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Billionaire Lego owners' plastic agenda comes at an unknown cost
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On Tuesday, Lego reported another decline in first-half revenue and profit, which it said was due to a weak dollar. (Bloomberg/Freya Ingrid Morales)
T
he chief executive officer of Lego A/S says it’s difficult to know the financial implications of a plan -- backed by one of Denmark’s richest families -- to no longer make toy bricks from plastic.
“It’s hard to say,” Niels B. Christiansen said by phone from Lego’s headquarters in western Denmark. “I’m not even sure that we currently yet can live up to the quality that we want. But it’s an agenda that we want to drive and an agenda that our owner is behind. We want to become a leader on this.”
Controlled by Denmark’s billionaire Kirk Kristiansen family, Lego brought in Christiansen as CEO in October. The family is behind a plan to make all of Lego’s colorful building blocks from sustainable materials, such as sugar cane, by 2030. The shift, which was announced in March, is part of a global effort to fight plastic pollution and the threat it poses to marine life in particular. For now, the Danish company has started to offer small plant-based Lego sets as gifts in connection with large purchases.
Christiansen says it’s not yet clear whether the shift can be brought about without hurting profit margins. The feeling at Lego is that there’s been a “breakthrough” on the path away from plastic production, but there are still many unknowns, he said.
“I think it’s too early to say whether it will be necessary” to sacrifice profit to achieve the company’s sustainability goal, he said. “But we won’t compromise on our quality.”
Read also: Turkish Airlines, Lego bring fun to safety video
Christiansen, who used to run Danish engineering giant Danfoss, was brought in by the Lego family to help trim the organization after years of rapid expansion left it overly complex and difficult to steer.
On Tuesday, Lego reported another decline in first-half revenue and profit, which it said was due to a weak dollar. Adjusting for currency swings, Lego said profit grew from a year earlier amid signs things are starting to stabilize.
Christiansen wouldn’t say whether any potential increase in production costs would be passed on to customers, in connection with the planned shift to plant-based toys.
“We have high quality products that offer a building experience as well as a playing experience and can be used for many, many years,” the CEO said. “Our prices are based on that rather than on whether the product is made from one thing or another.”
Lego is also trying to adapt its toy offering to a generation that’s spending more time on screens than on other forms of entertainment, such as building Lego structures.
“Many of our competitors are eager to know” just how many products Lego will digitize, Christiansen said. “I prefer not to be too specific. But it’s one of the areas we’re investing in. So it’s safe to say there will be more.”
