It's more about virtue signaling

Why would you assume that? Granted, there is a lot of corporate virtue signalling, and it's existed since time immemorial, but I don't get the sense Lego is necessarily virtue signalling in this case, or at least virtue signalling in a way that isn't genuine. One reason I say this is because it's a family-owned company and really aren't comparable to a corporate giants like Procter & Gamble(which happens to be known for blatant virtue signalling), Coca Cola, or Disney, to name a few.

I don't think it's farfetched for someone in charge at Lego to see value in biodegradable plastic, and there really isn't much of a reason for them not to research into and use biodegradable plastic if it was a viable alternative to whatever they're currently using.

Now, if they were making commercials about biodegradable Legos that don't exist, or "toxic masculinity", or saving the whales, then you could definitely say that Lego is virtue signalling. But I don't see that here.

It sort of is. The last time I saw this story going around, it was that they were swapping out the rubberier non-ABS bits that are almost always green tree elements to some kind of sugarcane-based polyethelene.

https://www.lego.com/en-us/aboutus/news-room/2018/march/pfp

It is virtue signalling.

As someone who has spent thousands of dollars on Lego, if I see "Biodegradable!" splash on the box I'm going to think twice. I painted my Lego, played with it in water, and I could still give it to my kids in the original condition. We can't know that any new Lego will perform the same way.

That's a rather cynical accusation. What if the people signaling this virtue are doing so because they genuinely believe in it?

$150 million is a pretty considerable amount to spend on virtue signaling.