Me.. Søren Kristiansen. Senior Director of Technology, Materials, Engineering & Quality. Joined the LEGO Group in 1988 Mechanical engineer

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2 Me.. Søren Kristiansen Senior Director of Technology, Materials, Engineering & Quality Joined the LEGO Group in 1988 Mechanical engineer Key roles and responsibilities: Setting direction for materials platform used for LEGO products. Identification of potential materials to be introduced in the transition towards a sustainable materials platform. Setting direction for material requirements and analytical methods in order to secure a fit to products and production processes. Internal capability building. Mapping and selection innovation partners.

3 A family owned business

4 The LEGO Group at a Glance Danish family owned 37,934 million 32.8% $ 5,470 million turnover 2016 operating margin 19,061 employees End years of consecutive growth Sold in more than 140 countries Approximately 60% of 2016 sales were novelties Figures per ultimo 2016.

5 Production & Distribution Facilities Denmark Billund Mostly moulding. High volume packing for more complex products Czech Republic Kladno LEGO System product processing and high volume packing Mexico Monterrey Moulding, processing and packing high-volume products for NA US Dallas Distributions Center Hungary Nyíregyháza Moulding, processing and packing of LEGO DUPLO Czech Republic Jirny Distributions Center China Jaixing Moulding, processing and packing high-volume products Shanghai Distributionscenter

6 LEGO Products LEGO Friends LEGO Chima LEGO DUPLO LEGO Juniors LEGO City LEGO Technic

7 LEGO Brand Framework

8 Planet Promise

9 Ambition: Our ambition is to make a positive impact on the world our children will inherit.

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11 Environmental footprint Environmental Impact Assessment 75 % impact is with our suppliers, materials and design 10 % impact is in our production 15 % impact is in the consumer & disposal phase Identify and prioritize impacts Climate Change Reduce our carbon emissions Resources Source and use materials responsibly

12 Making a positive impact Climate Change Reducing our carbon emissions By % balanced by renewable energy We have reduced the amount of energy used to make LEGO bricks by more than 12% since % 1 st Toy Company to partner with WWF Climate Savers Resources Innovate our sourcing and use of materials Green Box Initiative reduced 7,000 tonnes of packaging material In 2016, we achieved a recycle rate of 93% and 100% of element waste 1bn DKK investment in the pursuit of sustainable materials 100% FSC packaging & marketing materials

13 Sustainable materials by 2030

14 Sustainable Materials Ambition Our ambition is to use sustainable materials in all our core products (elements, packaging and building instructions) by 2030 Use materials that meet our sustainable materials definition across all of our core products Actively and publically engage with stakeholders in the sustainable materials dialogue Sustainable Materials Centre: The catalyst that will allow us to step change our efforts and deliver our Sustainable Materials 2030 ambition through partnerships and new ways of working

15 Ramping up our efforts Commitment Organisation Partnership Building Results The LEGO Group has invested 1bnDKK in the pursuit of sustainable materials. Our sustainable material ambition has been secured amongst our top leadership. A robust governance structure has been put into place. In 2015, we began the recruitment of 100 specialists who will work on this challenge. Partnerships are critical to our success. We are partnering with WWF and suppliers. We look to develop more partnerships and further engagement with organisations and children. The Sustainable Materials Centre will be physically located in Billund, Denmark. We will break ground on this research facility in We will continue enhance our efforts to deliver sustainable packaging and product materials over the next 5 years.

16 What is a sustainable material? Non-negotiable characteristics Compatible with the LEGO Building System Transition completed by 2030 Sustainable materials cannot compromise on Safety Consumer-perceived quality Durability of elements Each iteration of sustainable materials should reduce our environmental footprint versus its predecessor LEGO Group sustainable materials definition has been developed in collaboration with WWF Sustainable Materials Definition Sustainably sourced and manufactured feedstock The material is derived from: Sustainably grown renewable feedstock Recycled material or carbon capture technologies The production of the material has a sustainable manufacturing footprint Minimum waste in the value chain Material for elements can be reground and reused during production Packaging should be recyclable

17 Materials for the Building system

18 Material properties (examples) Transparency Shafts Small Medium Visual/feel Function Structural Decorated Soft Snap Knobs Large

19 Feedstock for sustainable materials

20 Monomeric building blocks Alcohols Acids Amines Others Ethylene glycol 1,3 Propanediol 1,4 - Butanediol Cyclohexanedimethanol Short chain diols Terephthalic acid 2,5-Furandicarboxylic acid Isophthalic acid Succinic acid Levulinic acid Sebacic acid Methacrylic acid D/L-Lactic acid Adipic acid Acetic acid Hydroxy acids Itaconic acid Hexamethylenediamine Diaamines Ethylene Isobutene Butadiene Isoprene Isosorbide Diphenylcarbonate Furan dicarboxylic methyl ester Glucose Farnasene

21 Several options for new sustainable polymers Alcohols Acids Amines Others Polyesters Copolyesters Polyamides Polylactic acid Other polymers Lactic acid Lactic acid Lactic acid Lactic acid

22 Supply chain Sugar Possibility for interaction and involvement Impact on the planet (Volumes) Follow Indicate areas of interest be involved invest

23 Feedstock sustainability

24 Circularity for plastic World Economic Forum, Ellen MacArthur Foundation and McKinsey & Company, The New Plastics Economy - Rethinking the future of plastics (2016,

25 What s ahead?

26 More than 50 different colours 20 different materials More than 3,600 different types of LEGO elements No compromise on quality and safety

27 Engagement is key The LEGO Group 2030 Materials Ambition Suppliers and supply chain parties Universities & technology institutes NGO s and 3 rd party organisations LEGO Employees Consumers, children and the general public

28 Achievements so far Organization in place with 35 materials specialsts and in total 80 employees are working with sustainable materials Several R&D projects have been initiated A funnel of new materials are in the screening phase Lab facilities have been expanded New ways of working have been introduced Joining effort with other companies.

29 Next generation materials

30 The first sustainable LEGO brick prototype

31 Demonstrating commitment The ambition to use sustainable materials in all our core LEGO products and packaging is something Jørgen Vig Knudstorp, our CEO, and I have discussed many times and we both see it as an exciting and necessary ambition for us to fulfil. It is a daunting and complex challenge, but I know we have to solve it and I am absolutely confident we can Thomas Kirk Kristiansen 4 th generation of the LEGO Group owners

32 Contact details and information SMC address (ideas, projects, corporation ): Søren Kristiansen Sr. Technology Director Materials LEGO System A/S Åstvej 7190 Billund Denmark Company: