Zkoušel jsem to dát celý do objektu abych to trochu odlišil od jiného kódu ale stejně to nefunguje.

var obj = {
        items: [{
          id: 45,
          lable: "Test 1.2.1",
          parent_id: 2
        }, {
          id: 12,
          lable: "Test 1.0",
          parent_id: 0
        }, {
          id: 32,
          lable: "Test 1.1",
          parent_id: 12
        }, {
          id: 2,
          lable: "Test 1.2",
          parent_id: 12
        }]
      },
      
      objDict : this.items.reduce(function(p, c) {
        p[c.id] = c;
        c.children = [];
        return p;
      }, {}),
      
      tree : this.items.reduce(function(p, c) {
        if (!c.parent_id) {
          p = c;
        } else {
          this.objDict[c.parent_id].children.push(c);
        }
        return p;
      }, {}),
      
      processTree : function (node, element) {
        var li = document.createElement('li');
        li.innerText = node.lable;
        element.appendChild(li);
        if (node.children.length) {
          var ul = document.createElement('ul');
          li.appendChild(ul);
          for (var i = 0; i < node.children.length; i++) {
            this.processTree(node.children[i], ul);
          }
        }
      }

obj.processTree(this.tree, document.getElementById("list"));