Lego swapping oil in its bricks for more expensive renewable plastic

Lego says it is on track to achieve its goal of replacing the oil in its bricks entirely with renewable plastics by 2032, after inking deals with major producers that can provide fossil-free materials for the long term.

But the move means a major increase in manufacturing costs.

The Danish toymaker said Wednesday that it plans to gradually swap out the oil-based plastics in its bricks with certified renewable resin, which is 70% more expensive than the raw plastic typically used to make the colorful building bricks.

"This means a significant increase in the cost of producing a Lego brick," CEO Niels Christiansen told Reuters.

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He suggested that the company would not pass along the added costs to customers, telling the outlet, "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."

When reached by FOX Business for comment, Lego noted that its decision to transition away from oil-based plastic in its bricks was not made recently, and the company has tested more than 600 alternative materials over the past eight years.

In 2022, Lego began investing more than $1.4 billion in sustainability initiatives over a four-year period in order to transition to more sustainable materials and cut its carbon emissions by 37% by 2032.

Last year, the company had to adjust its plan for making bricks from recycled plastic bottles after discovering "the material didn't reduce carbon emissions," a Lego Group spokesperson told FOX Business at the time.

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Lego's oil-free material suppliers are using bio-waste such as cooking oil or food industry waste fat as well as recycled materials to replace virgin fossil fuels in plastic production.

In its latest earnings released Wednesday, Lego reported its sales outpaced the overall toy market in the first half of the year, driven by strong demand in Europe and North America.

The company said sales from January through June rose 13% to 31 billion Danish crowns ($4.65 billion). By comparison, Lego increased first-half sales by 1% last year and 17% in 2022, year over year.

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Following the strong start to the year, Christiansen now expects double-digit sales growth in 2024, compared with earlier guidance of single-digit growth.

FOX Business' Daniella Genovese and Reuters contributed to this report.