LEGO Owners Plan Major Expansion in Plastics Recycling Investments

The investment company owned by the family behind the LEGO Group is preparing to increase its exposure to plastics recycling technologies as stricter European packaging rules reshape demand for recycled materials.

KIRKBI Climate, part of KIRKBI A/S, plans to double the size of its approximately $1.6 billion climate investment portfolio over the next five years. Plastics recycling is expected to become one of the major areas receiving additional capital, alongside investments supporting the energy transition.

Anupam Bhargava, CEO of KIRKBI Climate, said the company sees significant opportunities to improve a plastics recycling value chain that remains fragmented and inefficient. Future investments are expected to focus primarily on a limited number of European countries and on companies where KIRKBI can take sufficiently large positions to influence strategy and business development.

The strategy represents a shift toward a more active investment model. Rather than primarily holding smaller positions across climate-focused companies, KIRKBI Climate is seeking to build and scale businesses operating at key points in climate-related value chains.

KIRKBI Climate describes its approach as "systemic investing," using patient capital across areas where coordinated investments could accelerate wider market changes. Its three principal areas are the energy transition, circular plastics and land sustainability.

European Regulation Creates New Demand for Recycling

The investment plans come as the European Union begins implementing its new Packaging and Packaging Waste Regulation, or PPWR.

Regulation (EU) 2025/40 entered into force in February 2025 and began applying on a phased basis from August 12, 2026. Among its central objectives are requirements designed to reduce packaging waste, increase recycling and expand the use of secondary raw materials.

From 2030, packaging placed on the EU market will generally need to satisfy new recyclability requirements. The regulation establishes recyclability performance grades and requires packaging to be designed for material recycling, with further requirements on recycling at scale applying from 2035.

Plastic packaging will also face minimum recycled-content requirements.

From 2030, these include 30% recycled content for certain PET contact-sensitive packaging, 10% for some non-PET contact-sensitive plastic packaging, 30% for single-use plastic beverage bottles and 35% for other covered plastic packaging. Higher thresholds are scheduled for 2040.

These requirements could materially increase demand for reliable supplies of recycled polymers.

The European Commission has warned that, without further intervention, overall packaging waste in the EU could increase by 19% by 2030 compared with current trajectories, while plastic packaging waste could rise by as much as 46%.

For recyclers, converters and packaging manufacturers, that regulatory shift creates both an opportunity and an infrastructure challenge. Higher recycled-content requirements are only practical if sufficient quantities of secondary materials can be collected, sorted and processed at appropriate quality levels.

Scaling a Fragmented Recycling Market

Plastics recycling remains complicated by variations in polymer types, product design, contamination, collection systems and the economics of recycled versus virgin materials.

Bhargava identified fragmentation within the recycling value chain as one reason KIRKBI sees room for investment. The company intends to deploy capital into businesses that could help strengthen different stages of the system rather than focusing exclusively on individual recycling technologies.

That approach could encompass areas such as collection and sorting infrastructure, mechanical recycling, advanced recycling processes, recycled-material production and technologies that make plastic products easier to recycle.

Commercial conditions remain an important constraint. Recycled plastics must frequently compete with virgin polymers whose prices are closely connected to fossil-fuel and petrochemical markets. Weak demand or low virgin-plastic prices can place considerable pressure on recycling economics.

Regulation can partially change that equation by creating more predictable demand. Mandatory recycled-content requirements mean manufacturers can no longer rely entirely on price differences when deciding whether to purchase virgin or secondary materials.

For investors, this increases the potential importance of recycling capacity capable of producing consistent, traceable material at industrial scale.

Climate Strategy Separate From LEGO Operations

KIRKBI is the holding company through which the Kirk Kristiansen family owns the LEGO Group and other businesses. It reported total assets of DKK 189 billion at the end of 2025 and profit before tax of DKK 22.6 billion for the year.

KIRKBI Climate operates as a separate business area within the wider holding company and has its own leadership team and board. Its investment activities should therefore be distinguished from the LEGO Group's own sustainability initiatives.

The LEGO Group is separately working to increase the use of renewable and recycled materials in its products while reducing single-use plastic packaging.

In September 2026, the company said its sustainability spending increased by 20% in 2025 compared with 2024 and had more than tripled compared with 2022. Examples of materials currently being introduced include transparent elements containing material derived from artificial-marble countertop waste, flexible elements made partly from sugarcane and tires incorporating recycled material from sources including fishing nets and engine oil.

The broader KIRKBI investment strategy nevertheless highlights a growing link between corporate capital and Europe's transition toward a circular plastics economy.

Investment Could Accelerate Recycling Capacity

For the plastics industry, one of the most important implications of the KIRKBI strategy is the availability of long-term capital.

Recycling infrastructure often requires significant upfront investment in processing equipment, sorting facilities, material-quality systems and supply networks before facilities reach competitive scale. Investors willing to accept longer development periods can therefore play an important role in expanding capacity.

KIRKBI says its climate strategy is specifically designed around patient capital and investments that can move established or emerging technologies toward commercial scale.

Its plan to roughly double the existing climate portfolio could therefore add substantial capital to sectors facing stronger regulatory demand but persistent infrastructure and financing challenges.

The timing is particularly significant for European packaging markets. Although several major PPWR obligations do not take effect until 2030, recycling companies, packaging producers and manufacturers need to make capacity and design decisions well before those deadlines.

As recycled-content mandates and recyclability standards become part of normal market access requirements, access to high-quality recycled polymers is likely to become increasingly important across consumer goods, packaging and industrial supply chains.

For KIRKBI Climate, that transition is creating an investment opportunity. For companies that depend heavily on plastics, it also signals that recycling capacity is moving from a largely voluntary sustainability consideration toward a more strategic component of regulatory compliance and raw-material security.

Source: www.plasticsnews.com