Leadership in Sustainable Beauty
.jpg)
With the rise of highly customer-centric brands, the beauty industry has been expanding at an unprecedented rate. However, innovative product offerings, driven by an influx of new entrants due to lower industry barriers to entry, have an environmental cost that often goes unnoticed.
We interviewed Laura Burget, Co-Founder of Three Ships Beauty, and Dion Hughes, Co-Founder of HiBAR, to discuss, “How might beauty adapt for sustainability while remaining high-growth and consumer centric?” Both leaders innovating in the beauty industry, Three Ships Beauty is an all-natural, affordable collection of skincare products, while HiBAR is a plastic-free, waterless hair care company.
**Through out the article, we will be using "L" and "D" to reference Laura and Dion, respectively.
Environmental Cost: So Many New Products, But Where Do They End Up?
Today's customer has more options than ever before, as we discuss in our deep dive of the Beauty Industry's unprecedented growth. This has been a positive accelerator in many regards, as it has created more jobs, entrepreneurs, and innovative product breakthroughs. However, the industry's growth and its impact on the environment have not been balanced. From wasteful packaging, to complex international supply chains and microplastic pollution, the beauty industry’s environmental impact is impossible to describe in one article. These are a few shocking facts:
Toxic Ingredients
- Most products are rarely used in its entirety before it's thrown out, meaning their contents go back into our earth through landfills and water streams
- Oxybenzone in sunscreen, has shown in labs to be toxic for coral reefs and marine life
- Volatile organic compounds (VOCs) in fragrances, hairsprays, and hand sanitizers contribute to smog and air pollution, creating the same amount of chemical vapours as petroleum from vehicles (even though 15x more petroleum is burned as fuel)
- The notorious use of palm oil in over 70% of cosmetics has led to over 5% of tropical deforestation
Packaging and Carbon Footprint
- The global use of beauty products produces over 120 billion units of packaging each year
- In addition to the packaging itself, there is the impact of energy utilized in production and the carbon footprint of transporting ingredients and finished goods
- Wet wipes and face masks, a mix of fabric and plastic, were responsible for over 93% of sewer blockages and marine life damage in the UK (similar statistics exist across the globe, mainly across North America and Europe) prior to COVID-19. Since COVID-19, the increase of personal sanitization products exacerbated the problem by increasing the relentless disposal of wet wipes, napkins, and chemicals everywhere - many U.S. states saw an increase of at least 100 tons of wet wipes in landfills during COVID-19.
Carbon emissions, water pollution, marine life endangerment, deforestation, smog, and air pollution are only a few of the under-researched, but detrimental impacts of the booming cosmetics industry. Learn more about how cosmetics are damaging our earth here.
Our beauty products are polluting our atmosphere and oceans because despite sustainable innovations, we have not been able to deal with the problem of waste as an industry:
“London-based analytics firm, Future Market Insights, predicts the global organic beauty market will touch $54 billion by 2027. Clean formulations, efficient recycling, and non-toxic packaging have become basic hygiene practices expected by millennial customers. But even clean brands with better formulat and packaging aren’t addressing beauty’s biggest problem—the disposal of waste.” - Source: Mint
Do Customers Care About Sustainability?
In short, yes. Over 90% of CPG categories that were marketed as sustainable grew faster than their conventional counterparts, at a rate 5.6x faster. International CPG and cosmetics firm Unilever reported that sustainable products now contribute to over 70% of their turnaround growth rate. On average, 90% of customers agree that they would deeply trust and purchase more from a company that they view as environmentally and socially conscious. This number is higher amongst the younger gen-z and millennial crowd.
L: “As customers become increasingly aware of their ecological footprint, we have received an astounding amount of support from our customers admiring our sustainability practices. Many of our best sellers contain upcycled ingredients indicating that product sustainability presents a significant factor in driving a customer’s purchasing decision. Our sustainability social media content has also been some of our best-performing.”
What's Holding Customers Back?
The answer to this questions is more intricate when other product factors are considered. While conscious purchasing continues to become democratized, it is often expensive, creating a purchasing barrier for many customers. Three Ships Beauty is a great example of a transparent, natural, and eco-conscious brand that does not break the bank.
Additionally, there is a dilemma surrounding the perception of a sustainable product, as they are often placed in a category of boring and ineffective. Many believe that good-for-you products and good-for-the-planet products are mutually exclusive. However, Laura disagrees and provides recommendations for solving this gap:
L: “Unfortunately, there still exists this myth that good-for-you or natural/sustainable products don’t work. This is simply not the case any more. There’s a ton of science that goes into our formulations and so we are also having to fight the uphill battle of educating consumers that they aren’t compromising on efficacy when picking a natural product.”
L: “Sustainability is a broad term, and each brand defines it differently. Contradicting brand messaging is confusing and makes it difficult for customers to understand the purpose of switching to sustainable product alternatives. A lack of understanding and awareness is the reason customers are reaching for a different product on the shelf. The key to bridging the divide between consumer action and brand perception is product education. For this reason, transparent communication and environmental education are equally important as effective formulas.”
Dion Hughes from HiBAR emphasizes the same fact about functionality:
D: “We believe we can get most people to make the switch by creating products that are at least as good, and preferably better, than the plastic-packaged products they're replacing (in convenience, price, performance, the actual user experience). If we can do that, we are a viable part of the solution.”
In order to bring sustainability to the mainstream, products need to be made with affordability and functionality equally in mind. Customers care about sustainability, but aren't willing to give up either to make that choice. Transparency and product education will be key to helping more customers transition towards eco-conscious solutions.
Green Washing
Green washing is the concept of marketing goods and services with eco-conscious traits, while failing to live up to those claims. With the rise of online brands and digital marketing, it has become easier than ever to green wash products. Once again, transparency and detailed education are the most important to stand out as an authentic and truly sustainable brand.
L: "As more brands take advantage of marketing sustainability, it becomes challenging to differentiate greenwashing from authentic messaging. Although the industry’s growing interest in sustainability is a positive trend, this becomes a problem when brands only share a fraction of the truth. At Three Ships, we believe it is our responsibility to educate customers on the science behind the product, and it is our priority to communicate utter transparency. Our customers trust our brand because we will never make misleading claims or use fear-based marketing. Our website includes a full ingredient glossary."
A Small Indie Brand in Big Box Retailers: Scaleability or Sustainability?
Three Ships has grown from a small indie brand to a huge success at big box retailers such as Target and Hudson’s Bay. This switch has involved outsourcing manufacturing, coordinating large shipping orders, and creating strategic business partnerships. There is often a sentiment that as companies grow larger, it is harder to stay sustainable, as profit and scalability become the main priority. However, Laura discusses why sustainability is not contradictory to being profitable and consumer centric, and how other brands can do it too:
L: “Actually, we are finding it easier to prioritize and practice sustainability as we grow. When you are first starting out, time and money are really limited. Unfortunately, as a company it takes a lot of effort to build out an entire sustainability program and when you are small you don’t have the leverage with your suppliers to ask them to go above and beyond for you. As we have grown, we have been able to push our suppliers to source from more sustainable sources, require them to share documentation, and have been able to afford to apply for various certifications.”
Laura might be right, as we see large firms take sustainability initiatives of their own. Garnier recently launched their Green Labs collection of eco-friendly products. On the other hand, Sephora has been prioritizing clean and green products with their “Clean at Sephora” labelling and eco-friendly charity rewards.
Large companies have immense resources and operational advantages that can allow them to transition towards innovative eco-friendly solutions. However, it is not the lack of willingness by large companies to innovate, but rather the lack of an internal culture and organization of human resources to support innovation surrounding sustainability.
How Might Organizations Plan For Sustainability?
Often, to lead sustainable initiatives, objectives need to be laid out and a culture that supports that value needs to be in place. It can be challenging to minimize bureaucratic drag that creates opposition to new ideas, but doing so can help to build solutions that are bigger, better, and more sustainable. Additionally, now we can see the emergence of a new player; AI, that is changing the way we approach sustainability.
1. Create an Internal Culture of Transparency
Sustainability may be focused around preserving the planet, but it begins within people to be transparent about everything that they do at work. Leaders who aren't afraid to be open and vulnerable foster stronger relationships between employees and customers.
L: “Connie and I are transparent with the team in every way possible, we essentially share everything with them with the exception of co-worker salaries. Because we are so open with the team, this leads to a culture where transparency is at the core of everything that we do. We train our employees to think like the consumer and to understand what it is that they are doing/thinking and how we can best support what our customers need. Our team follows the golden rule so we don’t have an ethics council or anything like that.”
2. Designate a Leader
The worst thing that any company can do is make sustainability a "side-priority" as part of operations or marketing departments. Organizations who value sustainability will give it an equal place in their organization, which means assigning someone(s) to lead sustainability entirely.
L: “The best thing to do as a small team to ensure sustainability remains a focus is to hire one person to lead these initiatives. We recently hired a sustainability-focused intern who is responsible for developing our sustainability goals and launching the Three Ships sustainability webpage. This webpage will feature our three-year sustainability plan, links to sustainable product education, and information on responsible sourcing."
3. Measure Goals
By setting goals and standards for sustainability, everyone in the organization can better help to achieve them. Even better, measuring objectives help communicate with customers authentically and prevents green washing.
D: "We've recently secured our Leaping Bunny certification, a longstanding goal which took over a year of wrangling with various suppliers."
L: “The operations team is working together to apply for third-party certifications that support our sustainability practices. The back-end ops team that is responsible for measuring and tracking our sustainability goals, but the entire team is focused on ensuring that we are a sustainable company. It really is baked into our DNA and culture at this point.”
Eco-Conscious Beauty Innovation
Waterless Products
Most soap products are composed of over 70% water and packaged in plastic. In fact, over 552 million plastic shampoo bottles end up in landfills every year. HiBAR, Ethique, and ByHumankind are leading the waterless product category, creating bar soaps. Everist, another unique alternative, creates paste-like concentrates that are waterless and plastic free.
Sustainable Packaging
Almost every company in the industry has adopted sustainable packaging in some way. For most DTC beauty brands, compostable mailers and recycled boxes have become the norm. Recyclable packaging is not enough to preserve and restore our planet, but it is definitely part of the solution. Laura and Dion explain their brands' packaging philosophies:
L: "Our default packaging is glass, which not only offsets our carbon footprint but can be recycled endlessly to reduce long-term waste. Also, all our shipping boxes are made from FSC certified cardboard and 100% post-consumer recycled paper with water-based dyes."
D: "Our mission to eliminate single-use plastic goes beyond the pack that sits on a shelf. We say no to well-known retailers who require us to ship out products wrapped in plastic (the encouraging and happy end to that story is that our pushback actually encouraged them to change their shipping requirements!). We also eschewed selling on Amazon, as we understood that to compete in that channel, we would need to ship Prime, which would mean that we would lose control of the shipping packaging, and in turn, that would mean that our products would be shipped in plastic. We've since found workarounds to that system, so that now, yes, we are on Amazon, and when someone buys our product from our Amazon store, we guarantee it will come in 100% plastic-free packaging."
Local Manufacturing
While more expensive, beauty companies are choosing to prioritize sustainability, as they increasingly choose to skip overseas manufacturing, and instead opt to produce in their local regions. While shipping to consumers internationally is still a huge burden on this process, companies like Three Ships are also certified carbon neutral, meaning they are taking a steps to offset their shipping impacts.
L: "Beyond our formulation, we equally consider the sustainability of our supply chain and the end of the product life cycle. To reduce greenhouse gas emissions, all Three Ships products are manufactured locally in Toronto."
D: "Our products are manufactured locally by us in our facility in St. Paul, Minnesota."
Ingredients
Ingredients that are used in beauty products are not only extremely important for the effects they have on our skin, but how they impact the environment once we are done using them. Brands are avoiding the use of palm oil due to its effects on deforestation. Moreover, Sephora implemented the "Clean By Sephora" label to feature more brands that are using non-toxic ingredients. Three Ships takes a unique approach by diverting pre-consumer food waste into naturally derived and compostable products that are non-toxic to the earth at the end of their lifecycles:
L: "We use upcycled ingredients and source parts of produce that would otherwise contribute to food waste. This process favours renewable resources and optimizes bio-based materials as it circulates through the economy and natural systems."
D: "The list of considerations for ingredient standards is long - setting aside our own standards around the ingredients that we avoid (sulfates, phthalates, parabens, silicons)."
Recycling Programs
Most "recyclable packaging" is solemnly recycled appropriately by the end user, making it difficult to see the benefits of such initiatives. However, many companies are beginning to implement recycling programs for all sorts of industry waste, which helps contribute to circularity. Brands such as Lush, Origins, and Mac also have discounts and rewards for customers who bring in old products for recycling. Notably, CPG giant Garnier recently launched a recycling program with TerraCycle. Unfortunately, customers are still under-educated about the availability and benefits of such programs. Recycling programs are going to be bigger and better in the future, says Laura, as she sees this as an area of future innovation for Three Ships Beauty:
L: "We are beyond impressed by brands that have implemented a recycling program to eliminate waste and restore a products’ life cycle. These programs accept empty bottles which are sterilized and reused as new packaging. Brands like TerraCycle partner with manufacturing facilities to help recycle hard-to-recycle waste like skincare pumps and sprayers. A recycling program is an initiative we would love to implement in the future as our brand continues to grow. "
Refillable Products
Blueland, a CPG brand for household cleaning supplies, completely raised the bar here. While not a beauty company, many have followed suit with Blueland's refillable model that reduces the need for wasteful packaging. Dove, Dior, Kiehl's, and Ouai are a few top brands who already include some version of a refillable product in their inventory.
While 1-2 refillable products is a great start, in order to truly make a difference, brands need to rethink their larger product offering. Capitalizing on the ecological benefits and customer preference towards sustainability, Birchbox subscription service launched its third private label brand, Re.fil, to improve access to refillable products.
"As refillable beauty solutions gain traction — from Love Beauty and Planet's refillable hair care products at Target to Loop's partnership with Ulta to create reusable containers — Birchbox is launching an in-house brand to tackle similar problems." - Cara Salpini, Retail Dive
Funding Sustainability
Ultimately, bottom-up innovation is just as important as top-down change. In the startup world, this starts with where capital flows from in the first place: investors and VC firms. ESG has been an increasing priority for many larger firms such as CPP Investments and Manulife, but also created an opportunity for innovative firms, such as New Age Ventures and SustainVC, to join the landscape. According to the 2018 Global Sustainable Investment Review, ESG integration increased by 69% across public and private markets between 2016 to 2018. Additionally, nearly two thirds of investors, according to the 2019 Preqin Global Private Equity and Venture Capital Report, stated that ESG guidance is essential to alternative investments.
Unfortunately, there is green-washing for investing, too. The impact and value of sustainable investing is still missing in many cases:
L: "None of our investors during our Seed round back in October seemed to care at all about sustainability. I think that for most investors, they see it as a trend that they can profit from by supporting brands that have those values. I think that this will start to change with time as more “new-age” investors replace old school beliefs. Angels and VCs that focus on sustainability are still few and far between. In order for us to have real impact, investors in public companies need to hold leadership accountable. The big players are going to be able to make the biggest impact.”
Final Insights
From the widespread waste problem, to excessive packaging and green-washed marketing, the beauty sustainability puzzle is nowhere near solved. Instead of viewing this as a detriment, it can be motivating to view the lack of green innovation in the almost $700 billion dollar beauty industry as a collection of awaiting revenue streams. There are promising examples of thought leaders, such as Laura Burget and Dion Hughes, making it a priority. In addition to the brands discussed in this article, Elle’s 2021 Green Beauty Stars list and Harper’s Bazaar’s list of sustainable beauty brands are a fantastic starting point for greener cosmetics alternatives.
At Onova, we are dedicated to helping our clients reach their innovation goals surrounding sustainability through our corporate incubator and design sprint services. Visit our Twitter and LinkedIn for regular insights and updates.
L: “There is no Planet B - Earth is literally all that we have. It’s our responsibility to do the right thing for our environment and all living things that we share the planet with. From sustainable packaging to responsible sourcing, the future of the clean beauty industry is bright, and we hope to lead the movement towards sustainable beauty.”
