Beauty Giants Investing Big In Sustainability
Nicolas Hieronimus, Global CEO of L'Oreal, has spent his first six months on the job plowing ahead with a far-reaching sustainability agenda while facing the impact of a global pandemic. As it partners with Dubai's Expo 2020, the beauty conglomerate is leading the pack.
Nicolas Hieronimus, Global CEO of L’Oreal, has spent his first six months on the job plowing ahead with a far-reaching sustainability agenda while facing the impact of a global pandemic. As it partners with Dubai’s Expo 2020, the beauty conglomerate is leading the pack.
WWhile international political
efforts try to align on goals to tackle global warming, some of the largest companies in the world are playing their own part, pledging to reduce greenhouse gas emissions
and combat climate change. This is also true of the beauty and fashion sectors. For example, at the end of the 2020 fiscal year American skincare and cosmetics company, Estee Lauder, revealed that it had achieved its goal to source 100% of its electricity from renewables. In June 2021, British luxury fashion house Burberry announced its ambitious goal to become climate positive by 2040. In October 2021, Coach said it will stop destroying returned goods and commit to sustainability after a TikTok video showing slashed handbags went viral. And German skincare company Beiersdorf whose brands include Nivea, recently announced that its Berlin plant will be climate-neutral from 2022.
L'Oréal is among the biggest beauty brands striving to tackle the industry's global environmental impact, among other societal issues. The French cosmetics giant has reportedly allocated $115.6 million to impact investing to address key environmental challenges, and $57.8 million to a charitable endowment fund in support of vulnerable women. The group is now using major partnerships to further promote and advance the company's commitments to positive change, such as by joining Expo 2020 Dubai as the event's official Beauty Products and Services Partner. “L'Oréal is on a mission to create beauty that moves the world, with sustainability, innovation, and people at its core—a mission that shares many synergies with Expo's own future-focused themes,” says Global CEO, Nicolas Hieronimus.
During the first half of 2021, L'Oreal's revenues grew by 13.3%, based on reported figures, to $1.3 billion in the South Asia Pacific, Middle East, North Africa, and Sub-Saharan Africa region, driven by its Consumer Products and Active Cosmetics divisions. The French cosmetics giant said its overall net profit, excluding non-recurring items after noncontrolling interests, surged 21.2% to over $3 billion in the six months leading up to June 30, 2021, compared to $2.5 billion in the same period the year before. Its sales revenue rose 16.2% to $18 billion. Francoise Bettencourt Meyers & family own 33% of L'Oreal's stock and had a net worth of $91.2 billion as of November 3,2021, according to Forbes' real-time estimates.
Partnering with Expo is the latest move in a long-running campaign for L'Oreal. “Since 2013, when we launched our first sustainable development program, the world has changed,” says Alexandra Palt, Chief Corporate Responsibility Officer and Executive Vice-President of the Fondation L'Oréal in the company's 2020 “L'Oreal For The Future” booklet. “The scale of the challenges we are facing is unprecedented. Our ambitions must be in line with these challenges. We must not do better, we must do what is needed.”
According to market research publisher, Global Industry Analysts, the global organic and natural cosmetics market is forecast to be worth $30.1 billion by 2026, but the booming industry continues to produce a large amount of waste. Data from Zero Waste Week revealed that more than 120 billion units of cosmetics packaging were produced worldwide in 2018. And Netherlands-based group LCA Centre found that as much as 70% of carbon emissions attributable to the sector could be eliminated if refillable containers were used for cosmetics. L'Oreal has committed to reducing plastic consumption and working towards using 100% recycled or bio-based plastic by 2030. “We also aim to achieve carbon neutrality by 2025,” says Hieronimus. “L'Oréal allocates almost $1.1 billion yearly to R&D in beauty, more than any other company in the industry.”
The group claims to have reduced carbon dioxide emissions across its plants and distribution centers by 81% in absolute terms since 2005, but the French giant is not the only global beauty conglomerate to be setting net zero targets. According to its Fiscal 2021 Social Impact and Sustainability Report, Estée Lauder has hit net zero emissions in its direct operations for the last two years. “In fiscal 2021, we worked hard to continue developing long-term solutions to help protect our planet,” says Nancy Mahon, Senior Vice President, Global Corporate Citizenship and Sustainability at Estée Lauder Companies, in the report. “While we've made great progress, we know there is more collective action needed to help address ongoing and new challenges in the next decade.” Estée Lauder also recently announced that it is the exclusive partner of the International Space Station National Laboratory Sustainability Challenge: Beyond Plastics, funding research into alternatives to plastic using a space-based lab.
However, L'Oreal is also tackling challenges that go beyond climate change. On September 28, it lit up Dubai's Burj Khalifa in an LED display to raise awareness of its “Stand Up” program—a global campaign that aims to empower men and women to combat street harassment by reaching a million people worldwide. In October 2021, the company's Garnier brand launched a global educational campaign dedicated to promoting sustainable consumption, aiming to inspire 250 million people to adopt a greener lifestyle. And it launched its “Hairstylists for the Future by L'Oréal” salon at Expo 2020 Dubai, which is a sustainable development” program that aims to ensure salons manage water and waste sustainably, reduce energy consumption, and use recycled and recyclable product packaging.
It's been an eventful journey so far for the global CEO. Hieronimus took the helm of L'Oreal in May 2021, having been with the cosmetic giant since he joined it in 1987 as a product manager. He took the top job while the company was facing one of its biggest challenges. As a result of the global pandemic and an unprecedented crisis in supply, the global beauty market shrunk by around 8%, according to estimates by L'Oreal based on manufacturer's net prices. The business has also witnessed changes in consumer behavior. “Over the past 18 months or more, there has been a surge in e-commerce, with online sales representing around 27% of L'Oréal's business throughout the COVID19 crisis,” says the Group CEO.
“Digitalisation and sustainability are firmly at the top of consumers' agendas,” agrees Norma Taki, PwC Middle East's Consumer Markets Leader. To prepare for the future, retailers across the region will need to be fast and agile to capture business from a rising generation of youthful, socially aware consumers who are digitally savvy.”
As business recovers and realigns, the focus for now is on bringing sustainable beauty to the forefront. “These are exciting times for L'Oréal,” says Hieronimus.
“L’Oréal allocates almost $1.1 billion yearly to R&D in beauty, more than any other company in the industry.”