If you think L'Oreal's 2008 Sustainable Development Report might be shallow since the company produces make-up and hair care products, think again. The cover alone gives a sense that it takes sustainability seriously, depicting a male scientist inspecting a solar water heating panel. Thankfully, there is no superfluous subtitle such as "the beauty of sustainability". The cosmetics giant, which owns such brands as Lancôme, Maybelline, Kiehl's, The Body Shop, Redken, and Garnier, just wants to get down to business.
L'Oreal wants to be seen as being serious about sustainability and this substantial report, its 6th, is testament to that. It includes assurance from Environmental Resources Management (ERM) and PricewaterhouseCoopers and follows the GRI Guidelines. It incorporates recommendations from the UN, OECD, European Commission, and WBCSD.
Beauty is at the heart of L'Oreal and while the company makes no apologies about that, it fails to confront the consequences. The CEO letter is quick to affirm L’Oreal’s "deep-rooted belief in the valuable role that beauty plays in society and for our customers." Quite French. Very refreshing.
But this report also leads you to believe that L'Oreal is more than a cosmetics and hair care company - they are scientists. Most photographs are of Petri dishes, test tubes, molecules and people in lab coats. There are just two images of actual beauty products. And some of the most sophisticated content is found in the Research and Development section. If beauty is the end, science is the means.
The report covers many issues that one would expect, but also leaves a lot out. Curiously absent is any high-level discussion of the social impacts the beauty industry has on society. Perhaps they're preoccupied with the science of their products, but what about the impact of the industry on people buying those products? Do highly unattainable standards of beauty help sell L'Oreal products? Or do L'Oreal products help build confidence in a world already obsessed with perfection? There is no right answer, but there is a very real debate. What exactly is the "valuable role that beauty plays?" Unfortunately, we never find out.
For a company which states that its industry has little environmental impact, the report dedicates a lot of space to the subject. There are numerous systems in place to track information - so many that the data is sometimes confusing. For example, L'Oreal reports on the carbon footprint analysis of its products, but many of their products require varying levels of hot water to use once in the customers hands. So can that footprint ever really be determined? A lot of effort went into this, but what's the point? A big plus is its target to halve CO2 emissions by 2015 - that's impressive.
The R&D section is one of the most interesting. It covers everything from animal testing and the use of phthalates, parabens, and triclosan, to hair and skin regeneration. Unfortunately, it falls short of giving us any context for these issues. It's great they're not using phthalates, but why were they considered dangerous in the first place?
This can all feel Frankenstein-esque at times – L’Oreal is using cellular and molecular technology to try to cure baldness and wrinkles. It's fascinating, but fails to address the ethical implications of manufacturing youth and "playing God". This is a missed opportunity. For example, although L’Oreal is involved in controversial practices such as stem cell research, it fails to acknowledge concerns many people have about this, or whether it is appropriate to use human stem cells for cosmetic purposes. Similarly, there is no discussion of whether it is ethical or appropriate to develop potions that disturb the body's natural aging process - is beauty a great enough end to justify the means?
The Social Affairs section sounds as though it will address such issues but it doesn’t. Instead it deals with employees, and is one of the weakest sections. There is some data – females in management and a geographical breakdown of employees. The data is shocking at times: only 2 females on the executive teams of 13 - for a cosmetics company? Ouch. On the other hand, there are no figures on aspects such as race, age or disability, despite detailed descriptions of its programs.
There is an impressively detailed, seven-page supply chain section that includes data on carbon emissions and labor standards. L'Oreal continues to impress with its systemic approach, but some targets are weak. For example, in 2008 the company easily met its target of completing 500 supplier audits (they did 688), but has maintained a target of 500 for 2009.
The Consumer Relations section is buried deep on page 69, although the first line states that "Consumers are L'Oreal's ultimate stakeholder." This section has all of the right headings: product safety, responsible marketing, and product availability (although one wonders why availability is an issue). But the content doesn't do enough to address the real issues behind those headings. The code of ethics provides guidance to employees on issues such as using overly thin models or making exaggerated claims for product performance. But what about addressing the examples they actually faced, such as 2008's controversy claiming L'Oreal "whitened" singer Beyonce in advertisements? L'Oreal adamantly denied these claims, but they are serious enough claims to warrant mention in this report.
There is good use of charts, pictures and graphs. Visually, it is quite corporate, being neither overwhelming nor underwhelming, with surprisingly few pictures of beautiful women. A clever and accessible diagram on page 22 depicts the process of manufacturing shampoo and conditioner and explains the related impacts. This chart is particularly pleasing because of the commentary on systems and data.
Overall, the report is well written. The language can get a bit technical, particularly in the science-heavy EH&S and R&D sections. Those sentences emphasize the unexpected geekiness of this report given that it’s a consumer brand.
The online version repeats information from the printed report. The only unique web content is a collection of local case studies, which would work well in the report itself to show policy in practice. The web could have been better utilized as a communication tool.
This report is serious, reflective and ambitious with a fairly high level of transparency. L'Oreal has been around for 100 years and its confidence also lends credibility. For example, the report acknowledges where targets have not been met and pledges to meet them in future.
However, there are opportunities to be more transparent and take more responsibility. In particular, more detailed content on ethics could have been included. And by not acknowledging controversial issues, its credibility, or more likely its integrity, is weakened.
· Include a broader discussion of the societal need, if any, for cosmetics and any benefits they bring. Also the impact on consumers, especially women and girls, of the beauty industry, its promotion of beauty as a ‘must have’ and of certain ideals.
· Include materiality analysis.
· Incorporate case studies from the website throughout the report to illustrate specific topics.
· Move the report online to make it more accessible and produce a shorter printed document focusing on the most material issues.
· Include stakeholder voices that challenge L'Oreal.
· Incorporate ethics into the Research & Development section to address potentially controversial issues such as using stem cells.
Kristina Babbitt is a consultant at Context, a corporate sustainability strategy and communications consultancy with offices in London and New York. We are the world’s most experienced provider of advice and writing for corporate sustainability reports.