November 8, 2024 10:40 pm

Lego Embarks on Ambitious Path to Sustainability Amidst Soaring Profits

Lego, the Danish toy giant known for its iconic plastic bricks, has set its sights on a more sustainable future, announcing plans to replace the fossil fuels used in its products with more costly renewable and recycled plastics. This announcement comes as the company reported a remarkable 26% increase in profits for the first half of the year, reaching 8.1 billion Danish krone ($1.2 billion), with consumer sales growing by 14%, far outpacing the wider toy industry.

CEO Neils Christiansen, emphasized the broad appeal of Lego’s product portfolio across various age groups and interests, which has contributed to the company’s continued success even as global toy sales have faced challenges. “Our product portfolio resonates super well across ages and interests,” Christiansen said, highlighting Lego’s enduring popularity.

However, Lego’s journey towards greener materials has not been without its challenges. The company has tested over 600 different materials in its quest to replace oil-based plastics by 2030, but success has been limited. In response, Lego is now focusing on gradually reducing the oil content in its bricks by purchasing certified renewable resin, a raw plastic that is up to 70% more expensive than conventional materials. This investment aims to encourage manufacturers to increase the production of sustainable materials, a critical step in achieving Lego’s long-term sustainability goals.

Lego is on track to ensure that more than half of the resin it needs by 2026 will be certified according to the mass balance method, which allows for the traceability of sustainable materials through the supply chain. Currently, 30% of the resin used in the first half of 2024 meets these standards. The company’s ultimate goal is to produce all its products from renewable and recycled materials by 2032, a significant milestone in its sustainability journey.

Lego’s commitment to sustainability is further demonstrated by its willingness to absorb the additional costs associated with renewable materials. “With a family-owner committed to sustainability, it’s a privilege that we can pay extra for the raw materials without having to charge customers extra,” Christiansen explained. The market for recycled and renewable plastics is still in its early stages, partly because much of the available feedstock is currently used for subsidized biodiesel, which is mixed into transportation fuels. Nevertheless, Christiansen expressed optimism about the future, noting increased activity and investment in sustainable materials compared to just a year ago.

Rival toymakers, such as Hasbro and Mattel, are also exploring greener alternatives. Hasbro has introduced plant-based or recycled materials in some of its toys, while Mattel has committed to using only recycled, recyclable, or bio-based plastics in all its products by 2030. However, the broader plastics industry remains heavily reliant on virgin fossil fuels, with approximately 90% of all plastic still derived from these sources. Lego’s ambitious plans represent a significant departure from industry norms, positioning the company as a leader in sustainability within the global toy market.