The number of ethical cosmetics and skin care launches increased five fold last year to 2,260 with the UK and France accounting for 74 per cent of the market, according to the Mintel GNPD database.
The UK and France are leading the ethical trend which looks set to continue in 2008 as more than 420 new ethical products have already hit European beauty counters.
"Beauty manufacturers are innovating by making their products more compatible with the emerging lifestyle trends of ethical shopping and eco-consciousness," said Mintel analyst Nica Lewis.
"They are clearly looking at ways to cut down the amount of packaging they use and are trying to reduce the negative impact production can have on the environment."
Ethical products have already taken hold in the food and fashion industries and a number of ideas such as environmentally friendly packaging and fair trade products have inspired beauty manufacturers.
French women are particularly drawn to the idea of fair trade beauty products and recyclable packaging for their cosmetics.
Mintel said 25 per cent of French women want recyclable beauty packaging and 16 per cent are keen to buy fair trade cosmetics.
Environmentally friendly packaging was also a priority for British women with 20 per cent wanting to buy recyclable cosmetic packaging whereas the figure for US women was significantly lower at just 12 per cent.
Lewis said: " Today manufacturers are focusing more and more on using recyclable packaging or packaging made of recycled materials.
The next step will undoubtedly see a move towards products that need hardly any packaging at all."
Another key aspect of the ethical trend is cruelty free cosmetics, which are products that have not been tested on animals.
These make up the majority of ethical launches and have widespread support from beauty customers with around half of the British and French women surveyed saying they look for products that have not been tested on animals.
"We have already seen the no-animal-testing claim go from niche to mainstream over the past two decades," said Lewis.
"Although organic has proved popular in the beauty industry, the current trend for ethical claims on the rise centre around the use of fair trade ingredients and products having recycled and recyclable packaging.
All natural will also continue to appeal," she adds.