L’Oreal, the largest cosmetics brand in New Zealand, has been named one of the world’s most ethical companies by the Ethisphere Institute for the seventh time. We asked L’Oreal NZ country manager Martin Smith how the company translates this focus on ethics into the Kiwi market, and what New Zealanders really want from their cosmetics.
Founded in France during 1909, L’Oreal is a global heavyweight present in more than 130 countries. Forbes last year put L’Oreal at number 34 of the world’s valuable brands, with a net worth ofUS$106.6 billion.
The company offers a wide range of skincare, hair colour and care products and cosmetics under 32 different brands. It primarily retails in New Zealand through a number of large retail partners: Farmers, Countdown, Life Pharmacy, New World, The Warehouse, MyBeautyStore.com, Unichem, Radius Pharmacy, Amcal and Kmart. It also supplies beauty salons and hair salons around the country.
In a release announcing its Ethisphere Institute win, L’Oreal chairman and chief executive Jean-Paul Agon spoke of seeing a growing expectation that companies should behave ethically evolve over the last 10 years.
“The next 10 years will see ethics becoming no longer a ‘nice to have’ but a fundamental prerequisite to any organisation’s license to operate,” he says. “For companies who are leaders in this area, it will become a competitive advantage.”
Smith describes L’Oreal as a giant which uses its scale to create and leverage opportunities to raise ethical standards industrywide. He speaks of the company having a strong set of values which guide its conduct worldwide: transparency, integrity, respect and courage.
These values came into play shortly after Smith returned to L’Oreal New Zealand after spending 17 years overseas. Within two days of his arrival, he discovered that a product manufactured by a third party and offered as a free gift with purchase of L’Oreal products was faulty.
Smith had to balance respect for the consumer against a financial cost of “hundreds and hundreds of thousands of dollars”. Despite only one incidence of the product failing in New Zealand, Smith recalled every one nationwide.
This focus on integrity translates to greater consumer confidence, he says: “The consumer, we know, will use trust as a filter when choosing a brand.”
Smith also believes L’Oreal’s retail partners are also encouraged to make long-term commitments because they know the company will not put them in a position of compromise.
Asked whether ethics are a specific concern of New Zealand customers, Smith says yes, absolutely.
“New Zealand consumers are generally well-read, well-educated and very worldly.”
They are aware of global issues and are particularly jarred by social and environmental irresponsibility. Smith says Kiwis feel deeply about these issues and will continue to do so in the future.
New Zealand customers are asking fewer questions about animal testing, and more about social responsibility and environmental impact, says Smith. He is outspoken about the former topic: “L’Oreal no longer tests any products or items on any animal anywhere. The only exception is in areas where the rules and regulations demand it, and even then, L’Oreal does not do it itself.”
Smith says the company is on a mission to eliminate the need for animal testing, and has invested over €1 billion into the cause over the last 30 years. It has 100 people on its staff dedicated to ending animal testing.
Animal testing has fallen off the consumer agenda because technology has reduced its prevalence in the marketplace, Smith says: “That topic is becoming less and less relevant because there is a solution on the horizon.”
Social and environmental impact is now at the front of consumers’ minds, and Smith says L’Oreal is taking its responsibilities seriously. Globally, the company has made ambitious plans, among them to reduce its carbon emissions by 60 percent before 2020. Smith has also shared the following goals for New Zealand.
- L’Oreal New Zealand's goal is to be totally paperless by 2020. “If you translate this into trees, we will be in a position to save one tree per employee per year for the rest of their lives,” says Smith.
- L’Oreal New Zealand will work with its stakeholders and retail partners to materially reduce carbon emissions. It will focus specifically on electricity useage by switching lighting at all permanent points of sale to LEDs.
- The company wants to assist all partner salons in New Zealand to cut their water useage by 25 percent by 2020. Hair salons use a lot of water, explains Smith, and L’Oreal is in a position to strongly influence its partners using education and tools: “Water is really, really a subject that New Zealanders are passionate about.”
Smith is confident these will be achieved, describing the company as being “well on the way” there.