The investment arm of the Danish family behind LEGO plans to significantly increase its exposure to plastics recycling as Europe moves toward stricter packaging rules.

Kirkbi Climate, the climate investment unit of LEGO’s family-owned holding company Kirkbi, plans to double its US$1.6 billion portfolio over the next five years. Plastic recycling is expected to be one of the areas where the fund will invest heavily.

The move comes as the EU’s Packaging and Packaging Waste Regulation (PPWR) pushes the market toward recyclable packaging by 2030.

Investment meets recycling challenges

However, the economics of plastic recycling remain challenging. Recycled plastic continues to compete with cheaper virgin material, while the recycling value chain remains fragmented and inefficient.

“We can dive in knowing that the market economics don’t work today, but if there’s no chance for the market economics to ever work, then that’s very difficult,” said Anupam Bhargava, CEO of Kirkbi Climate.

Kirkbi Climate, which also invests in energy transition and land use, manages around 10 billion Danish kroner. Future investments will be broadly divided between energy and recycling, with a focus on selected EU countries and plastics.

The fund is also moving toward a more active investment approach, seeking positions in companies large enough to have meaningful influence at board level.

For recycling technology developers, the strategy reflects growing investor interest in plastic recycling as regulation and market conditions begin to reshape the economics of the sector.

Source: Bloomberg