The IKEA experience in moving towards a Better Cotton supply chain Making sustainability work Kavita Joshi Rai Dutch Sustainable Trade Initiative, 2011

Managing their supply chains so they are socially and environmentally responsible is a challenge for many companies that produce and sell products made of cotton. Their raw cotton and semi-finished products are sourced from multiple suppliers and different countries, and are mixed at various stages of the supply chain. The flows of products change from year to year depending on price and crop fluctuations. How can these companies ensure their products are produced in a responsible way, while still remaining competitive?

This booklet tells the story of how IKEA has been tackling this challenge since 2005. Cotton is the second-most important raw material at IKEA, after timber. This commodity has serious sustainability issues, such as the excessive use of water and pesticides, bad labor circumstances, and farmers’ indebtedness and poverty. IKEA, along with like-minded retailers, civil society organizations and financial institutions, decided to create a global platform, the Better Cotton Initiative (BCI), which would make cotton production better for the people who produce it, better for the environment it grows in, and better for the sector’s future.

As a retailer, IKEA embarked on a challenging journey of learning. It reached upstream into its supply chain to build capacity among suppliers, ginners and farmers to address social and environmental concerns and improve their businesses. The expertise and implementing capacity of civil society organizations, such as WWF, was a crucial building block in this effort.

With an outreach to 120,000 farmers in India and Pakistan alone, IKEA, other brands and their partners have achieved impressive results. But there are still millions of farmers to go. The Dutch Sustainable Trade Initiative (IDH) is proud to work with BCI, leading global brands and other funders and NGOs to accelerate and mainstream Better Cotton as a global commodity. Through this booklet we intend to make the experiences of IKEA available to other players in the sector. We hope it provides inspiration and lessons to build a critical mass and transform the cotton industry into a sustainable source of global welfare.

Contents

1.0 How IKEA embarked on the Better Cotton journey

1.1 Working towards Better Cotton

1.2 IKEA and cotton

1.3 Cotton in India

1.4 Industry response

2.0 How IKEA works towards Better Cotton in India

2.1 Starting to work, creating capacity

2.2 Field implementation partnerships

2.3 Three supply-creation models

3.0 How IKEA sources the new type of cotton

3.1 How does the new type of cotton enter the supply chain?

3.2 Monitoring the supply chain

3.2 Challenges at various steps of the supply chain

4.0 Business case for value chain actors

4.1 The farmer

4.2 The ginner

4.3 The supplier

4.4 IKEA

5.0 Driving impacts, scale and efficiency

5.1 Impacts

5.2 Finding scalable models in the field

5.3 Increasing efficiency

6.0 Lessons and conclusions

6.1 How close are IKEA cotton projects to matching the Better Cotton Initiative principles?

6.2 Lessons from the IKEA experience

Published 2011 by the Dutch Sustainable Trade Initiative (IDH). 40 pp.

Available from Dutch Sustainable Trade Initiative

Download 967 kb

Role of Paul Mundy: Editing