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The Danish toymaker’s failure to acknowledge the Shell and Ai WeiWei controversies raise questions over what else it is hiding
Here’s an easy way to diagnose transparency: check the contents of a corporate sustainability report against the list of bad news stories about the company in its reporting year.
One would hope, say, that Volkswagen would talk openly about its emissions scandal. That the banks would discuss how they rigged exchange rates and mis-sold insurance. That prosecutions for bribery and corruption were explained. That fines for forming cartels were revealed. That revelations of skeletons (and slaves) in the supply chains were reported.
And indeed, this is what some companies do. After its corruption scandal in 2008, BAE Systems, the defence company, went for full disclosure in its subsequent corporate responsibility report. Stakeholders rejoiced at the transparency and the heavens did not fall in.
Those are the really bad news stories. But how about the moderately awful? Like Lego’s very public run-in with Greenpeace over the toy company’s commercial association with Shell? Or its widely reported spat with the Chinese activist artist Ai WeiWei when Lego refused to sell him building blocks for an installation?
These are the events – and the company’s side of the story – that you would expect to read about in a sustainability report. The stories embody the very essence of responsibility and a company’s relationship with its stakeholders.
In both Lego sagas, the beloved Danish toymaker was brave enough to change its mind and embrace its critics. The reversals, Shell in 2014 and Mr Ai in 2015, followed belated but astute readings of public outrage. In hindsight, Lego should have seen the buses coming, but it must be congratulated for being big enough to realise its mistakes and change course after the impact.
And that’s why it is so disappointing to read Lego’s two most recent sustainability reports and find no mention of Shell and not a jot on Mr Ai. This is what these reports are for: If you can’t demonstrate transparency in your sustainability report about what’s already in the public domain, what else could you be hiding?
That the acutely analogue Lego thrives in the digital age is because of smart management and the ability to follow fast-changing markets. Like the other big toy players, Hasbro and Mattel, Lego has embraced digital (The Lego Movie) and is a thoroughly modern, progressive company.
With its trendy workspaces, a vowed ethical stance and ambitious environmental goals, Lego occupies the same space as super-cool high-tech Google and Apple. Owned by the investment vehicle of the Kirk Kristiansen family, Kirkbi, Lego makes great effort to tick all the responsibility boxes.
Doing things right
It is a signatory to the UN Global Compact (it was the first toy company to sign up), has some of its data externally audited, has a human rights policy, and is pursuing highly ambitious environmental goals to make its plastic bricks from renewable materials. As you would expect, it follows GRI reporting guidelines (and AA1000) and produces a comprehensive document that, it says, follows its 2013 materiality exercise and stakeholder engagements.
The 2015 report succeeds in conveying the impression that Lego is a serious company that cares for its people, the environment and its influential role in the world of play.
Although it uses images of young children’s Lego creations, this is not a playful document. Swap the bricks for, say, industrial packaging, and you would not notice the difference in tone.
The clunky dryness of the report appears intentional: this is not a communications document and there is no obvious PR spin. Given all these ticks, the report should get a gold star. Readers should be hailing the depth and clarity of the corporate narrative, holding the document up to others as an example of reporting brilliance.
But apply the transparency test and the disappointment is palpable. The only negative item in its 70 pages is a paragraph on a €130,000 fine from the German authorities for price fixing. Nothing about Ai WeiWei, the biggest sustainability news story about Lego in its reporting year.
This is certainly not a fluffy bunny report common in the early days of reporting. But it fails the transparency test – and that’s what reporting is all about.
Peter T. Knight is Chairman of the Context Group, a sustainability strategy and communications consultancy with offices in London, Los Angeles and New York.