ikea ethics case study

Shop at IKEA?

Choose your IKEA retail website

Ethics and Integrity

The IKEA vision is to create a better everyday life for the many people. Every word in this statement gives us inspiration and guidance. We side with the many people and embrace development to make people’s everyday lives better. By always keeping their best interests in mind, we can create positive change for families, communities and societies.

We also believe that whatever we are doing today, we can do a bit better tomorrow. Because, like our founder, Ingvar Kamprad, once said: “Happiness is not reaching your goal, happiness is being on the way”.

The IKEA way of doing business

The IKEA way of doing business is rooted in the IKEA values and culture. The IKEA values show up in our actions, decisions and behaviours. This behavioural part is the foundation of the way we do business and the way we interact with each other and those around us.

Our corporate conscience comes alive through our approach to ethics and integrity, both of which stem from our strong culture and values. Our viewpoints on different topics exemplifies this clearly and positively.  Click here  to read more.

At Inter IKEA Group, we continuously strive to be a mindful and caring company. A place where you can be you, where everyone feels safe and appreciated. Our shared view on ethics and integrity help to build and protect our vision. But as we all know, things do not always go as planned.

Code of conduct

Raise a concern.

Inter IKEA Group Raise a  Concern procedure

Read about why and how you can raise a concern; and how Inter IKEA Group manages concerns

Concerns raised – a look at the numbers

A new compass

Without blinders.

In the mid-1990s, IKEA was rocked by accusations of child labour. At the time the company was the world’s largest furniture retailer, with almost 100 stores in 17 countries, and production in 70. As success for IKEA increased, so too did the media’s scrutiny. Revelations of child labour would lead to a new compass – cooperation with UNICEF and Save the Children, and codes of conduct on everything from child labour to environmental impact.

In spring 1994, a Swedish documentary revealed that child labour was common practice in the rug industry in Pakistan, where IKEA had production. Many of the children were debt slaves, sometimes along with their whole family. The scandal was a reality, and the recently recruited business area manager for rugs, Marianne Barner, acted swiftly. Contracts with Pakistani rug manufacturers were terminated and other supplier agreements had a clause added that prohibited child labour.

“The film was a real eye-opener,” Marianne remembers. “The UN Convention on the Rights of the Child had come along in 1989, but child labour was still unknown to a lot of people. I myself had spent a couple of months in India for some supply chain training, but child labour was never mentioned. Our buyers met suppliers at offices in the cities and rarely visited the actual production sites,” she says.

Not the first time

IKEA had been the subject of an earlier scandal, in 1992. Investigative reporters at German magazine Stern found high levels of formaldehyde in the white lacquer on the company’s best-selling BILLY bookcases. In the shadow of scandalous headlines about “deadly bookcases”, IKEA halted all production and sales until the problem was resolved. Added costs and a damaged reputation made the company think along new lines regarding its environmental work, and start working alongside organisations like Greenpeace and the World Wide Fund for Nature, WWF. The revelations of child labour had similar consequences. Marianne Barner and others at IKEA went to countries like Nepal, Bangladesh and India to talk to suppliers, as well as unions, politicians, activists and non-profit bodies, UN organisations and rug exporting associations.

“We also went on surprise raids on rug factories, saw child labour with our own eyes and were sometimes literally thrown out,” says Marianne. She says that even so, there was still a tremendous desire and readiness to develop among IKEA employees and suppliers in India. “We realised that IKEA had an opportunity to influence and help change things. At the time though, we didn’t really understand just how big an opportunity.”

Sceptical reception

When IKEA first contacted non-profit players like Save the Children and UN bodies like UNICEF and the International Labour Organization (ILO), it was met with scepticism. “We were often invited along as ‘the bad guy’ – a representative of major multinationals,” explains Marianne Barner. “It took a while before people realised we were serious about wanting to learn and cooperate. From the very beginning, our starting point was the Convention on the Rights of the Child’s principle to always do what’s in the best interest of children in everything we do. Our own corporate culture at IKEA was also important, such as not doing everything alone but collaborating with others. Also always thinking long-term, taking responsibility and acting for the many people. And for IKEA, children were, and still are, the most important people on Earth.”

On the advice of Save the Children, IKEA brought in an independent consultant to check that the suppliers were complying with the new agreements. Even so, as soon as 1995 a new revelation came along, when German TV showed pictures of children working at an Indian rug supplier that had signed the new agreement. “There was no doubt that they were rugs for IKEA,” says business area manager for textiles at the time, Göran Ydstrand. After seeing the pictures, there was a lightning response in India, and soon after that Göran was in a studio in Germany. There, on live TV, he explained in broken school German that IKEA had immediately halted production with the supplier in question. That was well received, but ultimately it would not be enough to fight fires whenever a crisis arose.

“To begin with, Ingvar was worried it would cost more. But it doesn’t. It’s always cheapest to do right from the start. Treating people well is a good investment whatever the country. You get better people, better motivation, productivity and quality.” – Sven-Olof Kulldorff, purchasing manager

Close down or develop?

Some members of the IKEA management group now started saying the company should simply end production of rugs in South Asia, which were only a small part of the range anyway. Instead, Marianne Barner started looking at how the company could make a long-term contribution to fight child labour. Meanwhile, the German police announced that the film about child labour in India was fake. It turned out that the renowned German journalist had made several fake reports about different subjects and companies. He lost his good reputation, but for IKEA the damage had already been done. And for the people most closely involved, like Göran Ydstrand and Marianne Barner, it didn’t really matter that this particular film was fake. It was clear that child labour and debt slavery were a huge problem in manufacturing in South Asia.

While awareness increased of the often dire, sometimes dangerous working conditions that could occur with suppliers in countries where IKEA had them, a new purchasing manager started, Sven-Olof Kulldorff. For the first eight months in his new post, he visited different places around the world. His impressions from factory visits and chats with suppliers led to a new strategy for purchasing, and to a policy document called Credo. This was a first step towards the more far-reaching codes of conduct that would come later. “The hard thing isn’t writing policies, but making sure they’re complied with,” says Sven-Olof Kulldorff. “Especially with such a low level of awareness. The aim was to show that the results were better for everyone if things were done properly.”

Sven-Olof and his team focused on getting the management on board with the new ideas around codes of conduct for suppliers. The key areas were simplicity, clarity, measurement and consequences. “To begin with, Ingvar was worried it would cost more. But it doesn’t. It’s always cheapest to do right from the start. Treating people well is a good investment whatever the country. You get better people, better motivation, productivity and quality.”

“What I personally am most proud of is the code of conduct to prevent child labour, and that we took a stand on the primary principle of what’s best for children, clearly and early on.” – Marianne Barner

Code of conduct launched

Following extensive work, studies of international declarations, and cooperation with UN bodies and non-profit organisations, in 2000 IKEA presented its first code of conduct to combat child labour, as well as its IWAY code (The IKEA Way on Purchasing Home Furnishing Products). These documents covered everything from child labour to working conditions, minimum wage and environmental issues.

“There were now regular controls right down to the subcontractor level, but the measures were about far more than just controls,” says Marianne Barner. “We no longer simply shut suppliers out, as that was a major blow to poor families. When we discovered child labour, we instead took a break in our cooperation until the supplier could show evidence of new procedures, as well as guarantees that the children in question had been compensated and were being helped into education. We also wanted to contribute to a change in attitudes, both among suppliers and in society as a whole.”

The Teflon Shield

The changes at IKEA took place in discreet silence, and were first highlighted internationally in 2001 in an article in Newsweek magazine. It described IKEA as a successful “prototypical Teflon multinational”. Unlike other companies, wrote Newsweek , IKEA had managed to avoid or deal with attacks from young activists in the environmental and anti-consumption movements. The article said that IKEA seemed to have built a defensive “Teflon shield” – not through campaigns, but with proactive measures against child labour and eco-scandals, for example. IKEA CEO at the time, Anders Dahlvig, was interviewed and said: “We don’t do things just to get rid of a problem … It’s rooted in our value system … Call it Teflon if you like, but now we have something I think we can stand up for.”

In the mid-2000s, Harvard Business School, USA published a case study of IKEA and the way it dealt with child labour, entitled: “IKEA’s Global Sourcing Challenge: Indian Rugs and Child Labor”. Still today, the study is one of the schools’ most popular among students and faculty. Professor Robert Strand, Executive Director of the Center for Responsible Business at the Berkeley Haas School of Business, often uses the Harvard case study in his courses. “It’s timeless,” he says. “The example from IKEA shows that business is fundamentally far more about cooperation than hyper-competition, which we often think – at least in American companies. IKEA built up collaborations and partnerships with Save the Children and UNICEF, and with its suppliers, which ultimately worked in everyone’s favour.”

Marianne Barner says that the approach developed by IKEA in the 1990s is now the norm. “Collaborations between companies and the non-profit world are now completely natural, but they certainly weren’t back then,” she says. “What I personally am most proud of is the code of conduct to prevent child labour, and that we took a stand on the primary principle of what’s best for children, clearly and early on. And the fact that the work we initiated still inspires today.”

Work in progress

After ten years’ exchange of knowledge and experience, as well as different projects with UNICEF, Save the Children and others, IKEA started what came to be known as the IKEA Social Initiative, later incorporated in IKEA Foundation. The IWAY code of conduct has been constantly updated, and is still, today, being refined to encompass the entire value chain. It is no longer just about making checks in production, but about results-oriented implementation. Many areas have to be clarified, whether it’s procedures and regulations for everything from animal husbandry to diversity, gender equality and inclusivity, responsible use of land and water resources, or clarity around what IKEA really means by decent, meaningful work. Conditions for migrant workers is another area that needs deeper study. Moreover, IWAY needs to be in tune with new business models and working methods at partner companies, including the gig economy . When the world changes, IKEA changes with it.

Case Example

How companies in the UN Global Compact are taking action to advance corporate sustainability around the world.

IKEA’s Commitment to Children

Who are ikea.

IKEA is a global home furnishings company headquartered in Sweden.

What is the commitment?

IKEA has developed a comprehensive approach to preventing child labour in its supply chain. Suppliers are supported in implementing a corrective action plan if child labour is identified, which should take the child’s best interests into consideration. This includes age, family and social situation and level of education. The action plan emphasizes that responses should not merely move child labour from one supplier’s workplace to another, they should instead enable more viable and sustainable alternatives for the children involved.

What was done?

Since 2000, the company has developed long-term partnerships with child rights organizations to prevent and eliminate child labour in rural communities. These programmes include creating awareness and mobilizing local communities around school enrolment and improved quality education with a goal for both boys and girls to complete their schooling.

Another important component of the programme is developing self-help groups for rural women, which enable them to enhance their economic, social and legal status by improving access to credit and income-generating opportunities. This helps to reduce the burden of debt, which is one of the major reasons families send their children to work.

From our Library

Children’s Rights and Business Principles: Good Practices per Principle

Embedding Human Rights in Business Practices Series

Human Rights and Business Dilemmas Forum

Un global compact launches 2024 sdg pioneers campaign to recognize outstanding business leaders driving sustainable development, global africa business initiative announces plans for unstoppable africa 2024 flagship event in new york, the un global compact welcomes the outcomes from the ilo meeting of experts on wage policies, including living wages, un global compact launches guidebook to encourage companies to empower women in the workplace, joint statement at ilo meeting of experts on wage policies, including living wages, un global compact launches transformational governance corporate toolkit, the un global compact reiterates its support for efforts toward mandatory human rights and environmental due diligence worldwide, recognizing world wetlands day: four steps for improving water resilience, pilot of more than us$130 million in ifad-funded projects with preferential treatment for un global compact participants in project procurement kicks off in tanzania, office hours: communication on progress, private sector forum, un global compact leaders summit, unstoppable africa, high-level meeting of caring for climate at cop29.

IKEA U.S. takes equity, diversity and inclusion to the next level

Furniture retailer builds ambitious new strategies into its business plan.

5-MINUTE READ

Call for change

A responsibility to build a better society.

For many years, the world’s largest furniture retailer, IKEA, has prioritized efforts to promote equity, diversity and inclusion (ED&I). For example, the company has partnered with social entrepreneurs, creating thousands of jobs for under-represented groups around the world, including a project with Syrian refugees to develop textile products for sale in IKEA stores. Additionally, through employee development and human resources programs across the globe, IKEA has successfully increased the percentage of women in leadership positions,  reaching 50% in 2020 .

Even with its existing achievements in ED&I, IKEA wanted to do more.

IKEA U.S. asked Accenture to help assess its current state of ED&I, define an ED&I vision, and develop a comprehensive plan to accelerate gains in this area. The aim was to implement an effective approach that the company could replicate in other countries. IKEA U.S. was particularly interested in setting and pursuing race and ethnicity goals as well as increasing the diversity of its leadership.

With increasing inequality due to climate change and other global challenges, we recognized that we have a responsibility to help build a society that provides equal opportunities for all.

STEPHANI “STEVIE” LEWIS / Chief Diversity Officer, IKEA U.S.

When tech meets human ingenuity

Improving maturity in ed&i.

We used our maturity model to characterize the current state of ED&I at IKEA U.S. This model measures the extent to which ED&I is embedded in a company in specific areas and identifies opportunities for improvement.

The team inputted the results of several activities into the model:

• Interviews with IKEA U.S. departments:  For instance, interviews with communications staff focused on understanding how ED&I values are embedded into the communication strategy.
• A survey of executives at IKEA U.S.  gathering insights into the current state of ED&I and their aspirations for the company.
• Focus groups with IKEA U.S. co-workers  to explore their experiences working at IKEA and gather their perspectives on the company’s ED&I maturity.

Using the model’s results and additional research on ED&I at eight other retailers, Accenture compared the ED&I maturity of IKEA U.S. with that group. We also compared human resources data for IKEA U.S. employees with U.S. Census data in various geographic areas, revealing the diversity gap between IKEA and local Census populations.

A valuable difference

A roadmap for greater equality.

We presented the results from our maturity assessment in a facilitated workshop with the IKEA U.S. ED&I staff and leadership team. The participants translated the results into a vision to guide action and several ED&I strategies, such as increasing underrepresented groups at all levels of the organization. They also developed 30 recommendations to be integrated into the 2023 business plan for IKEA U.S., such as determining ED&I performance indicators.

Since Accenture completed the project, the ED&I team has asked leaders at each U.S. store to implement ED&I initiatives that support the new vision and strategies while serving specific store needs. These include an Equity Council, an accountability group led by CEO Javier Quiñones, and a pilot program to support diverse talent with leadership training and mentorship. IKEA U.S. has also built a dashboard that tracks ED&I indicators at stores, allowing for progress reports to be shared with executives.

“We now have the data and the tools to take ED&I to the next level,” said Lewis.

• SUGGESTED TOPICS
• The Magazine
• Newsletters
• Managing Yourself
• Managing Teams
• Work-life Balance
• The Big Idea
• Data & Visuals
• Reading Lists
• Case Selections
• HBR Learning
• Topic Feeds
• Account Settings
• Email Preferences

Inside IKEA’s Digital Transformation

• Thomas Stackpole

A Q&A with Barbara Martin Coppola, IKEA Retail’s chief digital officer.

How does going digital change a legacy retail brand? According to Barbara Martin Coppola, CDO at IKEA Retail, it’s a challenge of remaining fundamentally the same company while doing almost everything differently. In this Q&A, Martin Coppola talks about how working in tech for 20 years prepared her for this challenge, why giving customers control over their data is good business, and how to stay focused on the core mission when you’re changing everything else.

What does it mean for one of the world’s most recognizable retail brands to go digital? For almost 80 years, IKEA has been in the very analogue business of selling its distinct brand of home goods to people. Three years ago, IKEA Retail (Ingka Group) hired Barbara Martin Coppola — a veteran of Google, Samsung, and Texas Instruments — to guide the company through a digital transformation and help it enter the next era of its history. HBR spoke with Martin Coppola about the particular challenge of transformation at a legacy company, how to sustain your culture when you’re changing almost everything, and how her 20 years in the tech industry prepared her for this task.

• Thomas Stackpole is a senior editor at Harvard Business Review.

Partner Center

• IKEA Global
• Our business
• How we work

IKEA culture and values

We have a strong set of values. They are the compass that guides us in everything we do. Our culture is formed when we put these values into action.

The IKEA values were shaped during a time in Sweden when the living conditions were harsh. People had to get by with what they had. This fostered a culture of entrepreneurship and hard work, and made people more pragmatic and mindful of resources. A lot has changed since the early days of the IKEA brand. Today we have grown into a global business with the size and reach to create positive change, not only for people but also for the planet. But on the inside, not a lot has changed.

We are straightforward, innovative, creative and common-sense problem-solvers. We’re constantly trying to find better ways to get things done and to bring out the best in ourselves and others. We strive for a nurturing environment that encourages the entrepreneurs in us. We’re passionate about innovation and finding new solutions.

We’re constantly trying to find better ways to get things done and to bring out the best in ourselves and others.

The 8 IKEA Key Values

Togetherness.

Togetherness is at the heart of the IKEA culture. We are strongest when we trust each other, pull in the same direction and have fun together.

Caring for people and planet

We want to be a force for positive change. We have the possibility to make a significant and lasting impact — today and for the generations to come.

Cost-consciousness

As many people as possible should be able to afford a beautiful and functional home. We constantly challenge ourselves and others to make more from less without compromising on quality.

A simple, straightforward and down-to-earth way of being is part of our Smålandic heritage. It is about being ourselves and staying close to reality. We are informal, pragmatic and see bureaucracy as our biggest enemy.

Renew and improve

We are constantly looking for new and better ways forward. Whatever we are doing today, we can do better tomorrow. Finding solutions to almost impossible challenges is part of our success and a source of inspiration to move on to the next challenge.

Different with a meaning

We are not like other companies and we don’t want to be. We like to question existing solutions, think in unconventional ways, experiment and dare to make mistakes - always for a good reason.

Give and take responsibility

We believe in empowering people. Giving and taking responsibility are ways to grow and develop as individuals. Trusting each other, being positive and forward-looking inspires everyone to contribute to development.

Lead by example

We see leadership as an action, not a position. We look for people’s values before competence and experience. People who ‘walk the talk’ and lead by example. It is about being our best self and bringing out the best in each other.

• Business Ethics Cases
• Markkula Center for Applied Ethics
• Focus Areas
• Business Ethics
• Business Ethics Resources

Find ethics case studies on bribery, sourcing, intellectual property, downsizing, and other topics in business ethics, corporate governance, and ethical leadership. (For permission to reprint articles, submit requests to [email protected] .)

In this business ethics case study, Swedish multinational company IKEA faced accusations relating to child labor abuses in the rug industry in Pakistan which posed a serious challenge for the company and its supply chain management goals.

A dog may be humanity’s best friend. But that may not always be the case in the workplace.

A recent college graduate works in the finance and analytics department of a large publicly traded software company and discovers an alarming discrepancy in sales records, raising concerns about the company’s commitment to truthful reporting to investors. 

What responsibility does an employee have when information they obtained in confidence from a coworker friend may be in conflict with the needs of the company or raises legal and ethical questions.

A manager at a prominent multinational company is ethically challenged by a thin line between opportunity for economic expansion in a deeply underserved community, awareness of child labor practices, and cultural relativism.

A volunteer providing service in the Dominican Republic discovered that the non-profit he had partnered with was exchanging his donor money on the black market, prompting him to navigate a series of complex decisions with significant ethical implications.

The CFO of a family business faces difficult decisions about how to proceed when the COVID-19 pandemic changes the business revenue models, and one family shareholder wants a full buyout.

An employee at an after-school learning institution must balance a decision to accept or decline an offered gift, while considering the cultural norms of the client, upholding the best interests of all stakeholders, and following the operational rules of his employer. 

A senior vice president for a Fortune 500 savings and loan company is tasked with the crucial responsibility of representing the buyer in a multi-million dollar loan purchase deal and faces several ethical challenges from his counterpart representing the seller.

Extensive teaching note based on interviews with Theranos whistleblower Tyler Shultz. The teaching note can be used to explore issues around whistleblowing, leadership, the blocks to ethical behavior inside organizations, and board governance.

• More pages:

• No category

Ethical issues at IKEA case study

Related documents

Add this document to collection(s)

You can add this document to your study collection(s)

Add this document to saved

You can add this document to your saved list

Suggest us how to improve StudyLib

(For complaints, use another form )

Input it if you want to receive answer

• Study Guides
• Homework Questions

IKEA Case Study Analysis

• Training & Certification
• Knowledge Center
• ECI Research
• Business Integrity Library
• Career Center

Talking the Walk Case Study #31 – Leader Guide

• Skip to main content
• Keyboard shortcuts for audio player

Millions of customers' data found on dark web in latest AT&T data breach

Chloe Veltman

An AT&T store in New York. The telecommunications company said Saturday that a data breach has compromised the information tied to 7.6 million current customers. Richard Drew/AP hide caption

An AT&T store in New York. The telecommunications company said Saturday that a data breach has compromised the information tied to 7.6 million current customers.

AT&T announced on Saturday it is investigating a data breach involving the personal information of more than 70 million current and former customers leaked on the dark web.

According to information about the breach on the company's website, 7.6 million current account holders and 65.4 million former account holders have been impacted. An AT&T press release said the breach occurred about two weeks ago, and that the incident has not yet had a "material impact" on its operations.

AT&T said the information included in the compromised data set varies from person to person. It could include social security numbers, full names, email and mailing addresses, phone numbers, and dates of birth, as well as AT&T account numbers and passcodes.

The company has so far not identified the source of the leak, at least publicly.

"Based on our preliminary analysis, the data set appears to be from 2019 or earlier," the company said. "Currently, AT&T does not have evidence of unauthorized access to its systems resulting in theft of the data set."

AT&T says cell service is back after a widespread outage and some disrupted 911 calls

The company said it is "reaching out to all 7.6 million impacted customers and have reset their passcodes," via email or letter, and that it plans to communicate with both current and former account holders with compromised sensitive personal information. It said it plans to offer "complimentary identity theft and credit monitoring services" to those affected by the breach.

External cybersecurity experts have been brought in to help investigate, it added.

NPR reached out to a few AT&T stores. The sales representatives in all cases said they were as yet unaware of the breach.

On its website, the telecommunications company encouraged customers to closely monitor their account activity and credit reports.

"Consumers impacted should prioritize changing passwords, monitor other accounts and consider freezing their credit with the three credit bureaus since social security numbers were exposed," Carmen Balber, executive director of the consumer advocacy group Consumer Watchdog, told NPR.

An industry rife with data leaks

AT&T has experienced multiple data breaches over the years.

In March 2023, for instance, the company notified 9 million wireless customers that their customer information had been accessed in a breach of a third-party marketing vendor.

In August 2021 — in an incident AT&T said is not connected to the latest breach — a hacking group claimed it was selling data relating to more than 70 million AT&T customers. At the time, AT&T disputed the source of the data. It was re-leaked online earlier this month. According to a Mar. 22 TechCrunch article , a new analysis of the leaked dataset points to the AT&T customer data being authentic. "Some AT&T customers have confirmed their leaked customer data is accurate," TechCrunch reported. "But AT&T still hasn't said how its customers' data spilled online."

AT&T is by no means the only U.S. telecommunications provider with a history of compromised customer data. The issue is rife across the industry. A 2023 data breach affected 37 million T-Mobile customers. Just last month, a data leak at Verizon impacted more than 63,000 people, the majority of them Verizon employees.

A 2023 report from cyber intelligence firm Cyble said that U.S. telecommunications companies are a lucrative target for hackers. The study attributed the majority of recent data breaches to third-party vendors. "These third-party breaches can lead to a larger scale supply-chain attacks and a greater number of impacted users and entities globally," the report said.

Government rules adapt

Meanwhile, last December, the Federal Communications Commission (FCC) updated its 16-year-old data breach notification rules to ensure that telecommunications providers adequately safeguard sensitive customer information. According to a press release , the rules aim to "hold phone companies accountable for protecting sensitive customer information, while enabling customers to protect themselves in the event that their data is compromised."

"What makes no sense is leaving our policies stuck in the analog era," said FCC Chairwoman Jessica Rosenworcel in a statement regarding the changes. "Our phones now know so much about where we go and who we are, we need rules on the books that make sure carriers keep our information safe and cybersecure."

• data breach