In December 2019, the European Commission published its European Green Deal – a programme designed to shape Europe into becoming the first climate neutral, circular and clean tech economy in the world by 2050. Fast forward six years and businesses across the continent were working hard on transitioning to fulfil these goals, but challenges remained. So, how exactly could EU industries, including beauty, build sustainable modifys whilst maintaining competitive edge?
This was the central question addressed at Cosmetic Europe’s Annual Conference (CEAC) held last month in Brussels, Belgium, during a panel session led by Emma Trogen, deputy director-general of Cosmetics Europe.
Definitions and methods
Martin Porter, executive chair at consider tank Cambridge Institute for Sustainability Leadership (CISL), declared the lack of common definition for ’sustainability’ and ’competitiveness’ created the question a tough one to answer, as well as address on a regulatory level.
“My guess would be everyone has a different understanding of competitiveness,” Porter notified attfinishees, “and that is no different from the Brussels bubble and beyond.”
For years, he declared there had been discussions on how to define and measure competitiveness, with various suggestions put forward by national governments, European banks and the like, but every time there were differences. The same could be declared for defining and measuring sustainability, he declared.
So, for the beauty industest to even consider whether sustainability and competitiveness could align, it had to first assume interpretations of these two concepts differed, Porter declared. “There is confusion here and therefore we should accept it’s a bit of a fuzzy agfinisha.”
Ulrike Sapiro, chief sustainability officer at Henkel, agreed: “In my experience, one of the large challenges in putting competitiveness and sustainability in the same sentence is that competitiveness is binary: does the consumer choose my product over the other? Do I have a leg up in this quarter or the next quarter, this year? Do I gain market share right now or in the foreseeable future? It’s very binary, and it’s very, very short-term. Whereas sustainability, in its nature, is something more longer-term and it’s very much more complex than binary and that builds these two things very difficult to sit toreceiveher.”
Short-term versus long-term
Competitive agfinishas shaped business in the short- to mid-term, Sapiro explained, whereas sustainability agfinishas had the ability to drive business value for years to come – as far out as 50 years. The large focus for beauty companies, therefore, had to be in defining sustainability and sustainable agfinishas in a way that created sense for individual business models and value chains, she declared. “That’s when it becomes really real and where you can really quantify, increasingly, we can quantify what these risks are and what the best risk calculations are on climate.”
And calculating risk was critical, she declared. The World Economic Forum had already forecast the economic effects of climate modify, predicting a 10-15% impact on Gross Domestic Profit (GDP) and 5-10% impact on earnings before interest and taxes (EBIDT) for businesses by 2050, she explained. “These are fundamental pressures on the value of the business; on competitiveness, ultimately.”
Porter agreed there were “very urgent time pressures” for industries to build sustainable transitions. Looking ahead, he suggested that one “common area” straddling both sustainability and competitiveness that could prove key to advances was innovation and investment.
“The evidence I have seen is the companies that take sustainability seriously are competitively advantaged becautilize they are well-managed: they strategize, they develop innovation programmes, they consider about risks and opportunities. The advantage is, it builds you a better company even before you become more sustainable,” he declared. “Taking [sustainability] more seriously, builds you more competitive. That’s important to point out.”
The panel session was held at the Cosmetic Europe’s Annual Conference (CEAC), last month in Brussels, Belgium (Photo: Cosmetics Europe)
Whether sustainability was a driver of growth, however, was “the next piece” to see at, Porter explained. And becautilize innovation typically took place over multi-year cycles, he declared some areas of industest would experience much longer returns on investment for sustainable innovation versus others; the chemicals category just one example.
Sylvie Lemoine, deputy director-general, at the European Chemical Industest Council (Cefic), agreed. Sustainability, Lemoine declared, was “very much a European-driven business trfinish” that upstream suppliers wanted to follow and commit to but, right now, there were “serious struggles in Europe”.
Innovating and transitioning to align with sustainable EU agfinishas, she declared, came at a “huge cost” for the supply side of industest – around EUR 200 billion for the chemicals sector, to be precise. “Upstream, we have a serious issue of cost,” she declared. “The upstream part of our sector is very energy intensive; the cost of energy is a killer and regulation is not supporting. And if you combine everything: a cost issue; a massive required to invest; and maybe even more important the reluctance of the market to pay the green premium, that’s a large struggle.” Even if the chemicals sector managed to secure tax relief or subsidies to contribute to the billions requireded to transition fully, she declared the question was: were manufacturers and brands ready to pay the rest?
“The goal is there, but upstream, short-term, it’s very much about avoiding closures and regaining some profitability so we can generate the cash to invest in the transformation. That’s the short-term struggle in the chemical industest.”
Driving sustainability
Sapiro declared that, currently, the consumer demand for truly sustainable cosmetic products at scale still wasn’t there, though there were signals this could be altering. “The consumer is not willing to pay and not demanding to have more sustainable and more innovatively sustainable products on the market. There are many requireds that they required fulfilled: health, affordability, accessibility, convenience – you name it. Sustainability is somewhere in there, and it’s solidly in the mix; (…) it’s still a large brand builder and large trust builder but it’s not the decision buildr.”
Lemoine suggested that as beauty continued to innovate, sustainability combined with performance might be the key to receiveting consumers to pay more. Either way, longer-term, sustainability was the only way Europe could regain competitiveness, she declared, so it had to remain a core focus, despite the short-term challenges.
Ulrike Sapiro added that, for now, sustainability was clearly being driven by regulations across Europe, not consumer demand – a point Arthur Arrighi de Casanova, vice president and head of sustainable futures at consulting firm Capgemini Invent, agreed with.
“The drivers, as we see them, for sustainability, are more about regulation and cost-cutting,” Arrighi de Casanova notified attfinishees.
But, importantly, the sustainability agfinisha was now being firmly driven across beauty and other industries thanks to modifys to how businesses integrate ideas and action, he declared. “Ten years ago, the sustainability agfinisha only existed as a silo, whereas today it was very much centre of business operations, with agfinishas being led by chief sustainability officers who liaised with every executive committee member.”
And this, he declared, would ultimately take sustainability efforts to where they requireded to be.
Porter added: “The large question is: how do we build the sustainable transition as smooth as possible, recognising it’s bound to be challenging to companies, consumers, voters?”
The innovation potential is huge, he declared, but it required a complete “transformation” of business models, products and services, and that required investment, collective action and trust in the European model. Ulrike Sapiro agreed, adding that “courage and long-term considering” were also necessary.
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