Lego to Shift Towards Renewable Plastics Amidst Surging Profits

Lego, the iconic toymaker, announced plans to phase out fossil fuel-based plastics in favour of pricier renewable and recycled materials, as the company reported a significant rise in profits. The Danish company revealed on Wednesday that its profits for the first half of the year surged by 26%, reaching 8.1 billion Danish krone ($1.2 billion), with consumer sales growing by 14%, outperforming the global toy industry.

In an interview with CNN, CEO Neils Christiansen highlighted the brand’s global appeal and the strong connection it maintains with consumers across different age groups and interests.

Despite a global decline in toy sales, attributed to reduced consumer spending on non-essential items, Lego’s performance has bucked the trend. For instance, rival Hasbro announced a 20% workforce reduction last year due to declining sales.

Transition to Greener Plastics

Lego, which produces billions of plastic bricks annually, has been actively researching alternatives to its oil-based materials. The company has tested over 600 different substances in its quest to replace traditional plastics by 2030, though success has been limited. As part of its strategy, Lego plans to reduce the oil content in its bricks by investing in certified renewable resin, a more sustainable but up to 70% more expensive raw material.

“This represents a substantial increase in the cost of producing a Lego brick,” Christiansen told Reuters. He mentioned that by 2026, over half of the resin used in Lego products would be certified under the mass balance method, a system that traces sustainable materials through the supply chain. This is up from 30% in the first half of 2024.

Lego’s goal is to produce all of its products from renewable and recycled materials by 2032. While the company currently absorbs the additional costs, Christiansen expressed hope that their investment would encourage suppliers to increase production volumes.

“With a family-owned business committed to sustainability, we have the privilege to absorb the extra costs without passing them on to customers,” Christiansen explained. “We don’t see consumers ready to bear the additional expense.”

Lego’s move comes at a time when the market is flooded with cheap virgin plastic, due to significant investments by oil companies in petrochemicals. However, Lego’s suppliers are increasingly turning to bio-waste, such as cooking oil and food industry waste, to replace fossil fuels in plastic production. The market for renewable plastics remains in its infancy, largely because much of the available feedstock is directed toward subsidized biodiesel used in transportation.

According to Neste, the world’s largest producer of renewable feedstocks, fossil-based plastic is currently about half or a third of the price of sustainable alternatives. Despite this, Christiansen noted a growing willingness among suppliers to invest in sustainable materials, a trend he observed has gained momentum over the past year.

While other toymakers like Hasbro and Mattel have also begun incorporating sustainable materials into their products, Lego’s commitment to fully transitioning to renewable and recycled plastics by 2032 sets it apart in the industry.