IKEA France Vigilance Plan 2023-2024

I. Foreword

A. Introduction

Since its inception, the vision of the Ingka Group and of IKEA in France has been to strive to build a sustainable business model that is respectful of human rights, fundamental freedoms, health, safety, and the environment. IKEA France has put in place a set of policies and procedures, as well as measures, to ensure the long-term effectiveness of the vigilance approach it adopted a few years ago, while also taking into account local realities and challenges. It attaches particular importance to the respect of human rights, fundamental freedoms, health, safety, and the environment, as well as applicable laws and regulations. Ever since its inception, it has promoted the values of cohesion, concern for people and the planet, cost consciousness, simplicity, renewal and improvement, difference, a sense of responsibility, and leadership.

The Ingka Group is committed to helping people live a healthy and sustainable daily life by focusing on efficiency and functionality in the home. The products and solutions it offers are affordable and promote efficient use of water, energy, and waste. It is especially focused on ensuring that product design adheres to the five essential elements: quality, form, function, affordability, and sustainability.

The United Nations' 17 Sustainable Development Goals guide us as we strive to develop our way of working. The 'People & Planet Positive' sustainability strategy, implemented since 2012 within IKEA France, is part of managing the three major challenges impacting its activities and, more broadly, human society as a whole: namely, the overconsumption of resources, climate change, and growing inequalities. IKEA's sustainability strategy aims to provide a response to each of these three major challenges by matching strategic orientations to each of these threats: promoting a healthier and more sustainable lifestyle, the circular economy, reducing our climate footprint, and equity and equality. IKEA can clearly see the impact of its contribution on the future.

B. Regulatory Framework

According to Law 2017-399 of 27 March 2017 on the corporate duty of parent and instructing companies (hereinafter, the Law on the Duty of Vigilance), companies employing more than 5,000 employees in France or 10,000 employees in France and worldwide must set up a Vigilance Plan relating to their activities, the activities of the companies they control, as well as the activities of sub-contractors or suppliers with whom an established business relationship is maintained.

The Vigilance Plan aims to identify and prevent risks of serious harm to human rights, fundamental freedoms, health, safety, and the environment.

The Plan includes:

• Risk mapping
• Procedures for the regular evaluation of the situation of subsidiaries, suppliers, and sub-contractors, based on priority risks
• Actions to mitigate risks or prevent serious harm
• A whistleblowing and alert logging system in relation to these risks
• A mechanism for tracking measures and their effectiveness
• The summary of its implementation.

Finally, since 1 January 2024, Article 273 of the French Climate and Resilience Law has amended Article L.225-102-4 of the Commercial Code, broadening the vigilance obligation of companies concerned to guard against deforestation associated with imported goods and services.

C. Organisation of IKEA France and Scope of Vigilance

1. The IKEA Franchise System

The distribution of IKEA products is based on a franchise model, whereby companies controlled by different owners (the franchisees) operate the stores and sell the products under the IKEA brand according to a franchise agreement.

Inter IKEA Systems B.V. is the owner of the IKEA Concept and the worldwide IKEA franchisor.

IKEA Range & Supply is responsible for the development (IKEA of Sweden AB), the supply (IKEA Supply AG), and the manufacture (IKEA Industry AB) of IKEA products at IKEA-owned units, with support from suppliers, or in sub-contractor units.

Franchisees, on the other hand, manage the day-to-day operations of retail sales and pay a fee to the Inter IKEA Group to use the IKEA brand and know-how.

The Ingka Group is the largest IKEA franchisee and a strategic partner of Inter IKEA, with 482 customer meeting points (stores, plan and order points, pick-up points, etc.), 379 of which are stores across 31 countries, employing more than 177,192 co-workers.

The Ingka Group was established in the French market through IKEA Holding France, which is the parent company of:

• Meubles IKEA France (MIF): undertaking of 36 French stores and Plan and Order Points
• Distribution Services IKEA France (DSIF): logistics and distribution operations across seven logistics sites in France
• IKEA Developpement and its subsidiaries: real estate operations
• Actionvest: owner of seven wind farms.

IKEA Holding France and its subsidiaries will hereinafter be referred to as IKEA France.

2. Scope of Vigilance of IKEA France

As IKEA Developpement and Actionvest do not employ any staff, the impacts of IKEA France operations on internal stakeholders (co-workers) only affect MIF and DSIF.

With regard to suppliers and sub-contractors, the due diligence carried out focuses primarily on tier 1 suppliers and sub-contractors. The approach taken for tier 2 suppliers and sub-contractors is mainly based on the requirements of the internal IWAY Standard, as detailed further down.

3. Relationship with the Inter IKEA Group

The Inter IKEA Group has relationships with more than 1,500 direct suppliers, in over 50 countries, including furniture producers, food suppliers, transportation services, and furniture component suppliers. The suppliers are located in Europe, Asia-Pacific, and North America, including Brazil, Mexico, India, Bangladesh, China, Vietnam, Indonesia, Turkey, and Pakistan. The main materials used by suppliers are wood, natural fibres, textiles, plastics, food products, metals, and electronics. Wood comes mainly from Europe, and secondarily from East Asia, South-West Asia, and South America, with a small percentage from North America, Africa, and South Asia.

The Inter IKEA Group is responsible for developing and manufacturing the range of IKEA products through its own subsidiaries. While, as a subsidiary of the franchisee INGKA, MIF is responsible for distributing IKEA products within the French market.

IKEA France is not involved in decision-making as to the type of products distributed, their characteristics, or their manufacture. As a distributor, its authority is limited to ensuring that products sold on the French market comply with French legislation.

However, a decision was made to treat Inter IKEA Group suppliers as tier 1 suppliers (see above), given:

• the extent to which the products from the IKEA range may be involved in the risk mapping
• the near exclusivity of supply to MIF from the Inter IKEA Group
• the IWAY standard shared by Inter IKEA and Ingka, which was created in 2000 and demonstrates the two groups' commitment to having a reliable supply chain for over 20 years.

The Inter IKEA Group performs sustainability due diligence to ensure that its operations, products, strategy, and business partners respect the environment and human rights. The vigilance system is designed to identify and address potential negative impacts on people, society, and the environment within the supply chain.

NB: All the data provided in this report concerning the Inter IKEA Group or the manufacture of IKEA products by Inter IKEA is taken from the IKEA Sustainability Report or documentation supplied by Inter IKEA.

II. Risk Mapping

Risks are categorised into three separate areas according to the specific nature and management of the risks:

• IKEA France.
• Suppliers and sub-contractors of IKEA France (depending on the risks, additional distinctions may have been made, for example, with regard to construction or wind farm matters).
• Inter IKEA and its own suppliers.

A. IKEA France and its Suppliers

1. Guidelines

The risk universe is based on internationally recognised guidelines and sector publications, including:

• The OECD Due Diligence Guidance for Responsible Business Conduct,
• The UN Guiding Principles on Business and Human Rights,
• The Modern Slavery Act,
• The ILO Conventions on human rights,
• The SwedWatch publication << Risk assessments for products within five categories: furniture >>
• The CCFD-Terre Solidaire publication, << Vigilance on the menu: the risks that agro-industry must identify >>.
• The Sherpa publication, << Vigilance Plans Reference Guidance >>.

2. Risk Universe

This risk universe has thus been submitted to various IKEA France managerial staff at workshops with the relevant business lines in order to determine whether it is consistent with the operations of IKEA France and its suppliers, and to identify the risk owners. It is also supplied with information from risk analyses carried out by the Inter IKEA Group on its own operations and suppliers. It is updated annually.

The risk universe has been determined as follows:

Human Rights and Fundamental Freedoms

• Risk of child labour, risk of the presence of children or minors in the workplace and in particular on an IKEA France site, risk of employing work-study students beyond the regulatory time limits
• Risk of forced labour, including the use of migrant workers whose passports have been seized
• Risk of illegal work, of using undeclared workers, foreign workers without a work permit, risk of fraudulent service provision and posting of workers, and fraudulent sub-contracting
• Risk of insufficient protection for a co-worker who is a victim of harassment or sexual misconduct
• Risk of cronyism or conflicts of interest in recruitment, succession, or performance evaluation
• Risk of discriminatory treatment or perceived discrimination against co-workers, workers, or customers, lack of uniformity or equality in business operation handling
• Risk of obstruction or similar, of non-compliance with union prerogatives, restrictions on trade union rights, or not permitting negotiations for better working conditions
• Risk of restrictions on the freedom of expression and association
• Risk of restrictions on the freedom of religion and risk of an imbalance in the measures in place regarding the religions practised
• Risk of illegal or non-compliant processing (collection, use, archiving, etc.) of customer or co-worker data by IKEA France or by one of its suppliers: data used for a purpose other than the initial requirement; data collected not used for the initial purpose; not-up-to-date/incorrect data; information on consent missing or incomplete; data collected without mandatory consent; consent that cannot be proven
• Risk that the employment contracts do not observe the minimum wages provided for by law, and/or risk of irregularities in the payment of wages
• Risk of conflict with local communities as a result of using their resources, risk of land and water grabbing caused by certain activities (including farming and mining)
• Risk of interventions in conflict zones, indirect financing of conflicts, indirect involvement in criminalisation of human rights and environmental defenders

Health & Safety

• Risk of poor working conditions due to working hours that are longer than the legal limit or heavy workloads/dangerous tasks
• Psychological risks (situations involving psychological suffering, professional exhaustion, burn-out), harassment, violence, aggression in interpersonal relationships (between co-workers or between a co-worker and a customer), concerns about possible pandemics
• Risk of an accident involving a co-worker or customer on an IKEA France site (store, warehouse, wind farm, etc.), risk of an accident involving a supplier on an IKEA France site or during an assignment carried out for IKEA France (e.g. construction site, maintenance, last mile delivery, etc.), risk of inadequacy of the Document Unique d'Evaluation des Risques Professionnels (single occupational risk assessment document - DUERP) as a risk assessment tool, risk of Inter IKEA co-workers being put at risk in conflict zones
• Risk of food poisoning with products from the Food range as a result of sanitation issues during manufacture, transport, or production
• Risk of an allergic reaction, of choking, of a hazardous or non-hazardous foreign body, of raw materials that do not conform to specifications, of contamination or sabotage, of chemical contamination, or of food poisoning, with products from the Food range or products not from the Food range but consumed on an IKEA site (caterers)
• Risk of accident at the customer's property caused by IKEA products as a result of an issue with compliance, poor design, a change in the supply chain or during delivery, or misuse, or an accident caused by the customer's property during service provision (drilled pipe, etc.)
• Risk of exposure to hazardous substances (including particles, asbestos, pesticides, pollution, lead, volatile organic compounds, etc.)
• Risk of building collapse as a result of failure to implement practices/materials in accordance with EC standards, or a breach of these standards, or risk of damage following a safety/fire issue
• Risk of child abduction on an IKEA France site
• Risk of terrorist attacks at an IKEA France site, risk of violent demonstrations/grievances
• Risk of an epidemic among customers, co-workers, and workers
• Risk of supply chain security: product smuggling or illegal border crossing using the IKEA supply chain

Environment

• Risk of soil, water, or air contamination by waste, chemical or toxic spillages, unauthorised dumping, accidental leaks and spillages, air pollution
• Risk of speeding up climate change through greenhouse gas emissions, depletion of fossil fuels. This is an opportunity to provide the sites with cleaner energy, to use materials that pollute less and to reduce energy consumption
• Risk of visual pollution in public spaces as a result of advertising boards or infrastructures, light pollution
• Risk of noise pollution from IKEA France activities
• Risk of depletion of non-renewable resources, of poor waste sorting on site, of not using waste as a resource, of not getting involved in the circular economy
• Risk of increased water stress, reduction in access to drinking water
• Risk of damage to biodiversity and natural sites during construction of facilities, risk of impact on fauna and flora during operations
• Risk of harming the well-being of animals
• Risk of deforestation in forests supplying the wood that IKEA France uses, risk of using wood from illegal sources

3. Risk Analysis and Assessment Process

An initial score was determined based on geographical and sector risk indices provided by a well-known and widely respected stakeholder in risk analysis. This initial score reflects the risk level of a country on a matter (e.g. child labour, safety and occupational illnesses, waste management, etc.) and is based on a sector of activity (e.g. real estate management, logistics, etc.). This is therefore a "gross" score as it does not take account of the specific nature of IKEA France operations or existing measures to mitigate risks. It helps to identify priority areas for evaluation by the Risk Owners.

A second phase of workshops and interviews was arranged with the Risk Owners to assess the risks according to the Ingka Group risk management methodology: each risk identified was documented in a Risk Log. During the analysis, each risk was assigned a level of impact and probability, taking into account existing measures (net risk). The impact on internal and external stakeholders is assessed. The level of risk then determined the approach adopted (accept, mitigate, transfer, stop activities). The Risk Owners are responsible for defining the mitigation actions to put in place where the risk is assessed as a priority.

During the process, the management teams and departments interviewed at the various workshops were:

• People & Culture: Recruitment & Sourcing, Co-Worker Experience, Co-Workers Relations, Health & Wellbeing, Equality Diversity & Inclusion
• Procurement: Sustainability Development
• Legal
• Business Development: Sustainability, Market Expansion
• Real Estate: Construction, Facility Management
• Business Risk & Compliance: Safety & Security, Third Party Compliance, Operational Risk Management
• Customer Fulfilment: Services Fulfilment Operations, Store Fulfilment Operations
• Commercial: Product Quality & Compliance, Food
• Digital: Data Privacy, Information Security

Note that with regard to the sold product supply chain risk, on account of the IKEA franchise organisation (see "the IKEA franchise system" above), the risk analysis has been carried out by Inter IKEA. It is based particularly on the geographical location (country level) and business sector of the Inter IKEA suppliers.

4. Priority Risks

For IKEA France, the risk assessment highlighted, as priority risks for FY24, four risks already present in previous years and for which action plans are in progress, and one new risk:

• Risk of depletion of renewable resources, poor waste sorting by IKEA France service providers: the FY21 risk assessment identified this as high risk. A working group has been in place since FY22 to identify possible courses of action, and this work is continuing in FY25.
• Risk of unlawful data processing by an IKEA France co-worker: the assessment for FY22 showed that although the risk of unlawful data processing was not high for the MIF subsidiary, the action plan implemented, which involved training co-workers on security rules and good practices, had not been fully deployed. In FY23, mandatory training courses were satisfactorily completed by co-workers. However, it still needs to be ensured that these measures are maintained over time, and in particular that managers encourage teams to take part in these training courses, or even in the more in-depth modules. For DSIF, the risk is considered high this year.
• Risk of an IKEA France co-worker suffering an accident: the assessment for FY22 also revealed that the risk of accident was not high. However, risk management for this is based on the DUERP, which needs to be updated and used as part of an annual programme for the prevention of occupational risks and improvement of working conditions. An internal control plan was implemented in FY24 to monitor the DUERP and associated action plans.
• Risk of poor working conditions at our subcontractors' premises: the FY23 risk analysis highlighted a risk of working hours in excess of legal thresholds at some of our service providers' premises.
• In FY24, the risk of speeding up climate change through greenhouse gas emissions, depletion of fossil fuels, missed opportunities to provide the sites with cleaner energy and to reduce energy consumption, has increased from a medium to a high level. Several courses of action are already in place at both France and Group level to reduce the carbon footprint of our operations.

B. Inter IKEA and its Suppliers

1. Scope of the Risk Analysis

The first stage of the risk analysis carried out by Inter IKEA is to identify the scope of suppliers and supply chains, taking into account the severity and probability of potential negative impacts, and statutory requirements.

Three scopes have thus been identified:

• Direct suppliers for whom a contract is agreed between Inter IKEA and the supplier of products, product components, materials, packaging, or transport to IKEA stores.
• Indirect suppliers providing Inter IKEA with own-account operations (IT, facility management, professional services, etc.). The scope includes most expenses and the sectors most at risk. Indirect purchases with a low risk (for example, supply of water, electricity, mobile services, etc.) are excluded.
• The raw material supply chain, and third-party transactions between raw material suppliers and direct suppliers.

2. Priority Risks

The risks identified for FY24 across the Inter IKEA supply chain are largely the same as in FY23 and are:

• Risk of illegal or forced labour, risk of discriminatory treatment, in particular in recruitment, risk of exploitation of migrant workers, poor working conditions. The main sectors concerned are cotton production, mining (components of certain specific products), and maritime transport
• Geopolitical risks (Ukraine war)
• Risks of contraband and people trafficking using the IKEA goods transport network.

III. Actions for the Mitigation of Risks and the Prevention of Serious Harm

A. Ingka Group Strategy, Policy and Rules

1. Global Strategy

The Ingka Group has long defined the requirements that it strives to uphold, have its co-workers observe and apply to its business relationships. A company prospers if it is relevant and accessible to its customers, keeps its prices down, reinvests in the future, and takes care of people and the planet. The Ingka Group therefore rates its performance in these four areas, all given equal importance:

• 01 Better homes for our customers: the Group's mission is to make furniture inspiring and accessible to the many people. The current priority of IKEA is to be accessible to the many people thanks to its omnichannel sales network combining physical and digital points of sale, to offer affordable products, and to provide services and solutions for a healthier and more sustainable life.
• 02 Better lives for the many people and for our co-workers: the Ingka Group plays an active part in creating a more just and fairer society, starting with co-workers and the supply chain, then customers, local communities, and the wider society.
• 03 A better planet for everyone: actions are taken to ensure that operations generate less greenhouse gas and waste, consume fewer resources, promote biodiversity and water conservation, and guide customers along the same path.
• 04 A better company now and for future generations: guided by its vision and its values, the Group aims to be fair, inclusive, and encouraging, with ethical governance and respect for human rights throughout the value chain.

2. Code of Conduct

The way the business is run, and how co-workers behave towards each other and interact with customers, visitors, suppliers, and the world around them, determines how the Ingka Group and the IKEA brand are perceived. The Code of Conduct helps co-workers to inhabit these values and to understand them in the context of their day-to-day work.

The principles set forth in the Code of Conduct are:

• Internally:
• Equal opportunities
• Good working environment
• Protection of IKEA data and information
• Respect of privacy
• Sustainability
• Combatting harassment
• Prohibition of alcohol and drug use.
• In external relations:
• Representation of the IKEA brand
• Avoid conflicts of interest
• Zero tolerance towards corruption
• Policy on gifts and invitations
• Good use of IKEA time and internal resources.

The Code of Conduct forms part of the Internal Regulations, which are given to each co-worker when they start work. New starters receive mandatory training on the Code of Conduct during the on-boarding process, followed up with regular refresher sessions.

3. Rules and Procedures on Safety and Security

The safety and security of co-workers, customers, and visitors is a priority for the Ingka Group. It is responsible for creating a safe environment for its customers and co-workers, for protecting its assets, and for implementing effective and ongoing safety and security programmes in order to raise awareness among everyone about matters of security.

The Ingka Group defines the rules applicable to all Ingka units (Group Rules) on the management of new or existing risks, safety and security, especially accidents, occupational illnesses, property damage, business interruptions, and crimes, which may be caused by co-workers, customers, visitors, or sub-contractors at any Ingka unit or during any Ingka operation with its customers.

4. IWAY Standard

a) Principles

IKEA wants to have a positive impact on people while at the same time minimising its impact on the planet. This involves balancing economic growth with support for civil society in terms of environmental and social protection. That's why, in 2000, IKEA created the IWAY Standard (the IKEA way of sourcing products, materials, and services), which applies to the IKEA value chain and suppliers.

IWAY is a standard based on internationally recognised standards: the eight ILO fundamental conventions of June 1998, the ILO Fundamental Principles and Rights at Work, and the Ten Principles of the UN Global Compact of 2000. It covers four areas:

• Minimising impacts on the environment
• Securing decent and meaningful work for workers
• Respecting children's rights
• Improving the welfare of animals in the IKEA value chain.

b) Requirements

The Standard (currently version 6.0) applies to suppliers and sub-contractors from all IKEA organisations and franchises, and aims to ensure collective responsible procurement and a more sustainable IKEA value chain. The IWAY requirements are progressive (Mandatory, Basic, Advanced, and Excellent), encouraging suppliers to focus on continual improvement around IWAY topics.

The requirements are structured around the Standard's 10 key principles:

1. IWAY principles are supported by effective routines and open dialogue
2. Business is conducted lawfully and with integrity
3. Children are protected and opportunities for work, learning, and family life are promoted
4. Fundamental labour rights are respected
5. Workers have time off work, are paid responsibly, and have opportunities to develop their skills
6. Workers' health and safety are protected
7. Working and living conditions are suitable
8. The planet is protected
9. Resources, including water and waste, are managed in a sustainable and circular way
10. Animals live decent lives.

The Standard consists of several sections: a general IWAY section that applies to all IKEA business partners regardless of industry sector, as well as additional IWAY sections, which have been developed to more specifically address industry-specific challenges:

• «IWAY Accommodation Section»: which includes requirements on sub-contractors to provide housing arrangements for their workers.
• «IWAY Animal Welfare Section», which applies to all suppliers that deliver animal-based products to IKEA.
• «IWAY Digital Platform Work Section» which contains additional requirements specific to digital platforms, mostly regarding delivery and installation services. These requirements are for platform workers performing services for, or on behalf of, IKEA.
• «IWAY Forest Materials Section» which contains specific requirements for wood-based products.
• «IWAY Transport Section» which applies to suppliers transporting IKEA products, services, components, or materials in the IKEA value chain (excluding last-mile home delivery).

c) Application of the Standard

A contractual clause stipulating compliance with the provisions of the IWAY Standard is included in the contracts signed with suppliers. Direct suppliers and service providers are also asked to implement and verify the IWAY requirements with their sub-contractors.

Verification of compliance with IWAY in the supply chain is carried out by announced and unannounced audits (see the Regular evaluation of the situation of suppliers and sub-contractors: IWAY section). IKEA reserves the right to audit the sub-contractors of its service providers and suppliers.

B. Certifications and Responsible Sourcing

1. Wood

In FY24, 97.3% of the wood used by Inter IKEA came from "more sustainable sources" (MSS), meaning, from forests certified by the Forest Stewardship Council (FSC) or from recycling, as against 97.9% in FY23.

The FSC certification process aims to respect the following principles:

• Observe the regulations.
• Respect the rights of workers and provide good working conditions.
• Act in compliance with the rights of indigenous populations.
• Ensure good relations with communities.
• Ensure an equal distribution of proceeds generated by the forest.
• Minimise negative environmental impacts.
• Carry out monitoring and evaluation.
• Ensure high levels of conservation.
• Implement management activities.

Inter IKEA sources wood that has Chain of Custody (CoC) certification, ensuring the traceability and conformity of supply chains in line with the FSC standard.

2. Agricultural and Seafood Products

a) Cotton

More than ten years ago, IKEA, the WWF, and other partners set up the Better Cotton Initiative (BCI), an organisation that aims to improve global cotton production from industrial, social, and environmental perspectives.

Since 2015, IKEA has used cotton from more sustainable sources, meaning that it is either recycled, or from approved programmes such as the BCI or equivalents in other areas, Cotton Made in Africa (CMIA), or organic cotton, consuming less water, fertiliser, and chemical pesticides in its production than cotton grown using traditional methods.

b) Palm Oil

Inter IKEA supports efforts to strengthen the principles and criteria underpinning the Roundtable on Sustainable Palm Oil norm by using palm oil certified by this norm in its candles (95% of palm oil used) and as a food ingredient (5% of palm oil used). Thus, 100% of the palm oil used in its candles was RSPO certified in FY24.

c) Tea, Coffee, and Chocolate

The tea, coffee, and chocolate served in IKEA restaurants and sold to the grocery department (sold to IKEA France by IKEA Food Supply AG) are Rainforest-Alliance certified products. This means that they have been produced using methods that support the three pillars of sustainability: social, economic, and environmental. In FY24, 100% of the tea and cocoa used in IKEA branded products which include food ingredients supplied by IKEA Food AG (approximately 65% of the total food ingredients sourced for the IKEA Food business) came from Rainforest-Alliance certified farms.

d) Seafood

In FY24, 100% of the seafood served in IKEA restaurants and sold to the grocery department (sold by IKEA Food Supply AG to IKEA France) was ASC (Aquaculture Stewardship Council) or MSC (Marine Stewardship Council) certified, ensuring full traceability.

In FY24, the ASC announced its withdrawal from the Chinese market. Despite this, IKEA and the ASC have ensured that all fish supplies, including from China, are fully compliant with ASC certification criteria until the end of 2027.

C. Personal Data Protection

Privacy and data protection, whether it be for our customers, co-workers, or suppliers, is a priority for IKEA France. From 2018, the General Data Protection Regulation (GDPR) established increased monitoring of data use, continuing on from French Act 78-17 of 6 January 1978 on Data Processing, Data Files, and Individual Liberties.

From an organisational perspective, data protection at IKEA France relies on the following essential functions:

• A Data Privacy team, headed up by the Country Digital Manager and including the Data Protection Officer and contacts for co-workers in case they have any questions about data protection and processing in terms of their rights as data subjects.
• An Information Security team, also headed up by the Country Digital Manager, for any questions on data security in the IT systems.

Given the complexity and criticality of the matter, a more in-depth analysis and evaluation was conducted on data protection risks. The risk universe was created around 10 processing principles in relation to data protection:

• Fairness and lawfulness: there must be a legal basis for the collection of personal data and data processing must be fair and justified.
• Transparency and truthfulness: be transparent and give relevant information to data subjects before their data is collected. Data subjects must be properly informed about the way in which their data is collected and used.
• Purpose: data subjects' data must be processed only for the specified purposes and must not be used for anything else.
• Data minimisation: data collected must be limited to what is necessary in relation to achieving the purpose.
• Accuracy, quality, and adequacy: data subjects' data must be kept up to date and must be accurate. Requests from data subjects to rectify inaccurate data must be processed without delay.
• Duration of data retention and deletion: data must not be kept for longer than is necessary for the purpose.
• Information security: data must not be exposed to risk of loss, misuse, unauthorised access, alteration, destruction, or disclosure.
• Rights of data subjects: facilitate the exercise of data subjects' rights: give them sufficient information on the means of exercising their rights, and have a process whereby customer or co-worker requests can be responded to quickly and efficiently.
• Consent: data subjects must be duly informed that they must give their consent. The consent must be correctly recorded and stored with reference to the date and time it was collected (proof of consent).
• Data processing by third parties: third parties must have technical and organisational measures in place when they process data for IKEA France (Data Protection Agreement, guarantees with regard to transfer, etc.).

The risk assessment did not reveal any high or critical risks. However, the corrective action plans for the medium-level risks, including co-worker training on the rules and best practices for IT security and data protection, require close follow-up to ensure the efficiency level is maintained.

D. Waste and Circular Economy

Construction waste left by service providers working on an IKEA France site poses a considerable risk to the environment. Yet, taken as a whole, waste also presents a major opportunity for IKEA France to participate in the creation of a circular economy.

1. Management of Construction Waste

The risk analysis indicated a risk of environmental harm from construction waste, whether from the construction of a new building or from renovations of existing buildings, as a result of poor waste sorting by service providers using the skips at their disposal. After this finding, a working group was set up to identify solutions to improve waste sorting on construction sites. Pilot construction sites were identified to roll out the first courses of action. The conclusions will be presented in the next Vigilance Plan.

In FY23, a waste treatment guide was formalised to inform site service providers of IKEA France requirements and to remind them of regulatory requirements. In FY24, this guide was appended in the form of a charter to the Special Administrative Clauses (SAC) for construction and redevelopment sites, so that service providers undertake to comply with the requirements for the sorting and treatment of site waste.

2. EPR Eco-organisations and Chains

As a retail business, Meubles IKEA France belongs to a number of eco-bodies:

• Ecomaison (formerly Eco-mobilier),
• CITEO,
• ReFashion,
• Corepile,
• Ecosystem,
• EcoDDS,
• Ecologic.

By signing up to an eco-organisation, it can fulfil its Extended Producer Responsibility (EPR) obligations. French distribution businesses, whether manufacturers, importers, or distributors, of products involved in an EPR chain, need to either set up an individual collection and processing system for these end-of-life products, or be part of a collective system and sign up to an authorised eco-organisation, paying a fee based on the type and quantity of products distributed.

The eco-organisation must arrange collection of the end-of-life products and appropriate processing, preferably recycling. The eco-organisations also have a role to play in promoting recycling among the public and recyclability among distributors, encouraging them to move away from cost-cutting in favour of more recyclable and less impactful products for the environment.

3. Second Life for Used Furniture and the Recovery Obligation

On 1 January 2022, the French AGEC (Anti-Gaspillage et Economie Circulaire - anti-waste and circular economy) law provided for the free collection of used furniture by furniture distributors and, since 1 January 2023, for the collection of products such as old textiles, gardening and DIY tools, and toys and games.

However, IKEA France has been a forerunner in this field with the introduction of its Circular Hub several years ago (formerly known as "As Is"). This area, present in all IKEA stores of a suitable size, offers customers items at a reduced price: display models, a few discontinued items, IKEA furniture and decorative items taken back from customers, as well as unpacked or damaged products that have been checked for safety. In 2014, IKEA began to allow customers to return unwanted furniture to the store in exchange for a refund card. The "second life" strategy at IKEA France was stepped up in 2021, allowing customers to reserve products online and also allowing a wider range of products to be taken back.

E. Accidents

The safety of co-workers and visitors is a priority for IKEA and, although the level of risk of an accident at an IKEA France site was not deemed to be high, the analysis revealed two significant areas where risk management could be improved:

• The quality of the risk assessment for co-workers from different units, carried out using the DUERP.
• Identification and monitoring of the implementation of actions from the annual programme on occupational risk prevention and improvement of working conditions, which should be built around the risks identified.

An internal control was put in place in FY23 (first deadline in FY24) to ensure that the DUERP documents are kept up to date with a sufficient level of detail and monitoring of corrective actions.

F. Combating Climate Change

1. Climate Change Policy

IKEA as a whole has chosen to contribute to achieving the climate goals set by the Paris Agreement. Thus, IKEA has set out company-wide goals which have then been retranscribed and adapted for the Ingka Group, for each company and for each unit.

Like all companies undertaking this process, IKEA has two major deadlines:

• That of 2030, where the goal is to halve its greenhouse gas emissions
• And that of 2050, when IKEA aims to achieve net zero (the greenhouse gases emitted are counterbalanced by the same quantity of greenhouse gases avoided in the atmosphere). To achieve net zero, IKEA must reduce its greenhouse gas emissions by more than 90%.

Greenhouse gas emissions are not distributed equally throughout the value chain. Thus, emissions linked to the supply chain (materials, food production, product manufacture, and upstream transportation), which do not depend on the Ingka Group (being upstream of the retail phase), account for 59% of the Group's emissions.

Emissions connected with retail operations (which the Group is therefore better able to control) represent 1% of emissions. To which are added significant emissions from customer transport and home deliveries (11%). To achieve the goal of halving CO2e emissions at IKEA by 2030, emissions directly related to retail operations (heating and air conditioning of buildings, energy consumption, use of refrigerant gases, waste management, etc.) must be reduced by around 85% in relation to the 2016 tax year, which is the reference year. It should be noted that the Ingka Group does not wish to use carbon credits to achieve these objectives.

Finally, the use of products and their end-of-life management after marketing counts for 21% of the carbon footprint.

The Ingka Group is thus monitoring its greenhouse gas emissions, with reduction goals across three emission scopes. Although most emissions come from scope 3, the Group has also set up initiatives on its own-account operations (scopes 1 and 2). For scope 3, emission-reducing collaborations have been set up throughout the value chain (for example: use of renewable energy in plants, investment in recycling solutions, etc.).

In 2018, IKEA fixed its reduction targets for scopes 1, 2, and 3 according to the Science Based Targets initiative (SBTi). These targets were updated based on the Corporate Net-Zero Standard and were submitted to the SBTi in November 2023.

To achieve the net-zero target by FY50, all residual emissions will be neutralised by using best agricultural and forestry practices in the IKEA value chain, and ensuring that carbon remains stored for longer in our products by working on the circular economy principle.

Moreover, the Ingka Group wishes to achieve the net-zero target by acting beyond its own operations, by collaborating with its customers, suppliers, and partners to reduce greenhouse gas emissions, by improving its agricultural and forestry practices, and by further reducing emissions via investments in wind and solar farms.

(1 As a reminder, it is standard practice to distinguish three emission scopes or categories when carrying out a carbon assessment: - Scope 1: this represents direct emissions from the company (e.g. energy consumed in the buildings, such as gas, fuel used by the company's vehicle fleet, etc.)

2. Main Decarbonisation Levers

The scope 1, 2, and 3 reduction levers identified are:

• IKEA food products and furniture (81% of the company's carbon footprint):
• Renewable energies in the supply chain,
• Net-zero targets for sub-contractors,
• Energy efficiency of energy-consuming products,
• Use of recycled and recyclable materials in products,
• Plant protein-based food products.
• Operations within IKEA units (1% of the carbon footprint):
• Renewable electricity,
• Discontinued use of fossil fuels for heating and air conditioning in Ingka-owned buildings,
• Energy efficiency measures (for example, optimised use of Building Technical Management software).
• Goods and services used for our own-account operations and construction (5% of the carbon footprint):
• Renewable energy in the supply chain,
• Net-zero targets for sub-contractors,
• Purchase of materials with lower carbon emissions.
• Customer and co-worker travel and home deliveries (11% of the carbon footprint):
• Electric vehicles and zero emissions transport for home delivery,
• Electric charging infrastructure at IKEA sites for use by carriers, customers, and co-workers,
• Locations chosen for enhanced site accessibility (public transport),
• Reduce journeys by reducing product returns,
• Optimise home delivery transport.
• Scope 2: these are indirect emissions (outside the company) linked to energy consumption for corporate activity (electricity usage for example)
• Scope 3: all indirect upstream and downstream emissions (e.g. goods transportation, end-of-life product processing, etc.)

G. Human Rights at Inter IKEA Suppliers

1. Combating Forced Labour and Promoting Fair Recruitment Practices

These risks have been identified in complex migratory flows between Asian countries and towards Eastern Europe. Suspicions of the exploitation of migrants concern the recruitment phase (risk of payment of steep recruitment fees leading to debt bondage and forced labour) and the employment phase (non-payment of minimum wages and/or poor working conditions).

Inter IKEA has intensified discussions with its sub-contractors and suppliers on the subjects of working hours, fundamental labour rights, and the responsible recruitment of migrants and workers from vulnerable groups.

In-house training has also been provided since FY23 to raise awareness among staff and to allow them to better identify and handle cases of forced labour. In FY24, 25 IKEA co-workers and 400 sub-contractor representatives were trained.

Finally, IKEA is a founding member of the Leadership Group for Responsible Recruitment (LGRR), and supports the Employer Pays Principle commitments that no worker should pay to work, and that employers should cover the costs of recruitment.

In FY24, IKEA Supply AG signed a three-year partnership with the IOM (International Organization for Migration) to promote the rights and well-being of migrant workers employed within the IKEA supply chain, in line with the United Nations Guiding Principles on Business and Human Rights and the labour and human rights agreements: the work areas adopted were ethical recruitment, decent working conditions, and access to remedy.

The implementation of the IWAY Code of Conduct is complex, particularly in regions with large numbers of migrant workers and weak local regulations. In FY24, IKEA Supply AG organised training sessions on responsible recruitment and human rights with suppliers of products and services in South-East Asia and the Middle East. Support systems were created with the assistance of the International Organization for Migration (IOM), toolkits with clear guidelines were made available to recruitment managers, and business partners were provided with access to training programmes.

The guidelines are, for example, put in place when renewal tenders are sent out to service providers for warehouse operations: tenderers must submit their approach to responsible recruitment and prevention of forced labour, thereby being made aware of their responsibilities in this area even if they are unsuccessful in their bid.

In the United Arab Emirates, in partnership with the Swedish Business Council and the IOM, IKEA Supply AG has launched an initiative with other corporate members and the Swedish Embassy on the collective promotion of human rights and fair working conditions for migrant workers, following on from the setup of a dedicated working group.

The risk of forced labour in the cotton sector, particularly in Pakistan, China, and Brazil, has long been identified. Inter IKEA has ensured that cotton does not come from regions with a high risk of forced labour, by physically segregating cotton from the different supply sources, thus ensuring better traceability.

2. Employment Conditions

IKEA has a low consumption of inorganic resources, but their use is critical in certain applications such as furniture, household appliances, lighting, dinnerware, and kitchen utensils. In FY24, the work to map the supply chain to the sources of inorganic materials continued, allowing better identification of the main sources and increased understanding of the impacts of the supply chain.

a) Mining Operations

A partnership has been signed with the NGO Pact, aiming to identify the risks of mining and improve understanding of its impacts on sustainability, whilst at the same time promoting responsible purchasing and helping to reduce the negative impacts on people and the planet.

IKEA is also a member of the Responsible Minerals Initiative (RMI), and is continuing its efforts to promote social and economic development in mining production and purchasing.

b) Circularity and Recycling

Discussions are also under way regarding the environmental and social risks involved in waste management, in order to identify the best practices to promote. In FY24, IKEA became a member of the Fair Circularity Initiative (FCI) to implement and safeguard the principles of fair circularity and ensure the respect of workers' rights.

3. Respect for Human Rights in the Maritime Transport Sector

Greater attention is being paid to the risks of non-compliance with human rights in maritime transport, in particular the payment of recruitment fees, living conditions on board, access to shore leave, and working hours. Work started in FY23 with maritime transport providers and other external stakeholders to further the understanding of areas for improvement, and their occurrence in the IKEA supply chain. Work started in FY24 on defining new IWAY requirements on the well-being of workers at sea in the Maritime Transport section.

In April 2024, IKEA launched a three-year partnership with Mission to Seafarers, an international aid organisation for maritime workers. This partnership helps IKEA to identify, assess, prevent, and reduce the negative impacts on human rights of maritime services contracts, thus ensuring that maritime workers are properly supported and protected.

4. Geopolitical Risks: War in Ukraine

Operations in Ukraine were halted as soon as the armed conflict broke out, in order to prioritise the safety of employees and partners. The situation is continuously assessed from a humanitarian and operational perspective, with the aim of maintaining long-term relations with our partners and resuming normal operations as soon as possible. Resuming operations is conditional upon the guaranteed safety and security of people and the performance of human rights due diligence, and must be carried out in line with international humanitarian laws applicable during armed conflicts. This enabled a partial resumption of operations in the south-west of Ukraine where the situation is most stable, in FY23 and then in FY24.

5. Smuggling and Human Trafficking via the European Transport Network

In FY22, risks of human trafficking and illegal border crossings by migrants or criminals using the IKEA transport network were identified, endangering these people as well as the drivers.

Training and safety guides have been provided to the drivers of Inter IKEA transport service providers, and they are required to submit reports to the authorities and internally in order to enable weak points to be analysed. Improvements to the seals on lorry and container doors are also in the pipeline.

H. Management of Wood by Inter IKEA

The IKEA forestry management Due Diligence system is based on four key documents:

• IWAY forestry management section and supplier guide: documents informing IKEA suppliers on how to source forestry materials, collect information on the origin of the wood, perform a risk assessment, identify mitigation measures, and report to IKEA.
• IWAY Working Method on managing the wood used in furniture products: document describing the roles, responsibilities, and actions of suppliers and IKEA personnel in meeting IKEA stipulations on forestry management, for furniture products.
• The IKEA Forestry Due Diligence System: document setting out the procedures, measures, and checks to ensure compliance with IWAY forestry management requirements.
• Specification IOS-MAT-0087: traceability requirements for materials of plant-based origin used in IKEA products.

Before signing a contract with a supplier, Inter IKEA must obtain a Wood Procurement Plan from them detailing the sources, species, materials, volumes, and origins of the wood to be used. For suppliers based in countries with a high risk of illegal felling, an action plan must also be provided to ensure compliance with the most responsible wood sourcing strategy (More Sustainable Sources, MSS) used by IKEA.

IV. Regular Evaluation Procedures

Below are the regular evaluation procedures (internal control procedures, reports, etc.) in place at IKEA France on matters concerning Human Rights, Fundamental Freedoms, Health and Safety, and the Environment. If the evaluation procedure highlights a gap in performance compared to last year, measures to reduce this gap are specified, as well as any potential areas for improvement identified.

A. IKEA France

1. Code of Conduct

Mandatory training on the Code of Conduct is followed up monthly at all levels of the organisation:

• At national level, the Leadership & Skills Department monitors participation rates by unit, and communicates the results to all unit and regional directors on a monthly basis.
• At local level, the People & Culture Director and their teams monitor co-worker participation rates, and are responsible for planning training courses, assigning them to co-workers when they start and then annually as part of the Skills Development Plan, and reminding co-workers and their managers if sessions have not been completed on time.
• Managers, whatever their department, are responsible for following up with their teams and freeing up the time needed for training.

An internal control system ensures that Code of Conduct training sessions are completed on time, and that if they are not, the managers and co-workers concerned are contacted and a session is organised as soon as possible. This internal control system is assessed annually on a sample of units.

Summary of Implementation

Areas for Improvement

An initial compliance review of the annual internal control assessment, performed to ensure that it is properly carried out, has been postponed to FY25.

2. Retail Topic Reviews

Retail topic reviews (formerly known as Commercial reviews) are audits carried out by two auditors and the management team of a store. The reviews are used to determine whether tasks and processes are being performed correctly in terms of proven best practices and solutions documented by IKEA, and to identify areas for improvement in performance.

The review is split into nine sections in line with the Inter IKEA strategy, including People & Culture and People & Planet, which concern matters of Human Rights, Fundamental Freedoms, Health & Safety, and the Environment:

• People & Culture:
• Choose IKEA for what we are: actions taken by the unit to:
• Make IKEA the local employer of choice
• Proactively target and find talent
• Offer a positive experience of the candidate journey
• Promote our values during recruitment, in particular selecting the right skills and ensuring diversity
• Offer a welcoming and inclusive on-boarding journey
• Promote skills development
• Carry out succession planning for key roles to support growth
• Target skills that are suited to the new areas of digitisation and services
• Promote diversity and inclusion among co-workers.
• Committed co-workers who believe customers are at the core of all their work: actions by the unit to:
• Ensure that there are good working conditions in place, balance the needs of co-workers with those of the company
• Offer actions that promote health and wellbeing at work
• Inform co-workers about the competitive salaries and benefits provided
• Promote leadership in line with the priorities of the Business Plan
• Adapt skills to meet the needs of customers, proposing a variety of training solutions
• Tell co-workers about sustainability, train them on it, and encourage involvement.
• A modern, lean, and agile IKEA fit for growth: actions by the unit to:
• Foster innovation and an entrepreneurial spirit among co-workers
• Simplify processes and banish bureaucracy
• Base decisions on data and analytics
• Be effective in people-planning in terms of availability and skills
• Be prepared for digitisation and automation
• Involve co-workers in the upcoming changes.
• People & Planet:
• Circular & climate positive: actions taken by the unit to:
• Promote actions in favour of circularity, whether with customers (solutions to repair and extend the life of their items) or in internal practices (re-use, reducing the amount of waste, sorting, etc.)
• Use renewable energy and improve energy efficiency
• Offer more sustainable mobility
• Manage water consumption efficiently and rationally.
• Promote equity and equality: actions taken by the unit to:
• Work with suppliers to meet IWAY standards
• Create strong community engagement, anchored in the local area.
• Foundation of the People and Planet Positive strategy: actions taken by the unit to:
• Anchor the sustainability strategy and its objectives in the local strategy, with planning and monitoring of results.
• Encourage co-worker engagement and develop their skills related to sustainability strategy issues
• Work to engage other stakeholders (customers, local players, etc.).

Reviews are conducted every two years: all units must review all nine sections over the course of this two-year cycle. By default, the reviews are designed to be facilitated by auditors. However, if a unit meets certain criteria, i.e. seniority of management teams and good results obtained in previous reviews, a self-assessment can be carried out instead of an auditor-led review. For the following cycle, the review will be auditor-led. The review is presented as a survey in which each question can be answered: OK/Not OK. The score is calculated from the number of OK responses. The review is validated and considered green if a score of 80% or more is obtained. The result is yellow if the score is between 70% and 79.9%. If the score is below this threshold, the result is red and a new review covering the entire survey is scheduled in six months' time.

Summary of Implementation

FY23 was a year of transition. The formats and content of the Commercial Reviews evolved to become "Retail Topic" reviews. These changes, initiated by Inter IKEA and effective from FY24, led to a smaller number of reviews during tertial 3 of FY23, as this period was dedicated to testing these new formats and training auditors.

From FY24 onwards, reviews will be carried out in groups. The People and People and Planet Positive sections take place during the same week. This arrangement will allow a higher rate of reviews to be conducted.

Actions for the Mitigation and Prevention of Risks

For those units whose reviews could not be validated as a result of their score, a new review was scheduled within six months, once the unit had implemented an action plan.

For any units that need it, the action plan is specifically monitored by auditors, one from the function concerned and another from a store in order to offer additional expertise.

Areas for Improvement

Retail topic reviews will be more demanding than Commercial reviews, with the green score for validation having risen from 75% to 80%. An intermediate range has been added to the scoring, with a yellow score between 70% and 80%. A score of less than 70% is red. The questions are also more detailed, with each question divided into several evaluation points.

3. Co-worker Survey I Share

IKEA France uses the internal I Share survey tool to evaluate a number of areas considered essential. The tool can be used for annual surveys or one-off surveys given to IKEA France co-workers to get a sense of their experiences and gather key indicators relating to:

• Co-worker engagement
• Leadership
• Values
• Performance
• Simplicity and agility, the right tools and equipment
• Working together
• Work environment
• Empowerment for a better customer experience
• Sustainability
• Health and wellbeing
• Diversity and inclusion
• Remuneration
• Adaptation to the IKEA transformation
• The role, efficiency/efficacy, trust
• Remote working.

The result is calculated based on respondents selecting whether they "fully agree" and "agree" with the questions in each topic.

Compte-rendu de mise en oeuvre

In 2024, the participation rate for the survey rose to 78%, from 76% in 2023. The main results were:

4. Health, Safety & Security Controls

Unit compliance with health and safety requirements is assessed via 56 periodic internal controls (performance and evaluation ranging from monthly to annual), covering four key areas:

• Health and safety (accident prevention for both co-workers and visitors)
• Fire and natural phenomena safety
• Security
• General (handling of incidents, training, miscellaneous topics).

These internal controls ensure that the level expected by the Ingka Group is attained, help to standardise working methods within the Group, empower the different stakeholders within the functions to take responsibility for their risks, and improve monitoring of controls and corrective actions.

These internal controls are evaluated periodically based on the defence in depth principle:

• First line of defence: regular self-assessment by the units using a tool (iControl) that enables traceability, documentation/justification (evidence), and results tracking
• Second line of defence: compliance review of the self-assessments by auditors who are not part of the unit audited.

A compliance plan is used to check that the units are operating in line with the health and safety requirements. Each unit is assessed annually, using three different methods over a three-year cycle:

• Compliance review by the Safety & Security team assigned to the country's Risk & Compliance Department
• Compliance peer review by the unit Risk and Compliance teams
• Compliance audit by the insurer on normative aspects and internal rules.

Summary of Implementation

The FY24 on-site compliance review campaign enabled a second-line assessment of 26 units, returning an average compliance rating of 81%.

The main causes of non-compliance identified are:

• Assessment not carried out in the allotted time (tool doesn't allow assessments to be performed late)
• Insufficient or inappropriate documentary evidence.

Independent compliance audits were carried out by the insurer in 13 other units, giving an average compliance score of 83%.

The main discrepancies relate to construction elements or heavy equipment for which the building owner is responsible (in most cases this is Ikea Développement SAS, a subsidiary of IKEA Holding France):

• Fixed automatic water extinguishers (Sprinkler® type) (for example, distances between goods and sprinkler heads not observed, etc.)
• Electrical/photovoltaic installations, electric vehicle charging points (deviations from certain Group standards that are more stringent than the applicable French or European regulations).

Focus: Internal Control of DUERP Documents

An internal control was put in place in FY23 (first deadline in FY24) to ensure that the DUERP documents are kept up to date with a sufficient level of detail and monitoring of corrective actions.

The evaluation of the corresponding internal control returned a compliance score of:

• 89% compliance for the first-line assessment (self-assessment for 100% of units)
• 83% compliance for the second-line assessment (sample of 26 units).

To achieve the goal of 100% compliance on this internal control, targeted work is planned during FY25 with the departments concerned (strengthened communication, support workshops, involvement of facility managers).

Areas for Improvement

FY24 saw significant improvement in co-worker engagement, with the response rate for self-assessments increasing from 15% to 80%. Some support mechanisms have been maintained for FY25 to bolster the positive progress of the response rate:

• Monthly email reminders sent to co-workers in charge of self-assessments
• Organisation of monthly question and answer sessions to promote take-up of the process and tools
• Integration of the response rate into the control indicators used by the unit steering committees.

New measures have also been implemented:

• Periodic communication with market managers, national results sectors, and individual units (response rate and compliance rate)
• Distribution of a new version of the reference support document in order to clarify expectations, and provision of ad hoc documentary frameworks for control documents.

5. Supply Chain Controls

In order to fully protect ourselves against the entry of illicit goods and contraband and to standardise ways of working, security requirements are in place across the supply chain. These requirements can be found in a specific procedure which is split into the following five sections:

• Security prerequisites
• Control of site access
• Control of inflows/outflows
• Control of seals
• Anomaly processing.

Every four months, the procedure undergoes a check of its 41 control points and five sections to ensure that it is being followed correctly. A score is assigned according to the compliance percentage:

• Non-compliant if below 50%
• "Low" if the compliance percentage is above 50% and below 95%
• "Good" if the compliance percentage is above 95% and below 100%
• High if 100% compliance.

The check is carried out by an internal auditor for DSIF, and as a self-assessment for MIF, which can then be verified by an internal auditor.

Summary of Implementation

Not all reviews could be carried out in units lacking risk & compliance staff. Training new co-workers on how to use the tool will also improve the performance rate for reviews.

Actions for the Mitigation and Prevention of Risks

Units with a compliance score below 95% must put in place a corrective action plan, the progress of which will be monitored in the next four-monthly review.

The action plans which were also rolled out in FY23 to improve review results, with priority given to stores, where results were poorer than those of the warehouses, are still ongoing:

• Training on expectations in relation to the Supply Chain Safety procedure, including training for new co-workers
• Ensuring a minimum amount of time dedicated to responding to controls that are carried out less frequently due to lack of time
• Ensuring the drafting and implementation of safety protocols using a digital tool.

6. Installation Reviews

Installation reviews are carried out each year on the units by the regional Facility Management teams. The aim is to ensure that the facility managers for the units provide a work environment that is sustainable, healthy, clean, and functional for co-workers, customers, and visitors and conforms to the Group's regulations and policies. These checks concern the correct application of maintenance protocols on the units' safety mechanisms (fire safety, evacuations, etc.) and on energy, water, and waste equipment.

The review consists of a survey, which is assigned a score: if the number of positive findings is less than 80% and less than the other minimum thresholds in each section of the survey, the review is not validated. It then needs to be rescheduled at a time specified by the regional facility manager. Simplified reviews, with or without support from a regional facility manager, can be undertaken for units with a low risk level. The unit will then undergo a normal review the next year, and the review cycle is then every two years.

Summary of Implementation

The drop in the number of reviews carried out between FY23 and FY24 is explained by a high turnover of Facility Management staff in the units and tight time constraints for the regional and unit teams.

With regard to the validation of reviews, a significant change in procedures with service providers (particularly for maintenance) has led to a decline in results, and action plans are being rolled out. Finally, some sites identified as a priority are undergoing improvement, but the results will only be seen after a certain time.

7. Statement of Operational Indicators for Sustainability

All MIF and DSIF units compile monthly reports in the Sustain reporting tool on their water and energy consumption and on their waste production. The data is then:

• Sent to the performance report dashboard for the unit along with the indicators from the installation review. The low indicators are accompanied by a corrective action plan and are presented to the management committee for the unit and to the regional facility manager
• Sent to the 4Ps (People, Planet, Perception, and Profit) dashboard for the country, with a summarised version accessible to all co-workers
• Sent to the Ingka Group for control and monitoring.

Furthermore, to ensure the reliability of data and correct use of the Sustain tool, monthly reviews of values are conducted by Sustainability France, Group Sustainability, and Facility Management France. Lastly, People & Planet reviews (see above, Retail topic reviews) are performed every two years during a visit to each store and provide an opportunity to see the solutions implemented locally to reduce environmental impact.

Summary of Implementation

Areas for Improvement:

An objective of 100% of data completed every month was put in place in FY23 and continued into FY24, with closer monitoring during monthly reviews. In particular, discussions were held regarding automatic transfer of data from waste management service providers, allowing for information to be uploaded in good time and with no input errors.

² The values for the previous years differ slightly from the values provided for last year. Updates have been made concerning emission factors (including alignment on definitions of emissions for scopes 1, 2, and 3 based on the Greenhouse Gas Balance Sheet method: consideration of electricity losses en route, surface areas (change of tool, use of more accurate values) and source data (corrections made to data supplied by the units when an error is detected).

³ The operational carbon footprint is calculated based on emissions from energy and water consumption and waste processing in our units.

⁴ Recycling, composting, and production of biogas

B. Regular Evaluation of the Situation of Suppliers and Sub-contractors: IWAY

1. Evaluation of Tier 1 Suppliers at the Time of Their Selection

Adhering to the IWAY Must requirements is an essential prerequisite before any product deliveries or set-ups can be made, unless suppliers can demonstrate use of recognised and comparable standards which are specifically analysed by the Ingka Group.

Ahead of any business relationship, potential suppliers are provided with the IWAY Standard (general section and other relevant sections, if applicable), the IWAY compliance commitment, the Ingka Business Ethics charter, and the Ingka specification document which secures the right to audit sub-contractors.

An analysis of the risk of a selected supplier failing to comply with the IWAY Standard is carried out before signing a contract and is based on an initial phase of prioritisation depending on the level of expenditure and the level of risk determined based on the business sector.

An initial evaluation is performed if the analysis has raised a risk of non-compliance: it consists of a pre-audit of the potential supplier by an auditor independent of the Purchasing Department to determine whether the supplier is able to meet the IWAY Must requirements ahead of the first delivery or set-up, and to conform to the IWAY Basic requirements within 12 months of the first delivery or set-up.

This initial evaluation will determine whether or not to proceed with signing the contract, the IWAY compliance commitment, and the Ingka Business Ethics charter with the supplier.

2. Evaluation of Compliance of Tier 1 Suppliers During the Established Business Relationship

IKEA France has implemented a procedure to verify suppliers' compliance with the IWAY Standard throughout the business relationship.

a) Process of Verification Throughout the Contractual Relationship

At least once a year, the risk assessment for each supplier is updated according to activity sector, country, and historical supplier relationships. A list of suppliers requiring an audit is drawn up, along with a deadline by which the audit should be performed (critical and high risks as a priority).

The level of risk will determine whether or not to proceed with an announced or unannounced verification audit, and what the scope of this audit will be.

If the supplier decides to use sub-contracting, the audit will need to include a sample of sub-contractors.

If a breach of an IWAY Must requirement is detected, a corrective action plan must be implemented within 10 days, and for a Basic requirement, within 90 days. If the breach of IWAY Must or Basic requirements is not rectified within the given time, there will be business repercussions (for example, no invitation to bid in the next call for tenders, cessation of the current business relationship, etc.).

b) Maintenance of Compliance

Compliance with the IWAY Standard is ensured throughout the contractual relationship via ongoing communication, regular follow-ups at visits and meetings with the supplier, an annual self-assessment of the degree of the supplier's compliance with the IWAY Code of Conduct, training sessions, seminars, and workshops. Annual self-assessment is required of suppliers to ensure monitoring of IWAY performance and secure a "mandatory" and "basic" level of compliance with our stipulations.

Summary of Implementation

The IWAY performance indicators are reported every four months to the Ingka Group Sustainability function and to Inter IKEA in order to ensure the compliance of the group's suppliers with "Mandatory" and "Basic" requirements.

⁵ From FY23 onwards, the tool used to account for the number of suppliers will change, allowing for greater exhaustiveness. There are duplicate suppliers in different billing entities. There is only a small number of such duplicates; in FY23 they accounted for approximately 5% of the total and have been deleted.

⁶ A supplier may undergo several audits throughout the year, for example on different sites.

In FY24, in addition to the audits described above, four ad hoc investigations were carried out by the team in charge of auditing third parties in order to respond to reports from the units.

This year, a significant increase in the number of IWAY Must deviations has been noted. It is explained, amongst other things, by an almost exclusive focus on the highest risk operations: facility management, last mile delivery, and construction. These three activities are characterised by high or critical risk levels, notably on account of a strong reliance on sub-contracting for low-paid jobs requiring few qualifications. Half of the audits carried out on last mile delivery providers were unannounced, tending to increase the detection of non-compliances.

To cement familiarity with the IWAY Standard, introductory training on the Ingka IWAY supplier code of conduct has been compulsory since March 2024 for all Ingka managers, leads, buyers, and contract managers.

Moreover, to enhance understanding of the internal IWAY procedure, IWAY training has been rolled out by the Sustainability Developer and the Third Party Compliance Specialist at different levels of the organisation: for the back rooms and head office, for contract managers; for the stores, for operational management control. The key aim of these training sessions is to raise awareness and understanding of the environmental and social risk management procedure with suppliers and sub-contractors when the purchasing function is not involved.

IWAY Audits by Inter IKEA⁷

⁷ This includes all suppliers from the Inter IKEA group but not Inter IKEA suppliers for products destined for the French market only.

⁸ For FY23, this is the number of suppliers with a medium or low average compliance score.

Twenty-one cases of non-compliance with mandatory level requirements were detected among Inter IKEA suppliers in FY24. The main deviations were:

• For almost half, the non-compliances related to the inadequacy of the systems for recording the hours worked by employees, and in particular overtime.
• In addition, several suppliers did not comply with accident prevention requirements, which is not necessarily mandatory in terms of country regulations but is mandatory under the IWAY standard.
• Isolated instances of non-compliance with responsible recruitment practices of migrant workers and a failure to adhere to required standards around prevention of forced labor were identified, taken seriously, and remediated.
• One case of non-compliance with child labour requirements was identified: the supplier was unable to detail their method of verifying ages when recruiting. No proven cases of child labour were identified.
• No cases of serious environmental pollution were found.

The corrective process described above was applied, requiring the suppliers concerned to identify the causes of the deviations and implement corrective action plans within a limited time frame and in a reliable and sustainable manner, failing which, in the case of repeated or significant deviations, the business relationship was definitively terminated. As such, in FY24, Inter IKEA terminated its business relationships with five suppliers.

V. Whistleblowing

In 2014, IKEA France set up a whistleblowing system that is open to all co-workers. This was presented to the central social and economic committee for the companies at the time of its implementation.

This whistleblowing system was reviewed to take account of the provisions of the French Sapin II Law, the Wasserman Law, and the French corporate Duty of Vigilance Law. A description of this system is available to co-workers on the Intranet. Co-workers also have training on the whistleblowing system within six months of their start date, then every two years thereafter.

The whistleblowing system aims to encourage co-workers to make known any conduct or situations that are known to them personally and that are likely to result in a breach of the Code of Conduct. This is a way to promote health and safety at work, fundamental freedoms, sustainability, and anti-corruption.

Each co-worker can raise a concern via internal channels, which are put in place by the line manager, department manager, Risk and Compliance manager, or Human Resources manager. Co-workers can also use the Trust Line, free of charge, via telephone or online to report professional issues they may have encountered. For confidentiality reasons, the report is received by an independent company located in the Netherlands. The report is communicated to the Ingka Group Trust Line manager, who performs an initial analysis of the issue raised, then sends the file to a human resources manager or the risk and compliance manager in France.

In accordance with the Wasserman Law, IKEA France has ensured that the system involves no sanctions on or discriminatory measures for co-workers when an alert is raised in good faith. The company has also made every effort to ensure the protection of personal data and the confidentiality of whistleblowers and of the information transmitted in the alert.

This whistleblowing mechanism was launched in FY22 to all external stakeholders, such as customers, freelancers, suppliers, contractors, and applicants.

VI. Governance and Mechanism for Monitoring Measures

The Governance, Risk & Compliance Committee is responsible for monitoring the Vigilance Plan to ensure its effective roll-out over time, with an emphasis on continuous improvement. With this in mind, the Committee meets three times a year and updates the risk mapping and Vigilance Plan every year.

This update tracks any changes in risks and regularly evaluates and supplements the corrective measures put in place under the Vigilance Plan.

Lastly, the Vigilance Plan was presented to the MIF and DSIF Social and Economic Committees in FY22 for the 2020-2021 Vigilance Plan and early FY24 for the 2022-2023 Vigilance Plan.

IWAY Governance

Responsible purchasing is governed at Group level by several different bodies:

• Global IWAY Forum: oversees the development and implementation of the IWAY process.
• IWAY Forums in the countries: they supervise implementation at national level with the Purchasing, Risk & Compliance Management, Sustainability, and operational teams.
• Category Area Management Forums: they monitor IWAY performance and ensure the compliance of service providers for each purchasing category.
• IWAY Calibration Group: group of IWAY experts offering support at country level and ensuring a consistent, Group-wide approach to the implementation and verification of IWAY compliance.

Governance of responsible purchasing has been reconsidered to take better account of the various levels of decision-making and strengthen the information feedback system. This new governance system launched in FY24 will be fully deployed in FY25. It is operated in France by several bodies:

Governance, Risk & Compliance Committee: IWAY is an item on the agenda, particularly the monitoring of IWAY non-compliance by service providers, and key topics of the IWAY Strategic Committee. The Governance, Risk & Compliance Committee is coordinated by the Risk and Compliance Management Director supported by the IKEA France management committee.

IWAY Strategic Committee: this committee oversees supplier risk management and the implementation of IWAY in France. It validates the list of annual audits for IKEA France. It is coordinated by the IKEA France Purchasing Director with the support of the Sustainability Developer and the Third Party Compliance Specialist, assisted by the directors of the Risk & compliance management, Sustainability, Construction, Facility management, Operations, and Distribution functions. They meet once a year. This committee reports to the Governance, Risk & Compliance Committee.

IWAY Tactical Committee: this committee monitors the performance and implementation of IWAY from an operational standpoint in the purchasing categories identified as most at risk (Services & logistics and Construction & facility management), notably via risk mitigation plans. The forum is run by the Sustainability Developer and the Third Party Compliance Specialist with the support of the IWAY representatives for each function. They meet twice a year. This forum reports to the IWAY Strategic Committee.

Contact Information

Meubles IKEA France

425 rue Henri Barbusse - BP 129

78375 Plaisir Cedex, France

Tel: +33 (0)1 30 81 12 12