College students furnishing apartments, young couples setting up housekeeping, and working adults trying to stretch their earnings flock to IKEA for furniture and household goods. Most visit IKEA stores and select items packed in flat cartons for easy assembly at home, although a growing number purchase from the retailer’s website. IKEA’s main attraction is the array of beautifully designed items tailored to smaller spaces and priced affordably.

IKEA’s managers see the company as much more than a furniture store, however. They have a vision: “to create a better everyday life for the many people.” Creating a better everyday life includes enabling people to buy items that make their surroundings beautiful and functional. It also includes taking responsibility for the company’s impact on the larger world.

IKEA expresses that commitment in its management decisions. One of those decisions was the appointment of Steve Howard as IKEA Group’s chief sustainability officer. Howard is responsible for reducing IKEA’s negative impact on the environment and increasing the ways the company cares for the environment. For example, the company constantly looks for ways to reduce packaging, both the size of cartons and the amount of materials used in packaging. These changes lower shipping costs by reducing the paper, wood, and fossil fuels used in transportation. Better planning of distribution, such as shipping items directly to stores instead of to regional warehouses, also lowers the use of transportation resources. Further, IKEA is cutting its use of energy in factories and stores. By constructing energy-efficient buildings and installing solar panels and efficient lighting, the company is pursuing a goal of producing as much energy from renewable sources as it consumes from all sources by 2020.

Under Howard’s leadership, IKEA extends its concern about the environment to relationships with its suppliers. The company has established a supplier code of conduct in which, for example, it forbids child labor. Employees also help suppliers reduce their use of energy, water, pesticides, and other resources—changes that help the suppliers become more efficient.

IKEA’s managers see the company’s role as a corporate citizen extending beyond environmental issues. Acting on the belief that the company has “a responsibility to help build a better future and have a positive impact,” the company established the IKEA Foundation, which partners with organizations such as the World Wildlife Fund (WWF) to promote sustainable forestry and the United Nations refugee agency (UNHCR) to provide relief to displaced persons. IKEA’s experience in innovative design helps it advise on challenges such as how to house refugees or provide lighting where electricity is unavailable (for instance, it has provided solar-powered lamps).

Can a business thrive by pursuing goals beyond profits? IKEA’s commitment to social responsibility encourages innovation that gives the company a competitive edge. When IKEA saves money by using resources wisely (efficient lighting alone saves more than $20 million a year), it passes on some of the savings to consumers, thereby cementing its position as an affordable place to shop. Helping suppliers save money strengthens those business relationships. IKEA has enjoyed growing revenues, market share, and profits even in regions struggling with economic stagnation. No wonder Howard calls sustainability the “future of business.”¹