Corporate Impact Investing Case Study – IKEA Social Entrepreneurship
IKEA Social Entrepreneurship has the mission to create a better everyday life for people from vulnerable and marginalised groups – enabling a more equal and inclusive society, where everyone has the capability and opportunity to provide for themselves and their families.
Organisational Profile
> Legal Structure – B.V. (A Dutch limited company with social impact)
> Affiliated Company – Inter IKEA
> Headquarters – Delft, The Netherlands
> Financial Instruments – Grants, Loans, Equity
>Amount Invested to Date - €35 million
>Thematic Area – Focusing on livelihoods for vulnerable groups within inclusive employment, inclusive circularity and inclusive agriculture and food.
>Geographical Focus – Global
Impact Investing Approach
Which Approach & Why?
In 2012, Inter IKEA started working with social entrepreneurs to include their products and services in IKEA’s offer to customers. This initiative proved successful, prompting Inter IKEA to engage in impact investments to further support social entrepreneurs by setting up IKEA Social Entrepreneurship B.V. in 2018. IKEA Social Entrepreneurship B.V. began by identifying the social entrepreneurs’ key needs, which included access to funding, knowledge and markets. Their objective was to provide the needed support for social entrepreneurs to scale their businesses and impact, while potentially integrating these social enterprises into the broader operations and social value chain of IKEA.
IKEA Social Entrepreneurship B.V. was established as a separate entity for several strategic reasons. It aimed to create its own identity, closely associated with but distinguishable from Inter IKEA, allowing it to focus specifically on social entrepreneurship initiatives. This distinct branding improves recognition within the impact sector and facilitates collaborations with other stakeholders. By creating a separate entity, Inter IKEA could effectively ring-fence the associated risks, given that impact investing was a new approach for the company. Opting for the Dutch B.V. structure over a foundation format facilitated a closer alignment with the core business of Inter IKEA, while connecting it with the social entrepreneurs it supports through investments.
The Business Case
Transform the Value Chain
By 2030, IKEA’s ambition is to contribute to a fair and equal society, by respecting human rights, creating a positive impact for people across its value chain and contributing to resilient societies. IKEA Social Entrepreneurship contributes to this ambition by partnering with and supporting social businesses. On top of that, in India, for example, IKEA Social Entrepreneurship B.V. supports social enterprises in the waste management sector, from waste pickers to waste aggregators, building learnings, inclusivity and sustainability the value chain.
Learn about Inclusive Business by becoming a ‘Learning Lab’
Over the past five years, IKEA Social Entrepreneurship B.V. has collaborated with more than 200 social enterprises that focus on social innovation, particularly in addressing growing inequalities. Thanks to these partnerships, IKEA has gained insights into balancing impact and profitability which are supporting its broader sustainability goals and legislative requirements.
The Impact Case
Scale the Impact with a complementary tool to philanthropy
IKEA Social Entrepreneurship B.V. bridges the gap between IKEA Foundation’s philanthropic initiatives and the IKEA business. Recognising the "missing middle" challenge faced by social entrepreneurs – the difficulty of securing the right type of funding to grow and scale – IKEA Social Entrepreneurship B.V. supports these ventures in scaling their impact through the combination of grants, loans and equity. Beyond financial support, IKEA Social Entrepreneurship provides access to markets, networks and expertise to enable social entrepreneurs to grow to a stage where they can attract commercial investors or become viable partners and suppliers for other businesses. This approach ensures that social innovations can reach their full potential.
Bridge Impact and Business
IKEA Social Entrepreneurship B.V. leverages the company's strengths to support social entrepreneurs through tailored accelerator programs, matching them with mentors and coaches from across the IKEA network. Over 500 IKEA co-workers have participated, offering their expertise as part of their leadership development. This not only strengthens the business models of the social enterprises, but also deepens the company’s understanding of social innovation, creating a reciprocal relationship where both impact and business objectives are advanced.