Is LEGO Group Right to Link Exec Bonuses to Sustainability?
As the deadlines of 2025, 2030, 2040 and 2050 creep closer, companies come under increasing pressure to hit their sustainability targets.
There are many motivations behind achieving sustainability goals.
In the long term, it supports a safe, inhabitable planet for future generations. In the short term, it is in line with consumer expectations, it promotes partnerships and often encourages efficiency which comes hand in hand with long term cost saving.
However, all of these incentives are large-scale, with the implementing execs unlikely to see the full benefit of their work in their lifetime.
The solution? The LEGO Group is tying its sustainability performance to its executive bonuses, in the sustainability team and beyond.
“We have an ambitious target to reduce our emissions by 37% by 2032 and net zero by 2050,” explains Stuart Jefford, Head of Climate at The LEGO Group.
“To help embed this across our business, I’m proud to say that we’ve now tied a percentage of colleague bonuses to our annual carbon emissions.
“There’s lots still to do, but this will help everyone to play their part.”
LEGO said: “To keep ourselves on track, we’ve introduced an annual KPI to reward colleagues for contributing to our reduction targets.”
The new KPI is a trackable carbon intensity metric achieved by comparing Scope 1 and 2 emissions and one Scope 3 emission category (business travel) with how many bricks have been manufactured over the same period.
From 2024, a portion of the company’s salaried employees' bonus payments will be tied to this KPI, which will expand to include wider Scope 3 emissions as the company progresses.
Diving into LEGO’s sustainability commitments
In 2020, the LEGO Group was the first large toy company to announce a science-based emissions reduction target to reduce its absolute GHG emissions by 37% by 2032, against a 2019 baseline.
In August 2023, the company announced a new goal – to achieve net zero emissions by 2050.
How is the LEGO Group planning to reduce emissions?
In Scope 1 and 2:
- Boosting energy efficiency by investing in smart systems, updated lighting systems, optimised cooling and ventilation systems
- Increasing renewable energy in all regions where it operates. For example, in 2021 the LEGO Group installed more than 20,000 solar panels at its factories in China, Hungary and Mexico
- Building sustainable infrastructure. When constructing new buildings, the LEGO Group is prioritising high standards in sustainability. For example, the new LEGO Campus in Billund has Gold-level LEED certification and the new factories in Vietnam and the US will be designed to have the lowest possible environmental footprint and be run carbon-neutral.
- Sustainable investments. The LEGO Group's new tool, shadow carbon price, is designed to encourage more investments in low-carbon projects.
In Scope 3:
- Engage-To-Reduce is a programme, launched in 2014, designed to support the LEGO Group in understanding how the company can work with its suppliers to minimise GHG emissions.
- LEGO’s Responsible Business Principles are in place to ensure that the rights and well-being of everyone involved in making LEGO products is safeguarded, and to protect the environment.
- A supplier review process has been introduced to ensure that partners are aligned with LEGO’s goals. This also ensures that the highest-impact suppliers to participate in the Engage-to-Reduce programme.
- Newer, more sustainable materials. Over the last few years LEGO has tested more than 300 different materials, including recycled plastic bottles, and bio-polyethylene (bio-PE), in an effort to create a more sustainable material for its bricks.
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