I discovered about IKEA’s business operations and whether or not the company is ethical!
Is IKEA An Ethical Company?
IKEA demonstrates both ethical and unethical practices in different parts of its business model. Some of their ethical practices include joining the Better Cotton Initiative and reducing chemicals used in furniture. However, some unethical practices at IKEA include age discrimination, harvesting wood illegally, and avoiding taxes using tax havens.
To learn more about the ethical and unethical practices, IKEA has been a part of in the past and what plans IKEA has to become a more sustainable company, keep on reading!
Does IKEA Treat Their Employees Ethically?
When it comes to how IKEA treats its employees, both in-store and in the factories, there have been multiple reports of IKEA treating its workers unethically.
Additionally, the unethical employment practices spread across several store locations and different company areas.
Age Discrimination
For many years, IKEA has faced repeated accusations of age discrimination from their employees. In fact, a 2019 article reported that IKEA faced five age discrimination lawsuits in just over a year.
These age discrimination cases were made in the United States, with workers claiming they were refused a promotion, demoted, and discriminated against in terms of their wages based on age.
Unions
Employees accused the company of undermining the right to unionize in IKEA stores in the United States, Ireland, and Portugal.
In a 2018 report on the issue, employees claimed that IKEA management said their wages would be cut and job conditions would worsen if they chose to join a union.
Additionally, the same employees reported that their job security would not be guaranteed if they formed a union.
Unfair Wages
IKEA has also been accused of exploiting their truck drivers in their supply chain based in Eastern Europe.
A research study performed by the Business and Human Rights website in 2017 reported IKEA drivers were living in their trucks for months at a time and were being paid an hourly wage well below the minimum wage.
After the report was published and a group of IKEA truck drivers took the case to court, it was ruled that the company was breaking the law.
Is IKEA Involved In Ethical Political Practices?
IKEA has been under speculation when it comes to the political practices of the company. The primary source of criticism towards IKEA is a result of their taxation practices.
For example, in 2016, IKEA was accused of avoiding nearly $1 billion in corporate taxes between 2009 and 2014. Green Party ministers made these reports in the European Parliament.
According to the report, IKEA avoided taxes by using onshore European tax havens.
It does not appear that IKEA has altered its taxation processes since the accusations either.
As of 2019, IKEA was still accused of avoiding taxes by holding companies considered tax-havens.
Therefore, IKEA does not prove to be an ethical company regarding its taxation processes.
Is IKEA An Environmentally Conscious Company?
Overall, IKEA seems to be a generally environmentally conscious company.
For example, IKEA’s approach to using chemicals in their products is only to do so if absolutely necessary.
Chemical use is considered a positive approach to pollution, toxins, and palm oil usage.
IKEA also uses sustainable cotton in its products, which reduces water and greenhouse gas emissions.
One aspect of IKEA is not as environmentally conscious as the previously mentioned practices.
Because they consume 21 million cubic meters of wood annually, IKEA is the largest wood buyer on the planet.
In 2020, a report from a non-profit organization called Earthsight stated that IKEA was selling products made from wood illegally taken from forests of the Ukrainian Carpathians.
This report was particularly concerning because the Ukrainian Carpathians are home to lynx and bears, which are both endangered.
Is IKEA’s Cotton Ethically Sourced?
IKEA uses a lot of cotton in its rugs, clothing, and other furniture items. IKEA pays a lot of attention and continuously works to improve how they source their cotton.
IKEA has taken one step to source cotton more ethically by signing the Uzbek Cotton Pledge, which avoids using cotton from forced labor in Uzbekistan.
Additionally, IKEA is part of the Better Cotton Initiative and sourced at least 75% of their cotton as Better Cotton in 2018 alone.
Given the volume of cotton that IKEA uses on an annual basis, this is a significant positive impact on the environment.
What Ethical Practices Is IKEA Implementing For The Future?
IKEA has ambitious plans for the future in terms of its sustainable practices.
The furniture store is committed to recycling plastics, chemical use, water reduction, cotton supply, reducing greenhouse gas emissions, ethically sourcing wood, and efficient energy use.
By the year 2030, IKEA plans to become climate positive by reducing the amount of greenhouse gas emissions to be less than what the company emits.
Another plan IKEA has in the works is to become a circular business.
With that, IKEA wants the design of its products to be repurposed, repaired, reused, resold, and recycled. At some IKEA stores, this circular business concept is already in place.
For example, an IKEA store in Japan offers a buy-back service where customers exchange unwanted furniture for a voucher to spend in the store.
Then, IKEA refurbishes the furniture and sells it back at a discounted price.
The buy-back service allows products to be recycled, avoiding unnecessary waste.
IKEA hopes to implement this plan in all its stores in the future, which would result in a significant reduction in waste and allow products to have a second life.
Do IKEA Employees Receive Any Benefits?
According to IKEA’s website, the company does offer some benefits for its employees.
Additionally, IKEA states that they deeply value their employees, as nothing in the company could run smoothly without them.
Some of the benefits IKEA lists on its website include adding money to a pension fund and a bonus incentive program.
No matter an employee’s position or salary at IKEA, the company contributes extra to their pension funds.
Additionally, the amount of money IKEA contributes to the pension is the same for every employee across the board.
Another perk that IKEA employees are eligible for is the IKEA bonus program, which gives employees a bonus if they hit personal goals or the company reaches a specific sales benchmark.
If you are looking to learn more about IKEA, you can also see our related posts on IKEA statistics, why IKEA is so cheap, and IKEA’s competitive advantages.
Conclusion
It is challenging to determine whether IKEA is an ethical company or not based on their past actions. For example, IKEA has been accused of unfair wages, age discrimination, and harvesting wood illegally.
However, IKEA also demonstrates ethical practices like sustainably sourcing their cotton, only using chemicals if necessary, and plans to reduce the use of greenhouse gas emissions emitted by their factories.
