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The LEGO Group has revealed a key component of bonuses for all salaried employees will now depend on the company’s progress to meet emission reduction targets.
In an announcement shared on social media, the company said the ties to performance-related bonuses will keep the company accountable with its climate strategy.
“We have an ambitious target to reduce our emissions by 37% by 2032 and achieve net zero by 2050,” the statement says.
“To help keep us on track, from 2024, a percentage of our performance management programme for colleague bonuses will be tied to annual emissions as we take steps to reduce environmental impact across all areas of our business.”
According to the LEGO group’s sustainability page on its website, it has introduced an annual KPI based on how colleagues contribute to the company’s emission reduction targets.
The beloved toy brick manufacturer earlier announced fdevelopments to its climate strategy last year, including the goals to be ‘net zero’ by 2050.
It launched a Science Based Targets initiative (SBTi) in 2023 that set emission reduction targets for Scope 1, 2, and 3 emissions.
Scope 1 emissions are from sources an organization directly controls and Scope 2 emissions are from the energy indirectly used by a business such as office electricity, whereas Scope 3 emissions are from sources not directly produced by the company but elsewhere in its value or supply chain.
Alongside the emission reduction targets, LEGO also pledged over $1.4billion in investment for environmental sustainability initiatives until 2026, and shared plans to tie executive remuneration to a carbon KPI. Other policies included ensuring responsible employee travel.
As a part of LEGO’s update to its employee bonus program, the company will base part of an employee’s performance-related bonus not just on contributions to the reduction of carbon produced in LEGO factories, stores, and offices, but also to its Scope 3 emissions, which include business travel.
The measurement of emissions will relate to the amount of bricks LEGO manufactures each year.
The new policy reflects the increasing desire of HR and ESG leaders to work together on tying climate strategy into the employee experience, including remuneration.
Willis Towers Watson’s HR and Climate Strategy Survey previously found close to half (46%) of employers expect their employees to help the company deliver on its climate strategy, and a third (33%) agree that executive compensation should be based in part on the delivery of the company’s climate strategy.
