Sustainability is a notion which has various implications and meanings, it’s a broadly used unclear term that is desirable, uncertain and conflicted, which is used by different groups in many conducts of life. Hence, there have been different definitions of the concept. However, the most agreed definition is that of Brundtland Commission Report (1987) that defines sustainability as a strategic process with the target of meeting not only the current needs but also the future generations’ needs. One of the examples of the most sustainable global companies is that of Loreal, which was recognised as the top performing company on sustainability in 2017 (Forbes, 2017).
Loreal was founded in 1909 by a French chemist, Eugene Schueller, the company started by producing a hair dye called Aureole. Eventually the company added more line of products and became one of the best cosmetic groups in the world. Several launches, acquisitions and subsidiaries took place to make the brand what it is today. Loreal’s mission is to meet the diverse beauty needs of men and women across the world by providing them best cosmetics in terms of excellence, worth and safety. Loreal has 82,600 employees, 34 brands and operates in 150 countries worldwide. Loreal divides its products into four categories that are consumer products, loreal luxe, professional products and active cosmetics. Loreal is built on four strong ethical principles that are integrity, respect, transparency and courage. In 2017, consumer products contributed the most to the total sales of loreal with a percentage of 46.6%, loreal luxe contributed 32.5%, professional products contributed 12.9%, while active cosmetics contributed 8% to total sales. The growing Asian market provides a great opportunity to the company, it contributes 23.6% to the sales, followed by western Europe and north America. The skincare segment is the largest segment contributing 23.9% to sales In 2017, Loreal had the highest operating profit in a decade, the profit grew by 3% from 2016-2017. In 2008-2009 Loreals ever increasing profit had a steady decline due to a global financial crisis, however, in 2010, the company recovered and there was a sharp increase in the profits. In 2014, loreal acquired five companies and grew even more. Loreal invests a lot on research and development, it has 20 research centres, and 3.4% of sales is invested in research and innovation, and they aim to be quick and inventive in order to be better than competitors. Moreover, in a fast digitalising world, Loreal is focusing a lot on e-commerce, recently the company acquired Chinese augmented reality makeup app called “Modiface” which assists users visualize makeup and hairstyles on themselves, hence, being different and fast from competitors.
In 2012, Loreal faced the criticism of producing contaminated lipsticks that caused cancer (Forbes,2012). Therefore, in 2013, loreal launched social and environmental sustainability programme called “Sharing Beauty with All”, it’s a campaign that the company will have sustainable practices across all the aspects of business, from sourcing to manufacturing to packaging to distribution.
By 2020, loreal aims to improve the environmental and social profile on 100% of its new products, however, by 2017, it claims that 76% of its new products have a better profile. It also aims to further reduce CO2 emissions, cut water consumption and reduce waste in absolute terms. Moreover, it commits to zero deforestation and use eco-friendly packaging.
However, the company has claimed that if focuses on being sustainable by reducing CO2 emissions from its plants and distribution centres by 73% since 2005. It respects diversity by using 59% of renewable ingredients. 97% of paper used for instructions is certified while 100% of cardboard used for packaging is certified. 53505 people from underprivileged communities have gained access to employment. L’Oréal has managed to reduce its waste generation by 37%. On the other hand, L’Oréal conducts many initiatives which raise awareness about sustainable consumption with respect to environmental challenges. The company also claims that 82% of company’s suppliers are selected on basis of their performance on sustainability.
Loreal is the market leader of cosmetic and beauty industry. In 2017, the brand value was estimated to be $23.89 billion and 7.65 billion euros was sent on advertising by loreal (Statista, 2018). the other leading brands and direct competitors of Loreal are Unilever, Procter & Gamble and so on (Refer to Appendix A).