Greenhouse emissions are still one of the major concerns when it comes to producing goods, and many companies are trying to improve their production processes to reduce the impact their product have on emissions. The latest company to do this is Lego, who has opened a new factory in Vietnam that will rely entirely on clean energy and will not contribute to pollution.
The new $1 billion factory is located in the industrial area of Binh Duong, close to Ho Chi Minh City, and while it still does not run entirely on clean energy, the aim for the company is to finish the process by early 2026. Lego CEO Niels Christiansen spoke to The Associated Press about the company’s reasoning for the new factory “We just want to make sure that the planet that the children inherit when they grow up needs to be a planet that is still there. That is functional.”
Lego’s long term plan and how the new factory factors in it
According to the company, they wish to be completely free of greenhouse gas emissions by 2050, but they are aiming to start with reducing emissions by 37% by 2032. While this sounds ambitious considering that their products are made of oil-based plastic, this is not the first efforts they are making towards sustainable production. Lego has already spent more than $1.2 billion in a search for a better material for their blocks, but have been unsuccessful at finding alternatives yet.
Lego began as a wooden toy business founded by Ole Kirk Kristiansen and later introduced its now-famous plastic bricks in 1958. While the company’s signature products are known for their durability and potential for reuse, efforts are ongoing to transition toward more sustainable materials. CEO Niels Christiansen noted that about one-third of the materials used in the company’s bricks last year were derived from renewable or recycled sources. However, producing these eco-friendly alternatives remains costlier than traditional fossil fuel-based plastics. “It’s not inexpensive at this point in time, but we believe if we … lean into that, we help create a supply chain for the type of plastic materials that are not based on fossil fuel,” he said.
Their move to Vietnam is also strategic, as the country aims to achieve net-zero emissions by 2050 so it is favoring any company that wishes to accomplish the same goal. Since the new Lego factory boasts 12,400 solar panels and energy storage system, both the company and the government are hopeful that it will help to create a precedent for more sustainable manufacturing.
“Lego and Vietnam, we are having the same aspirations. We both want to be green, to play our part in the climate. And I think this with the solar and battery and DPPA, it is showcasing that it can be done,” Jesper Hassellund Mikkelsen, Senior Vice President Asia Operations at the LEGO Group told The AP.
The facility will take advantage of a 2024 regulation called the direct power purchase agreement (DPPA), which enables large international firms to source renewable energy directly from solar and wind providers and an adjacent energy hub will store electricity in large-scale batteries, ensuring consistent power availability even when the sun isn’t shining. “So even if the sun is only shining during the day, we store the energy and can use it all over. That will cover by far the majority of the consumption of the factory,” added Christiansen.
Manufacturing accounts for 20% of Vietnam’s economic output and is responsible for consuming 50% of the country’s total energy. The government aims to retire its coal-fired power plants by 2040 as part of its energy transition and thus, one notable example of this shift is Lego’s massive production site, which is equal in size to 62 soccer fields and which is now being held up as a model for how energy-intensive facilities can adopt sustainable practices without sacrificing financial viability.
Mimi Vu, a founder of the consultancy Raise Partners in Ho Chi Minh City. “Sometimes it takes a big company, like Lego, to take those risks. To show that we can do it … And we can be profitable.”