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What if bonuses are linked to Emissions Reduction Goals?

Throughout the years, the Science Based Target initiative (SBTi) has evolved into the central and approved framework for establishing ambitious emission reduction goals aimed at achieving net zero in alignment with climate science, in hopes of limiting warming to 1.5 degrees Celsius. It comes as no surprise that corporations like the LEGO Group have joined forces with the SBTi, setting a bold target to reach net zero by 2050 while also aiming to decrease emissions by 37% by 2032. This move has resulted in a substantial increase in the LEGO Group's investment to over $1.4 billion towards environmental sustainability.

In setting objectives and targets, what truly captivates attention are the innovative initiatives and measurement systems that businesses implement to ensure adherence and operationalization of such endeavors, while effectively monitoring their progress. For the LEGO Group, reducing emissions stands as a top priority, and achieving this goal involves linking employee bonuses to emission reduction performance. In their official announcement, the Group emphasized:

“We have an ambitious target to reduce our emissions by 37% by 2032 and achieve net zero by 2050.

“To help keep us on track, from 2024, a percentage of our performance management programme for colleague bonuses will be tied to annual emissions as we take steps to reduce environmental impact across all areas of our business.”

For organizations that have been issuing sustainability reports based on the Global Reporting Initiative, the integration of board members' remuneration with their Environmental, Social, and Governance performance is not an unfamiliar concept. Nonetheless, questions may arise regarding the implications for a company and its overall effect on environmental sustainability and emission reduction targets.

Integrating an emission reduction key performance indicator into employee bonuses entails correlating the staff's performance with the entity's efforts to reduce emissions. This approach motivates employees to prioritize sustainability and take steps that contribute to decreased carbon emissions and enhanced environmental performance. Moreover, by associating employee bonuses with emission reduction objectives, the group demonstrates its dedication to sustainability and holds its workforce responsible for propelling environmental initiatives. This fosters a sustainability-driven culture within the organization and aligns employee incentives and bonuses with long-term environmental goals.

This alignment with employee bonuses has the potential to instigate behavioral changes within the organization, enhance their environmental performance, bolster their reputation as a sustainable enterprise, and allure socially conscious investors and clients. Consequently, this leads to enduring financial advantages and a competitive edge.

While making commitments is one aspect, taking tangible actions is another, and today we are witnessing a renewed impetus towards climate action and sustainable progress. We urge everyone to engage in real-time actions while keeping abreast of the endeavors of the LEGO Group, which is establishing commendable standards for emissions reduction Objectives.


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