L’Oréal CEO talks about “responsible drinking” at the World Economic Forum
Experts participated in the presentation, “Strategic Perspectives: Responsible Drinking,moderated by Jane Nelson, Director of Corporate Responsibility Initiative, Harvard Kennedy School of Government, at the World Economic Forum Annual Meeting on May 24, 2022.
Nicolas Hieronimus, CEO of L’Oréal, joined panelists J. Michael Evans, Chairman, Alibaba Group Holding Limited; Gilberto Tomazoni, Global Managing Director, JBS (food producer); and Vivianne Heijnen, Minister of the Environment of the Netherlands for the discussion. (See the 50 minute video here at WEF).
Panelists were asked how they are overcoming current challenges, including inflation, water issues facing some communities, and more, while working toward these long-term goals:
- Be more eco-responsible
- Keep people healthy
- Be more inclusive and transparent
According to Nelson, the world population is expected to reach over 8 billion people by 2030, which will lead to a 50% increase in consumer spending. “So there has to be a fundamental transformation, in everything from food production to beauty products.” She adds: “Some people face water insecurity.”
Nelson continues, “There are plastic challenges — only 14% of plastics are recycled today. So there are changes we need to make — but there’s also a lot of innovation. So we want to focus on some of the solutions here today. “
Nelson asked Hieronimus if there were any major innovations he was passionate about that would soon lead to more responsible drinking. “Innovation is at the heart of our concerns”, says Hieronimus, adding: “More than 3% of our turnover is devoted to R&D.”
3 key areas for L’Oréal
There are three key areas for L’Oréal, says Hieronimus. They are-
1. Responsible innovation
“We put a lot of effort into improving the environmental footprint of our products, and 96% of all the products we launched last year had an improved environmental profile,” says Hieronimus. “An example is our new leave-in conditioner – each tube saves 100 liters of water – and that makes a difference.”
2. Responsible production
“We’re working on our packaging – we’ve committed to 100% recycled plastic by 2030. We’re around 20% right now, but most of our brands are on the way,” says Hieronimus. “Manufacturing and sourcing are very important – we want all of our sites to be carbon neutral. Today 70% of our factories are carbon neutral, including all in the US”
3. Responsible consumption
“The consumer has a very important role to play in responsible drinking,” says Hieronimus. “There is one big number that always strikes me: 85% of people say they want to behave more sustainably, but only 5% do. The reason for this huge gap is: firstly, a lack of information; and secondly , a compromise quality, these are the two things we are working on.
How L’Oréal encourages “responsible consumption”
With the aim of increasing consumer demand for more sustainable products and encouraging “responsible consumption”, L’Oréal is working to address the two challenges mentioned by Hieronimus:
Better Communication: Ensuring that consumers have more information to make better purchasing decisions.
Consistent quality: Maintain consistent quality so that consumers want to choose more sustainable products.
L’Oréal communicates better with consumers by being more transparent and listing a product’s ingredients on its website.
L’Oréal also intends to help consumers make more sustainable choices with the help of the EcoBeautyScore consortium, together with 42 other companies, including competitors, retailers and others working together. “We develop an EcoBeautyScore, and we’ve shared it with the entire industry,” says Hieronimus. “It will help the consumer to judge whether a product is sustainable or not, so they can make informed choices.”
Amorepacific joined the EcoBeautyScore consortium earlier this year. Henkel, LVMH and Unilever are the founding members.
Another hurdle to overcome — and to inspire more consumers to make more sustainable choices — is ensuring quality, says Hieronimus.
He mentions that a product in development recently was a “flop” that didn’t work out. “Whenever a consumer tries a sustainable product that isn’t as good as the non-sustainable product, they don’t stick with it,” he says. “Our labs work hard to ensure that all of our new sustainable products are at least as good as the non-sustainable ones,” he says.
Refillable packaging is the solution
Hieronimus talks about refillable packaging, presenting them as the ideal solution. The challenge is to encourage consumers to choose it. “Consumer empowerment” is key, says Hieronimus. “We need to help consumers understand how to change their behaviors. We can only be agents of change if consumers are agents of change,” he says.
Using more refillable packaging is an ideal sustainable solution, but consumers need to get on board and change their product usage behavior, says Hieronimus. “So instead of buying a bottle of shampoo or a bottle of perfume more than once, you buy a nice package once and have it filled,” he says.
“But it’s something that you not only have to achieve, but also inform consumers about it and incentivize them,” he explains. “We have to tell them that it’s cheaper to refill a perfume than to buy a new bottle,” he says, adding: “Then they will understand: buying refillable packaging saves the planet and allows to save money.”
Why reducing packaging is essential
When an audience member asked panelists how a small business can afford to choose sustainable packaging, since it often costs more, Hieronimus revealed the key: reducing packaging to offset costs.
“The cost of sustainable materials is an issue, yes, but we have no choice,” says Hieronimus. “The choice we have is that you can reduce packaging when you switch to more expensive sustainable materials.”
As an example, Hieronimus says that when L’Oréal replaced their shampoo bottles with PCR plastic, which is more expensive, they also reduced the weight of the plastic. This is often called relief.
And in beauty marketing, it all comes down to consumer perception. “Five years ago, consumers expected thick, shiny, heavy plastic bottles,” says Hieronimus, adding, “now today, if it’s soft and looks a little done by hand, they think it’s good”.
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