Ikea prepares to drop non-compliant suppliers

24 February 2012

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25 February 2012 | Paul Snell

Ikea is preparing to cut suppliers unwilling or unable to satisfy the requirements of its code of conduct, as it aims to achieve 100 per cent compliance this year.

The retail chain has a goal of making all of its suppliers compliant with its ‘Iway’ supplier code, which enforces standards on the environment, safety and social and working conditions. In its latest sustainability report, the company said it expected some existing vendors would not be fully compliant by the deadline of the end of September, and was preparing to “phase out” those who did not meet the standards.

The company has 1,026 home furnishing suppliers in 53 countries. In total, 60 per cent of these are Iway approved. Some 90 and 94 per cent of vendors in Europe and the Americas are, but only 11 per cent in China.

“Many suppliers in China do not comply with requirements relating to working hours, and it is not realistic to close the gap between the legislated working hours and reality in a short period of time,” said the report. As a result these vendors have been allowed to operate a 60-hour working week, as a step toward achieving the 40-hour week demanded by the code.

Last year, the retailer terminated business with 19 suppliers, eight for failing to comply with Iway and 11 for other non-compliance issues. The year previously, it ended deals with 27 vendors. It carried out 993 audits in 2011, with 711 of those unannounced.

Ikea also intends to extend the implementation of the Iway code. This year providers of cleaning, waste management and security services at Ikea stores will have to sign up to the code of conduct. All its global food vendors have also now been confirmed as compliant.

The retailer also plans to roll out its “trust line” – where suppliers can seek advice or report on unethical behaviour – to all suppliers worldwide by the end of September.

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