Materials from green resources boast a low carbon footprint, forming the foundation of the circular economy approach in materials science. Thus, in this study, waste poly(ethylene terephthalate) (PET) was subjected to depolymerization using propylene glycol (PG), and subsequent polycondensation with bio-based maleic anhydride (MA) produced unsaturated polyester resin (b-UPR). Bio-derived acryloyl-modified Kraft lignin (KfL-A) served as a vinyl reactive filler in the b-UPR matrix to create b-UPR/KfL-A composites. The structural characterization of KfL-A and b-UPR involved the use of FTIR and NMR techniques. The mechanical properties of the newly fabricated composites were assessed through tensile strength, Vickers microhardness, and dynamic mechanical tests. The addition of KfL-A to the rigid b-UPR matrix enhanced material flexibility, resulting in less stiff and hard materials while preserving composite toughness. For instance, incorporating 10 wt% of KfL-A in b-UPR led to a 17% reduction in hardness, a 48% decrease in tensile strength, and a 20% reduction in toughness. Positive environmental impact was achieved by incorporation of 64 wt% of renewable and recycled raw material. Analogously prepared b-UPR/KfL composites showed structural inhomogeneity and somewhat better mechanical properties. Transmission (TEM) and scanning (SEM) electron microscopies revealed a suitable relationship between mechanical and structural properties of composites in relation to the extent of KfL-A addition. The UL94V flammability rating confirmed that flame resistance increased proportionally with the KfL-A addition. Once deposited in a landfill, these composites are expected to disintegrate more easily than PET, causing less harm to the environment and contributing to sustainability in the plastics cycle.