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New from LEGO: Ready-to-Assemble Multi-Piece CSR Report

By Michelle Bernhart (True Blue Communications) on April 20, 2009 at 3:04pm.

Content:

Like its colorful interlocking “bricks”, the 2008 CSR report issued by the LEGO Group comes in many pieces. Unlike those bricks, however, the pieces of LEGO’s report are frustratingly difficult to assemble and understand. Called Progress Report on Corporate Responsibility, the official LEGO report is one of no less than three separate documents we’re told we should consult to learn about corporate responsibility at LEGO. The other two required readings, the annual financial report and a lovely but overly long (93-page) magazine called “The Brick”, require readers to make careful comparisons to determine how, if at all, the content is meant to be used together. Is it complementary across the documents? Does it compare year-to-year results? The answer seems to be that some is simply repetitive, while other information, such as the stories presented in “The Brick”, is meant to enhance our awareness of the ways in which LEGO puts into practice its four brand promises - play, partner, planet, and people. Unfortunately, these promises are included in the overview table two pages before the concepts themselves are introduced or explained, which only adds to the general confusion.

The good news is that the four promises demonstrate the integration of CSR into the LEGO Group’s overall business strategies and directly support the LEGO brand by focusing on concepts such as playful learning, creative potential, and the healthy development of children. And, quantifiable targets have been developed for multiple issues within each promise area. Further evidence of the evolving integration of CSR into the company’s business can be found in LEGO’s creation and use of a “balanced sustainability model” to drive business planning, and in the implementation of a new policy framework that seems to integrate concepts like responsibility with those addressing people and culture, risk management, and communication. The report also succinctly demonstrates the links to the UN Global Compact principles and suffices as the company’s Global Compact-required Communication on Progress. LEGO also self-declares adherence with Global Reporting Initiative Level C.

Communication:

The report is bare bones, with simply laid-out pages of text and without a single photograph. Still, it manages to confuse and confound. Targets and performance data are presented in two tables, separated by 10 pages of text. The second of the two includes helpful icons to demonstrate whether a target was met. However, no explanation is offered for the 40 percent of targets shown as unmet, nor is any text provided to indicate how the company might be planning to address these areas in the future. Several of the unmet targets are absent from the explanatory text entirely.

The report gets good marks for transparency in data calculation, which is explained at length, but completely lacks any graphs presenting the data, which many report readers find useful in understanding and comparing performance from year to year. In addition, of the four small graphics included in the report, one, which shows carbon dioxide equivalents for LEGO’s product supply chain, is erroneously introduced in the text by four paragraphs about LEGO’s value chain and mislabeled in the caption as “the value chain”. It is clear from the preceding text that LEGO report authors understand the difference between the value chain and the supply chain, but the subsequent mismatch between text and graphic risks both misinforming and disengaging readers.

Speaking of engagement, the report does identify six stakeholder groups, to which the company has made its four promises, and whose expectations are somehow further divided into three main areas. Whew. Those aren’t necessarily the kinds of metrics most readers are seeking in a CSR report. Dialogue, interaction, and feedback are not mentioned, nor have stakeholder interests or concerns been identified. Materiality doesn’t appear, either, and it seems evident that the concept has not been considered, at least not recently.

“The Brick”, on the other hand, is chock-full of information about one LEGO stakeholder group - consumers - but even this seems to be mostly marketing-related. In general, The Brick is rich in content, although its messages are decidedly subtle and readers unfamiliar with CSR issues may find it challenging to relate the stories to actual CSR performance. Topics referenced in some of the articles include consumer preferences in different parts of the world, climate change, philanthropy, toy safety (including product recalls, chemicals, EU directives, and U.S. consumer safety initiatives), and learning through play.

Credibility:

Despite its flaws and the lack of evidence that stakeholders are consulted to help identify material issues or anything other than their toy purchasing preferences, there’s nothing about this report that suggests outright hyperbole, unsubstantiated claims, or hidden mistakes. On the contrary, it conveys a certain earnest, if plodding, approach to CSR.

But one line gave me pause: issues were selected based on their “special importance to the LEGO Group’s long-term earnings.” I suspect many stakeholders might use a different criterion for assessing the importance of issues. Moreover, its lack of explanation about those unmet targets begs the question: does LEGO simply not know why those targets were missed, or does it know and not really care to say? Or, does it simply not know whether those targets are of interest to its stakeholders?

Recommendations:

1. Integrate annual financial and CSR reporting, rather than making readers consult several different sources. Publish “The Brick” if stakeholders want it, but don’t make it required reading in conjunction with the CSR report.
2. Engage with stakeholders, conduct a materiality analysis, and make sure the company is addressing - and reporting on - the material issues.
3. Inject some of the LEGO brand’s fun into the report. The soporific document does a disservice to a company devoted to engaging, stimulating toys for children.
4. Consider assurance.

Michelle Bernhart is the founder of True Blue Communications LLC, which helps organizations strengthen sustainability performance, achieve strategic objectives, enhance brand, and manage risk through credible and engaging communications.