It is increasingly hard to feel good about supporting almost any corporate brand these days. So when I stumble upon reasons to find even the slightest satisfaction in my support of a brand I already happen to enjoy — it feels notable. When I find brands that I can find more than just slight satisfaction in supporting — it feels historical. Fortunately for my childhood and my inner child, the LEGO Group is one such brand.
Sixty-four years ago today, the original patent for the LEGO brick was filed in Denmark by Godtfred Kirk Christiansen. It marks a significant moment in the The LEGO Group’s history as they prepare to celebrate 90 years in operation on 10 August 2022. While the company operated for nearly three decades before this patent was filed, it is inarguably what they are best known for today. The story of the patent is actually pretty interesting, and you should check out Jay’s Brick Blog’s fantastic article about it or BrickNerd’s articles this year and last year. But here, we are going to talk more about the LEGO Group today.
The LEGO Group
Let us start with a quick overview of the LEGO Group:
- Legally known as LEGO System A/S
- Founded by Ole Kirk Christiansen on 10 August 1932 in Billund, Denmark
- Privately owned and controlled by the Kirk Kristiansen family with 75% owned by KIRKBI A/S and 25% owned by the LEGO Foundation
- Became the world’s largest toy company by revenue in 2015
- In 2020, generated 43.7 billion DKK (approximately US$6.5 billion) in revenue and an operating income of 12.9 billion DKK (approximately US$1.9 billion)
- Employees approximately 20,500 people as of 2020
- Name origin: ‘LEg GOdt’ (Danish for ‘play well’)
So why am I so pleased with my support of one of the world’s largest toy company? It largely stems from the Kirk Kristiansen family’s decisions to keep the company private and develop a core set of values and promises (and like — keep to them). The company’s history is rooted in the Great Depression, and it was not always evident they would go on to become the mega success they are today. Resisting the allure of the cash influx provided by a public company model is laudable in itself. However, what the family has done with the company’s tremendous success is what I find most endearing.
Now look, I am sure the Kirk Kristiansen family are living their best lives monetarily. The grandson of LEGO’s founder and former patriarch of the family, Kjeld Kirk Kristiansen, is the third wealthiest Dane with a net worth of US$6.75 billion. I am not suggesting they are so charitable they are sacrificing all wealth. However, it seems very likely they could each be worth far more if they took a greedier stance.
The LEGO Foundation
As it stands, 25% of the LEGO Group is owned by the LEGO Foundation. It is a charitable foundation and that is pretty straightforward, so let us start there. Now just being a charitable foundation does not automatically mean anything good is actually happening — so we will dive into things a little further.
Let us start with a quick overview of the LEGO Foundation:
- Six person Board of Directors, two of whom are independent, and each serves in two-year term increments
- No one over the age of 75 can be elected or re-elected to the Board
- Approximately 120 staff
- Offices in five countries
- DKK 18.2 billion (approximately US$2.7 billion) in assets as of 2020
- In 2020, total activities amounted to DKK 1.4 billion (approximately US$209.6 million) — with 5% administrative costs
To summarize, the breakdown shows good evidence that they are a legit operation with approximately 120 staff spending approximately US$209.6 million a year. Their governance structure is relatively common for what is essentially a very large family foundation. The notion that the Kirk Kristiansen family would like to have a say in how the charity which bears the name of the brand they are owner and caretaker of is valid and consistent with similar foundations.
So where is all of this money actually going? Some of it you can experience right on their website. Related, I have to say I appreciate their site’s approach to cookies. Some of the costs are evident in the development of the activities provided via this website, and the wealth of impressive research conducted by the organization to support their vision of “learning through play”. They have also developed some compelling cases on why combining play and education are so vital to a child’s development.
That accounts for a portion of their activity expenses, but a majority of their expenses are in the form of grants to other charitable organizations. So who are these organizations? Their list of 2020 recipients ranges from an impressive “who is who” of nonprofits to organizations on the dawn of launching some truly creative projects.
Here is a list of some of the recipients of grants from the foundation in 2020:
- A:Primo
- aeioTU
- Boston College
- Brookings Institution
- IREX
- International Rescue Committee
- New Profit
- Right to Play
- Scratch Foundation
- UNICEF
- The World Bank
The grants varied in size and primarily focused on supporting children and education during the COVID-19 pandemic, promoting education innovation, and integrating play into children’s education.
KIRKBI
Alright — the foundation side of things look pretty solid. Maybe not every grant is a winner, but that is true for every successful grant-giving organization. So what about this entity that owns 75% of the LEGO Group?
Let us start with a quick overview of KIRKBI:
- Legally known as KIRKBI A/S
- Privately owned and controlled by the Kirk Kristiansen family
- Currently under fourth generation of family leadership
- Divided between LEGO Brand Group and investment activities
- In 2020, had 16.0 billion DKK (approximately US$2.4 billion) in cash flow and 6.4 billion DKK (approximately US$958 million) in profits
- Has 105.3 billion DKK in total equity (approximately US$15.7 billion)
- Name origin: Combination of ‘KIRK Kristiansen’ and ‘BIllund’
The LEGO Brand Group elements are essentially what you would expect. The LEGO Group itself, LEGO Ventures, and a percentage of Merlin Entertainments — the company which operates LEGOLAND Parks and Discovery Centers. The investment activities are divided between core capital (long-term equity, real estate, bonds, etc.) and thematic capital.
Now, the thematic capital is where things are most interesting as it essentially serves as an activist venture capitalist firm. The themes for the investments are transitioning to green energy, improving plastics, land preservation, and supporting the Billund region.
These investments are a natural extension of their expansive commitment to sustainability. This commitment extends to the LEGO Group itself — which has one of the most impressive corporate sustainability web portals I have seen. As of 2020, the company had invested 8 billion DKK (approximately US$1.2 billion) in solar and wind energy, and switched 34% of its company car fleet to either plug-in or electric vehicles.
A couple of their major thematic investments include:
Reading over their 2020 Annual Report, you get a distinct impression that they are making a serious commitment to addressing the environmental impact not only of their products, but also our cultures as a whole. The company absolutely exists to support in perpetuity the descendants of Ole Kirk Christiansen. However, in reviewing the materials of several similar entities over the past couple decades, I am struck by the seemingly genuine commitment to UN development goals, philanthropy, and improving the future for children found throughout the KIRKBI materials.
Really putting children first — some final thoughts and observations
The more I look into LEGO, the more in awe I am of its rich history, impact on the lives of people around the world, commitment to quality, and seeming ability to “walk the walk” when it comes to making children their primary audience. That last item about really making children their priority is a thread consistent across all elements of the LEGO enterprise. To the point that as an adult consumer I am almost jealous — and I love that dynamic.
A lot of companies do studies on children, market research, and even make large donations to child foundations. Few companies are 25% owned by a children focused charity, and sadly few do meaningful research and share the results publicly — such as this fascinating study on the circular economy and youth (PDF).
Right now, young people care about the planet and sustainability in ways that previous generations should make note of and be proud of. In recognition of that, and accepting the harm their own products may have unintentionally caused over the decades, the company is working “to make LEGO bricks from sustainable sources by 2030 without compromising quality or safety.” Since making that commitment, they have begun moving some new pieces to plant-based plastics and are transitioning to new materials for container bags.
This is not the only issue children have called them out on and they have made a commitment, and real progress, towards addressing. Last year, the company released a set entitled “Everyone Is Awesome” to celebrate and recognize the LGBTQ+ community. Later in the year, LEGO launched the “Ready for Girls” campaign as part of its celebration of the UN’s International Day of the Girl. The company also announced its plan to remove gender stereotypes its sets after revieiwng a study commissioned by the Geena Davis Institute on Gender in Media.
No company or person is perfect, and the LEGO Group has made mistakes over the years. However, in reviewing hundreds of pages of materials about them — I remain proud to be a fan and look forward to celebrating this and future International LEGO Days with a relaxing build.
