Responsible Business Organizations

How AB Anders Löfberg is Implementing Sustainability In Its Business Operations

Ayoub Hameedi

AB Anders Löfberg is a prominent business group from Sweden that started its entrepreneurial journey from the beginning of 1900’s and today serves coffee in ten different markets across the globe. Löfberg family is the owner of the Löfbergs Group that has a number of companies in its business portfolio. Löfbergs was established by Anders Löfeberg along with his brothers in 1906 in Sweden and the group now serves 10 million cups of coffee on daily basis to its customers across 10 markets. Löfberg group has a strong presence in terms of business operations in Sweden, Norway, Denmark, Latvia, The United Kingdom and Canada however, Sweden maintains a lion’s share of market (i.e. around 58.6%) in terms of overall sales and revenue. AB Anders Löfberg is a key player when it comes to the art of roasting coffee in the region of Scandinavia and it started its operations in 1911. It is the parent company that sells coffee through 6 different brands namely Löfbergs, Peter Larsen Kaffe, Melna, Crema, Percol & Green Cup, respectively. AB Anders Löfberg sells 50% of its coffee in retail form, another 25% to cafes and restaurants and the remaining 25% to customers who then sell coffee through their own brands.

Ab Anders Löfberg purchases its coffee from Brazil, Colombia, Peru, Costa Rica, Honduras, Nicaragua, El Salvador, Mexico, Guatemala, Ethiopia, Tanzania, Kenya, Uganda, Vietnam, Indonesia & India. The import / purchase of coffee from South & Central Americas and Southeast Asia points out that the cumulative carbon footprint of importing coffee through ships and rails to Sweden would be high. This single factor can and will impact the sustainability drive at AB Anders Löfberg in an undesirable manner. However, if AB Anders Löfberg hasn’t already, it can choose to invest in green bonds which will certainly help the company to reduce its carbon footprint. The company can also choose to purchase carbon credits to minimize its carbon footprint. As a mitigating strategy, AB Anders Löfberg can also choose to invest finances in maintaining private forests as carbon sinks. It is a commonly known fact that trees are the nature’s carbon capture and storage devices. Thus, by maintaining private forests on a large magnitude, AB Anders Löfberg can reduce its carbon footprint or can even choose to neutralize it completely.

Another important area to focus on is the certification of coffee. In 2015 / 2016, less than half of the purchased coffee was certified and a lion’s share of certification was either from Rainforest Alliance or organic / fairtrade. The least share was from UTZ certification. It must be appreciated that the percentage of the purchased certified coffee has increased two- fold in the supply chain of AB Anders Löfberg during 2012 – 2016. As a future strategy, AB Anders Löfberg can choose to purchase and provide 100% certified coffee through its supply chain. A key way to fulfill this goal is to launch a customer awareness campaign where customers would be encouraged to purchase certified coffee. The company can apply canvas strategy by considering only 5% of its customer base annually and convince them to purchase certified coffee. The successful implementation of this strategy will help AB Anders Löfberg to eliminate the existing gulf of uncertified coffee in its supply chain in the matter of a decade. Plus a comprehensive interaction with customers might certainly open new window of opportunities for AB Anders Löfberg to expand its existing business operations.

It is equally important to mention here that AB Anders Löfberg satisfied 41.4% of its total electricity demand through clean energy sources in year 2015 / 2016 and plans to consume 100% clean energy by 2020. To accomplish this goal, an option for AB Anders Löfberg is to invest in solar pv in Denmark that already had an installed solar pv capacity of 851 MWs in 2016. Denmark is also the second largest customer base for AB Anders Löfeberg so, investment in solar pv in Denmark will be a financially feasible and environmentally sustainable action to execute. Plus, the proposed investment might open another window of opportunity for AB Anders Löfberg. Likewise, it can also choose to invest in wind power in both Sweden and Denmark since both countries are considered as mecca of wind power in Scandinavia. Another effective strategy would be to use the trash from the business operations of AB Anders Löfberg to produce heat and electricity. The given recommendation will serve as a dual edge sword as it will completely eliminate the waste from the operations and will provide clean power too. It is important to remember that every small step in the right direction will increase sustainability in the business operations of AB Anders Löfberg. Similarly, gender equality is another area where AB Anders Löfberg can take positive steps to increase the share of female managers in its management team. At present, 30% of managers at AB Anders Löfberg are females and the company plans to increase this ratio to 40% by 2020.

All in all, AB Anders Löfberg can purchase carbon credits, invest in green bonds and maintain private forests on a large magnitude to reduce / neutralize its environmental impact when it comes to the import of coffee via ships and rail network. Likewise, a customer awareness campaign to achieve the goal of 100% certified coffee in 10 years will be another step in the right direction. It is understandable that the recommended goal is ambitious but as Jim Rohn recommended in his book “Leading an inspired life” that the key to achieve any target is to break it into smaller pieces and then pursue it strategically. Likewise, utilizing 100% clean electricity to satisfy electricity demand of AB Anders Löfberg will also provide a competitive edge to the company over its competitors. IKEA is pursuing the goal of 100% clean energy and is investing bullishly in solar photovoltaic panels and wind turbines. Studying the case of IKEA will certainly help AB Anders Löfberg to achieve the same target strategically. It is understandable that the magnitude of operations for IKEA is huge in comparison to AB Anders Löfberg but still IKEA can certainly offer strategic help to AB Anders Löfberg when it comes to achieving the target of 100% clean energy. The waste generated through the operations of AB Anders Löfberg is another valuable resource to generate clean power. Finally, scaling the percentage of female ratio in management to 50% will be another step in the right direction. The aforementioned recommendations would take time, energy and financial resources but are completely realistic in nature and will certainly facilitate AB Anders Löfberg to be a climate positive company.

How IKEA is Promoting Resource Efficiency in its Restaurant Operations & How Things Can Be Improved Further

Ayoub Hameedi

Mr. Ingvar Kamprad expired peacefully on 28th January 2018 at the age of 91 years. He was an oracle of wisdom as he certainly knew how to transform adversities into opportunities. Mr. Kamprad was the Michelangelo of modern era who worked really hard, over a sustained period of time, kept a keen eye on details and left his mark before he left the world for an even better place. The Great Michelangelo participated in designing Saint Peter’s Basilica and also painted the ceiling of Sistine Chapel with Creation of Adam before he left. The mentioned pieces of art are just two pearls in the ocean of creativity produced by Michelangelo in his life time. Mr. Kamprad’s masterpiece was IKEA which he established in 1943 with the money given to him by his father upon his graduation from high school. Today, IKEA is a major pillar of Swedish society and one of the few companies that have shaped Swedish society over the period of decades.

Mr. Kamprad’s story originally started almost a decade before he launched IKEA and was a true reflection of nothing but consistency and a firm will to succeed despite all odds. He started his entrepreneurial journey from selling matches at the age of 6. By the age of 10, he was selling Christmas decorations, fish and pencils in his community on bicycle. Mr. Kamprad valued time as it should be valued and divided it into 10 minutes slot in order to utilize it to fullest of potential. He declared waste of resources as a mortal sin at IKEA and firmly believed in the effectiveness of any solution only if it is also financially viable. Mr. Kamprad was 91 years old and certainly had wisdom and farsightedness based on his 85 years of business experience. An earlier example of his wisdom was when he offered furniture at a much lower price than his competitors. In the beginning of 1950’s, furniture was considered as a valuable commodity in Swedish society and therefore was offered normally at a higher price. However, Mr. Kamprad challenged the status quo by thinking out of the box. He purchased an old factory that enabled him to produce and sell furniture at a fairly lower price than his competitors. It caused an outraged in Swedish Federation of Wood and Furniture industry to such an extend that it went to boycott IKEA. Like any other creative thinker, the challenge was nothing more than another opportunity to expand his business operations. Mr. Kamprad came up with an innovative solution to purchase the supplies from Poland at a competitive price than Sweden and kept on carrying on with his business operations. The idea worked well and thus Mr. Kamprad transformed his adversity into a fantastic business opportunity for himself and IKEA.

The topic in consideration for this report is the restaurant operations of IKEA, how it is implementing sustainability in its operations when it comes to business execution and how the existing situation can be improved further. IKEA covers a wide range of customers when it boils down to its restaurant operations. On yearly basis, it offers food services to 650 million guests in its 400 stores in 48 markets across the globe. Since it operates on a mega scale therefore food waste also takes place on a macro scale. However, to comply with Paris Climate Agreement and to reduce IKEA’s food related footprint, the company plans to reduce its food waste by 50% through an initiative “Food is Precious” by the end of FY 2020.

However before addressing the strategies adopted by IKEA, it is important for readers to understand that minimizing food wastage is an extremely important issue. It is pertinent to mention here that around 1.4 billion tonnes of food is wasted on annual basis which causes an additional carbon dioxide gas emission of 4.2 billion tonnes respectively. Unfortunately, the emissions from global food wastage is more than the combined emissions of all countries across the globe excluding China and USA. Adding insult to injuries, 1.4 billions extra hectares of land is used to produce food which ends up as waste. Thus, if global food wastage is halved it will allow the governments across the globe to have an additional 0.7 billion hectares of land for the sake of forestation to reduce the concentration of greenhouse gases in our atmosphere. Trees are the nature’s carbon capture and storage device to remove excessive greenhouse gases from our atmosphere to maintain a delicate balance required to support life on planet earth. In terms of compounded effect, not only food as commodity is lost, manual labor and financial input is lost, transportation cost to transfer food from farm to shelves and eventually on tables is gone and finally the waste ended up as the third largest carbon dioxide emitter after China and USA. On the contrary, mitigating techniques to minimize food wastage is a gold mine provided one must know how to mine it properly. A study conducted by World Resource Institute (WRI) based on the data collection from 1200 business sites for more than 700 companies in 17 countries across the globe concluded that every dollar invested to reduce food wastage on half of the chosen business sites generated a revenue of more than USD 14, respectively.

Under the banner of “food is precious” initiative, IKEA is taking positive actions to reduce its food wastage. IKEA has collaborated with two tech companies to mitigate its food wastage. The first tech company in this regard is LeanPath which has designed a product that can be attached to waste bins to monitor the food waste, collect data and compile recommendations to reduce the food waste. IKEA is currently using the services of LeanPath to reduce its food wastage. IKEA has also partnered with another tech company Winnow that builds the capacity of employees in terms of showing them the financial worth attached to the food heading for the waste bin. The given training than facilitates the employees to reduce the waste to occur in future. IKEA has planned a sustainability vision 2020 for itself where by August 2020, IKEA will reduce its food waste by 50% and will turn 90% of its generated food waste into compost and biogas. Likewise, to diversify its menu and to minimize its environmental impact, IKEA restaurants offer veggie balls to its customers as a sustainable alternative to meat balls. From a business development perspective, the applied creative action will certainly attract customers and will help restaurant wing of IKEA to reduce its ecological footprint. Another effective strategy for IKEA restaurants would be to keenly observe its production process and find out ways to utilize less of resources to produce food with same quality. IKEA must apply same innovative thinking as it did in 1953 when Mr. Gillis Lundgren (i.e. one of the Mr. Kamprad’s associates) came up with the idea to distribute furniture in kit form and flat boxes. The proposed solution is easier said than done but enough research on the food production unit in IKEA restaurants will certainly make it happen. It will also be financially beneficial for IKEA both on the short and long term basis. To determine the outcome of the proposed recommendation, IKEA can develop its own internal mechanism or can choose to improve the one already in existence. The goal of achieving same quality of food with less resources will set new sustainability standards for IKEA. One of sayings by Zig Ziglar goes like this: “Go as far as you can see, once you get there you would be able to see even further”. It’s all about pushing yourself to your limits and making them expand. The life and philosophy of Mr. Kamprad was a true reflection of this ideology as he kept on expanding his limits during his lifetime.

It is extremely important to understand that IKEA serves 650 million guests on annual basis via its food operations all across the globe. The aforementioned figure is huge and even a minor positive step will create a massive positive change with compounded effect. Common examples in this regard are if 1/4th (i.e. 162.5 million) of its customers consume drinks in canes and restaurant wing of IKEA makes it sure to recycle them, then around 162.5 million canes would be recycled on annual basis. On a broader level, it would make over a billion canes in a span of 7 years. If accomplished successfully, imagine the compounded positive impact IKEA would leave on environment. By doing so, IKEA will reduce 95% of energy required to extract bauxite from earth crust, processing it further to extract aluminum to be utilized as a main component to form soft drink canes. Both of the mentioned processes are extremely energy intensive. The magnitude of savings can be understood from this example that recycling 1 kilogram of aluminum helps us to save 6 kilograms of bauxite, 4 kilograms of chemical products and 14 kilowatt hours of electricity. Likewise, to reduce the use of plastics and paper in take away cups, IKEA restaurants can motivate its customers to spare 5 minutes out of their personal schedule to drink coffee in mugs instead of taking it out. If IKEA would motivate 5% – 10% of its customer to drink coffee indoors, it will be a very good beginning to reduce paper and plastic use in its restaurant operations. It is understandable that taking away coffee is a personal right and it must be respected. However, creating positive awareness to reduce environmental impact will certainly create a very positive feeling in the customers which might give them another reason to visit IKEA restaurants again. If it hasn’t already, another effective strategy IKEA restaurants can adopt is to invest a portion of its profit from food services in green bonds. It can also increase its installed solar panels capacity from 0.7 million to 1 million by 2020 and increase the number of installed wind turbines from 327 to 427 by 2020. The increased installed clean energy capacity will certainly help IKEA to make a swift transition to the use of electric vehicles in its operations by 2030.

IKEA is a company that has certainly done a lot when it comes to implementing sustainability in its business operations in the past and has the right set of skills, experience and resources to repeat its history again. Most importantly, IKEA is a brain child of Late Mr. Kamprad who firmly believed in wasting resources as a major sin and his life was a testament that he neither wasted his time, financial resource or the intellectual potential he was blessed with. Finally, increasing sustainability in the operations of restaurants will increase the overall resource efficiency for IKEA which would not only be good for environment but will be incredible for IKEA too.

A Brief Overview of Dressman’s Approach to Sustainable Development

Ayoub Hameedi

The man behind the concept of Dressman was Frank Varner, a Norwegian who dared to dream big with the resources he had and the potential he was blessed with. In 1962, Late Frank Varner opened a store in Oslo on Thorvald Meyersgate, where he sold the men products that were imported from London. The idea became an immediate success. During the next three years, Late Frank Varner went on opening two more stores in Oslo and Trondheim. In 1967, the name “Frank Varner” for the stores was replaced with the title “Dressman” and Dressman kept on its journey on the road of progress and development. The start of 1980’s became another success in the series of achievements for Dressman as it went on to purchase a stock exchange listed company “Jonas Øglænd AS“. The purchased company was basically a conglomerate of 5 different companies including an insurance company, a bicycle manufacturing company, work clothing manufacturer, property development and Norway’s largest textile retail Cubus. By 1989, Varner had 90% shares of Jonas Øglænd AS and thus the purchased milestone came under the umbrella of Varner Group. Mr. Varner eventually sold the companies under the banner of Jonas Øglænd AS that were not aligned in spirit with Varner group. Carlings was launched in 1985 and few years later, a young gun of Varner family was given the opportunity to prove his skills and abilities. Petter Varner took the charge of Dressman in 1989 and kept on expanding the horizon for Varner group with the purchase of Bik Bok in 1991, purchase of Vivikes in 1994, purchase of a chain of 47 stores in Sweden and re-branding them as Dressman, acquisition of Urban in 2001, followed by the launch of WOW and Volt in 2006 and acquisition of Solo in 2007, respectively. By the end of 2010, the Varner Group offered clothing range for men, women & families and was operating in 9 countries. However, the mecca of operations still lies in Norway with a very strong presence in both Sweden and Finland. In 2011, Petter Varner was amongst the most financially blessed Norwegians with a declared worth of NOK 3900 million. Petter Varner’s dedication and resource efficiency took Varner group and Dressman to new heights. Today, Varner group manages 11 brands with around 11,000 employees and has over 1450 stores in operation. It earns an annual revenue of € 1.3 billion.

Like all the leading business organizations, Dressman has a lot of requirements to satisfy when it comes to environmental responsibility. It certainly has an ability to fulfill its responsibilities with a proper investment of physical and financial resources. It must be appreciated that the Dressman works in collaboration with Better Cotton Initiative (BCI) to ensure the use of cotton that is produced in a sustainable manner. The main aim of this initiative is to improve the social condition of masses responsible to harvest cotton, enable cotton to grow in a resource efficient manner which is good for the native environment and finally to facilitate the flow of sustainably produced cotton throughout the supply chain. Better Cotton Initiative (BCI) is financially supported by World Wide Fund for Nature (WWF), USAID, SIDA and a host of other stakeholders. Dressman initiated a collaboration with Better Cotton Initiative (BCI) in 2016 and plans to use 90% of sustainably produced cotton in its operations by 2020. If the goal is achieved by the end of this decade, it would be a big leap for Dressman in the direction of implementing sustainability in its supply chain. However, Dressman can and should aim for using 100% of cotton as sustainably produced. IKEA is one such example in this regard as it utilizes 100% of cotton produced from sustainable practices in its supply chain. Similarly, it must be appreciated that the Dressman became a part of Sweden Textile Water Initiative (STWI) to improve water efficiency in production process. It is an extremely important area which can prove to be an Achilles heel for Dressman, when it comes to achieving sustainability. A concrete follow-up as to how much consumption of water has been reduced will certainly improve the sustainability portfolio of Dressman. H&M can be studied as a case in this regard as it is working in close collaboration with WWF Sweden since 2011 to increase water efficiency in its operations. As a result of this collaboration, around 70,000 employees of H&M have received water awareness training when it comes to the use of water in a sustainable manner.

Dressman has its headquarters along with major operations in Billingstad, Norway. It is important to mention here that Norway generates 99% of its electricity through hydropower, thus the operations of Dressman in Norway are naturally supplied with clean electricity. Apart from that, the stores and business operations in countries other than Norway might need some attention when it comes to power consumption. In case of Sweden which produces over 40% of its electricity from Nuclear power, it would be interesting to know if the electricity consumed by Dressman is generated from nuclear power or clean sources of power production. In case of nuclear power, Dressman can make a gradual transition to more environment friendly sources of power production. Nuclear power generation is a water intensive process as it consumes roughly 400 gallons of water to produce a megawatt of electricity. Plus, it generates nuclear waste which remains a constant threat for society for coming 100,000 years. Another effective strategy for Dressman is to install its own wind turbines and solar panels. IKEA can be studied as a case in this regard. IKEA has installed 327 wind turbines and 0.7 million solar panels on its stores and distribution centers to increase the share of clean energy in its overall energy consumption. IKEA plans to use 100% of its consumed electricity from clean sources by 2020. Dressman can start with micro initiatives like installation of 5 or 10 wind turbines each with an output capacity of 4 MWs or above and can then gradually expand the wind turbines initiative to beyond a figure of 100. The proposed initiative will certainly make a difference when it comes to clean power consumption at Dressman. Dressman can also choose to purchase electricity from green companies and can satisfy a certain percentage e.g. 20% from clean sources. It can then expand the target to 100% in coming 2 decades.

An other effective strategy to increase sustainability at Varner Group would be to increase energy efficiency at 1450 stores in operations within and beyond the borders of Norway. Even a mere 2% of energy efficiency at each store will make a remarkable difference. A basic step Varner group can take in this regard is to improve the designs of its stores to decrease the consumption of energy. It is understandable that the number of stores is fairly huge (i.e. 1450 stores) and any sustainable change will certainly take a considerable amount of time and a gradual pace to occur. Normally, in any commercial place heating and cooling systems take 60% of the consumed energy while the remaining 40% is consumed by lighting system and electrical appliances altogether. Thus, by redesigning the stores to increase the use of daylight will certainly reduce the consumption of energy. Likewise, a report produced by Building Energy Exchange reflects that replacing current lighting systems with more efficient replacements can reduce the energy need up to 75%. The same report points out that a replacement of an existing lighting system with a more advanced and efficient system in a commercial space in New York city normally pays back in a span of 3 – 5 years. Similarly, replacement of an existing electrical appliances in stores with more efficient electrical appliances with A++ quality standard can decrease the energy consumption by 40%. In order to increase sustainability, H&M plans to build energy efficient stores in future. As a result, the future stores of H&M will consume 40% less energy per square meter in comparison to ones in operation today. Varner group can certainly examine this and replicate the same strategy to increase sustainability in its overall operations too. The replacement of electrical appliances with more efficient ones, retrofitting buildings to decrease energy consumption, replacement of existing lighting system with an improved one, installation of Dressman’s own wind turbines and solar panels will certainly take time, energy and patience but will facilitate Varner group to increase resource efficiency, reduce financial expenditure and its impact on environment.

Late Frank Varner certainly took massive actions with the launch of Frank Varner stores and the launch of Dressman. Petter Varner, the current CEO of Dressman certainly followed the footsteps of his father and took Dressman and Varner group to new heights. The recommended steps will help Varner group and Dressman to increase resource efficiency, reduce financial expenditures and to leave a more positive environmental impact. Dressman and Varner group has taken massive positive actions in the past to establish and expand business. It has the right skills, experience and courage to take bold actions again to increase sustainability in its business portfolio. Finally, it must be acknowledged that the magnitude of operations for Varner group and Dressman is large and any sustainable change will certainly take brief amount of time, patience and financial resource to happen.

H&M and It’s Strategies To Implement Sustainability

Ayoub Hameedi

H&M Foundation is a non-profit global foundation striving hard to promote the ideas which could improve the quality of life of masses in marginalized communities across the globe. The foundation is funded privately by Stefan Persson family, who has also founded, owns and operates Hennes & Mauritz (H&M). Mr. Stefan Persson owns 28% of the total shares of H&M and happens to be one of the most richest persons in Sweden. H&M foundation has so far channelized 365 million Swedish krona to execute partnered projects in 26 countries around the globe. This sustainable investment has so far positively impacted the lives of 740,000 people. The foundation focuses on four key areas namely education, water, equality and planet. Beyond the scope of these particular areas, the foundation also has the ability to provide emergency relief at the time of crisis.

Within the key area of water, H&M foundation has partnered with Water Aid, Sweden to execute Global Program for Water to provide water & sanitation facilities and hygiene services to masses in remote areas of world. The first phase of the program will come to an end in 2017 and both organizations have targeted Pakistan, Cambodia, Ethiopia and Uganda to implement the project with a total donation of 60 million Swedish Krona. The aim of the first phase is to improve the quality of life of 150,000 people in all the aforementioned countries across the globe. Likewise, within the area of education, H&M foundation has partnered with UNICEF to sustain Global program for Education and has donated 133 million Swedish Krona to implement the program. It is in operational form in 16 different countries and has positively improved the quality of life of 173,000 masses. Another sustainable initiative by H&M foundation took place in collaboration with CARE. The primary aim of Global program for Equality is to promote gender equality and H&M foundation has put money where the mouth is by donating 86 million SEK for this purpose. The project is in implementation phase in 20 countries (including Pakistan, Ethiopia, Africa, Middle East, South Africa, Sweden and Norway) and so far 103,000 people have been positively impacted through this program. It is important to highlight here that H&M foundation is directing money to facilitate unaccompanied refugee children in both Sweden and Norway. Under the initiative of planet, H&M Foundation is working in collaboration with The Hong Kong Research Institute of Textiles and Apparel (HKRITA) to develop techniques to recycle blended textiles in order to reuse them in future products. In another initiative (i.e. Global Change Award program), H&M foundation has donated €1 million to find 5 best ideas to promote sustainability within the textile sector. It also plans to share the findings of this initiative with the global textile industry at the earliest by 2020.

It was Erling Persson who founded Hennes in 1947. The background idea was to create a positive change in the lives of people across the globe. The business idea was based on a long term thinking and was adequately powered by strong values. Mr. Erling Persson then passed on the same ideology to his son, Stefan Persson before his soul departed to another world. Mr. Stefan Persson, who also happens to be the second richest person in Sweden then passed on the same teachings to his son Karl Johan Persson, who is a board member of H&M foundation and the current CEO of H&M. Persson family has donated 1.3 billion Swedish krona (i.e. $ 177 million) to the H&M foundation in order to introduce a sustainable change in the lives of masses across the globe. The birth of the Hennes concept took place in New York city when Late Erling Persson went on a road trip to USA in 1946 at the age of 30. Next year, the dedicated entrepreneur opened his first store in Västerås, Sweden with the title Hennes or hers in English. He later went on to open two more stores in the capital city of Stockholm. By the end of 1955, Hennes was already a top trending brand in the city and certainly amongst the pioneers when it comes to a full page advertisement in a leading newspaper. The turning point for Hennes took place in 1968 when Late Persson took over Mauritz Widforss and merged it with Hennes. Thus, giving birth to Hennes & Mauritz (H&M), a clothing brand destined to change the future of fashion in Sweden and in numerous other countries across the globe.

In 1974, Hennes & Mauritz was listed in Stockholm Stock Exchange and all the stores were renamed as H&M as an official abbreviation for the company. The visionary thinking and strategic planning of Late Persson motivated him to purchase a mail order company “Rowells” in 1980 so that the products variety would be made available to the customers at their door step. In 1982, he decides to step down as CEO in order to introduce young blood. Mr. Stefan Persson then takes over the charge as CEO and starts to elevate company to new heights. The beginning of 1990 marked another turning point when H&M opts for digital advertisement through billboards. Likewise, 2 years prior to the end of century, H&M again took another calculated risk by introducing online shopping facility in Sweden. Not to mention that H&M was the first company to provide such a facility to its customers. In the same year, H&M opens its first store in the capital of fashion “Paris”. In 2000, Rolf Eriksson takes over as CEO and H&M launches its first ever store on the fifth avenue in New York. The history repeats itself when H&M open its first stores in Shanghai and Hong Kong in year 2007. H&M transforms itself into H&M group with the purchase of Weekday, Monki and Cheap Monday. In 2009, the group then launched its own home services with title H&M Home. During the same year, Karl Johan Persson takes over as CEO and in the next year H&M launches its own full fashion collection made from sustainable materials.

In 2013, H&M launches its garment collection scheme and till now has successfully managed to collect 32,000 tonnes of garments from customers. The garments collected via garment collection scheme are utilized in 3 different ways: first, in which collected garments are sold as second hand clothes, second in which the collected garments are transformed into cleaning cloths and lastly, recycle where the collected garments are recycled into textile fibers and is used for purposes like insulation. At the moment, H&M can successfully extract 20% of cotton or wool from each garment however, the experts at H&M are working hard to find technological solution to recycle 100% of the textile fiber. H&M Group works with 1,826 factories across the globe out of which 508 factories are located in Europe, Middle East & Africa (EMEA) whereas, the remaining 1,318 factories are located in Southeast Asia. Likewise, H&M Group is also collaborating with Swedish International Development Cooperation Agency (SIDA), International Labour Organization (ILO) and several global & local trade unions to introduce sustainable change in the lives of masses employed in factories across India and Cambodia. The efforts are highly appreciated however, the H&M Group will truly make a leap towards sustainability, if the same strategy would be replicated in all other factories too. It is important to mention here that H&M Group does not own a single factory and it is working to introduce a sustainable change in the lives of masses employed however, the number of factories are fairly large therefore any positive change will take considerable time to occur.

The brand itself plans to attain a climate positive status in its value chain by 2040 and aims to increase energy efficiency in its future stores so they would consume 40% less energy than in comparison to the ones in operation today. Last year, H&M group satisfied 96% of its electricity demand through renewable energy. In coming years, it plans to satisfy 100% of its electricity demand with clean energy resources. H&M Group is also collaborating with WWF Sweden since 2013 to design strategies to promote water stewardship in four thematic areas namely sustainable use of water, awareness creation among masses, a collective action and finally measuring the risk and impact when it comes to the utilization of water. In March 2016, both stakeholders renewed the partnership for the coming five years.

Finally, there are three broad areas where H&M group can push limits further. First and the foremost is to expand the magnitude of garment collection scheme. The expansion of this program will minimize the amount of waste ending up in landfills in areas across the globe. The best way to do so is to design advertisement strategies which would motivate the customers to return more of their clothes for recycling and reuse. If it isn’t already implemented, an issuance of a bonus card with a certain discount can be a method to reward the customers for their good deed. Moreover, as mentioned earlier, that the experts at H&M are working hard to increase the ratio of cotton and wool extraction for recycling. An expedited effort to increase the percentage from the current ratio of 20% will further facilitate H&M group in terms of sustainability.

As a second point, it is appreciated that H&M plans to promote energy efficiency in stores likely to be constructed in future however, the promotion of energy efficiency in the existing 4,351 stores in operation across the globe is equally necessary. It is understandable that the number of stores in operation is huge therefore, any sustainable change will take a considerable amount of time to occur.

Finally, as per the Statista, H&M consumed 1.5 million liters of water in its operations during year 2015 and the figure was 0.5 million liters less than what it was in 2012. It can be concluded that H&M group displayed an overall 25% efficiency when it comes to consumption of water in its operations. It is equally necessary for H&M group to take actions to recycle waste water and to reuse it, so it’s reliance on water can be minimized further. Finally, H&M group is striving hard to achieve sustainability in its business as usual approach however, there is still a room for improvement. It is likely that H&M Group will take necessary steps to improve the existing scenario and to achieve new heights when it comes to implementing sustainability.

IKEA’s Approach To Sustainable Development

Ayoub Hameedi

This report is about IKEA, a company that has significantly shaped Swedish society over decades. It was founded by Ingvar Kamprad at the age of 17 with the money given to him by his father upon graduation. Unlike other teenagers of his age, he took a different path by using that financial resource to establish IKEA in 1943. He was suffering from dyslexia problem however still he managed to defy all odds and came up with the business idea in his uncle’s kitchen. The acronym itself refers to as Ingvar Kamprad Elmtaryd Agunnaryd (IKEA), where the first two alphabets are the founder’s initial and the last two are the names of farm and village, where he grew up. Mr. Ingvar Kamprad is the richest person in Sweden with a net estimated worth of 500 billion Swedish krona. Despite owning half of a trillion Swedish krona, he still lives in a modest house, drives his own car and takes low-budget airlines when it comes to traveling. He divides his time into 10 minute slots and he strongly believes that ten minutes once gone are gone for good and one should not waste even a minute.

IKEA introduced furniture in its product range in 1948 and it became an integral part of the group over the period of time. The business idea of IKEA and its massive success is based on three principles namely a wide range of products, affordable prices and a dedication to improve the quality of life of customers. Stichting INGKA Foundation is registered in Netherlands and it owns IKEA Group which represents several companies ranging from Swedwood Industrial Group to sales companies that owns individual stores. Inter IKEA Systems B.V. in Delft, Netherlands is the owner and franchiser of IKEA’s concept and trademark.

One of the most applaudable steps IKEA has taken in terms of Sustainable Development is the production of electricity through clean energy technologies. It currently owns 327 wind turbines and has installed nearly 0.7 million solar panels on its stores and distribution centers across the globe. In comparison, the number of installed wind turbines were 96 in 2013 and installed photovoltaic panels were around 550,000, respectively. An overall growth has taken place in terms of installed solar and wind power generational capacity. As an independent actor, IKEA has invested €1.5 billion in clean energy sector and plans to invest an additional €1 billion to mitigate climate change. Out of this pledged €1 billion, €500 million will be invested in wind energy and €100 million will be channelized for the promotion of solar energy. IKEA plans to generate as much clean energy as it consumes by year 2020. In United Kingdom (UK), IKEA is working in collaboration with a cleantech company Solarcentury to provide solar panels at an affordable price to it’s customers. Depending upon the size of roof, the actual installation takes place in 1 – 2 days. Under the umbrella of this initiative, IKEA offers a 25 years guarantee on solar panels, a 10 years guarantee on inverter, 6 years guarantee on electrical output and a guarantee of same time period on maintenance, too. In addition, it has replaced incandescent light bulbs with light emitting diode (LEDs) in its product range. These are much better in terms of product quality & design, utilizes 85% less energy and each bulb has a life span of two decades. It also develops electrical appliances in collaboration with Whirlpool Corporation and offers a 5 years warranty to its customers upon purchase. All the fridges and freezers in electrical appliances have A+ and A++ quality standard which means that these products utilizes 40% less electricity in comparison to a similar product with a quality standard of either A- or B-. In FY 2013, 82% of the heat energy consumed by IKEA industry group was generated from biomass and the figures for energy efficiency at stores and distribution centers were 8% & 9 % respectively.

Another appreciable step IKEA has taken is to collaborate with WWF International to instigate a sustainable change when it comes to wood and cotton consumption. As per WWF Global website, half of the wood consumed to produce products at IKEA was generated from sustainable sources. Likewise, 100% of the cotton was generated from sustainable sources too. The implementation of a resource efficient strategy “Better Cotton Initiative (BCI)” – a joint collaboration of WWF International and IKEA, has enabled the farmers to consume 24% less water to produce cotton in Pakistan. Water scarcity is a serious environmental issue for Pakistan especially with reference to agriculture sector. Likewise, the same initiative has enabled farmers in India to consume 6% less water to produce cotton. IKEA also relies on a technique referred to as soft pigment printing (SPP) to print textiles. It is another strategic tool which consumes 60% less water for printing in comparison to traditional techniques.

IKEA offers food at affordable prices to its customers so they can shop and satisfy their appetite at the same time. Food is the last segment of energy-water and food nexus when it comes to corporate social responsibility and IKEA is also taking significant steps to improve its services in this area as well. Coffee is an important product when it comes to hot drinks and is normally imported from Honduras, Mexico and Peru. It is organically produced and is UTZ certified too. IKEA is currently operating an initiative “Food is precious” to minimize food wastage in its restaurant operations up to 50% by year 2020. Till date, 20% of the stores with restaurants have implemented the strategy and reduced food wastage equivalent to 176,000 meals. It serves food to over 650 million guests in 48 financial markets across the globe. Till May 2017, 84 stores with restaurants in IKEA group saved 341,000 kg of CO2 emissions by minimizing the wastage of food at their end.

In the next 3 years, IKEA group with approximately 500 stores under its umbrella plans to receive over 1.5 billion visitors each year and to earn an estimated turnover of around €45 – €50 billion, respectively. Thus, whatever steps IKEA would take to promote resource efficiency and Sustainable Development will have a compounded effect at local, regional and global level. It can further choose to maximize energy efficiency in all of its stores and distribution centers. Similarly, water efficiency can be improved too when it comes to production of cotton in Pakistan, India and a number of other countries. The implementation of these strategies will take time, energy and resources but will be environmentally sustainable, socially equitable and financially viable for IKEA group in both short and long run.