L’Oréal accelerates the shift to an environmentally sustainable business model by 2030

On June 26, 2020, top global cosmetics maker L’Oréal launched its new sustainability program that outlines the company’s vision for 2030 — “L’Oréal for the Future”. Of note is the broadening of their areas of involvement based on the concept of “Planetary Boundaries”. Along with this, we take a look at L’Oréal Japan’s ESG policies that have also sprouted from this program.

L’Oréal has always been a pacesetter in the field of sustainability. In 2013, they announced their global sustainability program “Sharing Beauty With All” which has since produced several tangible results leading up to 2020.

By the end of 2019, they had achieved carbon neutrality at 35 of their industrial sites, which include 14 factories. L’Oréal was also recognized by the climate change-tackling international NGO organization CDP as the only company in the world to achieve a ‘triple-A’ score in all three of their categories — climate change, water management, and forest conservation — four years in a row.

L’Oréal’s 2030 program vastly builds on the work of their factories and supply chains and will impact all stakeholders including communities, societies, the environment, suppliers, and consumers. In tandem with this, the program aims to pursue profits and drive economic growth while taking into account what can be done as the world grapples with the COVID-19 virus.

Three goals set for 2030

The concept of “Planetary Boundaries” was first established in 2009. It refers to the concept that although there are forces (of resilience) at work trying to preserve the current natural environment, since the industrial revolution the earth has been hurtling down a path of destruction and once a certain tipping point has been crossed, we will rapidly head towards an irreversible fate. This means facing a future where recovery is no longer possible. The thresholds that mark this crossover are calculated as nine distinct Planetary Boundaries in nine different fields.

Based on this philosophy of Planetary Boundaries, and in order to achieve their global goals, L’Oréal launched its program with the following objectives:

● By 2025, improve energy efficiency to 100% adoption of renewable energy and make all L’Oréal industrial sites carbon neutral;

● By 2030, switch 100% of plastics used in L’Oréal product packaging to either recycled or bio-based plastics;

● By 2030, reduce greenhouse gas emissions per product by as much as 50% in comparison to 2016 levels.

The company’s commitments in the run-up to 2030 are summed up in the following three pillars, covering not only climate change but also indicating their intention to become more involved in solving the problems the world is currently facing.

1. Transforming ourselves and respecting Planetary Boundaries

2. Empowering our business ecosystem helping it transition to a more sustainable world

3. Contributing to solving the challenges of the world by supporting urgent social and environmental needs

1: “TRANSFORMING OURSELVES”

To fight climate change, which threatens to push the environment passed the Planetary Boundaries, L’Oréal, based on the Science-Based Targets, is aiming to reduce all greenhouse gas emissions connected to their businesses and throughout their whole supply chain — meaning up to scope 3 (scope 1: direct emissions; scope 2: indirect emissions from purchased energy; scope 3: all other indirect emissions).

The destruction of natural ecosystems via agriculture threatens the earth and regional communities’ resistance to climate change. In light of this, L’Oréal sees biodiversity as crucial as well as the growth-supporting source of innovation and has worked to procure raw ingredients via sustainable and responsible methods. Currently, most of their raw materials are sourced from renewable resources, and many are plant-based. The company has also pledged to switch 100% of the plastics used in their product packaging to either recycled or bio-based plastics by 2030.

Since 2017, L’Oréal has been conducting environment preservation initiatives on the island of Borneo — a major source of raw ingredients. These initiatives, which have been a step towards preventing forest destruction, have included a four-year project to restore the wetlands of the island.

Furthermore, by 2030 L’Oréal is aiming to have their factories as well as all the buildings and facilities under their management use renewable energy and to make use of sustainable materials to have a positive effect on biodiversity. On top of this, they will invest in developing sustainable agriculture and fisheries, eco-tourism, the commercialization of carbon credits, and other funds.

L’Oréal subsidiary Kiehl’s has already launched both a recycling and forest regeneration program in Japan. Forest protection helps to not only prevent global warming through CO2 reductions but also protect the flora and fauna of the earth. Kiehl’s has announced they will create the “Kiehl’s Forest” in the town of Chizu in Tottori Prefecture. It aims to be a diverse forest that will enrich both the environment and the regional economy.

2: “EMPOWERING OUR BUSINESS ECOSYSTEM”

For the second pillar, L’Oréal is planning to strengthen its business ecosystem by actively empowering stakeholders, including consumers, and becoming more engaged with the end-users of their products.

This means estimating how much CO2 will be emitted by end-users. Take, for example, the hot water used when washing your hair with shampoo. This hot water is made possible by heating water with energy. By knowing the different energy sources per country, the amount of CO2 emitted per person when showering can be roughly calculated.

Also, their initiatives aren’t only limited to reducing CO2 emissions. L’Oréal has taken up the responsibility to create and offer to consumers a shampoo that reduces the amount of water used, in consideration of water resources that are feared to run short globally. This is but one of the many measures they’re adopting.

L’Oréal has also developed the “Product Environmental & Social Impact Labelling” system that uses a 5-step scale from A to E to show how much effect their products have on the environment and society, with “A” being the “highest level” of impact.

This labeling system will be implemented in all L’Oréal brands and products to help consumers make more sustainable choices. By proposing ways to make daily beauty routines more sustainable, L’Oréal is trying to change the mindset of consumers and strengthen their business ecosystem.

3: “CONTRIBUTING TO SOLVING THE CHALLENGES OF THE WORLD”

Besides, L’Oréal has announced they will donate 150 million euros towards global-scale social and environmental causes that require urgent action.

They will also be committing 50 million euros each to an ocean and forest ecosystem restoration project through the Mirova-run “L’Oréal Fund for Nature Regeneration”, a fundraising project related to circular economies, and the launching of a fund to support women in disadvantaged positions.

The fund for women was launched in response to the particularly heavy impact the coronavirus pandemic has had on them, especially in terms of their loss of job opportunities and income. It was also in recognition of the current reality that domestic violence, sexual assault, and harm against women are growing worldwide along with the amplification of social instability.

Meanwhile, L’Oréal Japan has pledged to support single-parent families, donating haircare products to such families facing economic difficulties through the NPO Florence and the Single Mothers Forum. L’Oréal Japan has already been supporting single mothers’ employment through their support program “Doors for Future”, an initiative which they plan to continue.

Aiming for the overall benefit of society and stakeholders

These initiatives by L’Oréal as a whole have sprung largely from the way that the pandemic has highlighted social disparities around the world and that one cause of the pandemic has been environmental destruction.

During this period of economic confusion caused by the pandemic, environmental issues have gained attention around the globe to a much greater extent than ever before. Even in terms of companies’ ESG investments, the whole society is scrutinizing how serious they are in helping solve social and environmental problems.

This has been reflected in the way various general corporate stockholder meetings in Western countries throughout May and June this year have had major institutional investors, who have maintained amicable relations over the years, suddenly opposing the appointment of a CEO over a lack of environmental policies and in turn voicing proposals in the interest of the environment. This trend has grown more pronounced in various countries around the world.

Industries are becoming more convinced of the importance of ESG initiatives, as reflected in the way New York state governor Andrew Cuomo has started using the phrase “BBB (Build it Back Better)” in relation to a post-coronavirus world, and as companies are struggling to cope. It can be said that L’Oréal, which shifted towards ESG management early on, has been able to announce a bigger and better plan because they recognized the trends of this period well ahead of others.

Text: Ching Li Tor
Original text (Japanese): Yukari Akiyama