When thinking about climate change, we often feel the problem is just too large or complicated for us to do anything about it. With so many facts and figures thrown out and often used as part of a political agenda, it’s easy to feel overwhelmed and simply disengage from the conversation. L’oreal is proving that doesn’t have to be the case. We can impact climate change one corporation at a time, as long as we are willing to do our part and think creatively about the issues.
L’oreal Group, an international beauty company with a portfolio of 32 brands, 2015 sales of over €25B and profit of over €4.4B , employs over 80,000 people worldwide . Through its “Shared Beauty for All” pledge, the company has made a sustainability commitment to reduce its environmental impact by 60% by 2020 (from a 2005 baseline) . This means reducing emissions at their factories and distribution centers, reducing water consumption and waste, and sourcing 100% renewable raw materials from sustainable sources. Also impressive is their commitment to “zero deforestation” by 2020. They intend to generate carbon gains corresponding to the amount of their greenhouse gas emissions . This is quite an impactful pledge and one that sets the example for the $460B and growing global cosmetics industry .
How will they get there?
While L’oreal has laid out a four-pronged approach, I will focus on just two of them.
- Innovating sustainably- formulas and packaging sourcing
- One great example of L’oreal’s efforts toward a low-carbon sourcing model is in the West African villages of Burkina Faso, where the company helps the 22,000 women who harvest nuts used in shea butter to improve their cook stoves, thus requiring less wood consumption. This both fights deforestation and reduces their carbon footprint .
- L’oreal is subsidizing farmers in Indonesia to grow multiple crop ingredients needed for perfume (such as patchouli and cinnamon) on the same land, to optimize the use of agricultural land . Deforestation, often caused by converting forests to cropland, is a leading contributor to global climate change .
- L’oreal has implemented a responsible packaging policy to “respect, reduce, replace.” To this end, all packaging is recyclable, and has been sourced from sustainably managed forests that preserve biodiversity .
- Producing sustainably – reducing CO2 emissions
- Despite production volumes increasing by 21%, the beauty giant will reduce CO2 emissions by 60% at their plants and distribution centers . How? By improvements in building design and insulation, and by optimizing the product manufacturing process with use of more energy-efficient technology . Renewables represented 42% of energy used at plants and distribution centers last year. In fact, 9 of these sites have reached carbon neutrality . The Environmental Protection Agency (EPA) lauded L’oreal for supporting the renewable energy market, for reducing air pollution, and for demonstrating that using green power is smart for business and the environment .
How is this “smart for business” and what does this mean for L’oreal?
This is a commitment that ultimately impacts both L’oreal’s operating model and bottom line. It impacts how they think about sourcing and transporting raw materials, and about waste and water usage for each product line at every step of production. They are putting their money where their mouth is by funding programs and advancements towards this mission to the tune of $35M .
Is there anything in it for them? YES! 45% of consumers are willing to pay more for a product from a company known for being environmentally friendly , so L’oreal does stand to gain. Millennials and Generation Z care about corporate responsibility – they take notice of companies doing their part for the environment.
What’s more? It is predicted that companies that address climate change are more likely to thrive as a decrease in availability of natural resources like water will shape future profit and loss and drive new markets .
Are they doing enough?
While L’oreal has garnered quite a bit of press and customer attention for their efforts, should they be doing more? Should they get rid of their packaging altogether considering people simply throw the box away when they get home? Perhaps they shouldn’t include the product claim insert and instead have people scan barcodes with their mobile device to show product benefits and ingredient listings digitally. And maybe they should reduce all print advertising if they really care about zero deforestation. Or is it all too little too late – should they be getting to their pledge sooner? What do you think?
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 Business Wire, “Research and Markets: Global Cosmetics Market 2015-2020: Market was $460 Billion in 2014 and is Estimated to Reach $675 Billion by 2020,” [http://www.businesswire.com/news/home/20150727005524/en/Research-Markets-Global-Cosmetics-Market-2015-2020-Market], 7/27/15, accessed November 2016.
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 V. Kasturi Rangan, Michael W. Toffel, et al., “Sustainability at IKEA Group,” HBS No. 9-515-033 (Boston: Harvard Business School Publishing, 2015), p. 6
 L’oreal Website [http://www.sharingbeautywithall.com/en/innovating], accessed November 2016
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 “L’oreal USA reduces CO2 emissions by 57%” (2015). Global Warming Focus, 357. Retrieved from [http://search.proquest.com.ezp-prod1.hul.harvard.edu/docview/1678791019?accountid=11311], accessed November 2016.
 Rebecca M. Henderson, Sophus A. Reinert, et al., “Climate Change in 2016: Implications for Business,” HBS No. N2-317-032 (Boston: Harvard Business School Publishing, 2016), p. 10
 United Nations Environmental Programme, “Geo-5 for Business: Impacts of a Changing Environment on the Corporate Sector” [http://web.unep.org/geo/sites/unep.org.geo/files/documents/geo5_for_business.pdf], accessed November 2016.