The Business Case for Sustainability in Toys: Beyond "Just" Morality

by Sharon Keilthy February 02, 2024

On January 31st 2024, I spoke on stage at the world's biggest toy trade fair: Spielwarenmesse in Nurnberg, Germany. The talk title was:

Sharon speaking about sustainability on stage at Spielwarenmesse

Here's what I said...

"This talk is about sustainability…but I am not here to make you feel guilty. It’s not our fault things are the way they are. What is exciting is the opportunity to be part of fixing them.

And if you were here last year, the first minute where I introduce myself may sound familiar, but the rest of what I’ll say is totally different - I’ll share my view of the business case for sustainability in toys, help you consider which aspects will be most motivating for your business, and add some tips on how to make it work.

6 years ago I went on a shopping trip that changed my life. My daughter was about to turn 4 years old. I wanted a gift I could feel good about - something locally-made and plastic-free. I went to a very nice Irish toy shop - and I came out empty-handed. I just couldn’t buy it anymore: the plastic wrapped in plastic shipped 22,000km from China. I figured others probably felt the same and thought, if not me now, then who when, to sort this out?

So after 13 years at American management consultancy McKinsey & Company, I quit, and started the world’s first eco toystore, Jiminy.ie - named after Pinocchio’s conscience Jiminy Cricket.

In the 5 years since then we’ve retailed over €2.5 million of toys to feel good about - climate-neutral, minimal-waste - made from recycled plastic, bioplastic, wood, or cardboard. We’ve empowered over 15,000 people to choose a gift that delighted the child and their planet.

And I’ve learned a lot about what makes a toy sustainable: I share that with the global toy industry through:

The Women in Toys Sustainability Learning Community, which I co-founded;
The Toy Association (USA) Sustainability Committee;
I guest lecture to toy design students at Otis College Los Angeles;
I’m a sustainability columnist at Spielwarenmesse’s Spirit of Play magazine and for 2024 I was the sustainability member of their Toy Award judging panel;
I co-founded Sustainable Toys Action Consulting, and we are co-hosting Toys Go Green here today.

So that's nice - there’s Sharon, an eco activist, in her eco niche. But what’s that got to do with you? Why should your toy business act on environmental sustainability now?

There are 8 main business cases for sustainability - in a moment I’ll ask you, which will be most motivating to your business!

Moral - sustainability is the right thing to do;
Profit - if sustainability maximises our profitability;
Competition - to retain market share we need to match or beat competitors’ sustainability levels;
Funding - banks or investors need to see sustainability to lend us money;
Risk - sustainability avoids/reduces risks to business continuity;
Talent - people want to work for sustainable businesses;
Brand/reputation - society will judge us on our sustainability;
Regulation - regulators like the EU will mandate or incentivise sustainability.

These cases overlap, e.g., regulation affects profit and funding, and the moral case affects talent and brand. But we will discuss each one.

For each of the 8 cases I’ll try to tell you a story and give you some powerful facts, to help you pick those most motivating to your business, and then convince others in your business!

#1. The Moral Case - sustainability is the right thing to do

My story about the moral case is my own story that I told you earlier. But here are some facts:

"The impacts of climate change put almost every child at risk," says UNICEF (source). We’ve all seen the images of children whose home was washed-away by floods in Pakistan, burned by wildfires in the US; children left hungry in South Sudan; children made sick from air pollution in China; children injured in storms and heatwaves. All from climate change.
Ellen MacArthur says humanity's use of virgin petro-plastic causes 6% of carbon emissions. Source
Toys is the world's most plastic-intensive industry, with 90% of toys made from petroleum, emitting so much CO2 it’s like permanently deforesting 1 billion trees or an area the size of Portugal (sources) In other words, toys is responsible for a significant proportion of the climate change that is already harming children.
An industry that exists to make children happy should be protecting their planet and future, not the opposite.
As an industry obsessed with toy safety, it’s time to widen our definition of, “safe,” from, “safe for the child who plays with it,” to, “safe for all children in the world.”
The main thing we need to change to achieve this is our materials: virgin petro-plastic bad; recycled or bioplastic good.

#2. The Profit Case - if sustainability maximises our profitability

I chatted with one of the owners of a very big, successful mainstream toystore.I pitched him the idea of a toy repair or toy swap scheme, and I thought his reply was very wise. He said (not a direct quote), “Nobody wants to be wrecking the planet, so things have to change. But what we do has to work economically; anything else is just a distraction.”

Imagine the most sustainable toys were also the most profitable. We wouldn’t have a problem! That’s not yet the case. But:

There are plenty of sustainable toys that match cost/profit of unsustainable toys - here are some examples:

This is going to change thanks to regulation. Regulation will tax or limit unsustainable materials - more on this later!

#3. Competition - to retain market share we need to match or beat competitors’ sustainability levels

“Sustainability is the single biggest business opportunity of the 21st century, and will be the next source of competitive advantage.” - H. Lee Scott, CEO of Wal-Mart 2000-2009

Shoppers say they want sustainability, e.g.:

UK supermarket chain Iceland surveyed 5,000 people and 80% supported them getting rid of plastic.
Over 70% of consumers say they’re willing to pay more for eco products (source)

In my experience, they don’t always follow-through on that, but it’s on their mind - and at least some of them do, e.g.:

Sustainability was our headline message when I launched Jiminy - and we very quickly captured a small but stable share of the Irish toy market - "stole" it from existing toystores - by giving people a guilt-free alternative. So sustainability was a competitive advantage.
Unilever’s experience was the same when they found their ‘Sustainable Living’ brands accounted for 60% of company growth, and grew 50% faster than the rest of the business, in 2016.

#4. The Funding Case - banks or investors need to see sustainability to lend us money

Partly thanks to regulation of banks, it’s getting harder to raise investment for an unsustainable business, e.g.:

AIB is a bank with 30% market share in Ireland. Its published strategy is to achieve a Net Zero loan book by 2040 (excluding agriculture) and for 70% of all new lending to be green or transition by 2030. It already started including Sustainability in how it governs its loans in 2023.
A 2021 report from As You Sow found that investments in petrochemicals and plastics worth about $400 billion are at risk of becoming stranded assets due to product bans

But the opposite is also true: there’s more money out there looking for sustainable businesses to invest in. For example, the Alliance to End Plastic Waste and Lombard Odier Investment Managers have so far raised €335 million for their Circular Economy investment fund - investing in ‘scalable solutions’ to remove plastic waste from the environment, increase recycling, and drive the global transition towards a circular economy for the plastic value chain (source).

#5. The Risk Case - sustainability avoid/reduces risks to business continuity

We have only to look at flooded children's stores in Ireland in 2023; the 2021 toy shortages due to COVID 19 shutdowns in China (by the way climate change increases the incidence of pandemics); or the areas around the London and New York toy fairs that will be under water by 2050 if climate change continues at current rates, to see that climate change poses massive risks to business continuity.

Indeed, the World Economic Forum predicts a “a unique, uncertain and turbulent decade to come,” with climate change becoming the top risk to business over the next 10 years as perceived by business leaders (source)

#6. The Talent Case - people want to work for sustainable businesses

I spoke at the Play Creators’ Conference in London last year and in the bar afterwards a man in his early 30s approached me. He told me he loved his job, designing toys, but was considering quitting. He had tried to convince his colleagues start making their toys more sustainable. But nobody wanted to hear him. They were about to lose a senior creative because sustainability was more important to him, than to the company.

The World Economic Forum says:

58% of people consider sustainability when applying for jobs
Staff are 3 times more likely to stay and 1.4 times more engaged at purpose-driven organisations

So sustainability is becoming an important advantage - or disadvantage - in the war for talent.

#7. Brand - society will judge us on our sustainability

I spent the first year of Jiminy selling our eco toys at markets and events around Ireland. I would be a very wealthy woman if I had €1 for every time someone came up and said, “OMG I’m so sick of plastic toys, and when I go into Smyths I feel ill.” I’m sure that’s not a reputation any of us want for our brand.

In contrast, 1% of Irish women follow us on Instagram, so when I’m out in Ireland, people come up to me. They thank me for what I’m doing to make sustainable toys the new normal. They ask me to keep going. We regularly get thank-you emails too - here’s a recent one: “Just wanted to drop a message to say how wonderful your website is. I only just came upon it yesterday and so glad you took the leap to start your company. I’ll be letting all my family and friends know about it.”

Moreover, people want business to take a lead on sustainability. The Ipsos Global Trends Report 2021 shows, globally:

70% of people want business leaders to speak out on social and political issues;
70% tend to buy brands that reflect their personal values;
63% would rather a company prevent environmental harm than pay correct taxes;
75% agree that single-use plastic products should be banned as soon as possible.

And activists do target unsustainable companies and with some success, e.g.:

Ella and Caitlin McEwan the UK sisters whose petition put an end to plastic toys at McDonalds;

Greenpeace targeting Barbie (for links to rainforest deforestation) and LEGO (for links to Shell). I don't know whether these accusations were substantiated, I'm just saying, it's not helpful to any brand to be considered unsustainable enough to be targeted by Greenpeace!

#8. Regulation - regulators like the EU will force or incentivise sustainability

There are 2 EU regulations upcoming that will reward the toy business that becomes more sustainable (and punish the one that doesn’t):

Corporate Sustainability Reporting Directive (CSRD)
Ecodesign for Sustainable Products Regulation (ESPR)

CSRD for toys at a glance:

Applies mainly to large companies - over 250 employees / €50m net turnover
/ €25m balance sheet.
It’s like financial reporting, but for sustainability
Companies must submit an annual sustainability report covering:

Climate change
Pollution
Water and marine resources
Biodiversity and ecosystems
Resource use and circular economy

Micro enterprises may never have to report directly, but if they are selling to bigger businesses, they will be asked for the data

ESPR for toys at a glance:

Requirements / incentives to improve products’ sustainability including carbon footprint, use of post-consumer recycled materials, durability, reparability (e.g., availability of spare parts and repair services), and recyclability;
Better labelling / information to help shoppers and business buyers choose more sustainable products and get them repaired (including a Digital Product Passport and the EU Ecolabel);
Potentially mandating ‘green’ public procurement;
Making it illegal to destroy unsold goods;
Expected to come into effect about 2026.

So we’ve discussed all 8 cases for sustainability in toys…now please revisit the hypothesis you came up with at the start - which of these would you now say are powerful for your business? And what story from your own business - or statistic - can you use to persuade others in your business of this?

Making it happen

Once you’ve convinced everyone in your business of the need to move towards sustainability, the next question is, how?

Two examples of good practice in sustainable retail, that I’ve been doing at Jiminy for 5 years, and that any toy retailer can manageably start, are Green Procurement and Green Marketing.

Green Procurement for Toy Retailers

I’d summarise Green Procurement as:

Define what Sustainable means for your business - for Jiminy that’s climate-neutral and minimal-waste; and then
Make sure what you buy matches up to that - but how?

The top strategy is collaborating with suppliers to change and improve sustainability practices. The poster child for this is LEGO, who figured-out their sustainability strategy in 2015 and gave outsourced toy makers several years’ notice that they should change their materials.

And the second strategy is to put more weight on sustainability criteria in supplier and product selection criteria. E.g., I’m a fan of TESCO’s red-amber-green list for packaging - I admire that they've set-out such clear guidelines for their suppliers - but before you copy this, please note:

I don't agree with all the specifics: they seem to be prioritising recyclability and not carbon footprint, e.g., Aluminium, despite its 'green' reputation and 98% recycling rate, is actually quite a high-CO2 material because only 30% of global demand an be met by recycled Aluminium, leaving 70% of global demand to be met by coal-powered strip-mining in China.
This list is for packaging, not for products (like toys).

And I’ve effectively done the same for toys - I have 25 questions we ask about any given product - in fact we list the answers in each product listing on our website. If the product doesn’t meet these criteria, we don’t stock it.

Very important: green procurement only works with toys that will sell. If a toy is overly-serious it won’t sell. If the colours look boring it won’t sell. I talked with the owner of a huge toy retail chain who said, “We stocked those bioplastic toys but they were stuck to the shelf - they didn’t sell, so we discontinued them.” From experience I know the issue with those bioplastic toys is that they all brown, beige, and pale blue: the toy maker trying to signal that they are eco-friendly, to target a more eco-minded buyer. But the problem is, children want and need brightly coloured toys with primary colours, and that’s what sells, on Jiminy.ie and in that huge toystore anyway.

Green Marketing for Toy Retailers

This for me is about motivating your audience to shop green, and getting the credit for what you’ve done. Which for Jiminy has meant educating our audience about what sustainability means for toys, why it’s important, and why our ranges meet those criteria. E.g., what bioplastic is, why it’s sustainable. Or why our recycled plastic toys are safe despite the “recycled plastic is unsafe” message they see in the press.

We’ve done this through all the normal small business communication channels - social media (a few examples below), email, website, press releases, and applying for (and winning) sustainability awards.

So in summary, as a small toy retailer what I’m doing is:

I know what the business case for sustainability for my business is
I know what sustainable means for my business
I apply that in my buying and marketing

Sustainable Toys Action Consulting (of which I'm a co-founder) is producing a report this year - Sustainable Toys Snapshot 2024 - on how leading toy companies are embracing sustainability. It includes:

✨ Summary of Survey Results
✨ Sustainability Trends from Spielwarenmesse 2024
✨ Insights from the STAC team (Harald Kaeb, myself Sharon Keilthy, Arco de Leeuw, Sonia Sánchez Torres)
✨ Curated resources to advance your sustainability initiatives

To receive a free copy just click here to complete a 2-minute survey to contribute to our findings - thanks in advance!

I want to thank Spielwarenmesse for inviting me to speak and for all they do to celebrate sustainability in toys - through the Sustainability Toy Award, the Toys Go Green exhibit, and the Spirit of Play Magazine Sustainability column (for which I’m one of the contributors).

And thank you - for all you’ve already done for our planet, and thanks in advance for what you will do in 2024 for us, for our children and our shared planet.