making sustainable beautiful

March 25, 2016 0 comments

Could you elaborate on L’Oréal’s perspective on sustainability?

L’Oréal is a 100-year-old company. Through its long history and development, it has adapted and kept pace with the changes in the environment and society in which it functions—it is a vital part of our secrets of success. Our CEO, Jean-Paul Agon, believes there are two major transformations we need to look at—digital and sustainable. Our journey towards sustainability began in 2009. For the first time, we committed to a 50% reduction in environmental footprints in our manufacturing process.

599-1See, sustainability for us means company-wide transformation to a more sustainable model—this means all our activities have to be conscious of their environmental and social impact. This also then influences the way we operate on a daily basis. This move should be strategic and core to the business; it should not be a stand-alone initiative but must penetrate the entire value chain.

Given this, we realized merely committing to a cleaner production process, or launching another CSR, community, or philanthropic program was no longer enough. The need of the hour is for companies to transform the way they do business. So in 2013, we committed to completely transforming our business model into a more sustainable one, factoring in developments such as climate change, biodiversity loss, water shortage, poverty, and many more. This program includes all parts of our value chain and the way in which we operate—starting from research and innovation, manufacturing, branding, impact on society, community growth, and building customer awareness. Literally, the entire value chain and everyone in the company are concerned with this transformation.

How do you balance these goals with financial growth?

For a long time, people thought unlimited resources would sustain a model of unlimited production—leading to unlimited waste. Reality, however, is different—resources are not unlimited. They are bound to become expensive and so it makes sense to transform the business model in the interests of economic performance. The logic is simple—when you work on the reduction of energy, you save energy costs. Similarly, if you work on reuse of water—while it is not expensive presently, it will be so in the future—you will save money. It is just that you have to think differently. And we have several concrete examples at L’Oréal. Consider our experience in building a sustainable supply chain of Argan oil suppliers in Morocco. As a part of our responsible sourcing practices, we have adopted an economic model that helps women protect the environment and the Argan tree, (which is their livelihood) and educate themselves and their children. This gives us access to the supply of the best Argan oil in the best possible conditions. Likewise, the 50% reduction in our carbon footprint in production has raised production levels by 22%. In the end, it is about long-term considerations, it is about thinking differently—not looking at a three-month horizon but with a three-or thirty-year perspective in mind. So balancing financial and sustainability goals is not a contradiction.

In a VUCA world, with its constantly shifting goalposts, long-term goals may not always work. How flexible are your sustainability goals?

We have worked so long to create these undesirable changes; so climate change or biodiversity loss will not get reversed in a couple of years. So long-term goals are relevant in this particular context. For us, it is important that our stakeholders and consumers see us delivering on our commitment—so we are non-flexible in that aspect. Changing commitments also could have an adverse impact—people cannot follow, or track progress and targets achieved. So we will continue to report and our KPIs will reflect that.

On the other hand, the consequences of climate change, poverty, and innovation is growing rapidly. Hence we need to add to our existing commitment and go further. Last year, during COP 21, we decided to work towards becoming a ‘carbon balanced’ company by 2020—looking beyond our commitment of 60% reduction in greenhouse emissions. Similarly, we are also working on how we should add and go further on water—in this manner we are flexible.

What processes have you put in place to send the message of sustainability down the value chain—within the company and amongst your consumers?

Firstly, you need a strong leadership.  If you do not have the buy-in of the leader and the senior management, change will be difficult. Literally, the top sets the tone. Once this is in place, it is similar to any other major management transformation a company makes—a clear vision, clarity in communication, empowering people to be able to contribute, etc. We need to understand this is a process, not an overnight change. Also, the fact that I report directly to the CEO sends across the message to our internal stakeholders that this is a priority.

Secondly, we have integrated this into the bonus—the variable remuneration part—of senior managers. These are classical management tools one can put in place to ensure that sustainability goals are taken seriously.

As for external stakeholders, we have created an important tool—‘panel of critical friends’. This panel includes members from NGOs, environmental thought leaders, and experts and is chaired by the former president of Costa Rica, José Maria Figueres. These ‘critical friends’ will meet once a year, joined by Jean-Paul Agon. Their role is to review the progress made through the ‘Sharing Beauty With All’ program, evaluate the actions taken, and suggest improvements to be made.

The next is the consumer—I believe they are still ambivalent on sustainability. When you talk to them, they show a marked preference for sustainable products and would want to buy from a responsible company. But when they make the actual purchase, they do not
think about sustainability. This is because they find it difficult to evaluate what a sustainable product or a company is.

Take the case of our product, Biotherm. We evaluated that it impacts water the most because enzymes come from the water. We worked on the formula and packaging, and also supported charities working on ocean and ocean protection. We launched a campaign on Facebook that sensitized people to water issues and asked them to actively work on reducing their water consumption.  But the response was not enthusiastic.

But we did not change our commitment because consumers were not ready. Instead, we questioned ourselves—how could we make it more relevant to them? We need to listen and understand their wants. Companies need to make it easy for them to buy sustainable products—it is a mistake made by many corporations that offer sustainable products—we did not make it easy for the consumer to buy them.

By ‘easy’, I mean it should not be a complex jargon—the communication has to be simple and effective. For a long time in the US and Europe, sustainable products were not as beautiful and aspirational as ordinary ones. So consumers did not go for it. We as companies and brands have to make sustainability desirable. And that is a challenge we want to take on.

On one hand, we will continue to try and raise awareness, and on the other continue to have the best products, manufacturing process, less waste, and so on. We want to assure our consumer that she can trust us. Sharing information is critical and key to raising awareness.

How have you incorporated innovation and sustainability?

Every time we work on a formula, we analyze how its environmental footprint can be reduced; we also explore ways by which we can sustainably source raw materials. The process is completely integrated. We are focusing on incorporating innovation in how we can respond to consumer demands for sustainable products.

We have an open innovation model—all our centers work collaboratively through truly international networking. In India, we are focusing on marrying traditional methods with modern and more scientific methods to create products relevant to Indian consumers. We have two research centers—an evaluation and formulation lab in Mumbai, and an advanced research laboratory working on projects in the pipeline in Bengaluru. The advanced research center works with other scientific institutions in India, and we have already launched few products that are innovative and produced specifically for the Indian market such as Maybelline Colossal Kajal and Garnier neem face wash.

How do you innovate for a geographically diverse user base?

There are local specificities like the products created in India for the Indian market. There are similar efforts in other markets too where we try to adapt to the needs of our consumers, locally. So there is no ‘one size fits all’ mantra. We have a universalization strategy of adapting our global brands to each culture’s specific needs.

That is also another reason why research activities are now carried out in countries across the globe such as Brazil, India, South Africa, Europe, and the US. Respect for the diversity of types of beauty is a constant source of inspiration for L’Oréal’s innovation process. For over ten years, thanks to geocosmetics, the group has made listening to consumers and observing beauty rituals around the world a core part of the mission and activities of its research and innovation. And then there is reverse innovation—aspirational products coming from India inspiring women all around the world.

What triggered the launch of the SBWA initiative? How do you plan to grow, especially in India through SBWA?

I was not an environmentalist when I joined L’Oréal, but I had decided that all the social impact movements need to be integrated in a holistic vision of sustainability. I also realized that the concept of sustainable products is not aspirational and that is the vision behind SBWA—making sustainability beautiful. I wanted the SBWA initiative to reflect the company’s strong identity and commitment to delivering desirable and sustainable products across the globe. Through this initiative, we are dedicated to adopting sustainable practices across our value chain as well as sharing our growth with our suppliers, employees, and communities around us.

This initiative developed in 2013 as part of L’Oréal’s sustainable transformation is now operating worldwide. In India, this initiative has been implemented throughout the value chain—in manufacturing, research and innovation, formula innovation linking Indian beauty aspirations with sustainability as well as new packaging.

In India, there is enormous work being done on positive social contribution to the country—the up scaling of professional hair dresser jobs, training of underprivileged women for becoming beauty professionals, waste management initiatives such as our pilot program to collect sachet waste and recycle it into new raw material, and among many more. So there is great leadership in this country to bring forth these changes because it has to be relevant not just for L’Oréal, but for the country too. Also, L’Oréal India’s initiatives are aligned with those launched by India’s Prime Minister Narendra Modi, be it Swachh Bharat (sachet waste management program with NGO Stree Mukti Sanghatana), skill upliftment (beautician training of Indian women), or Make in India (90% of L’Oréal India’s products are produced in Pune).

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