IKEA continues to buy Russian timber, despite sanctions and promises to completely leave Russian market

Author

Lesia Solovchuk

Swedish furniture giant IKEA continues to buy Russian timber, despite the promise to completely withdraw from the Russian market, according to Swedish outlets.

The company announced its withdrawal from the Russian market in the second week after Russia had invaded Ukraine — on March 3. IKEA stressed that they are temporarily halting all exports and imports, as well as production in Russia.

"The devastating war in Ukraine is a human tragedy, and our deepest compassion and concern goes to the millions who have been affected. The direct actions of Inter IKEA Group and Ingka Group were to support the safety of IKEA employees and their families," the company said.

"This means that Inter IKEA Group is suspending all exports and imports to and from Russia and Belarus," the company wrote on its website.

In the same month, all department stores in the countries were closed. The decision to cut ties with Russia resonated around the world, and the Swedish company was called a role model.

But, despite the statements about stopping all exports, the purchase of Russian timber did not stop, moreover, it continues to this day.

The Swedish outlet Aftonbladet, which gained access to the company's correspondence, reported that in one of the letters to suppliers, Robert Olsson, purchasing development manager at Ikea, admitted that the purchase of timber from Russia had continued thus far and they were not going to stop it.

In the document, the manager addressed the furniture giant's suppliers with a request to reduce purchases from April by 85% compared to last year; there were no plans to completely stop deliveries from Russia. At the same time, the export of timber from Belarus was completely stopped.

"We must not harm our suppliers," Robert Olsson, IKEA purchasing manager, wrote in one of the letters.

In a comment to the outlet, Olsson confirmed that timber purchases were still ongoing, but in smaller volumes.

"IKEA also expects all suppliers to further reduce their dependence on Russian wood raw materials," the Swedish tabloid quoted the manager as saying.

Moreover, according to him, under certain conditions, suppliers could buy as much Russian timber as last year, if the volumes were approved by IKEA.

"Our own production units have come to a complete standstill, but some suppliers have continued to buy timber because they need to find new supply chains… We have greatly reduced and decreased our ‘dependence’ on Russia. This is our goal. But we have not closed everything at once," Olsson explained to the outlet.

What about EU sanctions?

In early April, the EU, as part of the fifth package of sanctions against Russia, banned imports of products from the Russian timber industry worth $6 billion a year.

At the same time, it was reported that IKEA was one of the first to refuse Russian timber and business in Russia, which caused many hours of queues in the company's Russian stores. Such woodworking giants as Stora Enso, Metsä, and UPM also announced the shutdown of business with Russia.

The Russian economy depends on the export of raw materials. Timber is one of several important sources of profit, which gave the treasury billions before the war. The volume of exports of Russian timber and products from it is about $14 billion annually.

In this regard, the EU imposed sanctions, including against Russian timber.

According to the estimates of the Russian outlet Kommersant, over these sanctions, Russia has lost the opportunity to supply timber products worth about $6 billion a year, and the reorientation to China will not compensate for the losses.

previously reported about the IKEA and Ukrainian timber scandal. The world's largest furniture retailer promised to check the supply chain of raw materials from Ukraine after an investigation by the public organization Earthsight, which revealed that the company had sold chairs allegedly made from Ukrainian beech in its stores. It is allegedly illegally cut down in the Carpathians, where endangered species of lynxes and bears live.