What did happen?
Sustainability agendas have been a mainstay of cosmetic business strategies for years. With governmental and NGO commitments ardently striving for net zero goals and beyond, companies within the beauty sector – one of the worst offenders of single-use plastic across the globe – have been pledging allegiance to the circular economy efforts for some time. Back in 2018, perhaps taking stock of the IPCC’s report on global warming that year, giants L’Oréal, Unilever and Johnson & Johnson committed to The New Plastics Economy Global Commitment to tackle plastic waste, while at the beginning of 2019, Procter & Gamble, Henkel and Clariant became some of the 30 founding members of the Alliance to End Plastic Waste (AEPW). However, while they talked the talk, most failed to properly walk the walk and offer true financial investment.
It seems, however, that there has been a marked turnaround in 2020. While the pandemic enforced store closures, lockdowns and the halt of global travel, it also seemingly accelerated a circular economy focus. With a slew of environmental developments made throughout the year, where financial investments and M&A dried up, capital was spent on putting strategies into practice, and it came from across the board.
Firmenich invested in green recycling company Loop at the start of the year, while Beiersdorf became the latest member of the AAK Sustainability Partner Program and its consumer arm took a climate neutral pledge. Henkel upped its efforts in combining attractive corporate financing instruments with progress in sustainability, becoming the first company globally to conclude a plastic waste reduction bond with a total volume of US$70 million and a maturity of 5 years. This was the tip of the iceberg for the company’s 2020 environmental efforts. Retailers such as Nordstrom, Maybelline and Boots all invested in recycling initiatives to tackle single-use plastic at consumer level, while brands Nivea, Garnier and L’Oréal Paris were among those that looked to evolve their green credentials through new refill stations, tech-based partnerships to plant trees, and recycled packaging offerings.
There were also partnerships formed to achieve broader sustainability successes. Natura & Co teamed up with UN Global Compact, Unilever partnered with Google Cloud to showcase how sustainable sourcing can be done via cloud computing, L’Oréal signed a multiyear supply deal with Loop, while CVS, Walmart and Target each donated $5 million to the Beyond The Bag initiative, which aims to eradicate plastic shopping bags.
What should have happened?
While challenging, 2020 has witnessed a surge in sustainability culpability – and it’s about time. With the devastating consequences of climate change, and the action needed for prevention, given global attention by the Paris Accord, as agreed in December 2015 and coming into force in 2016, widespread investment by the beauty and personal care industry is happening five years too late.
The accord, which clearly defined change themes such as long-term temperature ambitions and finance, technology and capacity-building support goals, was a landmark moment in the climate change fight – and one that should have been heeded with immediate effect.
However, not all companies ignored the science, with many responding to the accord with bolstered CSR agendas and financial commitments in a show of acknowledged responsibility. Yet while that may have been the case for a few, from supplier to retail, much of the industry environmental showboating was put down to at best clever PR and at worse, greenwashing. And with insights from transparency platform Compare Ethics showing that just one-fifth of shoppers trust sustainability claims, it was a gamble not worth taking. According to Abbie Morris, chief executive officer and cofounder of Compare Ethics, “Our report shows that without honest sustainability claims and readily available information, shoppers will soon discover the truth. The gamble of greenwashing does not pay off.”
That point has been proven by the pandemic – those that did authentically take note and take charge, such as L’Oréal and Unilever, have been among the pandemic victors, successfully weathering the current financial crisis resulting from the GVC.
What will happen next?
It may have been a long time coming, but as evidenced this year, it seems that the industry is now shifting gear, and is incentivised from the bottom up to start, or to evolve, strategies. Companies are making credible investments in order to align with governmental and NGO climate targets, and to engage in better business.
As the global economy embarks on a K-shaped recovery, the green recovery will be just as fervent, and the two will no longer be seen as separate entities – without one, there cannot be the other. What 2020 has taught the industry, as evidenced by Unilever’s Alan Jope, is that there is a fundamental shift happening towards a new era of capitalism, and it is one that is an imperative space to be in for future business success. In the words of Jope, “…the single-minded pursuit of profit is damaging. It has many unanticipated negative consequences.”
Companies such as L’Oréal, ELC, and Beiersdorf, brands like Shiseido, The Body Shop and Garnier, and retailers such as A.S. Watson are just some of the many that have made noteworthy progress this year, and will likely lead as more companies and brands heed Jope’s words and grow their environmental investments in 2021.
With the UK Competition and Markets Authority (CMA) cracking down on the aforementioned greenwashing within the industry, it seems that the appetite for environmental action will be married with a growing focus on weeding out those using the climate emergency for inauthentic financial gain. Because it also simply makes no sense – as proved by Compare Ethics, phony environmental credentials does not equal better results.
Natura & Co called it all the way back in 2018 – B Corps are said to be 63 percent more likely to weather storms due to their strong relationships with customers, workers and supply chains. And while governments, NGOs and policy makers may be setting the standards, businesses have the ability to be more agile with their actions, making faster green achievements in order to succeed in both business and climate change prevention.
In the words of Jope, “We truly believe that by positioning our brands on doing real good, by running our supply chain in a sustainable way, by being a responsible employer and creating great opportunities for people, a by-product will be better financial performance.”