The dilemma faced by the maker of plastic brick toys highlights the importance of factoring in the carbon emissions from upstream and downstream activities.Lego pledged US$1.4 billion to reduce carbon emissions by 2025, despite netting annual profits of just over US$2 billion in 2022.
So it was surprising when the Financial Times reported on Sept 25, 2023, that Lego had pulled out of its widely publicised “Bottles to Bricks” initiative. Currently, less than 30 per cent of companies report meaningful scope 3 emissions, in part because these emissions are difficult to track. Yet, companies’ scope 3 emissions are on average 11.4 times greater than their scope 1 emissions, data from corporate disclosures reported to the non-profit CDP shows.
As more companies follow in Lego’s footsteps and begin reporting scope 3 emissions, they will likely find themselves in the same position, realising that efforts to reduce carbon emissions often boil down to supply chain and consumer-use emissions. And the results may force them to make some tough choices.
California’s legislature passed similar legislation requiring companies with revenues of more than US$1 billion to disclose their scope 3 emissions. California’s governor has until Saturday, Oct 14, 2023, to consider the Bill and is expected to sign it. Because scope 3 emissions are significant, yet often not measured or reported, consumers are rightly concerned that companies that claim to have low emissions may be greenwashing without taking action to reduce emissions in their supply chains to combat climate change.
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