For the LEGO Group, growth has been as consistent and precise as the red plastic blocks that snap together to construct cars, castles, and kingdoms.
The Billund, Denmark-based iconic toy company, which has a movie, theme park, and several successful superhero product lines, increased its revenue by 13 percent this past year, and then decided to drastically decrease its carbon footprint for its supply chain, manufacturing, and distribution.
“We have a duty to inspire and develop the builders of tomorrow and therefore addressing the real issues around man made climate change is a key part of that,” said Morten Vestberg, communication manager for the LEGO Group. “By doing so, we move towards our goal of positive impact, reduce our energy use, cut operating costs, and ensure we are a business fit for the future.”
As part of the LEGO Group’s ambition to deliver a positive impact on the planet, the toy manufacturer signed a partnership with World Wildlife Fund to be a member of the Climate Savers Programpledging to intensify their work to improve performance on a range of environmental priorities – including greater focus on collaboration with suppliers to reduce total carbon emissions. The LEGO Group plans to: • Initiate test projects together with suppliers to co-create best solutions to address the supply chain carbon emission impact. • Work with an environmental strategy for materials, which could include producing products using fewer materials, keeping the recyclability high and using renewable or recycled materials. • Look into how it can best innovate its products to be more sustainable. • Reduce the energy used to manufacture one ton of LEGO elements by 10 percent by the end of 2016. • Produce more renewable energy than the company uses in its facilities; be 100 percent renewable by 2016.
“We have experienced strong growth for eight consecutive years and, as we grow, we are becoming increasingly aware of the impact we leave on the planet,” said Jørgen Vig Knudstorp, LEGO Group’s CEO. “Partnering with WWF is an important step in our efforts to get the best out of our sustainability initiatives.”
Innovative suppliers
In 2013, the LEGO Group had a total of 110 suppliers. If the company reduced carbon emissions directly related to production at LEGO factories by a minimum of 10 percent, which is the target, this would remove approximately 10,000 tons of carbon emissions.
But, only 10 percent of the total carbon emission from the entire value chain related to LEGO products originates from the processes taking place at factories during moulding, decoration, and packaging of LEGO bricks.
The remaining 90 percent of the carbon emissions stem from supply chain activities such as raw material extraction and refinement, indirect procurement, distribution from LEGO factories to toy stores around the world and end of life impact when the products are eventually scrapped.
If the toy company is able to enable its supply chain to also achieve a reduction in production at a similar level, the total emissions would be reduced by 100,000 tons, which is equivalent to taking approximately 28,000 cars off the streets.
“We are undertaking a number of pilot projects with key suppliers in our materials supply, machinery providers, and transport partners,” Vestberg said. “We are currently developing an approach through co-creation with these important stakeholders rather than implementing a predetermined standard as we feel this is how we will achieve effective and long lasting impact reduction.”
Since 1997, the LEGO Group has required suppliers and business partners to sign their Supplier Code of Conduct to ensure responsible sourcing. To promote sustainable supply chains the toy manufacturer has ongoing dialogues with suppliers on how to best take a proactive stance together to handle the environmental issues impacting the globe.
Responsible manufacturing
While the LEGO Group is now increasing focus on suppliers – it still remains ambitious and dedicated on reducing its own environmental impact. For a number of years the LEGO Group and the WWF have had a dialogue on a range of sustainability topics such as sourcing sustainable packaging materials through FSC and partnering on the launch of the WindMade initiative. Now the formal partnership puts focus on going beyond zero carbon emissions. The LEGO Group is already right on track to meet this ambition with concrete action by investing $532 million in a new offshore wind farm in northern Germany where the production of energy from the LEGO Group’s part of the wind farm equals the energy consumption of approximately 100,000 residential homes. The offshore wind farm, Borkum Riffgrund 1, will support the LEGO Group’s goal to generate enough renewable energy capacity to meet the company’s energy needs by 2020. The wind park is being built and operated by DONG Energy.
“As the LEGO Group works to achieve the ambitious aim to produce more renewable energy than it uses, the company follows a strict energy hierarchy of 1.) Reduce demand, 2.) Energy efficiency, and 3.) Renewable energy,” Vestberg said.
First, the company cuts energy use, or avoids processes that require excess energy. Secondly, they improve the efficiency of the equipment and buildings through controls optimization, insulation or reuse of heat and cooling. In this stage, the company would consider the use of combined cooling, heating and power systems, and will install such a system in its new Hungary factory.
“Then we evaluate the potential of renewable energy, initially onsite if feasible and if not, offsite,” Vestberg said.
Sustainable raw materials
In 2013, LEGO increased its efforts to find and implement more sustainable alternatives to the raw materials used for the toy bricks, as these contribute 30 percent of the company’s greenhouse gas emissions. By 2030, LEGO’s vision is to find and implement sustainable alternatives to its current raw materials.
The raw material for LEGO bricks starts out as a fragment currently distilled from crude oil. Through a number of processes, the large molecules from crude oil are processed via small molecules into long chains of molecules to make the raw material for the brick. As the company continued to grow its production throughout 2013,it used 68,000 tons of raw materials.
Even though it is a challenge to find materials that do not compromise the current high quality and safety standards of LEGO products, the company has set goals to find more environmentally friendly materials. The LEGO Group has:
• Established a separate department, anchored in top management, with the sole focus of moving into sustainable raw materials by 2030.
• Launched a number of initiatives in cooperation with both suppliers and selected cooperation partners to start the journey towards a sustainable material vision. The toy company will increase cooperation with cutting-edge material suppliers to develop more sustainable materials suitable for LEGO products and production.
• And start measuring the environmental sustainability of new materials to ensure that LEGO reduces its total impact and does not trade off between different environmental impacts.
“We are committed to improving our environmental performance year after year as we strive for positive impact on our sustainability agenda,” Vestberg said. “We seek to embed environmental sustainability into everything we do.”
