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September 17, 2024
Can the Beauty Industry Transform Into a Fully Natural and Eco-Friendly Powerhouse?
The beauty industry is undergoing a transformative shift as it embraces sustainability and eco-friendly practices. This movement reflects a broader trend toward making beauty products completely natural and eco-friendly, as companies seek to align with global sustainability goals.
Many of these objectives are driven by consumer demand for sustainability. Brands are focusing on greener ingredient cultivation, using biotechnology to enhance efficiency and replacing harmful substances with natural alternatives.
Product formulation and packaging are also evolving. Microbeads have been replaced with biodegradable options like apricot kernels, and many brands are shifting away from single-use plastics toward recycled, recyclable, and refillable packaging.
Animal welfare and ethical sourcing are priorities, with many companies offering vegan, cruelty-free products and ensuring fair labor practices. Water conservation is another focus, with innovations like fast-rinse shampoos and solid shampoo bars reducing water use.
On Sept. 12, L’Oréal announced that it has entered into a tri-party agreement with biotech firm Abolis Biotechnologies and specialty chemicals manufacturer Evonik to advance the production of sustainable beauty ingredients. The partnership is designed to accelerate the development and scaling of bio-based ingredients, supporting L’Oréal’s “L’Oréal for the Future” sustainability initiative and addressing the growing demand for eco-friendly beauty solutions.
“We are proud to invest in Abolis and expand our collaboration, working together as a tight ecosystem alongside our historical partner, Evonik. By mobilizing our respective companies’ research, innovation and manufacturing capabilities and expertise, we are building an end-to-end value chain that we believe has tremendous potential to be a game-changer in bio-based ingredients for beauty.”
Barbara Lavernos, Deputy Chief Executive Officer in charge of Research, Innovation and Technology, L’Oréal Groupe
Under the agreement, L’Oréal and Evonik have made minority investments in Abolis, a French biotechnology company known for its innovative use of microorganisms in various industries, including cosmetics, healthcare, and food. The $39 million (€35 million) funding round, which includes contributions from L’Oréal’s BOLD venture capital fund, Evonik CVC, Deep Tech & Climate Fund, Clay Partners, Icos Capital, and Liberset, will enable Abolis to expand its microbe-powered solutions and promote sustainable practices across multiple sectors.
The cosmetics industry in general is rapidly shifting toward natural ingredients, with the market expected to grow from $642 million in 2022 to $1,095 million by 2030, according to MarketsandMarkets. This trend reflects changing consumer preferences, with over 40% now prioritizing natural components in their beauty products. Research into natural ingredients has increased significantly, as evidenced by a rise in patents.
This is largely due to the fact that the cosmetics industry is facing a “critical crossroads with environmental stewardship and sustainability,” per CAS, a division of the American Chemical Society. With increasing awareness of the environmental, social, and economic effects of product life cycles, the demand for sustainable practices and natural ingredients has never been more pressing.
Replacing synthetic ingredients with sustainable alternatives presents challenges, but innovations in green chemistry are making headway. Natural emollients are leading the market, particularly in skincare, and are expected to grow substantially.
As the beauty industry evolves and sets new standards for environmental responsibility, the pursuit of natural and eco-friendly products is becoming central to customers and brands alike. As this transformation continues — with advancements in sustainable sourcing, green chemistry, and innovative packaging solutions — the industry is poised to lead the way in creating a more sustainable and environmentally friendly future for beauty.
Discussion Questions
How can the beauty industry’s push toward natural and eco-friendly products reshape consumer expectations and redefine industry standards over the next decade?
What role do technological advancements in biotechnology and green chemistry play in overcoming the challenges associated with transitioning to sustainable beauty solutions?
In what ways can the shift from synthetic to natural ingredients impact the broader environmental, social, and economic dimensions of the beauty product lifecycle?
Poll
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Kristin Shane
EVP Chief Merchandising and Marketing Officer, The Guitar Center
Richard Hernandez
Merchant Director
Brandon Rael
Strategy & Operations Transformation Leader
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The answer to this sweeping question is no. The reason it’s no is because a large part of the beauty market is driven by price and most consumers in this segment are unwilling to pay more for fully natural and ecofriendly products. The other point to be made is that certain categories in beauty, like skincare, are very dependent on the synthesis of both natural and man-made substances. These processes have an impact on the environment which, even with good practices, is unavoidable. The only way of reducing the footprint is not to produce or sell products at all, which is clearly not going to happen. All that said, fully natural and sustainable is a fast-growing part of the category so consumers now have more choice. However, what’s interesting is that many selecting natural in beauty do so because they believe products are better for them rather than because they prioritize minimizing the environmental impact.
These investments and patents do seem to be driving toward what would ultimately be lower-production-cost solutions. Still a need for chemical refining but not for petroleum products, so that implies smaller facilities needing less energy inputs and shorter supply chains. Your point about “better for you” is spot-on for the marketing message – and is a good strategy to flip the conversation: “what’s in those off-brand cosmetics and what are they going to do to you? Our trusted brand is more effective, kinder to your body, and still a fair price.” In this case, we might actually achieve the faster-better-cheaper trifecta.
The SEC 2025 requirement that all publicly traded companies report on sustainability will play a large role in moving these initiatives forward. That said, price is most often what dictates consumers’ brand decisions. So, while I do expect the beauty industry to continue to move this way, it’s not going to be an overnight shift in buying behaviors.
While consumers are cognizant and supportive of eco-friendly choices, many brands have not cracked the code on how to create product with a similar efficacy, color payoff, and performance to their non-natural competitors. Some have and are performing well, but many have tried and had the equivalent of a false start. It will happen… it’s just a matter of when.
Clean beauty has been around for quite a while. They are independents that are at the forefront of moving to natural and eco-friendly products for consumers. QVC and HSN have been the cheerleaders for clean beauty for a while now at a good perceived value and are keeping introducing new clean beauty vendors to the public. The large companies are taking baby steps to move in that direction with price and value perception remaining top of mind. The gears are moving slow because the Gen X, Gen Z, and millennials are still purchasing from the big guys at departments stores and big box stores- they aren’t watching QVC but they are active on TikTok, Insta, and Facebook which the large companies have used successfully.
This sounds like a lot of virtue signaling to me. All of these initiatives sound marvelous however when you look closer you realize many of them will increase the cost of cosmetics. Which for higher income consumers may not pose much of a problem, however as usual the middle and lower tier will “feel” the price difference.
“Fair Labor Practices” for example-what exactly does that mean, and how do you ensure it and communicate it in a way that is authentic? Here is an example: there has been a fair amount of hand wringing over factory conditions at factories Apple uses for their iphones…how many of us refuse to use an iphone because of these practices??? Me neither. But it is okay to use our iphones while we “tsk tsk” over this story or that one regarding fair labor. That is exhibit A for virtue signaling, and I am afraid the beauty industry is embarking on a mostly talk initiative here.
Hopefully I am wrong.
There was a brief moment when US customers prioritized and demanded more sustainable products that are organic, responsibly sourced, and reduce our carbon footprint. However, pricing and value are vital elements of the beauty industry’s customer experience and discovery process. The relentless impacts of the long-term inflationary period also played a role in consumers’ shopping decisions, where value has been prioritized over sustainability.
In an industry dominated by building profitable operating models, it continues to be challenging for beauty product manufacturers to produce sustainable and eco-friendly products at scale and profitably. This leaves only niche and boutique DTC beauty vendors who can provide organic and eco-friendly products. However, these often come at a premium price.
With that said, there is an opportunity for beauty product manufacturers to start to offer premium-priced, organically produced, and eco-friendly products at scale profitably. There are several factors to consider:
The major cosmetics manufactures have been engaged for many years in a delicate dance to move to a more sustainable overall product line. Cosmetics is an area that has a much greater loyalty than other retail verticals. Once consumers becomes confident that a product looks good and wears well without irritation issues, they are often very leery to move without a significant price or personal preference driver like sustainability. Additionally, most Cosmetics manufactures have multiple brands, as well as being producers of private label brands, allowing them to focus their sustainability drive in select pricing and marketing segments. Many of these companies have and will continue to have very significant investments in technology related to product production. However, when you weigh all of these points we are still several years away from the mainstream cosmetics market being entirely sustainable. That said as a whole, the industry has made remarkable strides in the last few decades on being more eco-friendly and will continue to move in this direction.
The beauty industry’s transformation to sustainability will only be successful if brands are willing to rethink their supply chains and prioritize innovation over convenience. While natural ingredients and eco-friendly packaging are a start, the true impact will come from embracing circular economies, transparent sourcing, and responsible biotechnologies. This is not about meeting consumer demand—it’s about rewriting the rules of profitability to align with a planet-first mindset, forcing beauty giants to confront the unsustainable practices that have driven their growth for decades.