IKEA's Sustainability Options: Circular Economy, Green Growth, or Degrowth

by: Andrew Hoffman

Publication Date: May 30, 2023
Length: 28 pages
Product ID#: 4-495-470

Core Disciplines: Marketing/Sales, Operations Management/Supply Chain, Social Impact, Sustainability

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Teaching Note

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This case explores the debate over which sustainability philosophy should drive a corporation’s strategy: circular economy, green growth, or degrowth. The case uses IKEA and its enormously successful “fast furniture” business model to illustrate several potential strategies for increasing sustainability. The strategies relate to the concepts of enterprise integration of sustainability—companies “being less bad”—and market transformation—companies “doing more good.”

The case describes IKEA’s sustainability efforts to date and areas for expansion, including its: 1) line of circular products; 2) forest stewardship roles; 3) secondary market program;  4) experiments with a furniture rental model; and 5) product servicing efforts. Also explored is IKEA’s option to discourage consumerism directly and publicly, in line with a degrowth mentality. Students are asked to consider whether IKEA can decouple its resource use from growth, or alternatively, whether IKEA can remain profitable while selling less.

Teaching Objectives

After reading and discussing the material, students should:

  • Critique IKEA’s current “fast furniture” business model and draw parallels to other “fast” industries (e.g., fashion).
  • Discuss the tension between IKEA’s internal values of providing low prices and promoting sustainable living.
  • Understand and apply the concepts of green growth and degrowth strategies to the challenges presented in the case and see how circular concepts may apply to both.
  • Identify the strategic business risks and benefits of IKEA’s various options to improve its sustainability record going forward.
  • Debate whether IKEA is altruistically trying to improve its ecological footprint, or simply using greenwashing to expand to new global markets.