L’Oreal is a leading beauty brand that sells its products across the world. The company is following a ‘universalisation of beauty’ strategy for its global consumer, which is tied with its global sustainability vision. It has tied consumption, as well as employee performance together with shareholder interests with the vision for sustainable development (L’Oreal 2011). The company caters to one billion new consumers, whose consumption has been stressed to be responsible and sustainable in the lieu of the corporate sustainability vision. The strategy is derived from several social and environmental issues and has been founded on five key principals. The main driver of the sustainability initiatives remains to be resource efficiency and environmental protection. These issues and principals, together with the benefits of the sustainability strategy and the environmental protection are discussed in detail in the paper.
Sustainable development allows people and companies to exploit the resources least, protect the environment that is in desperate need of protection at this point, and secure our future survival. Sustainable development needs to be embedded in the core of the corporate, social and government objectives so that all natural resources were considered and not exploited by any member of the society. All products, services and activities that take form are done with minimum effect to the environment and look for alternative means of survival and use the natural resources least. An example is the advent of electric cars which emit no carbon and ensure clean air; these not only reduce air pollution, but also reserve the natural resource of coal (Lazlo 2007, p. #). Trees are yet other major concerns for the societies all over the world which are increasingly running out making the world ugly, such as the deforestation in Amazon (L’Oreal 2011).
Sustainability is making a better and long lasting use of a resource. This is most commonly implied for natural resources, such as water, oil, air, gems, trees and plantation, food, cotton, etc. Almost every product has some or all raw material that is extracted from renewable or non-renewable natural resources. For L’Oreal, with massive levels of consumption as new product lines appear each year and new ‘needs’ are explored by company, the sustainability of natural resources is at stake. The concept of sustainability suggests that resources were used in a way that ensures their maximum usage in future. Sustainability may not have been a serious concern a few decades back for L’Oreal, but due to the high volume international impacts of globalization and rise of various different industries, many natural resources are soon to be extinct. Many ‘greener’ technologies are now being used to counter this threat, but they have done quite little in lowering the levels of consumption people do. For example, in US, air drying dishes or clothes is a myth for some families as for years they have become used to using machines for each, whereas in Asian countries, like Pakistan, India and Bangladesh, such concepts of energy saving techniques are dominant. This only shows that the Western consumption patterns bring more threats towards sustainability than Eastern consumption (Blowfield 2008, p. #).
Western consumption is accused of threatening sustainability of natural resources that may lead the world towards a future of massive extinction of necessities of life, such as clean water, oil, etc. But it would be wrong to blame them completely. They consume in such destructive patterns; they have been influenced to purchase the products and then use them and make repeat purchases. The consumption culture has been developed by companies trying to sell their products to earn profits. To fulfill the business motives, they have created problems for themselves, as now with the scarcity of natural resources they face higher cost of production. This higher cost for the environment, as well as for running the business has now again forced the companies to consider the alternatives to destructive consumption patterns.
Consumers have many motivators to pursue shopping. There are household products, food products, shoes, clothing and apparel, technological products, etc. There are thousands of product categories, each targeting a separate and distinctive need, which never seems to be satisfied fully. The main motivators are wants, desires, aspirations, self-esteem, pleasure and the sheer entertainment derived from the shopping and retail experience (L’Oreal 2011).
Purchasing, or rather ‘shopping’ is where necessity for many products is also an addiction to brands and looking good that keeps customers coming back for more. The products that customers require for everyday use cannot be replaced instantly, but customers can, however, be deviated from shopping irrelevantly and focus on other alternatives to please their desire for ‘social esteem’ and enjoyment. Tourism and sports are two markets where spending will only boost economy. More sport spectators will allow more sponsored events and more involvement of youth in sports. This only generates physical and mental strengths which are very desperately needed by the people of the West, as they are getting heavily reliant on technology, and traveling around the world would allow more appreciation for the beauty of the planet.
L’Oreal’s Sustainability Strategy and Benefits
In order to address the sustainability issues in the business environment that L’Oreal operates in, the company has developed a holistic sustainability strategy. L’Oreal’s sustainability strategy is tied closely with the corporate strategy. The company uses sustainable growth as a source of inspiration for new brands, services, management philosophies, and environmental protection ideas. L’Oreal encourages sustainable consumption for its resources, products and brands that seek to integrate corporate, function and operational issues, goals and agendas (L’Oreal 2011).
L’Oreal’s sustainability strategy is centered on two important values: the economic prosperity of the market it operates in and the standard of living of the society it serves. These two values are fundamental pillars of the strategy for a sustainable business model and a sustainable business environmental that seeks to add to the value and life to the business. At present, the company serves nearly one billion newly found consumers as the outcome of its global strategy for making beauty universal. The company strives to attain responsible, as well as sustainable consumption out of these one billion consumers while it addresses the key environmental issues (L’Oreal 2011).
L’Oreal has developed its sustainable strategy to address in an integrated and holistic fashion the interests of all of its stakeholders keeping in light the need for effective internal company performance, as well as adapting to the changing market forces in the increasingly competitive environment. The sustainability strategy does not isolate the company from the economic challenges. In fact, the strategy allows the company to better meet the growing global economic challenges and promises a much more profitable future for the company in the global industry (L’Oreal 2011).
The sustainable strategy of L’Oreal has five principles.
Integration of Sustainable Development with the Corporate Global Strategy
From top to down and bottom up, every hierarchical level of the company has been embedded with the sustainability focus, ambitions and values that the company plans to acquire in the years to come. In its sustainability report that was published in 2010, it presented details of the entire committee formed within the company. Its job is to make sure that the performance of each employee, department and division is closely knit with and addresses the key sustainability issues the company is facing and pertains to the sustainability strategy of the company. The committee also undertakes the allocation of resources according to the issues and challenges they help to address (L’Oreal 2011).
Establishment of a Long Term Vision
The sustainability plans of L’Oreal are for the long haul. The company holds a long term vision to address the environmental challenges and has taken various strategic actions in partnership with UNESCO that ensure the long term protection of the environment. The actions are discussed later in the section related with the environmental sustainability strategy of L’Oreal. These strategies have been framed to cater to 20 to 30 years in the future. The partnership with UNESCO is being curtailed to address environmental, as well as social issues such as the role of women in the workplace. At present, L’Oreal offers scholarships for women scientists with the help of UNESCO to reduce gender biasness in companies and promote more women to bring social, as well as technological and scientific innovations to companies. As per the highlights in the sustainability report of 2010 of the company, more investment plans for the environmental protection and social innovation and more investment projects are underway. (L’Oreal 2011).
Engagement with Employees
An important focus of the company in the lieu of bringing sustainability in integration with the corporate strategy has been maximum employee engagement. The company realizes that without the complete employee engagement, the long term vision of sustainability cannot be successfully achieved. The committee formed within the company specifically makes sure that employees at each level align their individual goals and performance outcomes with the vision for sustainability company-wide. The company provides regular trainings and seminars to create awareness and recognition of the need to move towards sustainable development and sustainable value and implements TQM techniques to align individual goals with corporate goals and objectives (L’Oreal 2011).
Achievement of Continuous Progress
The company has realized that sustainable development company-wide is non-attainable without the implementation of TQM and continuous progress of employee performance at each level. For this reason, the visions, goals and objectives set are ensured at the corporate, as well as functional levels to be measureable, realistic, challenging and motivating for the employees to accomplish results in the given timeframes (L’Oreal 2011).
With a large number of companies operating to service more or less the same pool of customers, there has been heightened competition over gaining an edge in the market over the years, which keeps on increasing. L’Oreal focuses on its competences to gauge success and minimize its costs to provide value back to their shareholders. With the new era came a new concept of corporate social responsibility, which brought the notion that the company has a duty to the society, which it has to fulfill. This, in turn, brings a positive image for L’Oreal. As much as can be argued about the additional costs it brings for the company, investing in social responsibility has only benefited L’Oreal in terms of strengthening its competitive advantage in the industry (L’Oreal 2011).
Addressing an environmental or social issues a nation is facing, means implementing corporate social responsibility which brings back a phenomenon called ‘sustainable value’ that L’Oreal is benefiting from. This refers to the value given to the shareholders, as well as the stakeholders. Putting this idea to action requires the managerial and shareholder understating of the objectives and interests of the many stakeholders that in one way or another are a part of the business. This calls for a rather different leadership style (L’Oreal 2011).
The multiple stakeholder interests and objectives have to be aligned in the core business strategy to ensure sustainability from the roots. The leaders of the businesses have to display a proper application of corporate social responsibility through committing truly to generating sustainable value. Such a leadership that is a requirement of the today’s business environment is adaptive to change and the exact opposite of authoritative (L’Oreal 2011).
When leaders gain an insight to the interests of the people working for them they better understand how to manage them. Gone are the conventional authoritative and aggressive ways of handling the work, with workers working in fear of job insecurity. Today, new managing theories and practices are emerging and the latest make much use of self-managing teams, which remove hierarchical barriers and allow for freedom, leaving much room for innovation. This is evident in L’Oreal. Allowing self-managing teams to grow means that the company is encouraging new ideas to emerge and better application of creativity on part of the employees (Blowfield 2008, p. #). Self managing teams are part of the organizational trend of flatter organizational structures and the emerging idea of borderless organizations with the commitment to sustainable value, embedded with each individual working in the company.
The concept of sustainability value yields an understanding that the company can perform better with the multiple interests of the stakeholders aligned in a unified company strategy, rather than hiring a separate specialized department to cater to the social needs. The committee in L’Oreal has been established to make sure that performances of all employees are aligned with the corporate objectives, vision and goals for sustainable development, but is not responsible for addressing the issues on its own. These issues are integrated with the performances of each activity of the company.
With managers of successful companies continually tapping social needs and the organizational core needs and embedding them into the corporate strategies, they are ensuring that the companies sustain their value. They are finding new sources of value generation and new ways of enhancing the overall performance of the business whilst reducing the major negative environmental impacts. Thus, the managers in L’Oreal are earning a well-reputed name for the companies that their customers feel proud to be associated with (L’Oreal 2011).
The shift from conventional means of operations and strategy making to those that incorporate sustainable value is a rather large change to manage. It calls for change of shareholder attitudes from short-term orientation to more long-tem orientation, and of managers to be more adaptive to change and develop an organizational culture that is more receptive to change, which is the biggest challenge. L’Oreal has incorporated the shareholder issues in its sustainability strategy by tying performance goals and standards with sustainable growth objectives (Blowfield 2008, p. #).
Employees are prone to conventional means of operations and take up a lot of time and training efforts to make the best out of the modern means employed by the managers to adapt to the changing times. The concept of sustainable value calls for the invention of new and improved ways of business processes and the reengineering of the old ones (Kotler & Lee 2008, p. #). This only means training for employees. Although, the companies may be reluctant to give in to the additional cost of training and investment in new methods, this is the call of the change, which has to be managed, or the companies may lose out in the end. This is so because in future survival would be more difficult with only the primary goal to satisfy the sheer shareholders in mind of the managers and the employees of the business. L’Oreal, however, in order to tie employee performances at all levels with sustainable development has invested in training of employees to make them realize the importance of inculcating sustainability in the business model. Moreover, it is now focused towards making its consumers realize the importance of sustainable value and sustainable consumption (May 2008, p. #).
Surviving in the today’s world filled with global crisis, let it be in the form of environmental issues that have to be reduced, societal wrongs that need to be corrected and the wellbeing of the community that is to be considered, is an intense business environment on its own. Businesses can no longer survive with a sole responsibility to its owners, but being a part of the larger community they have to face the challenges and bring about solutions.
Companies now are increasingly opting for addressing specific and special social and environment issues, creating awareness among the people of the society regarding the hazards, and, at the same time, bringing to them solutions, let it be in the form of their innovative products and services, or through special voluntary services. Of course, in the end the business benefits from the positive image in the minds of the potential and existing customers and enjoys the sustainable value that ensures a profitable future (May 2008, p. #).
Creating services and products to cater to the sustainable-value commitment of the business while, at the same time, applying social responsibility mechanism calls for bringing about social innovation. This, by definition, means creating new strategies, plans, concepts and ideas to address the specific and existing social needs that are targeted by an organization. Social innovation is by far a different concept from the innovation encouraged in the organizations for the benefit of the organization itself alone. Social innovation has a much larger scope with takes into account the entire external, as well as internal environment in which the company operates addressing each member’s interests (Kotler & Lee 2008, p. #).
Sustainable value is the value given to the shareholders and stakeholders, which can be expressed in monetary terms and which is increasingly rejecting the idea that investing in corporate social responsibility only means additional costs for the company. Sustainable value sustains the returns for the company, and the added cost notion is just a myth that is by far the only hindrance in its successful implementation in companies. It calls for social innovation, a change in leadership style and the overall direction of the company that puts the social environment alongside its main objectives, which are all related to maximizing its returns.
Sustainable value is a concept, which emerged from the groundwork put forward by the not so distant phenomenon of holistic value. This idea cleverly integrates the monetary objectives of the organization with the social environment, the community in which the business operates in, and the internal structure of the organization, not missing out any value generating element or competency residing inside, and any future value generating opportunity lying in the outside world. Holistic value calls for realizing the bigger picture of the business world, which works successfully with the well-combined effort of its many elements (L’Oreal 2011).
In the context of sustainable value, social responsibility and holistic value, another important concept that comes into focus is the social environment which the business operates in. This social environment consists of the following elements and members: the employees that work for the company to enable it to meet its objectives; the people who are and could be the customers of the company; the social activists and environmental pressure groups, which potentially hold the key to disrupting the entire organization’s public image, let there be any environmental mishap caused by it; a primary and secondary set of attitudes, values and objectives of each of these groups; a profound culture; and a set of societal norms that the business has to follow up to survive in a well established social environment (McElhaney 2007, p. #).
No doubt, social environment is not the only influencer of the overall business world, sustainable value strategy making calls for the vivid concern for the serious economic issues facing the nation or the world. With the recent global recession that affected the organizations around the world, profit sustainability became quite a challenge to achieve. Commitment to sustainable value ensures the involvement of economic issues to be addressed through a well-formed strategy in combination with the issues of the society (Porter & Kramer 2006, p. #).
The dominant issue facing L’Oreal in its sustainability strategy is environmental protection. Among the other moral, economic, ethical and natural hazards that the world is currently facing and fearing for its future, global warming presents one of the biggest threats and challenges for the safety of the human kind and sustainability of the natural resources to ensure the future survival. The severe concern for the global warming emerged in the new millennium, when symptoms for a disastrous future sprung up in various forms, the most noticeable being the worldwide climate change (Booker 2009, p. #). Individual, national and international actions have to be put in place to cater for a cleaner, safer and a healthier environment that sustains the natural resources and accounts for less hazards. As troublesome as the hazards that the global warming is capable of are, so are its prevention measures, which put ethical and economic perspectives in a complex dilemma for individuals (Archer 2006, p. #).
With the invention of combustion engines and several forms of vehicles, the air got heavily infused with several combustions of fossil fuels and carbon dioxide, which accounted for the immense threat of global warming (Rogers 2007, p. #). It has been recorded that in the last 50 years, the temperature has risen and the sole cause for that is the increase in the greenhouse gases in the atmosphere. Greenhouse gases are the single most important concept to understand to give way to the whole idea of global warming. Greenhouse gases include water vapors, carbon dioxide, nitrous oxide, sulfur hexafluoride, hydrofluorocarbons, perfluorocarbons and chlorofluorocarbons and methane, etc. They are found under the ozone layer that protects the Earth from the harmful rays from the Sun. When fossil fuels or coal is burned in factories, and in vehicles, the carbon emissions go directly upwards in the atmosphere and form the greenhouse gas, which produces the greenhouse effect. The greenhouse effect heats up the atmosphere (Booker 2009, p. #).
The greenhouse effect is the process of keeping the Earth heated with the needed heat requirements. The greenhouse gases capture the sun rays, absorb the head, provide the Earth with how much it needs and reflect back the rest. This keeps the Earth warm, otherwise it would freeze terribly and life on Earth may not exist at all (Vogel 2008, p. #). This was the natural process, but due to the increased combustion activities on Earth, the greenhouse gases incumbent enhanced exposure of Earth to heat that is changing the entire world’s climate, making it hotter than it was 50 years ago. With the intense heating up caused by the greenhouse gases, the ozone layer is getting affected and weaker each day. This only spells doom for all life forms in future in terms of the hotness it would withdrew (Archer 2006, p. #).
Global warming has had two major influences upon the environment. First it increased the overall temperature of the Earth to 3° C, which will in future increase to 5° C by 2100. Secondly, it has made the sea levels rise by 25 meters. These two have the potential to cause a chain reaction which would eventually lead to the destruction of the entire food chain of humans, thus, presenting the humans with the grave concern. With such effects of the global warming and concern for the future survival of the life forms on Earth, the government has been compelled to take on several actions. One such act is the Clean Air Act which binds companies into producing fewer air polluting products, such as hair sprays, and more ozone friendly products (L’Oreal 2011).
But the prevention against global warming is not the sole responsibility of the government. The responsibility for the protection of the environment goes further to the individual level, and, together with the combined effect produced by all the individuals, global warming can be very well prevented. But as much as this sounds, it is quite ideal, and far-fetched from reality (Vogel 2008, p. #). L’Oreal, like other companies in the contemporary business environment, has realized how it is responsible for protecting the environment. This realization has been enforced onto the companies from the government, as well as brought in face with the companies in their search for attaining competitive advantage, resource efficiently and cost efficiency (Booker 2009, p. #). Prevention from global warming calls for reducing the use of electricity and using it only when desperately required; watching less TV, air drying clothes and limiting the use of washing machines and dryers; limiting the use of hair dryers and air conditioners, and many electrical appliances. Also, on the other hand, prevention measures include driving cars that emit less carbon into the air, limiting the use of hair sprays, instead of cutting down forests, and trees, planting more trees, etc (Archer 2006, p. #).
Planting trees and buying more fuel efficient cars are two highly favored areas where people are currently strongly contributing to, but when it comes to the use of electric appliances, people are finding it difficult to get used to the idea, as their lives are strongly dependent upon the use of many electrical appliances. For example, in Asian countries, during summer, the heat is intense and air conditioning is like a blessing. For them, limiting the use of air conditioning is only possible during the winters. For more cold European nations, there is a lack of heat, which calls for the use of dryers for drying the laundry, leaving the people helpless to rely on electricity (L’Oreal 2011). Moving ahead to more economic dilemmas, when companies are bound under environmental protection rules, they face the complex scenario of measuring their costs and countering other laws. For example, employing more environmental friendly means of production increases the cost of production and raises the prices of the products, which becomes only a burden for the people whose incomes limit them into purchasing, thus, affecting the overall economy of a nation (Archer 2006, p. #).
As much as can be said about the economic and individual dilemmas being faced by the people in countering the effects of global warming, it has to be prevented, nonetheless, in one way or another. Its drastic effects may not be seemingly obvious to the people yet, but they are happening all around the world, and quite sooner than one expects, the life on Earth is going to change, all thanks to the industrial infusion and dependency of the humans on machines (Booker 2009, p. #).
L’Oreal’s Environmental Sustainability Measures
L’Oreal is acclaimed to be one of the leading beauty brands in the world. In order to sustain the edge that the company has attained in the lieu of this accomplishment, it has to allow consumers to know that the company cares for the consumers’ health, beauty and their atmosphere they, and any production or operation carried out the company or any product sold by the company does not harm the environment in any way. Being a world leader in beauty products, it has to address the leading environmental issues that are otherwise threatened in the production of the beauty items (L’Oreal 2011).
L’Oreal has directed its attention towards resource efficiency which refers to the efficient utilization of resources that otherwise become increasingly scarce in the natural environment owing to being non-renewable. Realizing the growing concern about diminishing the Earth’s resources, L’Oreal has invested heavily in biodiversity and biospheres. The outcome of this has led the company to use around 40 per cent of the raw materials taken from the in-company plantation generated from the biospheres. L’Oreal has taken a pro-active approach in this regard in the form of investments in projects directed towards biodiversity and biosphere protection (L’Oreal 2011). Carbon emissions remain to be the biggest concern of the company. The company has aimed to reduce the rate of annual emissions during its production and operations by 50 per cent by 2015. This initiative has taken its first step towards implantation in 2010. By the end of 2010, the company has been able to reduce the rate of carbon emissions by 27 per cent. Other environmental issues being addressed by the company are minimum water consumption and waste disposal volumes. These have been so far in practice reduced by 19 per cent and 23 per cent (L’Oreal 2011).
L’Oreal is focused on making use of sustainable innovation to protect the environment and inculcate responsible consumption. It has set up new laboratories in the last two years to respond to the growing amount of environmental threats and challenges. It is encouraging eco-design for all of its product ranges, and operational activities and procedures, and undertakes eco-evaluation to measure the sustainable value that each initiative generates and pertains to the corporate sustainability development plan and goals (L’Oreal 2011).
The company has begun its drive towards sustainable development in 2008. Its sustainable development measures before this period are non-existent. As much as the company claims to have a “proactive” approach in bringing about sustainable value from its operations, it has actually taken a laid back and responsive approach. Its environmental protection measures in the form of reduced carbon emissions is a response towards the increased government taxes on the level of carbon emission from factories and plants (Blowfield 2008, p. #). Companies, like L’Oreal, are now paying attention to these regulations and protectionist measures of the society, as well as the company to attain resource efficiency and sustain a “good” image in the environment they operate in (Vogel 2008, p. #). The key driver towards “green” revolution in businesses like L’Oreal remains to be the need to attain a competitive advantage from cost efficiency and resource efficiency, and sustainable development in company operations; encouragement of sustainable consumption and creation of sustainable value are measures taken to promote a healthy brand association with the company and boost the economic returns.