What potential does ‘natural capital’ have for the beauty and personal care industry?

Ecovia Intelligence will be covering these developments and more at its upcoming editions of the Sustainable Cosmetics Summit​​ (Paris, 5-7 November, and Hong Kong 12-13 November).

What do you mean by ‘natural capital’?  ​

Natural capital is a metaphor for nature, from which flows benefits such as raw resources, materials and services such as pollination, water filtration and others.

These benefits underpin successful societies and healthy economies. The use of 'capital' terminology only helps to convey how we must manage, grow and invest in nature in the same way we would for financial capital

Why is it hitting the industry agenda now, what factors are bringing it into the spotlight?​

All industries depend on natural capital, and the cosmetics sector is no different.

In fact, due to the reliance on cultivated flora - sometimes rare or largely uncommercial varieties - they can be even more at risk to disruption.

Take the example of Chanel No 5. Each bottle contains around 1,000 jasmine flowers.

To ensure a high quality flower, Chanel and their growers depend on healthy soil, unpolluted water, a climate that brings regular rains, and insects that pollinate plants.

They also depend on habitats to sustain these pollinating insects, landscapes that filter water, organisms and processes that cycle nutrients back into their fields, and so on.

Essential oils also commonly used to make fragrances such as jasmine, rose, iris, vanilla, sandalwood and lavender also cannot be created in labs, and no man-made alternatives exist.

The success of many cosmetic products is indisputably entwined with the health of the ecosystems that produce their rare and exceptional ingredients.

Degrading environments a risk to the industry​

The risk to the industry grows as the environments on which they depend continue to dwindle and degrade.

The quality and cost of these materials are deeply sensitive to changes in land use, climate, weather, water availability, pest species populations, disease and other pressures.

As products become scarcer, brands can find themselves competing for rare or exotic materials, driving up prices and incentivising the rapid and unsustainable depletion of remaining stocks.

To combat this, some companies are leading the charge to better understand the relationships between nature (natural capital), their business, and the communities (social and human capital) they rely on to cultivate and produce their products.

Vetiver: a key case study​

Haiti for example produces half the world's supply of vetiver. Vetiver roots yield an essential oil with a unique dry fragrance which Haitians call the "essence of tranquillity".

In 2012, companies worked with producers to refurbish equipment and develop sustainable practices with 160 farmers across three Haitian villages.

These villagers have now formed a cooperative and receive a guaranteed minimum price.

In this way, a steady supply (and price) is maintained for manufacturers, Vetiver is cultivated sustainably with minimized environmental damage, and the farmers livelihoods are secured.

Businesses are quickly realizing that through a better understanding of the way that they depend on nature and its complex systems, they are able to avoid risks and identify opportunities for efficiency, resilience and innovation.

It’s not just upstream risks that should concern producers​

Consumers are ever more concerned with  ingredient provenance, the use of artificial chemicals, packaging, growing practices, human rights and other supply chain policies of beauty and cosmetics companies.

One example of this in action is the recent consumer-led ban on plastic microbeads in cosmetic products. Companies are noticing that leaders who commit early to changes are more successful in the long run as regulation and legislation is tightened.

When the ban on microbeads was announced, those who had already been listening to customers’ concerns had plans in place to phase them out.

Organizations such as Johnson & Johnson, Unilever, and Procter & Gamble took smaller hits (and gained reputational advantages), while those that lagged found themselves fighting to keep up  and avoid losing market share.

As the global consensus continues to strengthen, and our global environment fluxes,  the organizations that understand their relationship with nature will have a much larger chance of weathering the storm.  

Discover Pitts' tips for making the most of natural capital here​.