Rated in the top ten brands amongst families with children, Lego position themselves as being recognised, trusted, respected and loved (LEGO Group, 2002),whilst being associated with high quality and happy memories their products often have the image of being old fashioned and dull (Schultz et al, 2005:169) What is CSR? Originating from the United States of America (Matten and Moon, 2004), “CSR is the concept whereby companies integrate social and environmental concerns in their business operations and in interaction with stakeholders” (Belz and Peattie, 2009:34).
It is a relatively new and dynamic concept, which changes over time in accordance with contemporary issues of importance in a given society (Roome, 2005:320). Traditionally associated with larger companies, it has now become an important issue for any organisation regardless of size, as it focuses on business ethics, sustainability, philanthropy, and environmental responsibility. Examining LEGO Group’s CSR Communication On the LEGO Groups Company website there is a large section entitled ‘Corporate Responsibility’ (See appendix 2).
Through using the internet, the LEGO Group can communicate on a Global scale where any stakeholder who has access online can view their CSR plans. Within this section Lego publish an annual report which addresses areas of CSR they have covered and areas they plan to tackle. Through publishing this report they are acting socially responsible, as they allow stakeholders the opportunity to access key information on the LEGO Groups CSR progress. However it may only be due to legislation that Lego are publishing this report.
Being based in Denmark, the LEGO Group are required by Danish law to issue annual reports regarding CSR (CSRgov, 2011). In reference to Carrols pyramid, it becomes apparent that they may only act socially responsible to a ‘required level’ and may only be addressing their legal responsibilities. It could be that they do not have the stakeholder’s interests as their main priority. Another way the LEGO Group communicates its interest in CSR is through the use of corporate philanthropy.
Most recently the LEGO Group has united with the BBC to produce a product line, where all profits go to Children in Need (BBC, 2011). The product is a ? 4. 00 Lego Pudsey bear (See Appendix 3), which is being sold in the retail giant Asda and the LEGO Groups shops exclusively (BBC, 2011). Through involvement in philanthropic activities it will attribute positively to the company’s image and regard amongst varied publics, it will also have increased respect within the community and a stronger desired brand position (Kotler and Lee, 2005:147).
Using Asda to distribute the product, the LEGO Group will be communicating to a large and diverse demographic, this establishing relationships outside their normal target audience, thus leading to “national attention and goodwill for the brand” (Kotler and Lee, 2005:152). According to Peattie (1992) organisations can create competitive advantage by going green. However the LEGO Group do not market their green credentials. On product packaging there is no evidence of any CSR through the use of Eco labelling schemes or stating what recycled materials it is made from( See appendix 4).
This could be a key area to communicate, as consumers are now changing their spending habits, feeling they have an active part in solving environmental problems by recycling and choosing eco-friendly products (Rokka & Uusitalo, 2008). It has been highlighted in their CSR Report that they plan to use only FSC certified fibres within packaging, if this is fulfilled it will then allow the usage of the FSC logo on packaging, being a third party assessment it has greater credibility within the consumers mind (D’Souza, 2004) Stakeholder Messaging Stakeholders are those groups or individuals with whom and organisation interacts or has interdependencies” (Carroll and Buchholtz, 2011:9) One Stakeholder relationship the LEGO Group has acted upon to improve is within the community, specifically environmental groups. The LEGO Group was put under pressure from GreenPeace, who did research in the Toy Manufacturing industry and found all the major companies were having there paper supplied from Asia Paper and Pulp (Brooks, 2011).
APP source paper through deforestation and have no sustainability plans, so GreenPeace asked the major toy manufacturers to stop co-operating with this “forest offender” and source sustainable forest products for all their toys and packaging (GreenPeace, 2011). The LEGO Group acted upon this revelation and now intends not to buy packaging from companies involved in deforestation, confirming APP will not supply to the company (GreenPeace, 2011).
The LEGO Group have also outlined a three stage plan, to reduce the environmental impact of packaging materials and paper used in their products (LEGO Group, 2011b). The first is to reduce the amount of packaging materials used, secondly to always use recycled fiber when possible, with 2010 seeing 75% of packaging made from recycled material, the third step is when it is not possible to use recycled fibres, LEGO must ensure the pulp based packaging is produced in a sustainable manner (LEGO Ground, 2011b).
Through changing packaging the LEGO Group are also addressing the concerns of the General public, with consumers saying that packaging is the top environmental problem in relation to the products they buy (DEFRA, 2009). This emphasises the role and power stakeholders have in influencing a company’s product, with Hazlett et al (2007) stating that long-term organisational success can only be achieved if management acts to meet the needs and expectations of customer and non-customer stakeholders. Trends within the Industry
Within the construction toys industry the LEGO Group have two direct competitors MEGA Brands who manufacturer the MEGA Block (MEGA Brands,2011) and Hasbro who are trying to penetrate the market with KRE-O Transformers (Hasbro, 2011). Other than assuring consumers they promote safety in their products MEGA Brands do not publish any CSR activity creating the assumption that they do not have a CSR policy. MEGA Brands are a much smaller company than the LEGO Group posting a gross profit of $146mi(MEGA Group,2010)to LEGO’s $1. 9b(LEGO Group, 2010).
Although smaller according to Carrols pyramid it does not explain why they are not involved in ethical and philanthropic responsibilities as they are making large profits. On the other hand Hasbro have an independent website dedicated to their CSR policies, illustrating how much is donated to charity annually to the amount of recycled content in products (Hasbro, 2011b). Also like LEGO and the other big players in toy manufacturing industry they have stopped sourcing paper from APP due to sustainability issues highlighted by Greenpeace.
However Hasbro only made this switch to source sustainably once all the competitors had, showing that being ethical may not be their main priority, but do it as a form of risk management as to not lose leadership positions and let others gain competitive advantage (Business & the Environment, 2004). The largest toy manufacturers such as Mattel and Bandai Co. , LTD are also changing suppliers and packaging opting to sustainable and more environmentally friendly options.
Another major trend within the toy manufacturing industry is reducing the size and amount of materials used in packaging and increasing the recycled content in products, Mattel (2011), Hasbro (2011) and Bandai (2011) all mention this as a key target in their annual CSR reports. CSR is such a current issue within the toy industry that the world’s largest toy fair was themed ‘ecology’ for the 2010/11 annual event (Bandai, 2011). The LEGO Group are currently viewed as the best practice of CSR, even being voted as the most respected company worldwide in 2007 (CSR Europe, 2007).
This is because currently 75% of all LEGO’s packaging is from recycled content (LEGO Group, 2011b) and the closest is Mattel who aim to have 70% recycled content by 2012 (FSC Canada, 2011). However involved in philanthropy the LEGO group donate the least with $15mil (LEGO Group, 2010b:31) compared to Hasbro’s $23. 7mil (Hasbro,2010) and Mattel’s $20mil (Mattel 2009), but the LEGO Group have the highest percentage of donation of their profits made. Is the LEGO Group green washing?
Friend (2009:78) describes greenwashing as “the act of misleading consumers regarding the environmental practices of a company or its environmental benefits of a product or service – even with the best of intensions. ” The LEGO Group seems to be solely focused on the issue of “not jeopardising the capacity of the environment”(Roome 2005:321). The LEGO Group does not seem to be motivated by or focused on economic gains in the communication of the company’s commitment to improving its environmental performance.
Instead, the LEGO Group’s approach to the objective of sustainability seems only to reflect an internal drive, to take part in solving some of the major issues that face the world presented as a natural part of the company’s values and beliefs. Evidence of this concern for stakeholder interests is linked to the history and culture of the company, basing how they operate on the motto of the LEGO founder “Only the best is good enough” (LEGO Group, 2012). According to Neergaard & Pedersen (2006) there are three reasons which drive a company to engage in CSR activities: a value-driven, performance-driven and stakeholder-driven approach.
From the evidence above the LEGO Group seem to be value driven, “being self-motivated to have a positive impact on the society regardless of external social pressures only practicing CSR because it is ethically correct” (Neergaard 2006:25). A value driven approach is also supported when you view the LEGO Groups marketing, be that on packaging (See Appendix 4) or advertising. They do not boast of their green credentials be that through eco labels, using emotive colours relating to green promotion or informing consumers of what recycled content is involved, proving it isn’t performance driven. However the LEGO Group are orking closely with Windmade™(Hopwood, 2011) and the Forest stewardship Council so they can use these Eco labels on packaging in future (LEGO Group, 2011b), this should drive green brand equity if better publicised. The LEGO Group also finance external audits to cross check if the figures on recycled waste, energy efficiency and CO2 produced are all correct, “challenging them to be more aggressive” (LEGO Group, 2010b:21). Although they say they use external audits there is no publication of this audit on their site and they don’t expand onto who the auditors were, so can this be classed as a credible source?
Conclusion and Recommendations It is clear to see that the LEGO Group view CSR as an important part of their business practice. Annually reviewing all areas of the business and researching ways to cut emissions and improve work standards. However the LEGO Group still need to remember they are a business and whilst CSR may be value driven there needs to be financial benefits. Communicating there green stance should be key, as consumers spending habits are changing with their increased awareness of environmental issues (Rokka & Uusitalo, 2008).