Beauty Industry Sustainability: Balancing Green Innovation with Market Competitiveness in 2025
Since the European Commission unveiled its ambitious European Green Deal in December 2019, the beauty industry has been grappling with a fundamental question: Can sustainability and competitiveness coexist harmoniously? This challenge took center stage at Cosmetic Europe’s Annual Conference (CEAC) in Brussels, where industry experts examined the intricate relationship between environmental stewardship and market success.
The Definition Dilemma: Understanding Sustainability and Competitiveness
The conversation begins with a fundamental problem highlighted by Martin Porter Cambridge Institute for Sustainability Leadership: the absence of universally accepted definitions for both sustainability and competitiveness.
This definitional ambiguity has persisted for years, with various stakeholders—from national governments to European financial institutions—proposing different frameworks for measuring these concepts. The result is what Porter aptly describes as “a fuzzy agenda” that complicates strategic planning and regulatory compliance.
The Time Horizon Challenge: Short-term Competition vs. Long-term Sustainability
Ulrike Sapiro Henkel Chief Sustainability Officer identified a critical temporal mismatch between competitive and sustainable thinking:
| Competitiveness Focus | Sustainability Focus |
|---|---|
| Quarterly performance metrics | Multi-decade impact assessment |
| Binary consumer choice decisions | Complex ecosystem interactions |
| Immediate market share gains | Long-term value creation |
| Short-term ROI expectations | 50-year business planning |
Economic Pressures: The Cost of Climate Change
The urgency of sustainable transformation becomes clearer when examining the economic implications of climate change. According to World Economic Forum projections cited by Sapiro:
Projected impact on GDP by 2050 due to climate change
Expected reduction in EBITDA for businesses by 2050
These projections underscore that sustainability isn’t merely an ethical imperative—it’s a business necessity. Companies that fail to adapt face substantial financial risks that could fundamentally undermine their competitive position.
Innovation as the Bridge Between Sustainability and Competitiveness
Despite the challenges, Porter identified innovation and strategic investment as the connecting thread between sustainability and competitiveness. His research suggests that companies taking sustainability seriously often gain competitive advantages through improved management practices.
Competitive Advantage Through Sustainability:
- Enhanced strategic planning capabilities
- Robust risk assessment frameworks
- Systematic innovation programs
- Improved operational efficiency
Supply Chain Challenges: The €200 Billion Investment Reality
The upstream supply chain faces particularly acute challenges, as highlighted by Sylvie Lemoine European Chemical Industry Council. The chemical sector, crucial to beauty manufacturing, requires approximately €200 billion in investment to align with EU sustainability goals.
Supply Chain Sustainability Barriers:
- Energy-intensive processes facing rising energy costs
- Regulatory complexity increasing compliance burdens
- Market reluctance to pay green premiums
- Cash flow constraints limiting transformation investments
Lemoine explained that even with potential tax relief and subsidies, the fundamental question remains: Are manufacturers and brands prepared to absorb the remaining costs? The short-term focus for chemical suppliers has shifted to avoiding facility closures and regaining profitability necessary to fund long-term transformation.
Consumer Demand: The Missing Piece of the Sustainability Puzzle
A critical gap exists between industry sustainability efforts and consumer behavior. Sapiro noted that while consumers express interest in sustainable products, purchasing decisions remain driven by traditional factors:
| Primary Purchase Drivers | Sustainability Priority Level |
|---|---|
| Health benefits | Secondary consideration “Solidly in the mix but not the decision maker” |
| Affordability | |
| Accessibility | |
| Convenience | |
| Product performance |
Regulatory Drivers: The Primary Catalyst for Change
Both Sapiro and Arthur Arrighi de Casanova Capgemini Invent agreed that regulatory pressure, rather than consumer demand, currently drives sustainability initiatives across the beauty industry.
However, Arrighi de Casanova noted a significant organizational shift: sustainability has evolved from a siloed function to a core business operation. Chief Sustainability Officers now collaborate directly with executive committees, integrating environmental considerations into all business decisions.
The Path Forward: Innovation, Investment, and Transformation
Looking ahead, industry leaders emphasized that successful sustainability integration requires comprehensive business model transformation. This includes:
Essential Elements for Success:
- Strategic innovation programs with multi-year investment cycles
- Collective industry action to address supply chain challenges
- Trust in the European model of sustainable competitiveness
- Courage and long-term thinking from leadership teams
Porter concluded with a crucial observation: The innovation potential is enormous, but it requires complete transformation of business models, products, and services. This transformation demands substantial investment, coordinated action across the value chain, and unwavering commitment to the European sustainability vision.
Conclusion: Embracing the Fuzzy Agenda
The beauty industry’s journey toward sustainable competitiveness remains complex and challenging. While definitive answers about aligning sustainability with competitiveness remain elusive, the industry consensus is clear: transformation is inevitable.
Success will require beauty companies to:
- Develop company-specific sustainability definitions that align with business models
- Invest in long-term innovation programs despite short-term cost pressures
- Collaborate across the entire value chain to address supply chain challenges
- Maintain strategic patience while navigating regulatory and market uncertainties
As the industry continues to navigate this “fuzzy agenda,” one thing remains certain: companies that successfully integrate sustainability into their competitive strategy will be best positioned for long-term success in the evolving European market.