THE LEGO GROUP RESPONSIBILITY HIGHLIGHTS 2014

Transcription

1 THE LEGO GROUP RESPONSIBILITY HIGHLIGHTS 2014

2 Contents 21 Letter from our CEO 13 1 Letter from our CEO 5 Child development 9 Safest products and play experiences 13 Business impact on children 15 Communicating with children 17 Caring for and engaging employees 21 Reducing carbon emissions 25 Raw materials and waste 27 Business ethics The LEGO Group Responsibility Highlights 2014 is published for the LEGO Group by Corporate Communications. Mail: [email protected]. Design: Kontrapunkt. Print: Rosendahls. Photos: Page 22 DONG Energy. Page 3, 4, 11, 12, 14, 20, 24, 29 Sascha Maric. All others by the LEGO Group. LEGO, the LEGO logo, the Minifigure, DUPLO, are trademarks of the LEGO Group The LEGO Group The LEGO Group has made a promise to the world: wherever we operate, we will have a positive impact. I am proud to say that our ability to deliver on this promise has never been better than it is today. Children all over the world spend millions of hours engaged in LEGO play experiences. We create jobs where we operate. We encourage and support employees to develop their competencies. We generate business for partners and engage with local communities. We continue to reduce our impact on the environment. We fiercely advocate the safety of toys. A better future through play 2014 was a record year, where our turn - over totalled DKK 28.6 billion. We opened new offices, expanded factories and added more than 800 employees all in the name of reaching more children with a great LEGO experience. Our ultimate ambition is to reach every child in every country in the world, be cause we genuinely believe that the most important impact we have on the world is to provide children with fun and creative LEGO experiences. Playing and learning with LEGO bricks will help children develop the very important skills and competencies they need to create a better future for themselves and our planet. 1

3 In 2014, we estimate that we reached more than 95 million children through our activities in the LEGO Group and the LEGO Foundation. That is more children than ever before. Only the best is good enough Wanting to do better has always been part of the LEGO Group s way of working. Our culture, you might say. It goes back to our founder who coined the phrase Only the best is good enough, as the company spirit. Results for 2014 are good, yet there are still improvements we can make in the years ahead. We will continue to improve employees safety in the workplace and find new ways to reduce our impact on the environment. I also believe we can encourage more of our dedicated employees to engage in the local communities so these can be enriched by our presence. Finally, there are more children to be reached around the world and work to be done to support and promote their rights. I hope you will enjoy reading about our 2014 responsibility highlights. Jørgen Vig Knudstorp President and CEO of the LEGO Group My highlights from 2014 We have seen a vast number of results from our work in I am particularly proud of seven achievements: We reached more than 95 million children through activities in the LEGO Group and the LEGO Foundation according to our estimates We had the fifth consecutive year with zero product recalls We continued to experience high motivation and satisfaction at the workplace We entered into a partnership with UNICEF to support children s rights across the world We further reduced our carbon emissions as part of our Climate Savers partnership with the World Wildlife Fund We now sell all LEGO products in smaller, FSC-certified LEGO boxes, reducing CO 2 emissions by 10,000 tonnes annually We engaged more than 2000 employees and reached approximately 50,000 children in our local communities. The most important impact that we have on the world is providing children with fun and exciting LEGO experiences that develop the essential skills and competences that they need to create a better future for themselves and our planet. Jørgen Vig Knudstorp, President and CEO of the LEGO Group, Build the Change, Copenhagen, Denmark 2 THE LEGO GROUP RESPONSIBILITY HIGHLIGHTS

4 Child development We reach children all over the world 85 million children were reached with a LEGO play experience, according to our estimates 10 million children experienced LEGO Education ideas and materials in 2014, according to our estimates I talk a lot with children and parents about how they, together, can be creative and have fun with LEGO bricks. I believe I can have a positive influence on children s development by ensuring that they get the most out of playing and learning with LEGO products. Carlos Fernandez, Store Manager LEGO Brand Retail Store 5th Avenue New York City, USA In 2014, we reached more than 95 million children with a LEGO experience through activities in the LEGO Group and the LEGO Foundation. Play and creativity have been at the heart of the LEGO Group since its founding in Today, this foundation has evolved into strong support for children s right to play and thereby reach their full potential. The LEGO Group is a major player in the global toy industry and we are one of the most recognised brands in the world. We have a unique understanding of children and how they play and learn. We think this obligates us to do what we do best: manufacture fun, creative play materials that develop essential skills with children. We also aim to lead by example on toy safety and quality, and seek partnerships with organisa tions to strengthen our foundation and impact; for example, by promoting children s rights and reducing carbon emissions. One shared mission The LEGO Group, which comprises LEGO Education, shares its mission inspire and develop the builders of tomorrow with the LEGO Foundation. LEGO Education provides solutions LEGO Education supports playful learning experiences around the world 400,000 children were involved in activities organised or funded by the LEGO Foundation in countries have stores that sell LEGO products 35 countries have LEGO sales offices 4 THE LEGO GROUP RESPONSIBILITY HIGHLIGHTS

5 What does learning through play mean? When we think about learning, we often think about education. About lectures. About blackboard teaching. However, learning is much more than this. Some of the most important things you know were learnt before even thinking about school: how to walk, to talk, to sing, to share with others. These things you learnt through playing. Playing with LEGO bricks, for example, you learn about threedimensional space, colours and shapes. You develop motor skills. We want more of the learning in children s life to be playbased. Also in schools. Through research we know that play is one of the best ways to learn. Through our products and other activities, we work to help others experience that too. by training educators in how to get the most out of LEGO Education solutions in the classroom. In 2014, LEGO Education reached more than 10 million children. For instance, around 19,000 schools in the USA, 10,000 schools in China and 8,500 schools in Germany used LEGO Education solutions to teach children subjects ranging from maths and physics to language studies. LEGO Education is also a partner of the FIRST LEGO League programme, where students in more than 80 coun - tries use LEGO products to solve realworld challenges through hands-on learning, building skills in science, tech nology, engineering and maths. In the same way, LEGO Education sponsors the World Robot Olympiad a robotics competition with teams representing more than 50 countries. LEGO Foundation The LEGO Foundation owns 25% of the LEGO Group and uses its share of the profit our business generates to transform attitudes and behaviours to learning through play. The foundation supports programs that exemplify play that works, builds and shares evidence to explain the value of play. The LEGO Foundation works in partnership with others to achieve this goal. In 2014, the LEGO Foundation s work impacted more than 400,000 children. This work included programmes in South Africa and the Ukraine, where teachers are trained and LEGO Education products donated to provide learning through play. The LEGO Foundation is also working with the local authorities in the LEGO Group s home town of Billund, Denmark, to develop the town into The Capital of Children, an outstanding place for children, play, learning and creativity. One part of this plan is the LEGO House. When it opens to the public in 2017, this house will be an experience centre where LEGO fans of all ages can come and experiment, share stories and express their imagination through LEGO bricks together with other LEGO builders from all over the world. Learning through play EXPLAINED 6 THE LEGO GROUP RESPONSIBILITY HIGHLIGHTS

6 The LEGO Group Safety Assessment Our adherance to the strictest global safety standards and additional internal requirements has resulted in zero product recalls since 2009 Each year we interact with more than 1.6 million consumers. All product safety-related input is analysed by our product safety team to improve future products LEGO sets are sent by truck, ship and train safely packed in LEGO boxes to stores around the world, eventually reaching children all over the world & sales Comsumer Distribution feedback Legislative CONSUMER Every LEGO product is tested and certified to applicable toy safety standards by an accredited third party to ensure that the products live up to the strictest global demands toy safety recalls INTERACTION 3rd-party approval Approval of raw materials SAFETY ASSESSMENT PRODUCTION Safety control Each of the more than 2000 raw materials are assessed for chemical safety and approved before being used to make LEGO elements New elements designed TESTING Production test Mechanical safety tests are carried out on all new LEGO elements to ensure that they will not break during foreseeable use test Safety LEGO element and model assessment One 2x4 LEGO brick goes through detailed safety documentation; 10 checkpoints in total before it is approved Every LEGO model is assessed to ensure that it does not present a hazard and a safety evaluation is completed to ensure a high-quality play experience The size of a LEGO brick must be accurate to within 40 micrometers of the official size. In-house quality controls are conducted to ensure only the best products leave our factories To ensure that no small parts can unintentionally detach, e.g. on a LEGO DUPLO figure, a tension test with the force of a minimum of 120 Newton is applied; exceeding regulatory standards Safest products and play experiences World-class product safety performance with zero product recalls for the fifth consecutive year. We believe that children should be safe no matter what toy they play with. We push ourselves and hope to inspire others to maintain high standards. This is possible only because we think about product safety in every step of the making of a LEGO product. In 2014, we maintained strong collaboration between designers and product safety specialists in the early stages of product development. In broad terms, the LEGO Group Safety Assessment illustrates how we work: 1. Safety Assessment designing a product using only chemically assessed and approved materials. 2. Testing risk assessment of every single LEGO element this covers mechanical/physical safety and electrical safety, as well as hygiene and flammability safety. 3. Production in-house quality and safety control and testing processes and third-party approval. 4. Consumer Interaction products are on the market, and all safety-related feedback from consumers is analysed by our product safety team and used as input for future designs. Safety in numbers 2,000 raw materials used to produce our products have been assessed for chemical safety and approved 10 detailed safety checks is what a standard 2x4 LEGO brick goes through before approval 40 micrometres (0.04 mm) is the most a LEGO brick is allowed to deviate from the official size 12 kg is the approximate pull the LEGO Group applied (exceeding official toy standards) to the head and arms of every single LEGO DUPLO figure to secure that they cannot be detached 8 THE LEGO GROUP RESPONSIBILITY HIGHLIGHTS

7 What does safest products mean? Every once in a while, products are pulled off the market because they are discovered to be unsafe. This happens to toys as well: when put to normal use it can happen for example that small parts break off, so small children might choke on them, or they cause allergic reactions. We believe that toys should never cause harm. All LEGO products are put through extensive tests to make sure they are safe. In the last five years, the LEGO Group has not had to recall any products anywhere in the world. We also work to support legislation that all toy manufacturers will have to comply with. Keeping children s products safe is a high priority issue for us. Every LEGO product is tested and certified by external laboratories independent of the LEGO Group, to make sure that the products live up to the strictest global demands. Shaping standards and sharing know-how Our achievements in making safe products are what allow us to inspire others to uphold high standards of product safety. We play a central role in major associations promoting and regulating toy safety in the world, including the European and international toy safety standardisation committees. This is part of our efforts to promote support in our industry for the principle of giving all children the right to safe play. We believe that regulations and standards should ensure that all play experiences are safe, so that parents do not need to be concerned about the safety of the toys they buy. Customers are pleased We appreciate feedback from children on their experience of playing with a LEGO product. One option is to contact one of our service centres across the world. In 2014, we were contacted more than 1.6 million times by children and parents. We use all the information we get from children and parents to improve and maintain a high-quality play experience. Again in 2014, consumer feedback about our products, retail stores, web site, online shop, LEGO Club magazine and video games has been very positive. In our laboratory, we test that the product meets and goes beyond compliance with the strictest global safety and quality standards. The most difficult part, however, is to imagine the many different ways children will use our products and to proactively integrate this into the design of LEGO products. Thomas Tarp, Product Integrity Director, The LEGO Group. Safest products EXPLAINED 10 THE LEGO GROUP RESPONSIBILITY HIGHLIGHTS

8 Business impact on children Partnering with UNICEF In 2014, the LEGO Group estab lished a global partnership with UNICEF to promote children s rights and support children s development. By entering the agreement, the LEGO Group will: We have an obligation to respect children s rights in our operations. With our UNICEF partnership, I travel around the world talking and listening to children, organisations and businesses on how best to ensure that children s rights are prioritised. Marie Busck, Senior Director of Social Responsibility, Billund Airport, Denmark In 2014, we entered into a part nership with UINICEF to promote children s rights and support their development. Children are our role models and we want to operate a business that is responsible towards them. We are not alone in this pursuit. In 2012, the United Nations Global Compact, UNICEF and Save the Children launched 10 Children s Rights and Business Principles, stating the standards that apply to businesses to ensure that they respect and support children s rights. In 2014, the LEGO Group took two important steps in making these principles directly relevant to our daily 12 THE LEGO GROUP RESPONSIBILITY HIGHLIGHTS operations: We translated the 10 principles into LEGO Group actions. We established a global partnership with UNICEF, as the first company in our industry, to promote children s rights and support children s development. This includes keeping children safe from potential negative impacts of our business such as avoiding risks to children s health that could result if we produced less safe products, or if we engage with children for example in test groups or building activities at unsuitable locations, conducting inappropriate activities, facilitated by untrained staff. Together with UNICEF build evidence and awareness of how businesses can act responsibly towards children. Promote the 10 Children s Rights and Business principles publicly and implement the relevant ones in our operations and share our experience to inspire others. Make and apply a child protection standard in our work.

9 Our website has more than 18 million visits each month from all over the world. It is important that our interaction with children on the website is engaging and fun while ensuring that it is also responsible and ethically. Cecilia Weckstrom, Senior Director, LEGO.com & Consumer Experiences, LEGO office, London, United Kingdom Communicating with children Criticised for stereotyping girls play In 2014, the LEGO Group elevated its protection of children s safety online when achieved a Safe Harbor certificate. We also continued to embed our Marketing to Children standard in the organisation as we believe in respectful and responsible communication with children. To guide our actions, we rely on guide lines and standards and base our work on the Children s Rights and Business Principles statement, which specifies that we market and advertise with respect and support for children s rights. In practice, this means: Complying with the International Chamber of Commerce s Code of Advertising and Marketing Communication Practice. Complying with our own standards for marketing to children, which cover all LEGO entities and all third parties who work with us and the LEGO brand. Complying with the US law on protection of children s privacy online, which we also use as our policy for data collection for children less than 13 years old, together with EU regulation on data privacy. Complying with our Gender Marke t- ing Guidelines to ensure that children are not being subjected to, or limited by, gender stereo types. Some of our stakeholders have criticised us for working against gender equality, particularly with the launch of the LEGO Friends theme in This range is popular among children and especially young girls. To us this is not so strange, as we developed the LEGO Friends universe in close dialogue with young girls, to make creative LEGO play more relevant for more children. In 2014, we continued to expand the LEGO Friends universe, catching the interest of even more children who now have the opportunity to express their imagination through LEGO bricks. The LEGO Friends range was among our five best-selling product lines globally in THE LEGO GROUP RESPONSIBILITY HIGHLIGHTS

10 What does communicating responsibly mean? Companies know a lot about how to communicate and market their products to make consumers buy them. But when selling toys, it is important to think carefully about how to communicate with children. In addition to the rules defined by legislation, the LEGO Group has defined a set of principles and rules which we will adhere to when planning how to market our products. These cover both physical play materials and communication with children online. We are against any form of discrimination, including discrimination based on gender. Successes and activities in 2014 In the US it is possible to have your communication with children certified as a safe harbour in accordance with the US law that protects younger children s privacy. Among other things, this means making parents able to oversee how and where a company can collect and use the personal data of their child. The LEGO Group achieved such a Safe Harbor certificate for in More than 100 employees took part in training sessions on Marketing to Children, and we tested an e - learning programme that includes gender issues in marketing. All relevant LEGO employees must complete this e- learning programme in Again in 2014, we looked at what exter - nal and internal sources had said about our marketing to children during the year. This includes input from public authorities, from our own systems and processes and in 2014 also from the European Advertising Standards Alliance. We use this input when we develop training materials for those of our people who work with marketing. In 2014, no cases were taken up by authorities. Principles of marketing to children our communication must not: Take advantage of children s inexperience by creating materials that would potentially mislead their understanding of the product in any way. Portray unsafe or harmful situations or actions. Put pressure on children or parents to purchase our products, or create an unrealistic perception of the cost or value of our products. Caring for and engaging employees In 2014 our local community engagement activities included 2000 LEGO employees and reached more than 50,000 children. We know that the success of the LEGO Group depends on the people who dedicate their working life to furthering our mission and implementing the LEGO Strategy. In return, we must create an extraordinary, safe and engaging workplace with opportunities for all. To assess the LEGO Group as a place to work, we conduct an employee in their work, actually well ahead of the international benchmarks we compare with. They are particularly satisfied with their managers and the efforts invested in reaching our mission. Engaging in the local community We want to be actively engaged in the local communities where we are present. By making it possible for employees to demonstrate the LEGO culture and the LEGO play experience where they live and work we hope both children and their parents in these communities benefit. In 2014, our local engagement initiatives Building a factory in China The next LEGO factory will be fully operational in 2017 and construction is under way in Jiaxing, China. From the beginning, we have been dedicated to our promise of having a positive impact on society. This has meant ensuring that construction is conducted responsibly and in accordance with the LEGO Group values and policies and standards for the environment, employee health, safety and workers rights and welfare. In 2014 alone, we conducted more than 20 internal audits at the site and numerous safety walks. We have an ongoing dialogue with the General Contractor responsible for the con - struction site on subjects relating to Communicating survey every year. In 2014, it showed us benefitted children and their families at our Code of Conduct and the safety responsibly that our employees continue to experience nine LEGO locations around the world. of employees. high motivation and satisfaction At these locations more than 2000 LEGO EXPLAINED 16 THE LEGO GROUP RESPONSIBILITY HIGHLIGHTS

11 What does safe workplace mean? Keeping employees safe is a key priority and basic obligation for any company. As an employer, you are responsible for making sure that at the end of a working day, employees can return to their families unharmed. In order to do this, the LEGO Group provides safe work - places where all equipment is safe to use, personal protection gear is available to those who need it and there are documented processes for carrying out tasks and preventing accidents and injuries. Every year, we make sure that we communicate with employees about work place safety and that those in charge of safety have the training they need. And from the first day of a job in the LEGO Group, we tell employees about our rules and attitude to safety at work. employees and 50,000 children got directly involved in a project that in one way or another benefitted children and their parents. The local community engagement is funded through the LEGO Foundation. To support this work, workshops for 85 LEGO employees were organised. The employees learned how to engage children and how to use the LEGO bricks and learning through play as tools to bring on board both colleagues and the local community. Safe, safer, safest The LEGO Group insists on providing the safest working conditions possible, be it in our factories, offices or stores, and we have a strong safety record. In total, the rate of injuries has been reduced by more than 40% in five years. In 2014, we maintained our high level of employee safety; however, we did not meet this year s improvement goal. A number of steps have already been taken to ensure that we remain among the world s best-performing companies in terms of employee safety. In 2014, more than 1,400 employees participated in safety training using both traditional training and an e-learning programme in safety culture. Local LEGO Community Engagement In 2014, activities were carried out at these LEGO locations; USA, Czech Republic, Hungary, Germany, France, United Kingdom, Mexico and China. We focus on ensuring that employees rights and safety as well as the environmental systems follow the same global standards here at our Chinese factory as at our other factories around the world. To me, being responsible also lies in repaying our employees trust and living up to the high expectations our local community has of us. Safe workplace Box Yang, Programme Director, EXPLAINED LEGO factory, Jiaxing, China 18 THE LEGO GROUP RESPONSIBILITY HIGHLIGHTS

12 To me, being responsible is to select the best supplier overall. Some companies are involved in our Engage2Reduce programme where we jointly seek to create environmental improvements. We work together on developing solutions that improve their energy efficiency, for the benefit of them, us and the planet. Zdeňka Mixa, Procurement Manager of Engage2Reduce, Kladno, Czech Republic Reducing carbon emissions In 2014, we improved our energy efficiency, installed our first wind turbines and got our highest score ever and the best in the industry in the Carbon Disclosure Project. The LEGO Group has been on a steep growth curve for more than 10 years and we now reach more children than ever before. At the same time, we focus on producing LEGO products in the most environmentally friendly and efficient way. In the area of climate change, our pro - In 2014, we expanded our production space by more than 50%, yet through more efficient machines, insulation and smarter systems as well as new energy sources we improved our energy efficiency beyond the 30% we have already achieved over the previous five years. With a two-year energy efficiency improvement of 9% (2.3% in 2014) we stay on track for our World Wildlife Fund Climate Savers partnership commitment of a 10% reduction in energy consumption by Since 2014, all new LEGO products have been packed in boxes that are What does reducing carbon emissions mean? The LEGO Group is working to reduce emissions from our activities as part of our Climate Savers partnership with the World Wildlife Fund by applying smarter technology and solutions that will improve our energy efficiency. We know that 75% of the emissions related to our products occur with our suppliers. For this reason, we have initiated a project to collaborate with suppliers to find less emission-heavy solutions. For the LEGO Group, sourcing renewable energy is one way to reduce carbon emission. We have invested in an off-shore wind farm to use 100% renewable energy by mise to impact positively translates smaller than before. This reduced our Reducing carbon into using energy more efficiently and CO 2 emissions by approximately 10,000 emissions producing more renewable energy. tonnes alone through the saving of EXPLAINED 20 THE LEGO GROUP RESPONSIBILITY HIGHLIGHTS

13 6,000 tonnes of cardboard and reducing transportation by 3,000 truckloads. It is our goal to produce more renewable energy than the energy we consume by By 2016 we aim to become carbon positive. Collaborating for energy efficiency in our supply chain The LEGO Group s work to reduce our own consumption and emissions is relevant. But in reality, 75% of the CO 2 emissions from our products and activities are produced through our suppliers activities. Consequently, in 2014, as part of our Climate Savers partnership with the World Wildlife Fund, we invited suppliers to collaborate on finding and creating initiatives that reduce CO 2 emissions. We are very pleased that a number of our suppliers agreed to participate and help develop the Engage2Reduce project. Disclosing environmental performance In 2014, we achieved the top A score for performance and 98 points on a 100-point scale for our disclosure in the Carbon Disclosure Project (CDP ) survey. This is our highest score ever and the best in our industry. The CDP is a leading nonprofit initiative working with companies on disclosing their actions and results regarding climate change. Wind farm begins operations DONG Energy In 2014, the first turbines were installed The link between the LEGO Group in the offshore wind farm Borkum and the wind farm is KIRKBI A/S s Riffgrund 1 in the German North Sea. 31.5% stake in the 78 wind turbines that will ultimately make up the wind This was an important event to the farm. KIRKBI A/S owns 75% of the LEGO Group, because the wind farm LEGO Group. plays a major part in reaching our goal of producing more renewable energy than the amount of energy we consume through our activities in Build the Change, Copenhagen, Denmark 22 THE LEGO GROUP RESPONSIBILITY HIGHLIGHTS

14 To me, being responsible means that we keep challenging ourselves to make a positive impact on the planet with our product while making it more sustainable. We want to keep raising the bar for our products sustainability without compromising on the safety or quality of the play experience. Nelleke Van Puil, Vice President of Material Strategy, LEGO Factory, Billund, Denmark Raw materials and waste In 2014, we raised our recycling of waste to 91% and reached 97% of FSC-certified material used for LEGO sets packaging. We work to eliminate waste in production, to use more environmental friendly packaging and to find and use more sustainable raw materials. In combination, this will move us towards our promise to make a positive impact. We have a number of ambitions that we continue to work towards: We want to use 100% FSC-certified print and packaging globally and the material used for LEGO sets packaging was FSC-certified. We want to reduce bringing down the volume of production waste. In 2014, we generated relatively less waste, while making even more more sustainable packaging solutions. In 2014, more than 97% of achieving zero waste. minds are set on working towards Waste management EXPLAINED 24 THE LEGO GROUP RESPONSIBILITY HIGHLIGHTS LEGO bricks. We want to reuse increase the amount of reground LEGO elements in the production of new elements. This technique allows us to make what corresponds to 75 million 2x4 LEGO bricks without using new raw materials. We want to recycle recycle as much as possible. In 2014, we re cycled 91% of our waste. Our What does waste management mean? Manufacturing always leads to waste. The question is how you handle this waste. Is everything loaded onto trucks and taken to the nearest landfill? Or are there other ways to dispose of it? Reduce, reuse and recycle are well-established concepts related to waste management. When applied, they ensure that you whether you are a company or a family will minimise your impact on the environment. The LEGO Group works according to these three principles. This means we work to create less waste by using smaller quantities of raw materials, we convert waste into materials that can be used again and we sort waste to make sure as little as possible is taken to landfill. Our mindset is to create zero waste. Right now only 9% of our waste is not recycled.

15 We want to find and implement sustainable alternatives to the raw materials we use now for LEGO bricks by Also in 2014, we continued to look for better ways to include environmental assessments in our work as well as progressing with our review of the impact different LEGO elements have on the environment. Searching for more sustainable materials In the LEGO Group, we want to find and implement sustainable alter- natives to our current raw materials by LEGO bricks are made of plastic. This is the best material for achieving strength, durability, clutch power and consistent colour all essential qua - lities of the LEGO brick and the LEGO System in Play. It is a major challenge to find an alter - native to the plastic we use, since we insist that new material should offer the same safety, quality, durability and play experience as our current materials do. In 2014, we stepped up our effort in the search for more sustainable materials by collaborating with companies and universities that develop materials with a reduced environmental impact. Business ethics In 2014, we resolved 100% of the non-conformities found at LEGO facilities and at our suppliers in relation to quality and our Code of Conduct. The way we conduct our business must be in line with the LEGO Group s values and the highest global standards. This goes for our own activities and for practices and conditions at our suppliers sites, and covers subjects such as labour rights, anti-corruption, health and safety and environment. Working with suppliers suppliers, which together are called The LEGO Group s Code of Conduct for suppliers. Without accepting these requirements, a company cannot work with the LEGO Group. We follow up on these requirements through a combination of dialogue and audits, which are performed by a company independent of the LEGO Group. In 2014, we expanded the number of businesses to whom our Code of Conduct applies, including a new but similar setup for companies producing LEGO branded items on a licence from the LEGO Group. We also increased What does business ethics mean? Rules and requirements on business behaviour are plenty and growing. Requirements and compliance demands are in place for labour conditions, environmental questions, marketing methods and how you engage with public officials just to name a few. While some things are part of the laws of different countries, for example that you cannot pay bribes or discriminate based on gender or race, other things are regulated through voluntary initiatives. In both cases, companies need to have systems and processes that ensure they comply with laws or other commitments. In the LEGO Group we conduct our business in line with our values and the highest global training for more than 60 LEGO pur- We have a set of standard requirements we make on the conduct of our chasers to make sure that they have Business ethics EXPLAINED 26 THE LEGO GROUP RESPONSIBILITY HIGHLIGHTS standards.

16 the knowledge and skills to carry out the continued dialogue with suppliers. Finally, we performed a total of 45 audits and found 23 cases where the supplier did not live up to our quality requirements. These cases were all resolved within agreed timelines. In 2014, we performed 40 supplier audits (Code of Conduct, including Environment and Health and Safety), found 24 non-conformities and resolved 100% of these within the agreed timelines. The issues we found mostly related to working hours and health and safety; for example, insufficient processes and equipment. New initiatives to combat corruption and bribery The LEGO Group is growing globally and we now conduct business in a number of countries where business ethics and standards vary. As we grow, we are applying stronger tools to ensure that we conduct our business in an ethical way in line with our policies and local laws. In 2014, we: Provided the necessary training in anti-corruption for the relevant management-level employees. Drafted our new Code of Ethical Business Conduct and established two new sub-policies on anticorruption, gifts, hospitality and entertainment. Began creating anti-corruption expertise in LEGO Group offices in Asia, the Americas and Europe. Developed two new e-learning pro grammes in ethical business conduct and anti-corruption. The programmes will be mandatory for relevant employees in Developed and began applying new requirements in our contracts with companies acting on our behalf, for example solicitors. Few reports to compliance line We encourage employees to report any suspicion of breaches of our ethical standards to their immediate manager or alternatively to use the LEGO Compliance line on our intranet. In 2014, the LEGO Group received eight incident reports through the LEGO Compliance line, which is a reduction from 24 cases in A large part of my work is to ensure that we conduct a responsible and ethical business globally and that our business partners contribute. Our responsibility stretches beyond our own factories; it involves ensuring that we, our suppliers, and our business partners align our business conduct. Dena Nurko-Lopes, Head of Compliance, LEGO office, London, United Kingdom 28 THE LEGO GROUP RESPONSIBILITY HIGHLIGHTS

17 Read more about the LEGO Group and our responsibility at The LEGO Group Aastvej 7190 Billund Denmark Tel.: TRYKSAG 0457 Rosendahls 30 THE LEGO GROUP RESPONSIBILITY HIGHLIGHTS 2014