LEGO says it will ‘bear the burden’ of increased costs: ‘We’re not shifting that on to consumers’

The LEGO Group’s CEO says the company will ‘bear the burden’ of increased material costs as it moves away from oil-based plastics, and won’t increase prices as a result.

Part of the LEGO Group’s quest towards sustainability involves finding renewable sources of plastic for its bricks, and the company’s Chief Financial Officer Jesper Andersen says it’s made ‘significant and meaningful progress’ towards that aim in the first half of 2024. That’s by purchasing the resin required for its elements through the mass balance principle, which allows companies to track the use of sustainable materials through their supply chain.

“We have a unique challenge,” Andersen said. “We want to replace the current fossil-based resins we use with others that meet the very high safety, quality and durability criteria, because we’re committed to making products from renewable and recycled materials by 2032. We have tested over the last year more than 600 materials, with some success.

“In the first half [of 2024], we made significant and meaningful progress, continuing to increase the amount of resin we purchased under the certified mass balance principle to 30%. This means that an average of 22%, or more than one fifth, of the materials that have gone into producing LEGO bricks in the first half [of 2024] come from renewable and recycled sources, replacing oil-based materials.”

Moving away from fossil fuels comes at a price though, especially amidst a climate of cheap virgin plastic as oil companies ramp up investment in petrochemicals. The LEGO Group has nevertheless committed to spending up to 70% more on renewable resins over oil-based plastics – and says it won’t pass those increased costs on to customers. 

“For me, this first half [of 2024] is a real milestone,” added the LEGO Group’s CEO Niels B. Christiansen, referring to this week’s news that the company’s sales and profits grew by double-digit figures in the first six months of 2024. “The fact that we have been able to grow the company and still buy less oil-based plastic, I think that is a fantastic achievement, and it bodes well for our ambition towards 2032.

“On average, more than 20% of a LEGO brick is already made of renewable materials or renewable sources. We are looking to increase that number over the coming years, and we’re committed to driving that further up. And of course, there's a cost associated with this, because these materials are considerably more expensive than oil-based materials.

“[But] we're super proud that we are able to cover those costs. With these earnings we have already taken on – and we bear the burden of – that extra cost. We are not shifting that on to consumers. I think that's a really good development.”

The LEGO Group raised prices on dozens of current sets in 2022, driven by ‘increased raw material and operating costs’ amid rising inflation rates worldwide. Those increases ranged from 5% to 25%, or far lower than the 70% increase in material price the company is said to be shouldering with its renewable resins.

Given there’s still plenty of scope for additional renewable materials within LEGO bricks, it will be interesting to see whether Christiansen and co. can continue to commit to that promise in the years to come. The LEGO Group is currently aiming to ensure that more than 50% of the plastic used in any given LEGO brick is certified by the mass balance method by 2026.

Head here to check out the LEGO Group’s full financial results for the first half of 2024.

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