Green beauty: L’Oréal partners with Alibaba, key suppliers to decarbonise China’s US$80 billion cosmetics industry-Khongtu Review

L’Oréal and 10 key suppliers pledged last week at China’s first carbon-neutrality expo to reduce the industry’s supply-chain emissions

The French cosmetics maker also has a three-year partnership with Alibaba to work on new products and circular-economy solutions

The logo of French cosmetics group L’Oreal is seen at an exhibition in Paris on June 15, 2023. Photo: Reuters

L’Oréal, the world’s largest cosmetics company, wants to utilise China’s role as the world’s biggest e-commerce market and a fast-developing digital economy to tackle the beauty industry’s environmental problem.

The company hopes a partnership with China’s e-commerce platforms and major suppliers in its North Asia region will help Asian consumers better perceive the value of sustainability and make greener consumption choices, said Janet Neo, L’Oréal’s chief sustainability officer for North Asia and China.

“The Chinese e-commerce market has high penetration, big volume and huge market size,” Neo said. “It presents a real opportunity in the sense that if we can promote the right behaviours, then lasting change could be just around the corner.”

The French company and 10 key suppliers pledged last week at China’s first carbon-neutrality expo in Shanghai to reduce the industry’s supply-chain emissions of greenhouse gases. Signers of the declaration include Microsoft China, internet giant Alibaba’s logistics arm Cainiao and hyaluronic acid producer Bloomage Biotechnology.

Employees work at a warehouse of Cainiao, Alibaba’s logistics unit, in Wuxi, Jiangsu province, China on October 26, 2020. Photo: Reuters

The move follows the signing of a three-year partnership between L’Oréal and Alibaba during French president Emmanuel Macron’s three-day visit to China in April, where the companies agreed to work together to develop new products and create circular-economy solutions in China’s beauty and personal-care industry. Alibaba owns the Post.

As China keeps pushing its 2060 national carbon-neutral goal, all industries, including beauty, are under increasing pressure to decarbonise. China’s cosmetics market, the world’s second-largest, was worth 572.6 billion yuan (US$80 billion) in 2021, accounting for 17.3 per cent of the global market, just behind the US at 20 per cent, according to data from Euromonitor.

Meanwhile, greenhouse-gas emissions from some of the world’s biggest players in the beauty industry are rising, according to a report released by climate consultancy The Carbon Trust in January.

Two of the industry’s activities – sourcing of raw materials to make products and packaging from fossil-fuel based synthetic ingredients, and consumer use of products, which often requires large amounts of hot water – account for 30 per cent and 59 per cent of the beauty sector’s emissions, respectively, according to The Carbon Trust.

In China, fierce competition and a low barrier of entry also contribute to the challenge of reducing the industry’s emissions and promoting green consumption, Neo said. “It’s not easy for consumers to perceive the additional value on sustainability a brand makes through investment, and from there make sustainable choices,” she said.

Despite rising awareness about green consumption, Asian consumers are still in the early stages of shifting to a sustainable-consumption mindset, so more empowerment from brands is crucial, she added.

L’Oréal achieved carbon neutrality in its China operations in 2019 – the first of the company’s markets globally to do so – and in its North Asia region in 2022, according to the company.

From 2018 to 2022, L’Oréal shipped out 149 million so-called green parcels, which use no tape or plastic foam, through a partnership with Alibaba’s Taobao e-commerce platform. Both companies are also testing recyclable parcels, which can be reused up to 40 times, according to L’Oréal.

The French company also developed a system of product-impact labelling in 2020 to tell consumers about the environmental and social impact of its products, and partnered with Alibaba to promote environmentally sustainable products and reward consumers for low-carbon behaviours.

In 2021, the consumer-goods industry will sell 44 trillion yuan worth of goods in China, contributing 65.4 per cent of the country’s GDP, according to the National Statistics Bureau.

“The consumer-goods industry itself is not a high carbon-emitting industry, but the sector is still important to the national carbon-neutral goal due to the industry’s huge consumption and consumer demand, as well as the varieties of products and the complex production processes,” said Li Yan, professor at the school of environment and natural resources at Renmin University of China.