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How Lego is building its supply chain with net zero in mind

Ask most people involved in achieving long-term emissions targets, and they will tell you that Scope 3 is the hardest area to tackle.

Scopes 1 and 2 emissions, those that a company creates directly or indirectly in the course of doing business, may create the most carbon dioxide and are where the bulk of action to change methods has been focussed to date.

Which made Lego’s announcement about how it will challenge all suppliers to achieve net zero targets all-the-more interesting. The company has unveiled a supplier sustainability programme that has metaphoric parallels with its iconic pieces of plastic - a piece-by-piece, collaborative and learn-as-we-go approach to reducing emissions across everything it buys, which currently amounts for around 99% of its emissions.

The Danish toy giant has committed to an ambitious mid-term emissions reduction target as well as a 2050 net zero one - it aims to lower emissions by 37% by 2032.

Clearly that can only happen by ensuring suppliers are all driving in the same direction, and take a uniform approach to sharing data on their achievements.

Annual reporting across the supply chain will begin this year, with suppliers asked to set their own short and mid-term targets, and all have been challenged to lower emissions from facilities, energy consumption and logistics, according to Sustainability Magazine.

Importantly though, in running the rule over companies that it buys from, LEGO has said that it will share carbon accounting expertise and offer the services of its own sustainability team to help drive progress.

Overall, the emphasis of the programme is on decarbonising together fairly and clearly. Yes it is a mandate for those with contracts with LEGO rather than an option, but it’s an example of a major multinational setting out what it will do itself and how it plans to conduct the orchestra across an extensive global supply network.

The numbers are pretty eye-watering. The company makes an estimated 200 million little plastic pieces a day and there are 3,700 unique items to produce. Getting those coloured blocks into the right packages and sending them to the right places on-time is an enormous inventory control, manufacturing and distribution challenge.

And of course, we’re talking about plastic. Lego’s hurdles in making itself more sustainable have been well-documented, including rowing back on making oil-free products from recycled materials. But in making that change, it did say that recycling materials in that way would have actually made emissions worse. A cynic might say that’s a convenient get-out, but the news did much to spotlight the complexities of lowering Scope 3 emissions, and the choices that may have to be made along the way.

The new programme is as ambitious as it is extensive. If Lego can drive the desired outcomes, it may be a model for Scope 3 partnership across other forms of supply chain, and is surely one that companies in other sectors will watch closely.

First though, it will need to start fitting all the pieces of decarbonisation together carefully.

Written by

Steve Earl, partner at Boldt Partners

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