By leveraging its ‘buyer-driven’ powers to impose sustainability standards on its suppliers and supply chains, IKEA is able to drive change in a way that national governments are not, concludes research by Arabella Mocciaro Li Destri and her colleagues at the University of Palermo.
Arabella comments: “As multinational enterprises operate internationally and interact with institutions and communities they are in a position to define sustainability goals at both global and local levels.
“We selected IKEA for our study as over recent years it has shown a significant commitment to improving social conditions and ensuring sustainable use of natural resources across countries and is actively involved in creating partnerships with private and public actors.
“Our research demonstrates that organisations such as IKEA act as ‘bridging institutional actors’ and have a valuable role in progressing the UN SDG goals.”
The research highlights the powerful role that that multinationals can have in shaping policy for good… or for worse.
Sustainable supply chains
Buyer-driven supply chains give the purchaser bargaining power to impose conditions on their supplier networks and increasingly there are regulatory frameworks to underpin this.
The International Sustainability Standards Board (ISSB) has superseded the Taskforce for Climate Related Financial Disclosures (TCDF), which compelled companies above a certain size to disclose environmental impacts, not just of their own operations but also (in the form of Scope 3 emissions reporting) those of their suppliers.
ISSB and the voluntary disclosure scheme CDP are creating an international framework for monitoring and enforcing sustainability directives and these are being used to inform investment and finance decisions.
IKEA has been leveraging its supply chains to improve sustainability for several years. It is accountable for almost one per cent of the world’s commercial wood consumption, making it one of the largest users of wood in the retail sector. As part of its ‘People & Planet Positive’ sustainability strategy it aims to align its activities with the UN SDG.
Suppliers to IKEA need to comply with its ‘IWAY’ code of conduct, which codifies its expectations for environmental, social and working conditions and animal welfare.
To support its code IKEA has been a significant player in the Forestry Stewardship Council (FSC) and in 98% of the wood used in its supply chain was FSC-certified or recycled.
Measuring and monitoring supply chains
IKEA uses a number of mechanisms to create a positive working relationship with its suppliers, investing in a smaller number of quality relationships.
Knowledge-enhancing mechanisms – this includes training and sharing of experiences with suppliers. Each of IKEA’s 16 regional trading areas has a purchasing team that verifies the implementation of the IWAY code.
Knowledge – controlling mechanisms – implementation of the IWAY code is assessed, with suppliers being scored across a staircase model – Must, Basic, Advanced, Excellent. This is independently audited.
Influencing policy
IKEA’s aim is to become climate positive by 2030, by focusing on:
- Renewable energy – to use 100% renewable energy and use electricity for its delivery fleet.
- Reforestation – to invest in reforestation and responsible forest management.
- Promote bi-modal logistics – partnered with other players to increase the use of the rail network – part of the EU Green Deal is to move freight from road to rail.
- Campaigning – supporting campaigns that lobby government to introduce green policies – eg the international ‘uniting business and governments to recover better’ campaign and BICEP (business for innovative climate and energy policy) in the US.
Ahead of COP27 IKEA Foundation brought together businesses and philanthropic groups to discuss the need to invest in new infrastructures to advance new technology for the reduction of global warming. These included green hydrogen fuelling stations and EV charging stations.
Conclusions
The research showed that Multi-National Enterprises by interacting with institutions and societies have political, social and economic roles. Additionally, by creating foundations, that operate outside of market dynamics and shareholder pressure they can be philanthropic and accelerate the transition to a more sustainable and ‘just’ economy.
The multiple roles of MNEs emerging in IKEA case
| Role | Actors | Mechanism employed for sustainability | Mechanism employed by IKEA |
| Economic actors | MNEs and actors belong to their supply chains | Codes of conduct Corporate standards | IWAY Code of Conduct |
| Social actors | NGOs | Civil standards | Partnerships: |
| Not-for-profit organizations Social businesses | Soft laws | Developing product | |
| Social service organizations | Programs with local communities | Accelerating for impact | |
| Political actor | National governments | Hard laws | |
| Regional institutions | International treaties | BICEP Public Policy | |
| Local institutions Inter-governmental organizations | UN-backed statement | ||
| Government agencies | |||
| Bridging institutional actors | Actors bridging businesses, social and public actors with different logics | Goals and programs set by private–public partnerships | IKEA Foundation |
Arabella Mocciaro Li Destri is a keynote speaker at the 2025 R&D Management Conference.
R&D Management Conference 2025:
Innovation & Biodiversity
Institute of Management of Scuola Superiore Sant’Anna, Pisa
30 June – 2 July 2025
