Beauty Industry and Climate Change Research Project Assessment

1. Introduction

The global personal care and beauty industry is seeing a splurge in demand and undergoing rapid growth, primarily boosted by the cosmetic and skin care sector (Kanda, 2021). Everyday beauty and personal care regimens keep evolving as global trends are continuing to spread predominantly aided by social media and e-commerce platforms, both of which contribute vastly to purchasing behaviours of consumers (Statista, 2022a).
As the economy picks up over the following five years, there will likely be massive improvements in global per capita income, which will likely make it easier for people to buy high-end cosmetics everywhere, especially in developed economies (Kanda, 2021). Besides, the industry is seeing a massive influx of millennial aspirational brand
conscious consumers demanding luxury products for affordable prices (Kanda, 2021).
Other than the rise in demand for luxury products, the industry is also confronting a demographic shift in the mindsets of consumers as the demand for sustainable beauty is on a rise as a result of increasing environmental awareness amongst the young generation. Statista (2022b) states that purchase decisions of 52% consumers was impacted by product features like a vegan ingredient list and that 60% consumers looked for sustainable products. This demographic shift has forced brands to incorporate sustainably sourced ingredients and invest in research and development for the same, as the demand for sustainable and eco-friendly beauty is expected to rise (Kanda, 2021).
The report shall focus on the iconic industry giant, the L'Oréal Groupe, a French personal care brand that started as hairdressers in Paris and is the parent company of numerous well-known beauty brands. Under the infamous L'Oréal Groupe, there are several high end and budget beauty and cosmetics products ranging from makeup to skincare and haircare. The company is a major player in the beauty and personal care industry (Kanda, 2021).

2. Literature Review

i. Wicked Problems and Climate Change

Churchman (1967) introduced the idea of wicked issues, citing a session taken by Professor Horse Rittel at the University of California Architecture Department. He defined them as a type of "social system problems" including conflicting information with numerous players, including consumers, policymakers, and industry leaders on opposite sides, and having wide implications throughout the system. The phrase "wicked" alludes to the unfavourable or even incomprehensible nature of some situations, when the proposed "cure" frequently aggravates the side effects (Churchman, 1967).
Climate change has been branded as a wicked problem for quite some time now and is an ongoing concern with a rising need for prompt and aggressive intervention (Stang and Ujvari, 2015). The reduction of the greenhouse gas emissions that contribute to climate change has been inadequate, inconsistent, and politically controversial, earning it the reputation of a "wicked problem" for years (Stang and Ujvari, 2015). Decades of effort have been made to address and advance in issues of the environment, to alter and simplify the narrative
of climate discussions to make political leaders and policy makers understand the gravity of the situation, as a result of which the modus operandi of worldwide climatic change policy has shifted (Stang and Ujvari, 2015).
As a "super wicked problem," climate change has many complicated causes, unclear effects that are intertwined with one another, and remedies that may actually make the situation worse, without an uncomplicated single way to combat it (Saab, 2019).
Climate change remedies have unanticipated impacts over time, making it tricky to assess their efficacy, besides also having unintended repercussions (Murtugudde, 2019). Climate change, unlike other problems, is not an ordinary issue that has a finite number of viable solutions, is intertwined with others, and does not have a single fundamental cause (Murtugudde, 2019).

ii. Industry Highlights, Emerging Businesses and Environmental Impact

The beauty industry was founded and thrives on the idea that perpetual innovation and novelty generates profit (Kelly, 2022). The emergence of firms that prioritise customer happiness has resulted in the unparalleled development of the beauty industry. The environmental cost of new product possibilities remains hidden. New players are constantly enticed to these alternatives due to how easy it is to penetrate the market, which is greatly impacted by technology, social networks, internet marketing, and other relevant variables. Every day, new poisons are released into the environment as a result of human activity, which is a consequence of the growing usage of a variety of commodities, particularly personal care items and cosmetics (Juliano and Magrini, 2017).
The use of unwanted packaging, water pollution, glasshouse gas emissions, contamination with microplastics, and animal suffering are just a few of the challenges faced by businesses trying to lessen their adverse environmental repercussions.
According to March (2018), the customers find it inconvenient, as a result of which excessive plastic packaging materials that go unrecycled causing environmental harm. Barely half the toilet waste goes through recycling, which indicates that 30-40% of it goes into landfills (Benson, 2019). Microplastics and glitters found in cosmetics and personal care products contribute to the damage, remnants of which have been detected in food and sea (March, 2018), as they can only be partially processed by wastewater treatment plants (Guerranti et al., 2019; Juliano and Magrini, 2017).
Plastic pollution is stated as a wicked problem by Daniella Russo, a co-founder of the Think Beyond Plastic Foundation, who explicitly mentions that plastic can never be accommodated into the circular economy model and transitioning into the framework from a linear model would require switching to newly developed raw materials and transformation of corporate structures and core business models of the beauty industry (Utroske, 2021). Besides, Russo also points out that the market for recycled plastic is adding to the issue by creating demand for plastic waste, as a result of which more and more single use plastic is added to packaging that is meant to be discarded (Utroske, 2021).

iii. Over Consumption & Social Media Usage

While customers are preferring alternatives nowadays that substitute chemicals in the ingredient list that include microplastics out of a sense of responsibility (Guerranti et al., 2019), this creates a new barrier because the substitutes comprise hazardous organic and inorganic elements that shorten the product shelf life, as opposed to conventionally utilised ingredients involving microplastics (Guerranti et al., 2019). Furthermore, the idea of outright prohibiting these chemicals would be unfeasible (Juliano and Magrini, 2017); instead, practical strategies to follow to ensure to tackle the wicked problem include raising consumer awareness to make sensible decisions and researching and developing substitutes.
The beauty industry is often held accountable for using social media and e-commerce platforms to drive sales volume, which is directly linked to content creation by influencers (Pessanha and Soares, 2021) and hence aggravate the issue of over consumption. According to (Ceci, 2022), beauty related content is a business on YouTube with over 169 billion views on fashion and beauty hauls, brand sponsored content, product reviews, makeup tutorials etc. A piece by Refinery29, a popular digital media outlet that focuses on beauty reveals that brands use aggressive promotional strategies through social media platforms like TikTok, Instagram and Facebook, and put the environment at risk by creating a massive amount of garbage (Kilikita, 2022). According to the source, short video formats (reels) and long video formats (YouTube content) is the root of overproduction, over consumption and environmental degradation (Kilikita, 2022).
According to Kugel (2022), states two major reasons regarding the issue of over consumption that is being aggravated by social media: it pushes people to adapt themselves to continuous trends as it takes no time for new products to popularize, and classism is encouraged by beauty community influencers as a result of which consumers purchase unnecessary products from high end brands.

3. Research Questions and Methodology

The fact that the issue of over consumption and over production is completely disregarded by companies is stated unequivocally by Lorraine Dallmeier, CEO of Formula Botanica, who believes that sustainable businesses can be created only when businesses take the responsibility to address the issue (Brown, 2022). The above source also mentions that Dallmeier refers to the logical contradiction of reducing consumption while building a product-based business given that beauty businesses are striving to reduce the environmental footprint while profiting on constantly shifting trends and producing an expanding number of items.
At least half the customer base actively seek out sustainable and cruelty-free personal care and beauty products today, which makes it evident why majority of companies, from mass market to premium, claim to put sustainability at the heart of their business strategy (Friedman, 2022), yet may lose out if their labelling is unclear (Morosini, 2021).

This research paper is centred around two key questions:

1. If an age-old giant like Loreal adapt itself to new trends that have developed in recent times. These new trends pertains to increasing consumer awareness about the eco-friendliness, free from animal cruelty, use of good quality active ingredients and use of recyclable packaging amongst others.

2. If it is practically possible to cater to the above consumer demands, while driving down consumption and making profit.

3. If it is practically feasible to transition from a linear to circular economy. 4. What are the viewpoints of shareholders with regards to climate change? 5. What is the role of the government regarding climate change?

Taking the route of Systems Thinking Approach

Systems Thinking, which was first articulated by Churchman (1963), is a strategy that takes a comprehensive stance and studies system elements and the variables that connect them rather than seeing the system in its entirety. allowing us to take into account various viewpoints to differing degrees.
This method may be quite helpful in attempting to identify the greyscale in the identified wicked problem and in helping to deconstruct its numerous facets (ranging from overconsumption, overproduction, environmental elements, income, and wealth creation aspects, pleasing multiple stakeholders, etc.) and examine each of them in an effort to discover a potential workable alternative (Patnaik, 2022).

Methodology

This paper involved making use of pre-existing qualitative data to review literature concerning the sub-categories of the chosen wicked problem. Numerous journals from various topics ranging from environment, sustainability, chemistry, to management and marketing were used to build on the research qualitatively. Industry reports and studies from IBISWorld, Statista, Schroders were useful to gain insights on trends. Articles from the magazines catering to beauty and personal care community, like Harper’s Bazaar, Refinery29, Elle, Vogue, etc have been extremely useful in getting insights on the activities of the beauty industry. Although information collected from the above sources has been exceedingly useful in building literature, they have also contributed to finding plausible solutions to the multiple faceted wicked problem, which are recommended in the final section of this paper.

4. Data and Analysis

i. Microplastic contamination

There has been rising concerns about the presence of microplastics in beauty and personal care products that have been traced in air, sea, food, soil, and has recently been found in human blood (Leslie et al., 2022). Consumers today not only expect the quality of products to be outstandingly formulated but are also apprehensive about what goes back into the ecosystem, which has posed a new challenge to beauty and personal care companies (Stork, Mauer and Ptock, 2021).
As a result, companies are now working diligently to reduce the number of plastic particles released into the environment, even if it has been established that the usage of plastic microbeads in beauty and personal care products makes up a relatively minor fraction of the overall quantity of plastic trash released into the ocean ecosystem (Rettinger and Huber, 2016). According to Lim (2021), the proportion of micro and nano plastics in the environment is not large enough at this point to affect human health but is surely taking up more and more space in the ecosystem in the upcoming years.

ii. Waste creation

Fortune Business Insights (2022) states that the global cosmetic industry market cap is expected to rise from USD 287.94 billion in 2021 to USD 415.29 billion in 2028. This brings us to anticipate the amount of potential waste that would be generated, which is the second challenge that the beauty and personal care industry is facing is criticism for the use of wasteful packaging. According to Plastic Pollution Coalition (2022), the industry generates over 120 billion units of packaging annually across the globe, out of which most are not recyclable. The above source also mentions that only 9% of the total plastic has been recycled since the beginning of the plastic production in 1950s. Besides, most initiatives that encourage people to mail plastic waste are greenwashing because these waste materials are incorporated into other products which eventually end up in landfills (Plastic Pollution Coalition, 2022).

iii. Animal testing

There has long been controversy around the suffering, anguish, and fatalities that animals go through during scientific research besides, being expensive, time consuming and requiring skilled personnel.
Animal experimentation is a contentious and polarising issue. Some individuals think it is inexplicable in any situation. Others say that it can yield to lifesaving and life improving breakthroughs.
There are countries where animal testing is strictly prohibited. For example, in the United Kingdom, the Home Office grants clearance to operate with animals under extremely stringent criteria with an audit mechanism in place to ensure that these regulations are not broken. To get the license for animal testing, researchers are expected to do a harm-benefit analysis and must compare the possible advantages for humans with the damage to the creatures and must specify the degree of pain that each animal is expected to endure (Rowles, 2022).
The US Food and Drug Administration is exploring alternative methods to replace, minimise, and improvise testing on laboratory animals by deploying alternative strategies aiming to provide more human-relevant discoveries, accelerate product design, and minimise expenses. (Nuwer, 2022).
Also, testing on animals causes more harm than good to people by conducting false safety tests, perhaps abandoning beneficial medicines, and shifting focus away from more successful testing methods (Akhtar, 2015).

iv. Water pollution

From solidified soaps, shampoos and conditioners, anhydrous products have become increasingly popular in recent years to counter climate change. According to Fisher (2022), 12% of global personal care and beauty brand launches in 2020 claimed to be water-free, and water-free formulated product sales are expected to grow by 13% by 2031. Other than the motive to reduce the usage of plastic packaging, anhydrous products also are highly concentrated than their diluted counterparts, require lesser quantities of preservatives and retain longer (Malivindi, 2021, Nazish, 2021).
Water shortage is a matter of global concern and demand for water less products is on a rise. While one might think that a product is waterless, the process of production need not be because water plays a crucial role in running machinery, packaging, shipping, etc (Vallis, 2021). Besides, chemical compounds released into water bodies in increasing rapidly as the demand and usage of beauty and personal care products in increasing, the hazardous effects of which is not fully known as they bypass wastewater treatment, accumulate, react with pre-existing contaminants that could potentially lead to the creation of further unpredictable toxins (Juliano and Magrini, 2017).

v. Shareholder Perspective on Climate Change

As partial owners, shareholders can exercise their rights for the purpose of both financial and non-financial reasons that includes pressurizing corporations to implement green policies. Flammer, Toffel and Viswanathan (2021) state that investors are speaking out more than ever and demand companies to disclose risks associated with climate change, by filing environmental related recommendations, inducing firms to proactively report global warming concerns. In fact, firms that proactively disclose such information typically gain from it as investors abhor unpredictability and are prepared to shell out more for firms that are more transparent.
Moreover, when it comes to exerting influence on consumers through social media, which does add value to shareholder equity and profit making, Beckers, van Doorn, and Verhoef (2017) assert precisely the reverse. The above source mentions that shareholders are often not convinced by these modern techniques to generate profits due to their erratic nature and high potential of creating the opposite effect and believe that traditional brands with their traditional corporate structures may not gain from these contemporary strategies.

vi. Analysing activities of the L’Oréal Groupe

The Loreal Groupe makes the following claims on their website:

• Claim 1: To have invested the last 25 years to reinvent and innovate business practices to shift towards more environmentally friendly practices by procuring raw materials responsibly, replacing petrochemicals with alternative ingredients while prioritising safety and quality (L'Oréal Groupe, n.d.).
• Claim 2: To have reduced their water footprint by 80% by formulating using biodegradable products, hence improving the “environmental profile” of all their products (L'Oréal Groupe, n.d.).
• Claim 3: Reducing pollution at source to avoid garbage disposal in the end, development of synthesis procedures that are harmless to humans and environment, safer product designs that involve the use of chemicals, replacing the usage of fossil fuels by renewable natural resources, restricting the number of compounds to reduce wastage, etc amongst others (L'Oréal Groupe, n.d.).
• Besides the company also targets to use 100% of plastic packaging post recycling, make 100% of plastic packaging refillable, reusable, and compostable, and formulate 95% of its products using bio-based ingredients (KOH, 2022).

The company has faced multiple criticisms with respect to animal testing and claims to have not tested on animals for 3 decades now (L'Oréal Groupe, n.d.), but as per an article published by Ethical Elephant, the company sells its products in Mainland China, where it is mandatory for products to undergo animal testing before they’re out in the market (Fisher, 2019).

vii. Greenwashing and Government Regulations

Greenwashing is a technique used by brands to make unsubstantial claims about the eco-friendliness of their products and production processes where capital is spent on marketing and PR activities rather than actually diverting funds towards actually contributing to sustainable practices. Besides, greenwashing is also used to disguise involvement in harmful environmental activities by emphasizing sustainability in a product in an attempt to profit from rising environmental concerns and increasing demand for sustainable products (Kenton, 2022). It is not mandatory for companies to disclose their environmental policies or get them vetted by third party auditors, which raises the question of whether committed policies actually transition into actual policies and are factual or misleading (Ramus and Montiel, 2005).
Loreal recently faced scrutiny for claiming that plastic packaging from a certain range of products are 100 recycled whereas the cap of the bottle was not (Provenance, 2022). Ramus and Montiel (2005) contend that any corporation that pledges to a policy without having an economic incentive to do so should be viewed with suspicion by an outside stakeholder.
A rather disturbing article by the Harvard Business Review cites that sustainability and industry reports have been created with improper, inadequate, misrepresented, and confusing information with report headlines highlighting faked sustainability milestones which the author calls “greenwishing” as they amplify milestones and shift focus away from regulations, altering consumer and authority mindsets, and corporate behavior (Pucker, 2021).

5. Discussion and Conclusion

The beauty and personal care industry is questioned time and again for the use of microplastics, contributing to waste generation not only during the process of production but also with regards to using wasteful packaging that ultimately goes to landfills, water pollution and unethical practices like animal testing. Following are a few recommendations that can be executed by corporations including the Loreal Groupe to strive towards a greener and cleaner environment and preserve the planet for future generations to come:

• The use of microplastics in beauty and personal care products is financially motivated and brands would pay a heavy price (approximately 8 billion Euros per year) upon banning the use of microplastics (Nguyen, 2022). Ju et al. (2021) recommends the usage of chito-beads instead of micro plastics, which is a renewable polymer extracted from crustacean waste that has better cleansing properties as compared to microbeads used in cosmetics and personal care products, with the ability to fully biodegrade into soil without emitting toxic chemicals.
• As the plastic footprint of the industry has amplified enormously, smaller brands are seen to be taking steps to not add further to the issue. According to Borunda (2019), indie brands are making use of glass for packaging because it can be recycled infinitely in spite of the cost of production increasing by ten folds and higher shipping costs. Other brands are eliminating water in their formulation to get rid of the plastic packaging, by producing shampoos and soaps in solid bars instead of liquid form (Borunda, 2019). Moreover, a lot of indie brands are giving consumers the option to refill products at their stores to prevent the accumulation of waste bottles and packaging (Borunda, 2019). Rose Inc, Milk Makeup, Kiehls, Glow Recipe are examples of brands that have refillable options.
• Doke and Dhawale (2015) recommend methods to replace animal testing as follows:
  • Using computer software to generate simulations to understand potential physiological and toxicological implications of chemical substances or prospective medications without having to dissect animals.
  • In vitro cell culture where human cells from vital organs are tested in controlled laboratory environments, which is not only an alternative to the unethical practice of animal testing but is also more affordable and show faster results.
  • Using micro-organisms like Protists, Prokaryotes, Fungi, etc instead of animals.
• Cosmetic wastewater unfortunately does not have that one solution that may be successfully employed to filter out all types of contaminants, as each composition would require a suitable treatment method. Gkika et al. (2022) recommends physical adsorption to oxidise and mineralise contaminants, because the process has been extensively researched and is affordable as well as eco-friendly. Biological treatment of wastewater is also another cost
  effective method used by fertilizer manufacturing facilities to breakdown toxins, but can be time consuming (Gkika et al., 2022).
• A study conducted by Schroders’ surveyed 650 global investors from 26 countries with $25.9 trillion in assets. It was found that 65% investors preferred sustainable investing and wanted to get involved in environment related causes like climate change and fossil fuels, 82?lieved governments and policymakers have a crucial role to play in climate change mitigation efforts, 70% of respondents think businesses can make a significant difference in reducing the effects of climate change and 71?lieved that sustainability is the ultimate significant criterion in equity (Schroders, 2020).
• Alexandra Palt, the Chief Corporate Responsibility Officer for Loreal shows concern regarding the consequences if governments fail to meet their obligations under the Paris Agreement, which she feels is their duty, but also holds corporates accountable for the situation surrounding climate change (Sams, 2021).

It is established how companies use strategic content on social media to generate revenue using modern aggressive marketing techniques. However, that happens at the cost of the environment, and it increases the probability of future generations not experiencing an earth that is still green, sky that is still blue and water that is still pure. The key topic of this paper was to review literature to figure out a way for beauty industry to push consumption rates down while adding value to shareholder wealth at the same time.
As much as we would find it easier to blame governments, regulatory bodies, and corporates for not acting and not putting efforts to create awareness, at some point it reduces down to being self-aware and exercise self-conscientiousness to reduce consumption at a personal level, view marketing tactics and social media content with a critical lens. This would change the scenario at a large scale and bring relief to mother nature much more effectively at a faster rate.
Academia is contributing extensively to literature and has come up with possible solutions to the above problems, that would not only help the world to catch up to the wicked problem of climate change, but also improve the face value of the cosmetic and personal care industry if implemented diligently.

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