"Making recycled plastics safe for food is an enormous challenge for our industry," Mark Schneider, chief executive of Nestl (NSRGF), said in a statement.
"That is why in addition to minimizing plastics use and collecting waste, we want to close the loop and make more plastics infinitely recyclable," he added.
Sander Defruyt, the expert on plastics at the Ellen MacArthur Foundation, told CNN Business that food companies have a bigger challenge than other consumer firms when it comes to replacing plastic packaging.
That often lends food producers to set lower targets for recycled content, said Defruyt.
What Nestl hopes to do is create such an economy for food-grade plastics that would ensure the material never becomes waste. Defruyt said the strategy could stimulate a market that currently barely exists.
Nestl also announced a $260 million venture fund to invest in start-ups that focus on sustainable packaging. Total spending on the initiatives could reach 2 billion Swiss francs ($2.1 billion), the company said.
"It is encouraging that Nestl has finally committed to reducing its reliance on virgin plastic," Matthias Wthrich senior campaigner at Greenpeace Switzerland said in a statement. "If Nestl wants to stop polluting the world, it needs to end its reliance on plastic," he added, urging the company to "eliminate single-use packaging altogether."
Nestl is one of the world's worst corporate plastic polluters, according to Break Free From Plastic, a global lobby group whose members include Greenpeace and The Sierra Club.
Nestl's total plastics packaging usage in 2018 was 1.7 million metric tons, according to the company's website. Defruyt says only 2% of Nestl's plastics packaging is currently recycled.
Its bottled water division, Nestl Waters, is the largest of its kind in the world, manufacturing the likes of S.Pellegrino, Buxton and Poland Spring across 87 factories worldwide.