In recent years, food packaging in Finland has been targeted by various EU-level and national policy measures and regulations aimed at driving the sector towards more sustainable practices, products, and services. To address the environmental concerns raised by the increasing production of packaging and packaging waste, for example, littering and terrestrial and aquatic pollution and the climate impacts of packaging use, the industry needs to actively develop and adopt innovative, more sustainable solutions. This article investigates how the current innovation policy in Finland has addressed and supported sustainable innovation in the field. It highlights the shortcomings of traditional innovation policy that focus on the short-term growth potential of individual companies rather than supporting systemic innovations towards more structural transformation. To achieve sustainability goals, innovations must increase recyclability and reuse of packaging materials, which necessitates systemic changes in the food packaging value chain. Thus, more comprehensive, transformative innovation policies are needed to encourage collaboration among all parties in the value chain, from material producers to retail, the food industry, brand owners, the food service sector, and regulators. Finally, the article concludes by discussing the potential, possibilities, and obstacles of adopting such transformative approaches in innovation policy.