Lego Group will invest kr1bn ($152m) to set up Lego Sustainable Materials Centre in Billund, Denmark, to explore sustainable alternatives by 2030 for the raw materials it currently uses.
The proposed centre will be established between 2015 and 2016, and will employ 100 people.
This facility will conduct research, development and implementation of sustainable raw materials for manufacturing its products and packaging materials.
The company has partnered with firms and experts to find ways to sustainable alternatives.
The Climate Savers partnership between the Lego and WWF signed in 2013 is aimed at developing a sustainable materials strategy.
The company formed another partnership with WWF earlier this year to focus on better assessing the overall sustainability and environmental impact of new bio-based materials for Lego elements and packaging.
LEGO Group CEO and president Jørgen Vig Knudstorp said: "We have already taken important steps to reduce our carbon footprint and leave a positive impact on the planet by reducing the packaging size, by introducing FSC certified packaging and through our investment in an offshore wind farm. Now we are accelerating our focus on materials.
"There is no common definition of a sustainable material. Several factors influence the environmental sustainability of a material, the composition of the material, how it is sourced and what happens when the product reaches the end of its life. When we search for new materials all of these factors must be considered."
The decision to use sustainable alternatives for raw materials is part of the company's strategy to reduce environmental impact.
Lego Group owner Kjeld Kirk Kristiansen said: "Our mission is to inspire and develop the builders of tomorrow. We believe that our main contribution to this is through the creative play experiences we provide to children."
Image: More than 60 billion Lego elements were made in 2014. Photo: courtesy of the Lego Group.