Carbon transparency- Logitech isn't playing games:Logitech's Prakash Arunkundrum

Hi Fred, how are you?

Yeah, indeed. So we actually are a company that's been focused on designing for sustainability for a long time now. And last year we actually announced our pledge to be carbon neutral as part of the Paris Accord. We also took a few of our products and our manufacturing carbon neutral. Our gaming lineup is entirely carbon neutral. And then we were looking at this and we said, you know, we really think carbon is the new calorie. So when you go out and buy anything today which is a food item, you know what calorie stands for. And we wanted to empower and have our consumers actually have the same choice from a carbon perspective. And so what we did essentially was created a transparency program around the carbon footprint of our company's products. And the reason for this is really to make sure that when people buy our products, you could see sort of the carbon impact. So we designed our own carbon impact logo, and it's essentially a letter C with an arrow pointed down to indicate our sort of intention of reducing carbon. And it actually has the total carbon value of that product all the way from when it was made to when it goes into landfill. So that's essentially what we did last year, and we're going to put this on our packaging, it will be on our website, and we believe we are trying to empower consumers. And this is something we've created that would essentially help hopefully others as well as part of this journey.

That's right. So what is required here is what we call the life cycle analysis capability. So you need to sort of estimate the carbon impact from material sourcing to manufacturing, distribution, consumer use, all the way to end of life. So we're going to do that across our entire portfolio of products. We're going to start with our gaming products, and then we're going to roll it out over time across all of them. So by 2025 we have a plan to get everything carbon logoed, well before that. But we have a long list of products, so we're going to work through it every year, and hopefully I'll beat that timeline next time I talk to you.

That's a great question. And one of the reasons we are doing this is partly to inform consumers, but also partly to make ourselves and our teams, especially our design and engineering and product teams, really be aware of the carbon impact of our products. So that when we make the next generation products, we are looking to lower the amount of carbon. And you know, if you can imagine a typical G Pro Wireless mouse, which is a gaming Pro Wireless mouse that we have today, if you look at it on the box it'll say things like Lightspeed, which is our technology for wireless. And along with that, in the future it's going to say the amount of carbon it has. Let's say it's 8.2 kgs of carbon equivalent. Now next time around, the designers and engineers go out to actually make this, they're quite aware that it's 8.2 kgs, and they're going to look to reduce it by 10%, 20%, etc., all the way down. And to do that, we're going to really design from a sustainability perspective, looking at materials, looking at manufacturing choices, looking at how much time you have with these products when you actually use it, using lower power electronics in it so that you can actually extend the life of those products, and also really rethinking about how when we are done using the product, how do we actually reclaim it back and recycle it. And so some of these things we're already doing. So for instance, we already recycle plastics and use recycled plastics in our mice and keyboards. We have reduced sizes of packaging, we put in lower power sensors. But as you can imagine, once you have a number, we're going to actually keep improving on that number from an internal perspective. And consumers who see that, they'll hold us accountable for it. And we sure hope other companies join us in this endeavor to actually have carbon transparency.

Yeah, so that's a great question. I mean, there's really three things here, right? First is knowing the number itself and having it sort of validated. So we're working with external partners, ifu Hamburg, which is a company that we're working with, a consortium that actually looks at carbon calculations. And we're going to work with DEKRA, which is the authorized verifiers. So DEKRA standards are kind of known well in automotive, we're going to use that. So that's the external piece, right? Like the first thing is making sure the number itself is aligned with a standard and it's validated externally, not just based on what Logitech is saying. The second thing we're going to do is all this knowledge that we've developed, we're going to share this with whoever wants it, including competitors. And the third thing is really we're going to work with other industry-wide groups to actually have them embrace this idea. Now, one of the reasons we're talking to you here is actually just getting the word out on this is going to start tipping the scales on how people start thinking about it. If you think back, calories didn't appear on nutrition labels just like that, right? I mean, it started with some movement, and then it became regulated over time, and then it was mandated by the FDA in the US and other government bodies. And we kind of see carbon the same way. It's moving that direction. And as you get more standards and clarity of standards, consumers would have a choice and they'd be able to look at it and understand what that means related to others. But we are committing ahead of this schedule because we truly believe in this, and we believe that we're empowering our consumers and really hoping to make ourselves better by holding ourselves accountable.

Not really, actually. One of the things is, as a head of operations, I also oversee sort of our efforts to drive gross margin to the company. And most of the time, actually, sustainability and costs are directly correlated. So for example, if you were making packaging and you used to make a certain kind of packaging, and you applied sustainability efforts towards packaging, you end up reducing the size of packaging. First thing you do is reduce the size, which actually is less material, which is less transportation cost, and it's less for the consumers to throw away. So overall, sort of end-to-end life cycle, the cost went down actually in that case. Now there are some sustainable materials that we are exploring that are quite not there because the supply-demand economics have not worked out. But I truly believe that over time, sustainability is not going to have a cost impact. It might have something short-term and temporal, but over the many years that we've been doing this, we haven't seen any major impact to our cost structures, and we don't anticipate that in the future either.

I guess so. Logitech is many, many things, right? We're a Swiss company, we're here in the US, which is what I'm based out of. We have operations all across Asia in terms of manufacturing and sales. We operate in lots of different countries, so we're truly global. But we do have a very, as you pointed out, a Swiss legacy and heritage that we're quite proud of. And for sure there is a European angle to sustainability where some of the European groups are actually ahead in terms of some of the thinking around sustainability, global warming, and things of that sort. And that has definitely influenced us. But in this case, I don't believe there is any consumer electronics company anywhere in the world that is actually voluntarily trying to do this. So this is really coming from really passion for sustainability from the management team, that includes me and our CEO Bracken Darrell, as well as our board. We truly believe that we want to make a difference, and that's where this is coming from. And hopefully it helps educate consumers as part of the journey as well.

For sure. So for now, we have on our logitech.com, on the sustainability page, we have information on carbon transparency. You can always reach out to us. We are publishing our sustainability report for the last 10 plus years, so you probably see that. And very soon, the end of summer hopefully, you'll start seeing the labels appear on boxes, and along with it a lot of detail around how we compute it. And if anyone is interested in reaching out, you can always go to our website and check it out.

Thank you.