In an interview with Arab News en franҫais, Alexandra Palt takes us through L’Oréal’s business strategy and the impact of sustainability and climate change, the role of women in business, and how corporates need to involve and empower consumers to make more conscious and sustainable decisions.
The importance of sustainability to L’Oréal’s overarching business strategy
Sustainability is part of L’Oréal’s strategic orientation. In 2013, Jean-Paul Agon, CEO of L’Oréal, announced two major transformations of the 21st century, the digital transformation, and the sustainable transformation. The latter was integrated, not as an initiative or project, but rather as a transformation of the business model. A commitment to live up to challenges that humanity faces today.
L’Oréal achieved its first generation of sustainability targets by 2020. The company outperformed its initial 60 percent target for industrial activity, to record an 80 percent reduction in carbon emission, and improved the environmental footprint of 95 percent of its products, up from 85 percent in 2019.
By 2025, 100 percent of the group’s sites (factories, distribution centers, offices, and research centers) will be carbon neutral, and using 100 percent renewable energy.
By 2030, 95 percent of L’Oréal’s ingredients will come from bio-based sources, and 100 percent of the plastic used in L’Oréal’s products’ packaging will come from recycled plastic.
In May 2020, the group launched its €150 million ($173.45 million) sustainability program, “L’Oréal for the Future,” a more radical transformation toward an increasingly sustainable business model, contributing to solve some of the environmental and social challenges the world faces today. Allocating €100 million to impact investing, through L’Oréal Fund for Nature Regeneration, to finance damaged natural marine and forest ecosystems restoration projects as well as financing projects linked to the circular economy.
L’Oréal also created a €50 million charitable endowment fund, to help vulnerable women achieve social and professional integration, prevent violence, and provide emergency assistance.
A transformation, driven by the highest level of governance, “The board at L’Oréal is committed to sustainability which thrives us in the right direction.” says Alexandra Palt.
A transformation from the core of the group and its impact on supply chain
Following L’Oréal’s commitment to improve the environmental footprint of 100 percent of its products back in 2013, every new product introduced to the market, has its environmental footprint evaluated, considering the formula, packaging, fabrication, and supply chain. Every product developer and marketer, uses the SPOT tool (Sustainable Product Optimization tool) in this evaluation, to determine the product’s environmental score.
Engaging employees in the process, creating a culture geared towards improving the environmental footprint, and including it as a performance metric, enables an organic change and a change in mindsets. The transformation is happening form the core by integrating sustainability in day-to-day operations.
The change in mindsets also applies to the supply chain. On this front, L’Oréal had been doing social audits on its supply chain, conducting more than 3000 audits per year, since 2000, ensuring that the supply chain is ethical, responsible, and sustainable.
“Sustainability is in changing the way you do your job. It’s not just adding a label indicating that the product is ethically produced, or environment friendly,” said Palt. Sustainability leads to more innovations across solid cosmetics and new materials of packaging, refilleries and recharge.
L’Oréal’s relationship with suppliers starts with a mutual ethical commitment letter in line with the group’s values, ethical principles and commitment to society and the environment. Partnerships with suppliers also exist to accompany them in building a sustainability strategy and to reduce their carbon emissions. Through its solidarity sourcing program, L’Oréal also works with organizations, employing people from underprivileged communities or fair-trade communities. The various processes are analysed by independent auditors.
Women in business, expo 2020 and the role of women in the region
“At L’Oréal, we are a feminist company,” says Alexandra Palt to highlight that more than 50 percent of L’Oréal’s board members are women, more than half of its brands are led by women, and around 60 percent of managerial positions are held by women. “You can ask women to come to your building, or you can say “we build together.”
The commitment is to empower women in every field: women in science through the Fondation L’Oréal, and women in climate through the L’Oréal brand and Stand Up training sessions, the latest held at the Expo 2020 Dubai, and Burj Khalifa to help raise awareness and combat street harassment, as women will be disproportionately affected by climate change.
During her stay in Dubai for Expo 2020, Alexandra Palt met “incredible, powerful, strong, resilient women. I was impressed by my colleagues, the teams, the women I met in conferences. It is important to listen to women and understand their situation to better respond to their needs, instead of defining their needs.”
Consumer awareness about sustainability
Consumers aspire for sustainability and for sustainable products, but available options in the market can be luring. “We have a mutual responsibility. Consumers to push us to bring them more sustainable products but they also need to change their behavior,” says L’Oréal official.
“People should understand that there is no other option. Either we do this, and we come to a decarbonated economy, or COVID-19 was a small crisis compared to what is coming. The question is not how much it will cost, but how much will it cost if we don’t do it.”
The target is in reaching a safer operating space for humanity that will otherwise face social unrest, and increased disparity for the already underprivileged.
The dynamics of the industry
There is an increasing movement of the private economy towards sustainability, particularly in Europe and in the US. “Nobody wants to be alone in fighting climate change,” Palt said.
L’Oréal aims to have all its activity within the planetary boundaries by 2030. The Glasgow meeting is the next opportunity for action, not only for renewed commitments. “Climate change is not a local issue, it’s a planetary issue. We have to take necessary decisions now, individually and collectively.”