Green beauty boom: Investment is the ‘new black’ in sustainable business, says expert

By Kacey Culliney

- Last updated on GMT

The beauty industry is on a new sustainability path, armed with the tools, knowledge and now investment necessary to make real change (Getty Images)
The beauty industry is on a new sustainability path, armed with the tools, knowledge and now investment necessary to make real change (Getty Images)

Related tags green beauty sustainable beauty circular beauty sustainable sourcing Supply chain certification Environment

The investment community is finally backing businesses with strong sustainability agendas and aligning with environmentalists on what diverse and inclusive supply chains should look like, says the co-founder and CEO of certification firm Positive Luxury.

Recent years had certainly seen consumer interest in sustainability pick up pace, fuelled further amidst COVID-19​. And this was an uptick beauty brands could “definitely galvanise”,​ according to the World Wildlife Fund (WWF)​.

But it wasn’t just consumers spurring the sustainability agenda, there were now strong business incentives too.

“The new black is the investment community – money talks,” ​said Diana Verde Nieto, co-founder and CEO of Positive Luxury – the company behind the Butterfly Mark awarded to luxury brands demonstrating positive social and environmental impact.

“This is the first time in history in which the investment community is actually totally behind the activists and environmentalists and saying they will only invest in companies demonstrating their impact in sustainability,”​ Verde Nieto said during a panel discussion at The Pull Agency’s online webinar The Future of Beauty: Sustainability – Do our consumers really care? ​held in February.

Beyond the environment – people from farm to boardroom are critical

But this wasn’t just about the environment, Verde Nieto said; it was also about people. “Diversity and inclusion are part of the sustainability agenda. The way you work with your suppliers, the work that you do all the way across your value chain, including the leadership business, is part of the sustainability agenda​.”

“…This is the first time in history that we have the tools, the knowledge, the will, the government, the legislation, and the brains that we can really change the world for good.”​  

Asked about circularity and circular business models, Verde Nieto said: “I think that the circular economy is at risk of being a fad, and I say this very cautiously and quite controversially, because in order to really achieve a circular economy, we really need to change the system.”  

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However, she said her hope was that circularity did not become a fad “because we cannot afford that”.

Sustainability push – luxury beauty ‘is taking this seriously’

Spotlighting the luxury beauty category specifically, Verde Nieto said there was certainly action being taken because there was plenty of space for sustainable innovation given larger margins.

“There is great work that luxury brands are doing today,”​ she said, including work around refills, alternative materials to plastic, and a closer look at upstream and downstream supply chain impacts.

“The luxury industry is taking this seriously. If you think about one of the most famous perfume brands in the whole world, the main ingredient is jasmine, and you only have one single location where you can get this jasmine from. Just imagine what it would be like if we didn’t conserve, preserve that soil or those farmers? We would not have that perfume that we’ve had for many, many years (…) For luxury brands, sustainability is very, very high on their agenda.”

The beauty industry more broadly, she said, was going through “huge transformation” ​in sustainability terms, largely around transparency of raw materials and real investment in innovation. But efforts had to continue, particularly given scrutiny would increase in beauty in the coming years, just behind fashion, because of how central products were to consumer lives.

Third-party certifications are ‘very uncomfortable’ but can create results

Independent, third-party certifications, therefore, would prove important for the future, Verde Nieto said.

“The difference between [third-party] certifications versus your own is the validation process. When you have a third-party really go into your business, creating a cross-functional team and facilitating that dialogue internally and understanding the government of the business, the social side, the sustainability side, innovation side and getting under the skin and giving real insight of what’s happening, it’s very uncomfortable. It feels very uncomfortable, but actually when you get out the other side, that robustness and impartiality give results.”

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