Labor), in order to demonstrate how seriously IKEA view these issues.76 UNICEF now regards IKEA as a model case of how to implement regulations in order to avoid the use of child labor.77
IWAY was developed and implemented after the child labor scandal that shook the company to its core in the early 1990s. IKEA realized that merely having regulation for the prevention of child labor would not suffice in terms of controlling the supply chain in the long run.78 IKEA employees or co- workers are often on-site at suppliers' factories to support and motivate the implementation of IWAY. Additionally, IKEA auditors visit suppliers to ensure that the IWAY criteria are met. Suppliers are audited at least every two years. In the event of non-compliance to requirements, IKEA does not abandon this supplier, but instead show that it “cares” by giving the supplier a second chance to solve the problems encountered.79 Action plans are set up within 24 months, and follow-up visits are conducted to review progress.80 Third party auditors participate to verify IKEA working methods and audit results. They also carry out their own audits at IKEA supplier locations. In 2007, 78% of the European suppliers, 17% of Asian suppliers and 67% of American suppliers, were IWAY approved. The goal is for 100% of the suppliers to be IWAY approved.81
IKEA owns only a few factories and outsources most of its production. Thus, IKEA for the most part is not directly accountable for subcontractors’ mistakes in terms of labor issues. This supply chain management policy poses a risk in terms of CSR, according to NGO watchdog Fair Trade Center Sweden.82 Nevertheless, IKEA puts a lot of effort in to following up the results, in fact more than most companies, according to Professor Bo Edvardsson.83 However, IKEA is also aware of these risks and recognizes that there are numerous violations to the IWAY requirements. The most common violation areas are in the areas of chemicals, waste, fire prevention and wages and overtime. These are issues that IKEA try to educate its suppliers about and continuously improve by developing adequate storage methods of chemicals and the fire prevention equipment, sufficient storage of waste and/or employment contracts and overtime compensation procedures.84 There is still substantial room for improvement as only 17% of the Asian suppliers are IWAY-certified, as opposed to 78% of the European suppliers. This low rate of certified suppliers is likely one of the reasons that IKEA mainly works with unannounced audits in Asia, whereas announced audits are the norm for the rest of the world.85
Since the implementation of IWAY, CSR has become an integrated part of supply chain management at IKEA.86 IWAY allows IKEA to not only ensure that CSR issues are met and dealt with, but also that quality measures such as ISO 9000 and 14000 can be implemented, which contributes to cost efficiency. IWAY is considered to be especially important in building legitimacy and trust when procuring from countries in Asia and Eastern Europe, where the view on environmental matters and on working conditions differs from that of the host company.87
76 77 78 79 80 81 82 83 84 85 86 87
Interview, Stål, E., 2008-05-13. http://www.unicef.org.uk/publications/clrg/pdf/appendix6_C.pdf. Interview, Bergmark, T., 2008-05-26. Interview, Fredriksson, Å., 2008-11-10. IKEA Sustainability Report 2007. IKEA Sustainability Report 2007. Interview, Lindholm, H., 2008-06-22. Interview, Edvardsson, B., 2008-10-13. IKEA Sustainability Report 2004. IKEA Sustainability Report 2007. Interview, Ahlgren, K., 2008-10-27. Interview, Ahlgren, K., 2008-10-27.