In a rare move by two fierce competitors, Walmart and Target brought together stakeholders from across the U.S. beauty and personal care (BPC) industry in 2014 to drive safer, more sustainable products. This was bold considering that there was no consensus on the basic definition of product sustainability in an industry estimated at over $80 billion. After three years, a core group of eighteen organizations across the BPC value chain, including the Environmental Defense Fund (EDF), released the first science-based scorecard of 32 key performance indicators (KPIs), marking the most sweeping market demand signal for safer and more sustainable beauty and personal care products yet.
Why does this matter?
Beauty and personal care consumers increasingly care about the health and environmental impacts of the products they buy. A vast majority of 87 percent of consumers globally prefer products with “no harsh chemicals or toxins.” Millennial women are also driving demand for more sustainable products. To address this gap, Forum for the Future worked together with The Sustainability Consortium to facilitate the three year mission to “shift the beauty and personal care product sector into a more sustainable, thriving and resilient industry that serves the needs of people and planet both now and in the future.”
The scorecard is a breakthrough for quantifying product sustainability, or the degree to which a product does what it is supposed to do without harming the user, the makers, or the planet. To understand the full range of potential impacts of a product, it is important to evaluate the human health and environmental impacts of the product’s raw materials, processing, manufacturing, packaging, transport, sale, use, and disposal. Consider that one supplier can make tens of thousands of different products, and this process can quickly become overwhelming. Add to that the fact that a retailer can sell hundreds of thousands of products. Trying to assess and improve sustainability of such vast product portfolios is daunting.
KPIs are important because they align and simplify the conversation by narrowing the focus to the most relevant environmental and social issues, or “hotspots.” Meaningful KPIs add clarity to key hotspots and incentivize suppliers to adopt more sustainable practices by assigning higher points to those actions.
The new BPC scorecard focuses on four major “clusters” to characterize product sustainability:
- Human Health – Human health impact of ingredients and product formulations
- Supply Chain and Environmental – Resource usage (e.g. energy, water) and emissions during sourcing, manufacturing, and product use
- Disclosure – Ingredient disclosure to consumers, and
- Packaging – Environmental and health impacts of packaging decisions.
This scorecard is unique for two reasons. First the scorecard is publicly available. While deciding how to share results will be up to individual companies, consumers can at least see where the sustainability conversations between suppliers and retailers are likely to be focused and can be comforted that the scorecard evaluates what’s in a product and packaging, not simply a company’s procedures. Second, the scorecard awards the highest number of points to the human health “cluster” (130 points out of 400 points). This is especially important considering that in the US regulatory oversight of chemical safety of personal care products is lacking. In the United States, only 30 ingredients had been partially banned, compared to 1,300 chemicals in European countries. The last federal law to regulate the safety of personal care products was passed in 1938.
Race to the top on store shelves
If the full scorecard is adopted and implemented industry-wide as intended, every retailer will apply uniform indicators. In theory, this alignment will both reduce the number of sustainability surveys required of suppliers and send a clear market signal for what types of products are most desirable. This is especially important for innovators, who are trying to determine where the markets are going, and what types of new products or ingredients will be accepted.
These collective actions should continuously improve market offerings for consumers while increasing consumer trust; retailers and others will be able to point to the quantifiable improvements the KPIs track as they engage with their customers on product sustainability. And shoppers are most likely to frequent retailers and purchase brands that they trust.
Getting to the best case scenario faces some hurdles.
The BPC group recognized human health impacts as critical to product sustainability and aligned on a Stewardship List [see box], a compilation of lists of chemicals identified by reputable authoritative bodies as known or suspected carcinogens, endocrine disruptors, reproductive toxicants, and PBTs. Despite major retailers’ existing focus on these lists, the group could not reach consensus on how much the reduction of the use of chemicals on the lists should contribute to a product’s sustainability score. This was disappointing to EDF; we hope that in the future, activity regarding the Stewardship List will be sufficiently rewarded in practice.
Retailers vary in their use of scorecards to track sustainability improvements across product portfolios; some have years of experience crunching sustainability data while others are just beginning the process. While scorecards are a powerful tool for product improvement, companies also need to have strong chemicals policies and strategies in place. One framework, which has influenced some retailers, is EDF’s Five Pillars of Leadership for advancing safer chemicals and products in the marketplace. Over the last few years, we have seen retailers issue chemicals policies, call for greater supply chain transparency and the reduction of chemicals of concern, as called for in EDF’s Five Pillars.
With any data collection system, technical challenges are also a factor. Different organizations work with different technology platforms to facilitate affordable data collection, analysis, and reporting; interoperability remains more a goal than a reality.
But EDF sees reasons to be optimistic.
The estimated $86 billion U.S. beauty and personal care industry just received the first comprehensive demand signal from the nation’s leading retailers for safer, more sustainable products. In a time when the government is shirking its role in driving a sustainable marketplace, it is powerful to see market leaders playing theirs. For consumer protection, we need both.
Follow Boma Brown West on Twitter