Post by account_disabled on Feb 20, 2024 4:21:27 GMT -5
The world's largest toy manufacturer, has built a reputation not only for the durability of its bricks, designed to last decades, but also for its substantial investment in sustainability. Despite making annual profits of just over $2 billion in 2022, the company has pledged to invest $1.4 billion to reduce carbon emissions by 2025. This initiative is not just for show. LEGO believes its core customers are children and their families, and sustainability is fundamentally about ensuring future generations inherit such a habitable planet. as the one we enjoy today. So it was surprising when the Financial Times reported on September 25, 2023 that LEGO was withdrawing from its widely publicized “Bottles to Bricks” initiative. The LEGO sustainability case illustrates the complexity of sustainability and the challenges companies face along the journey, according to The Conversation . LEGO aborts sustainability plan… and these are the reasons It was not easy for the brick manufacturer to announce the suspension of the “From Bottles to Bricks” initiative, an ambitious project that aimed to replace traditional LEGO plastic with a new material made from recycled plastic bottles. However, when LEGO assessed the project's environmental impact across its supply chain, it found that producing bricks with recycled plastic would require additional materials and energy to make them durable enough. Because this conversion process would result in higher carbon emissions, the company decided to continue using its current fossil fuel-based materials, while continuing to look for more sustainable alternatives. According to experts on the subject, the change in focus on sustainability at LEGO is just the beginning of a larger trend in which companies are seeking sustainable solutions for all stages of their supply chains within a circular economy. That is, companies are not only considering sustainability in their final products, but in the entire production and distribution chain, from the acquisition of raw materials to the disposal of products at the end of their useful life.
Examine all emissions from cradle to grave Business leaders are increasingly integrating environmental, social and governance factors, commonly known as ESG , into their operational and strategic frameworks. But the pursuit of sustainability requires attention to the entire life cycle of a product, from its materials and manufacturing processes to its use and final disposal. Understanding a company's full carbon footprint involves analyzing three types of emissions: Scope 1 emissions are generated directly by a company's internal operations. Scope 2 emissions are caused by the generation of electricity, steam, heat or cooling that a company consumes. And scope 3 emissions, generated by a company's supply chain, from upstream suppliers to downstream distributors and end customers. Currently, less than 30% of companies report significant Scope 3 emissions, in part because these emissions are difficult to track. However, companies' Scope 3 emissions are, on average, 11.4 times greater than their Scope 1 emissions, according to corporate disclosure data reported to the nonprofit CDP. LEGO is an example of this uneven distribution and the importance of tracking scope 3 emissions. A staggering 98% of LEGO's carbon emissions are classified as scope 3 emissions. Emissions disclosure and transparency: The next frontier As more companies follow in LEGO's footsteps and start reporting on Scope 3 emissions, they will likely find themselves in the same position, realizing that efforts to reduce carbon emissions often come down to emissions. supply chain and consumer use. And the results can force them to make difficult decisions. Added to this are new regulations in the European Union and those pending in California that aim to increase the transparency of corporate emissions by including supply chain emissions. In June 2023, the EU adopted the first set of European Sustainability Reporting Standards, which will require listed companies in the EU to report on their Scope 3 emissions, starting with their fiscal year 2024 reports. The California legislature passed similar legislation that will require companies with revenues over $1 billion to report their Scope 3 emissions. California's governor has until October 14, 2023 to consider the bill and is expected sign it.
At the federal level, the U.S. Securities and Exchange Commission (SEC) released a proposal in March 2022 that, if finalized, would require all public companies to report data related to climate risk and emissions, including scope 3 emissions. Genuine commitment to sustainability Given that Scope 3 emissions are significant but often go unmeasured and unreported, consumers are right to worry that companies claiming to have low emissions may be greenwashing without taking steps to reduce emissions in their chains. of supply to combat climate change. At the same time, it is possible that as more investors support sustainable investing, they may prefer to invest in companies that are transparent in disclosing all areas of emissions. Ultimately, consumers, investors and governments will demand more than just words from companies. The LEGO example serves as a cautionary tale in the complex ESG landscape for which most companies are not well prepared. As more companies come under scrutiny for their entire carbon footprint, we may see more cases where well-intentioned sustainability efforts face uncomfortable truths. This requires a nuanced understanding of sustainability, not as a list of good deeds, but as a complex and continuous process that requires vigilance, transparency and, above all, a commitment to the benefit of future generations. Financial services company Liberty Mutual sees people sustainability as a factor in limiting the global risks of its clients, partners and employees in the face of accelerated climate change. Chief Sustainability Officer Francis Hyatt, who previously served as Executive Vice President of Enterprise Talent Practice, oversees the integration of global climate issues into the company's risk management approach and promotes sustainability solutions for employees, resellers and customers.
Examine all emissions from cradle to grave Business leaders are increasingly integrating environmental, social and governance factors, commonly known as ESG , into their operational and strategic frameworks. But the pursuit of sustainability requires attention to the entire life cycle of a product, from its materials and manufacturing processes to its use and final disposal. Understanding a company's full carbon footprint involves analyzing three types of emissions: Scope 1 emissions are generated directly by a company's internal operations. Scope 2 emissions are caused by the generation of electricity, steam, heat or cooling that a company consumes. And scope 3 emissions, generated by a company's supply chain, from upstream suppliers to downstream distributors and end customers. Currently, less than 30% of companies report significant Scope 3 emissions, in part because these emissions are difficult to track. However, companies' Scope 3 emissions are, on average, 11.4 times greater than their Scope 1 emissions, according to corporate disclosure data reported to the nonprofit CDP. LEGO is an example of this uneven distribution and the importance of tracking scope 3 emissions. A staggering 98% of LEGO's carbon emissions are classified as scope 3 emissions. Emissions disclosure and transparency: The next frontier As more companies follow in LEGO's footsteps and start reporting on Scope 3 emissions, they will likely find themselves in the same position, realizing that efforts to reduce carbon emissions often come down to emissions. supply chain and consumer use. And the results can force them to make difficult decisions. Added to this are new regulations in the European Union and those pending in California that aim to increase the transparency of corporate emissions by including supply chain emissions. In June 2023, the EU adopted the first set of European Sustainability Reporting Standards, which will require listed companies in the EU to report on their Scope 3 emissions, starting with their fiscal year 2024 reports. The California legislature passed similar legislation that will require companies with revenues over $1 billion to report their Scope 3 emissions. California's governor has until October 14, 2023 to consider the bill and is expected sign it.
At the federal level, the U.S. Securities and Exchange Commission (SEC) released a proposal in March 2022 that, if finalized, would require all public companies to report data related to climate risk and emissions, including scope 3 emissions. Genuine commitment to sustainability Given that Scope 3 emissions are significant but often go unmeasured and unreported, consumers are right to worry that companies claiming to have low emissions may be greenwashing without taking steps to reduce emissions in their chains. of supply to combat climate change. At the same time, it is possible that as more investors support sustainable investing, they may prefer to invest in companies that are transparent in disclosing all areas of emissions. Ultimately, consumers, investors and governments will demand more than just words from companies. The LEGO example serves as a cautionary tale in the complex ESG landscape for which most companies are not well prepared. As more companies come under scrutiny for their entire carbon footprint, we may see more cases where well-intentioned sustainability efforts face uncomfortable truths. This requires a nuanced understanding of sustainability, not as a list of good deeds, but as a complex and continuous process that requires vigilance, transparency and, above all, a commitment to the benefit of future generations. Financial services company Liberty Mutual sees people sustainability as a factor in limiting the global risks of its clients, partners and employees in the face of accelerated climate change. Chief Sustainability Officer Francis Hyatt, who previously served as Executive Vice President of Enterprise Talent Practice, oversees the integration of global climate issues into the company's risk management approach and promotes sustainability solutions for employees, resellers and customers.