Lego’s Sustainable Supply Chain
Lego, along other toy companies, was targeted by a Greenpeace social media campaign highlighting the sourcing of their packaging materials, fibers from endangered rainforests (Stine, 2011), and their partnership with Shell Oil (Mainwaring, XXXXXXXXXXLego executives have stated that children are their most important stakeholders and changing operations to protect the environment for them is critical (Mainwaring, XXXXXXXXXXThe company ended its partnership with Shell Oil when the contract term expired (Mainwaring, 2016), and Lego now uses less packaging and makes that packaging out of recycled materials whenever possible (Stine, XXXXXXXXXXWhen it is not possible to use recycled materials the virgin materials used are all Forest Stewardship Council certified (Stine, XXXXXXXXXXLego also enforces these policies with the vendors in their supply chain (Mainwaring, XXXXXXXXXXLego’s Sustainable Materials Center is working to discover and replace existing materials with sustainable alternatives by 2030, a task that will include both packaging and end of use situations for the toys themselves (Mainwaring, 2016).
The rationale Lego presented for the change was that the company’s mission is to inspire future builders (Mainwaring, XXXXXXXXXXThe initiative does support the stated mission in that the company is working towards leaving a better world for those future builders to build in. It also provides those future builders with an example for using sustainable materials instead of materials that are bad for the environment.
The external pressures included pressures from environmentalist groups like Greenpeace, and letters from customers (Mainwaring, XXXXXXXXXXThere may have been political pressure as well since packaging materials were being made from fibers taken from endangered rainforests in Indonesia (Stine, XXXXXXXXXXInternal pressures were potential loss of revenue from socially conscious consumers, and reevaluation of how existing practices supported the company’s mission and values.
Multiple rationales were utilized in this change initiative. Lego understood that loss of reputation resulting from the environmentalist groups targeting them could result in decreased revenues. They also probably understood that the ability to market themselves as a sustainable company would increase both their reputation and revenues. Corporate social responsibility measures also contribute to employee morale and buy-in regarding the change initiative (Gonzalez-Padron, 2015).
References:
Gonzalez-Padron, T. (2015).Business Ethics and Social Responsibility for Managers. Bridgepoint Education.
Mainwaring, S. (2016, Aug 11). How Lego Rebuilt Itself As A Purposeful And Sustainable Brand.Forbes.
https://www.forbes.com/sites/simonmainwaring/2016/08/11/how-lego-rebuilt-itself-as-a-purposeful-and-sustainable-brand/?sh=5af277a6f3c4Links to an external site.
Stine, R. (2011, Sept 1). Lego’s quick action to smarten up its packaging supply chain is a model some competitors should copy.Reuters Events.https://www.reutersevents.com/sustainability/supply-chains/analysis-toy-manufacturing-lego-builds-sustainable-supply-chain