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What Entrepreneurs Can Learn about Sustainability From the Cosmetic Industry As entrepreneurs, it's our responsibility to lead the charge on climate change and contribute to a sustainable future.

By Gino Sesto Edited by Micah Zimmerman

Opinions expressed by Entrepreneur contributors are their own.

Sustainability is making waves across the global economy at present. More than a buzzword, it's a business imperative that aligns with the values of your customers, employees and investors. It's about future-proofing your business and positively impacting the planet. Simon Kucher's Global Sustainability Study 2021 shows 65% of consumers worldwide are willing to dig deeper into their pockets and pay more for products that are kind to the planet.

The cosmetic industry has been near the forefront of this movement for some time, redefining business practices and setting an example for other sectors. From innovative marketing methods to tackling consumption and packaging problems, the industry's actions show sustainability and profitability go hand-in-hand. Here's what entrepreneurs can learn from big beauty's approach.

Related: 3 Ways You Can Bring Sustainability to Your Workplace

Understanding sustainable entrepreneurship

Sustainable entrepreneurship is a business approach combining economic performance with environmental and social responsibility. It's about creating and running profitable businesses while positively impacting the planet and humanity. A sustainable approach benefits companies, employees and investors, and the beauty and cosmetic industry has quickly embraced the concept.

Once notorious for being an environmental villain, the industry is making significant strides toward sustainability, supported by consumer demand, regulatory changes and a genuine commitment to reducing environmental impact. Brands increasingly source ingredients sustainably, harvest them ethically and avoid contributing to deforestation or biodiversity loss.

Manufacturing processes are becoming more eco-friendly, with brands investing in energy-efficient facilities and working to reduce waste and water usage. Packaging, a significant contributor to the industry's footprint, is another area where brands are making changes. Many are switching to recyclable or biodegradable packaging, using post-consumer recycled materials, and designing packaging that is easy to disassemble for recycling.

Related: What Is Sustainable Entrepreneurship, and Why Does it Matter?

Sustainability in action

Some of the biggest cosmetic brands are leading the way with sustainability initiatives. For example, L'Oreal, the world's largest cosmetics company, launched a "Sharing Beauty With All" program to improve sustainability across the entire product life cycle. The company targets 50% post-consumer recycled (PCR) plastic usage by 2025. Unilever has committed to making all its plastic packaging reusable, recyclable, or compostable by 2025.

Industry giant Estee Lauder is targeting 25% or more PCR plastic usage and investing in research to find sustainable packaging solutions. Lauder is also working to reduce its carbon footprint across the entire supply chain. Meanwhile, Lush has pioneered 'naked' or packaging-free products, with over 50% of their range now sold unpackaged.

The generational shift

Big beauty can achieve this shift because of the industry's consumer profile. Younger generations, such as Gen Z and Millennials, are more aware of (and concerned about) environmental issues than previous generations. As a major beauty consumer segment, they significantly drive the industry's shift toward sustainable practices. They use their purchasing power to support businesses aligned with their values and are unafraid to call out companies that fall short. They pressure beauty brands to reduce their environmental footprint, use ethically sourced ingredients, and be transparent about sustainability efforts. This is good for the planet and companies, as it helps attract and retain environmentally-conscious consumers.

Impacting profitability and reputation

The move towards sustainability also benefits industry profitability and reputation. Sustainable practices lead to financial savings in the long run, as energy-efficient operations and waste reduction significantly cut costs. Moreover, as consumers become more environmentally aware, they are inclined to support brands that conform to their principles. This leads to increased sales and customer loyalty, driving profitability for brands prioritizing sustainability.

In terms of reputation, brands that are transparent about their sustainability efforts and show a genuine commitment to environmental stewardship are more likely to be viewed favorably by consumers. This enhances their brand image, attracts positive media attention, and sets them apart from competitors in the increasingly crowded cosmetic market.

Related: Sustainability for Entrepreneurs — Why It Matters (and How to Achieve It).

Lessons for entrepreneurs

Entrepreneurs can learn several key lessons from the cosmetic industry's sustainability journey. These include:

1. The importance of making mindful decisions about relationships with suppliers, manufacturers, distributors, and even customers. Cosmetic brands prioritizing sustainability often work with suppliers who share their commitment to the environment. They source ingredients from suppliers who use sustainable farming practices and choose manufacturers who use energy-efficient processes.

2. Seeking expert help and mentorship. Achieving sustainability goals is not easy and often requires expert support and mentorship. Many beauty brands work with sustainability consultants or join industry groups focused on sustainability to learn from others and share best practices. As an entrepreneur, don't be afraid to seek help in your sustainability journey.

3. Building a sustainability-focused community. The cosmetic industry has seen the benefits of forging sustainable connections and building a sustainability-focused community. This could involve joining existing sustainability networks or creating your own community of like-minded entrepreneurs. Brands often collaborate on sustainability initiatives, share best practices and support each other in their sustainability journeys.

4. Supporting a sustainable workplace. The cosmetic industry's journey highlights the significance of building a healthy, diverse, and sustainable workplace. Brands that prioritize sustainability extend the commitment to internal practices, creating workplaces that are inclusive, respectful, and mindful of their environmental impact.

As an entrepreneur, it's essential to realize that sustainability starts from within. By creating a workplace that values diversity, promotes health and well-being, and minimizes environmental impact, you foster a culture of sustainability that permeates every aspect of your business.

The future is bright

Sustainable entrepreneurship has a bright future. As consumers become more environmentally mindful and regulations more stringent, businesses prioritizing sustainability will be better positioned to succeed. Companies that thrive will be those balancing profitability with sustainability. As entrepreneurs, it's our responsibility to lead this change and contribute to a sustainable future. This is not just a trend but a fundamental shift in how to do business.

Gino Sesto

Entrepreneur Leadership Network® Contributor

CEO of DASH TWO

Gino Sesto is the Founder of DASH TWO, a media buying agency in Los Angeles specializing in out-of-home advertising & digital advertising.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

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