00:00One of the favorite stories that I share with my students is the story of how IKEA achieved
00:11sustainability by using something called better cotton. Now sustainability is a problem that
00:15every company faces and IKEA was very serious about sustainability right from the beginning
00:18and they wanted to move all their cotton consumption into organic cotton. But most
00:23companies as you know work with organic cotton in a way in which they buy organic cotton at very
00:28high prices because it's very difficult to produce organic cotton the yield is very low and then they
00:32end up charging a huge premium to the customer and customers buy it only because they want to
00:36assuage their guilt but very few customers can afford high priced organic cotton products. IKEA
00:40decided that they would change this approach to sustainability because they decided they would
00:44somehow try to buy cotton at the same price which will enable them to sell better cotton to customers
00:49at the same price as they were earlier selling. Then of course it's a no-brainer that a customer
00:53will buy a sustainable product at the same price and the volumes could be massive it could generate
00:57huge increase in growth so IKEA analyzed the production of cotton realized that farmers are
01:01using way too much fertilizer and pesticide and water worked together with WWF and a few other
01:06companies which got together an initiative called better cotton and in 2005 they launched this project
01:10they taught farmers how to farm using less of fertilizer but pesticides and water and made sure that
01:16they got the same yield so the farmers could actually sell cotton at the same price they'd actually
01:21make more profit even by selling at the same price because the consumption of these key materials was less
01:25this enabled IKEA to buy cotton at the same price that we were they were buying cotton from before
01:29this gave IKEA volumes they guaranteed farmers all across Asia and South America they taught them how
01:35to grow cotton like this signed long-term contracts with farmers and used that purchasing to build it
01:40across their supply chain all textile suppliers of IKEA and at the end of the day IKEA is a much bigger
01:44company selling more product and remaining as profitable as before that's the story of how you can turn
01:49sustainability challenge into an opportunity for growth
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