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Ikea highlights the challenges of corporate stability

COP26 has brought many promises and commitments from companies to tackle climate change. But sifting through those that are true and washing the green is not easy.

Even the best-established companies can still struggle to keep their promises. Take Ikea, a flatpack furniture seller who is one of the largest buyers of wood in the world. Non-governmental organizations (NGOs) admit that it is one of the companies that is focusing on environmental issues because it wants to be the “best of the best” in the air supply by 2030. And yet it has had some problems in its supply chain.

Earthsight, a UK-based development team, has conducted research published twice in the last 18 months to say concerns over firewood from Russia and Ukraine allegedly entered the Ikea chains. Earthsight claims that the boards were cut differently from the permits and procedures.

“They are some of the foremost experts on the source of their timber and direct them to the forest. . . If Ikea fails, then probably everyone is failing, ”says Sam Lawson, chief executive of Earthsight.

Ikea rejects any idea that it has deliberately accepted illegal firewood. But Jon Abrahamsson Ring, apparently the most powerful man in Ikea’s growing empire as the nation’s chief owner, Inter Ikea, acknowledges that forest management is a “very complex issue”.

Ikea, which originated in the jungles of southern Sweden although now in the Netherlands, says that wood is a durable and recyclable material that is far better used than plastic or metal. That is an experiment in part against the argument Ikea burns discarded by making cheap furniture.

But ensuring that the wood is cut correctly is not a straightforward matter. Loggers may have permits for certain areas but then illegally cut down in the surrounding forest. Another issue is the misuse of a practice known as sanitary cutting, in which all trees in the area are felled to protect them from disease or accidents, such as wind damage.

Ikea relies on three levels of security for its logistics, according to Ulf Johansson, logger and forestry manager at Inter Ikea. Traders must provide an annual plan for the purchase of firewood; a team of 40 in-house experts examining about 200 each year; and Ikea also uses third-party readers, on both public and private occasions. It also uses certification by the Forest Stewardship Council as an “additional protection”.

Johansson emphasizes: “Tactful forest management is essential to our business. It is not something we can dedicate to someone else. It is our responsibility to ensure that we only use firewood from reputable sources. ”

But something went wrong in Russia. Ikea insists it works “urgently to ensure that” no illegal firewood is replaced but admits that there was “wrong” associated with more expensive sanitary permits. The reason is that it not only prohibits companies that are at the forefront of Earthsight notices, as well temporarily prohibited the use of firewood from clean logs throughout Siberia and eastern Russia.

There are questions about why Ikea exports most of its forests from countries such as Russia, Belarus, and China instead of relying on the more expensive countries near its base.

Johansson says Ikea does a lot of research in Russia because it is called “the most vulnerable country”. But he argues that the group has a lot of vendors out there who have worked with it for years and “we believe”. Ikea may be able to produce all its firewood over time from Sweden and Finland but it believes “very strong that we can do a lot of good by staying, and managing our forests”, he adds. If it reveals an error, it knocks the seller out.

Furthermore, there is the question of how far Ikea’s role is. Both Johansson and Ring argue that it is not just about Ikea movement but also making forest management a habit in the industry. Lawson believes that Ikea needs to move forward in improving consumer research and eliminating harmful practices.

“Most of the time, I ask companies: Do you want to look good, or to be good? To look good is to work with your own chain. Being good is taking responsibility for all companies. As more and more companies struggle with the details of sustainable promises, Ikea may not be the only one to address the problem.

richard.milne@ft.com

Twitter: @rmilneNordic




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