Estee Lauder Companies' Sustainability

The Estee Lauder Companies (ELC) is the global leader in prestige beauty and has a portfolio of products in the makeup, fragrance, skin care, and hair care categories. The company owns over 30 major brands, such as Michael Kors, Donna Karan New York, Aveda, Clinique, and Kiton. ELC was founded in 1946 and was run as a family owned company until 1995 when it became public on the New York Stock Exchange. While ELC sells and markets its products in over 150 countries, in the prestige cosmetics category, ELC has a U.S. market share of 46 percent.^[1]

Due to its vast worldwide supply chain network, ELC realizes that corporate responsibility is important to the long-term success of the company. William P. Lauder, the Executive Chairman, states that “Corporate responsibility is how we do business, how we create long-term value and continually deliver a sustainable business model.”^[2] ELC has been conscious about its business practices for many years, and in 2007 started to release a sustainability report of its practices, which it titles The Beauty of Responsibility. The 2014 report was the fourth version of the report, which now uses the standardized Global Reporting Initiative (GRI) G4 guidelines as a reference for the reports format and content.

In 2013 ELC expanded on its commitment of its sustainable strategy by creating the new position of Vice President of Global Corporate Responsibility. This new position is to advance and integrate the corporate sustainability strategy and align it with the company’s long-term business objectives^[3]. Previously, corporate sustainability strategies where managed by the Executive Vice President of Global Supply Chain. By creating this new position ELC clearly states that they take sustainability seriously and has appointed a dedicated position to be accountable for their sustainability programs. The company goes beyond the typical Reduce, Reuse, Recycle mantra of sustainability and more closely follows the Green Five theory. The new global corporate responsibility strategy includes measurable targets that can be reported against in the following five categories: Product innovation/Experience, Sustainable supply chain, Efficient Operations, Social impact and employees.        

           One of the largest and most impactful areas of ELC is its sourcing of raw materials and its supply chain. In order to better understand the company’s impact, ELC contracted PricewaterhouseCoopers (PwC) to map ELC’s value chain. Along with mapping, PwC identified and quantified the social and environmental impacts of ELC’s operations. PwC’s analysis calculated that 60 percent of ELC’s environmental impact occurs upstream in their supply chain, during the raw materials and third-party manufacturing phases, which is before ELC has direct operational control (see figure 1). In order to manage Estee’s social responsibility during the upstream phase, all vendors must follow ELC’s Supplier Code of Conduct. The Supplier Code of Conduct ensures that ELC’s partners meet or exceed the company’s minimum expectations regarding the environment, human rights, labor, and health and safety. Additionally, all new suppliers must complete a self-assessment questionnaire and agree to a third-party audit of its practices. Over the past 6 years there have been 424 third-party audits of suppliers’ social impact, and 123 self-assessment questionnaires.