For today’s eco-conscious shopper, the idea that natural ingredients might be better left in nature could not be further from her mind.
This story first appeared in the February 8, 2008 issue of WWD. Subscribe Today.
In fact, consumers cite “ethical and environmental” concerns second only to “health” as reasons for buying natural and organic beauty products, according to London-based tracking firm Organic Monitor. Yet evidence suggests that as natural beauty blooms—global sales of natural and organic cosmetics topped $7 billion in 2007 and are expected to soar 40 percent to $10 billion by 2010, according to Organic Monitor—pressure is increasing on the very resources consumers would like to see preserved.
In other words, is demand outstripping supply? Is the desire for botanical-based skin care, fragrance and hair care products putting exotic ingredients in jeopardy, particularly in places where there isn’t the same protection for biodiversity as in developed countries?
“We regard the issue of sustainability as one of the major growth drivers for the personal care industries,” says Bettina Jackwerth, global marketing manager skin care for cosmetics supplier Cognis. “We expect the green trend, the focus on sustainability and the awareness of climate changes to gain even more relevance in the coming years.”
“It is putting pressure on supply for certain plants that have never been in demand at these types of commercial levels before,” agrees Diana Dodson, senior cosmetics and toiletries market analyst for Euromonitor.
High-profile issues such as the destruction of peat lands to make way for the booming palm oil industry, deforestation to supply sandalwood oil and the depletion of marine resources have put beauty products under the spotlight. While cosmetics suppliers may often be the smallest users of such sources, compared to, say, food manufacturers, experts wonder whether natural beauty’s move to mainstream can really be sustained.
“Any increase in demand for natural materials will have an impact on natural environments if the methods of production aren’t fully investigated,” says Mark Constantine, founder of Lush. By researching on the Internet, attending trade fairs, keeping up with current affairs and also visiting suppliers in the field, Lush aims to make informed decisions about the environmental impact of its raw materials.
In the case of sandalwood, that commitment has taken the British soap maker on a global scouting mission from India to Indonesia to the South Pacific islands via Australia. Deeming Indian sandalwood to be the best quality on the market, Lush for some years imported government-certified sandalwood.
But as demand for sandalwood soared, large-scale illegal logging grew out of control, a reality hammered home when Lush’s Indian neighbors awoke to find their security guards tied up and bandits cutting down their sandalwood tree before being chased away by police, recalls Simon Constantine, Lush’s head of creative buying and Mark’s son. Fearful that some suppliers were not being honest about its origins, Lush decided to find a new supply. “Its value on the Indian market meant smuggling, kidnapping and bribery, making it hard to legitimately use the oil,” says Constantine.
Searching for an alternative, Lush was offered Indonesian sandalwood, which turned out to have come from trees felled in East Timor during Indonesia’s occupation, and Australian sandalwood, which was sustainably farmed but didn’t have the odor Lush wanted. A civil uprising prevented its buyers from visiting the South Pacific island of Vanuatu and the firm rejected sandalwood from Papua New Guinea, where it is suspected smugglers have set up shop. Finally, in the French island of New Caledonia, where the government imposes annual quotas of 40 tons and the Kanak tribesmen who harvest sandalwood are required to plant three trees for every one they cut, Constantine has found a sustainable source he’s happy with.
Securing that supply has paid dividends—and not just for the environment. At approximately $1,000 per kilo, the New Caledonian sandalwood Lush is sourcing costs roughly half the price of Indian sandalwood, where increased demand has inflated its value to some $2,000 a kilo. However, such rural, small-scale farming may struggle to satisfy global demand.
Australia’s forests, where the government has limited sandalwood harvests to 1,500 tons a year, could provide the answer. At first deemed to be lower quality than Indian sandalwood, fragrance suppliers have been working to improve the olfactive profile of the Australian species. Givaudan’s purchasing director for naturals, Remi Pulverail, claims Givaudan’s reprocessing technology has improved Australian sandalwood’s quality to match the Indian variety, and Givaudan has now replaced the former in 90 percent of its formulae. Givaudan’s policy is to try and improve problematic supply chains, but switching is often inevitable. “Sometimes we can do nothing because of the government there or the situation,” says Pulverail, “and we stop sourcing.”
Biotechnology procedures or synthetic reconstitutions may also take precedence when natural resources are threatened. “We prefer mixed solutions (natural and synthetic) or ingredients issued from new biotechnology procedures, in cases where there are any risks of environmental repurcussions,” says Armand de Villoutreys, managing director of Firmenich France and vice president of its fine fragrances worldwide. If Firmenich has to use a species of rare flower, for instance, it prefers to use its Nature Print technology (the reconstitution of natural odors using head space technology) then risk destroying what remains of a threatened variety.
Like sandalwood, efforts to obtain sustainable palm oil, used for cosmetics, food and, increasingly, as a biofuel, have been problematic. Last November, Greenpeace accused a number of suppliers that had signed up to the Roundtable on Sustainable Palm Oil, or RSPO, a union between nongovernment organizations and the private sector, as using palm oil from plantations that had destroyed protected Indonesian peat lands. The burning of those peat lands has propelled Indonesia to become the third biggest country for greenhouse gas emissions, releasing some 1.8 billion tons of climate-changing gases every year, representing 4 percent of the global total, according to Greenpeace.
Because the palm oil trade is controlled by processors, whose huge plants are fed by a vast number of plantations, the end product is a mixed batch: Some is sustainably farmed, some isn’t. “Consequently, consumer companies who manufacture products using palm oil have virtually no way of knowing whether or not the palm oil they are using is from rain forest destruction and conversion of peat lands,” according to Greenpeace in a report it issued titled “How Palm Oil Is Cooking the Climate.”
Rather than walk away from Indonesian suppliers, Greenpeace wants cosmetics companies to push for a moratorium on deforestation and the conversion of peat lands. “Because there are big global players involved in this commodity, it is possible for them to influence their suppliers,” insists Greenpeace campaigner and the report’s author, Phil Aikman. “All the big companies buying palm oil add up to quite a big amount of buying power. Buying power can make things happen,” he continues, pointing to the success realized when Carrefour and McDonald’s backed Greenpeace’s campaign to halt the deforestation of the Amazon.
Used as a skin conditioning agent and as an emollient in skin care, makeup and hygiene applications, palm oil is also the (sometimes hidden) base of many fatty compounds and surfactants found in cosmetics. Establishing its exact origins is easier said than done. As one of thousands of ingredients, the effort is hampered by the supply chain’s complexity. Fifty ingredients in one formula could come from as many different suppliers, and those ingredients in turn can be sourced from as many different raw materials producers.
While LVMH Moët Hennessy Louis Vuitton-owned beauty brands don’t use palm oil as a separate ingredient, the firm is currently checking to see if it’s present in any raw materials such as surfactants or emollients. “Our goal is to remove this kind of material,” says Patrice Andre, head of LVMH’s research and development unit specializing in ethnobotanicals, the study of how people of a particular culture and region make use of indigenous plants. L’Oréal, which purchases 300 tons of palm oil a year, acknowledges the difficulties tracing the origins of the palm oil-based fatty compounds and surfactants used in even higher volumes in its products. “For these chemically processed substances, supply chains can be very complex and it is sometimes much more difficult to identify original sources,” Pierre Simoncelli, sustainable development director for L’Oréal, told Greenpeace in a letter late last year.
For its part, L’Oréal remains convinced that joint action through the RSPO, which it joined in 2007, is the right route to achieving traceability. “We perfectly know that to date there is no gold system to guarantee the social and environmental traceability of palm-based products, especially for processed substances,” Simoncelli told Greenpeace. L’Oréal sees its membership as helping to strengthen relations with suppliers.
It is also assessing its palm-based raw materials through its Corporate Social Responsibility program, with particular emphasis on deforestation and damage to biodiversity. L’Oréal developed the assessment with suppliers to measure the environmental impact of its ingredients, 41 percent of which came from plants in 2006, a 5 percent increase over 2005. The five criteria it looks at are human health and safety, environmental protection, the preservation of biodiversity, fair business practices and social impact activities.
Other firms are looking for alternatives to palm oil altogether. Lush has persuaded its soap manufacturer to switch to a palm oil-free soap base using a blend of sunflower, grape seed and coconut oils. LVMH, meanwhile, has begun a study to select the best vegetable oils, in terms of origins, efficacy, quality and sustainability. “Nowadays, sustainability is a selection criterion for ingredients and is as important a quality as safety,” says Eric Perrier, executive vice president for research and development at LVMH, which uses around 70 percent of plant ingredients in its products.
Those on the forefront of environmental awareness would like to see biodiversity receive as much attention as climate change. “The difference between climate change and biodiversity is climate change is seen as having a direct impact on us, while biodiversity is seen as a beautiful thing for animal and nature lovers to protect,” says Juan Carlos Vasquez, legal affairs officer at the U.N.’s Convention on International Trade in Endangered Species of Wild Fauna and Flora, or CITES.
Vasquez criticizes cosmetics companies for not investing enough to preserve biodiversity, noting that some firms have even tried to be exempted from CITES regulations requiring permits to trade in marine resources like caviar because they claimed they use minimal amounts. “We need a more responsible industry,” he says, calling on cosmetics companies to undertake population studies for every potential plant ingredient. “Where and when does it occur? What’s the trend—is it declining or stable?”
The costs of such research may be a deterrent, however. A population survey of a tree in the Amazon could cost between $1 million and $2 million. Some firms are upping their investments, however. Through its Guerlain brand, for instance, LVMH has begun a project to replant an endemic species of orchid in China. “There are more than 50,000 different species of orchids in the world,” says Andre. “The wild species are the most interesting, but in order to study them, we need to protect them.” Industry sources estimate LVMH will spend over $2 million on that project alone.
Suppliers hope consumers will eventually shoulder some of the costs of such research. “The main challenge is to convince consumers that sustainable sourcing and high-quality raw materials have a certain price,” says Manfred Axter, global product manager of botanicals for Symrise.
While the costs may be high, failing to address sustainability issues may prove even pricier. A study by Information Resources Inc. found that one in five U.S. consumers was “sustainability-driven,” citing at least two sustainability factors such as “the product itself is better for the environment” as influences on their choice of brand.
The fact that ingredient stories like palm oil have entered the mainstream media provides further indication of a growing sensitivity toward the environment. “Ten to 15 years ago, nobody had a clue about palm oil and the fact that you could devastate the environment just to source the substance,” says Simoncelli. While there has yet to be widespread public outcry, the issue is gradually coming to consumers’ attention. “It comes as a bit of a surprise to people that using a cream is actually connected to global climate change,” says Greenpeace’s Aikman.
That paradox seems almost guaranteed to be a catalyst for change. “Cosmetics is an amazing field that promotes well-being,” says LVMH’s Perrier. “How is it possible to work toward our well-being without taking care of our environment? Sustainability is not a trend. It is a necessity.”
A primer on five ingredients in danger of imminent demise.
Also called eaglewood, gaharu or aloeswood, agarwood is reputed to be the most expensive wood on the planet, fetching between $5,000 and $10,000 per kilo, due to its scarcity. The fragrant heartwood, used for incense, fragrance (particularly in the Middle East) and traditional medicines, is obtained from the Aquilaria tree variety found throughout Asia. Six species of the tree are considered threatened due to overexploitation—the resin is harvested by felling and then splitting trees open—and have been regulated by the Convention on International Trade in Endangered Species, or CITES, since 1995. Projects to grow the wood are under way in India, Indonesia and Vietnam, while some fragrance houses have created synthetic versions.
As stocks of wild sturgeon, the fish whose eggs are processed into caviar, have fallen over recent years, there is frequent evidence of illegal trade, including in beluga, the world’s most valuable caviar according to CITES. To monitor the origins of caviar, which is used in high-end cosmetics products, and tackle illegal trade, CITES launched a computerized database last November to track all shipments worldwide.
Prized largely for its rich, woody, long-lasting aroma for fragrances, large-scale, illegal logging of sandalwood trees in India has depleted resources and sent prices soaring. Many fragrance suppliers have switched to alternative sources including Australia, where the government has set a harvest limit of 1,500 tons a year and a tree is replanted for every one felled, plus small-scale producers in South Pacific islands like New Caledonia.
A common surfactant, palm oil is often produced on plantations on former peat lands and forests. A U.N. report has found that palm oil plantations are now the leading cause of rain forest destruction in Indonesia and Malaysia, feeding the growing global demand for cheap vegetable oils for food, cosmetics and increasingly as fuel. Compared with the year 2000, demand for palm oil is predicted to more than double by 2030 and to triple by 2050, according to Greenpeace. Some companies have started sourcing alternative oils or setting up projects to harvest the oil in a sustainable way.
Commonly known as the African plum tree, the species is under pressure because its bark is used in the cosmetics and pharmaceutical industries. This has reached such proportions that bark can only be traded with special permits issued by CITES. To obtain a permit, exporters need to prove that trade is not detrimental for the survival of the species and have proof of the legal origin of the specimens.