Transparency in Sustainability: Case Studies from Health & Beauty Brands

By Tori Chen and Chrissy Brogan . This article was written in collaboration between Glow and CarbonBetter .

Health and Beauty is an industry vertical with unique challenges and opportunities when it comes to incorporating sustainability. This is the third article in a three-part series by Glow and CarbonBetter, where we have been evaluating the intersection of sustainability and Health and Beauty. In the first article , we examined consumer expectations around sustainability in this sector. The second article focused on the environmental challenges and opportunities faced by Health and Beauty brands. In this final piece, we will discuss the importance of transparency in sustainability claims, showcasing industry case studies and highlighting brands that are making a difference. This series offers insights for ESG, marketing, and operations professionals in Health and Beauty, as well as for those looking to apply these learnings in scaling their own brands.

The health and beauty sector, like other sectors, faces the challenge of making trustworthy claims that resonate with consumer expectations and adhering to evolving regulatory standards. Transparency and traceability are at the heart of these claims. According to NielsenIQ, 79% of shoppers express doubts about the authenticity of sustainability claims, underscoring the imperative for brands to substantiate their claims with transparent data and methodologies. In this final article in the series, we will explore how brands in the health and beauty sector are responding to these challenges, the innovative strategies they are employing to enhance transparency, and the methods used to ensure that their sustainability narratives stand firm against both consumer scrutiny and regulatory compliance.

Making Trustworthy Claims

Building customer trust is a natural outcome when a brand effectively and transparently communicates its sustainability efforts through storytelling, connecting the impact directly to the customer's experience. Often, the message and its significance can become obscured when brands present raw data without relevant context, or when brands try to hide less sustainable aspects of their business operations instead of honestly communicating their efforts and progress. The following section contains some of the topics dealing with making trustworthy claims.

Transparent Disclosure and Methodologies

Transparent disclosure involves openly providing detailed data and clear methodologies behind sustainability claims. When a brand claims reductions in emissions or enhancements in packaging sustainability, for instance, it should provide specific figures and the methodologies used for these calculations, thus building consumer trust and setting an industry standard for honest communication.

Adapting to the Evolving Regulatory Landscape

The regulatory landscape is rapidly evolving. The European Union's stringent regulations on carbon-neutral claims and the updated FTC Green Guides in the U.S. necessitate a higher level of diligence and integrity in environmental claim verification. These changes aren't just regulatory obligations; they represent a move towards a more accountable and sustainable industry.

The Role of Certifications

Certifications such as B-Corp, which assesses a company's overall social and environmental impact, can play a crucial role in lending credibility to sustainability claims. These certifications, essential for on-package labeling, provide consumers a more reliable indicator of a product's sustainability. There are a number of on-package labeling claims and certification programs out there such as “Certified Carbonfree” and “Cradle to Cradle Certified”. With the ever evolving certification and label landscape, it’s important for both brands and consumers to consider what the certification actually means and how it is attained. Labels can be a trust signal but they can also create confusion or a false sense of sustainability.

Effective Communication Strategies

Effective communication is key to establishing trust and authenticity, while simultaneously creating business value , and often involves a nuanced approach, balancing factual information with engaging narratives that resonate with your audience, as well as using the appropriate metrics. This means identifying the sustainability issues that matter most to your stakeholders and crafting messages that directly address these concerns. It also means talking transparently about what you have done, choices you’ve made, and even tradeoffs.

Transparency and honesty about where a company stands on its sustainability journey, including the challenges faced and the progress made, lends credibility to the narrative. This transparency should extend to all aspects of sustainability reporting, avoiding the pitfalls of overstatement or vagueness, which can be construed as greenwashing or greenhushing .

Moreover, emotional engagement plays a significant role. Sustainability stories should not only be about numbers and targets but also about people, communities, and the real-world impact of sustainability initiatives. It's about connecting on a human level, showing the faces behind the efforts, and the lives touched by sustainable practices.

With a blend of accurate reporting, transparent storytelling, and emotional engagement companies can more effectively share their progress.

Addressing Consumer Concerns and Market Opportunities

Setting interim milestones and regularly tracking progress are recommended best practices, not only signifying commitment to continuous improvement but also providing tangible evidence of progress to consumers.

The consumer shift towards sustainable products, particularly in the health and beauty sector, represents a significant market opportunity. Glow’s research indicates that the U.S. health and beauty sector could capitalize on approximately $2.9 billion annually by catering to this shift. This change in consumer behavior is a clear call for brands to align their operations and communications with sustainable practices.

Making trustworthy claims in the health and beauty industry is a multi-dimensional process involving transparent disclosure, adherence to regulatory changes, strategic use of certifications, and effective communication. By embracing these principles, brands can exceed consumer expectations, leading the way for a more sustainable and responsible industry. This commitment to transparency and continuous improvement is crucial not only for environmental stewardship but also as a strategy for business growth and building consumer trust in an eco-conscious market.

Industry Highlights / Case Studies

As a consumer-facing industry, the success (or lack thereof) of the health and beauty sector’s sustainability initiatives can be heavily dependent on public perception. In this section, we’ll explore two case studies and see how action and perception can be linked.

We will look at two brands and their associated Social Responsibility Score , which measures consumers’ perception of the brand’s social and environmental performance and benchmarks it against the industry or competitive brands.

Ongoing tracking of consumer perception is key to understanding the full picture of performance, to identify if actions are resonating with consumers or if there is a gap that needs to be closed between sustainability performance and consumer perception.

The Honest Company

The Honest Company was built on the philosophy of providing safe and effective products. They have taken significant steps towards thoughtful ingredient and materials selection, as well as waste reduction. For example, their cartons are FSC certified and made from 100% recycled materials . They also provide consumer education on ways to reuse empty packaging, or properly disassemble and recycle them. The Honest Company’s Conscious Cleaning line is Green Seal certified, and reduces its environmental footprint through offering refillable cleaning products.

The Honest Company’s current Social Responsibility Score is 54, a leading score within the brands tracked in Health & Beauty today, with a 20% positive differential to the overall SRS score for Health & Beauty. The score is primarily driven by the older generations with potential risk and skepticism coming from Gen Z.

Despite their efforts and their generally positive perceptions amongst consumers, they have faced greenwashing criticism over the years, particularly around claims and product labeling. One instance of this was a lawsuit around the use of the word “natural” when referring to ingredients, despite products containing synthetic chemicals such as sodium lauryl sulfate (SLS). The Honest Company argued that they used plant-based versions of such ingredients, settled the lawsuit, and discontinued the use of the ingredients in question.

The Honest Company is a great example of how closely tied sustainability initiatives, transparent communications and consumer choice can be. In order to continue to drive sustainable improvements and realize consumers switching into their brand due to positive perceptions of their performance, the brand must maintain high standards for how they solve environmental challenges, how they tell their consumers about those initiatives and how they keep a pulse on and engage with consumers’ reactions.

Kiehl’s

Kiehl’s and its Mission Renewal initiative are dedicated to promoting circularity for their products and business operations. This includes activities such as switching production facilities to 100% renewable energy, and incorporating ingredients that can be replenished or regrown without an undue burden on the environment. Kiehl’s also has an in-store recycling program that incentivizes consumers to bring empty products to stores to ensure proper recycling of materials. To promote transparency, Kiehl’s has a Product Impact Labeling system that displays environmental impact scores.

Kiehl’s current Social Responsibility Score is 44, a slightly lagging score within the brands tracked in Health & Beauty today, with a -4% differential to the overall SRS score for Health & Beauty. The score is primarily driven by significantly lower perceptions amongst non-buyers and Gen Z.

Given the brand’s current perception position vs. the industry, Kiehl’s has the opportunity to improve their score by focusing on engagement with target consumer groups such as non-buyers and Gen Z. Research can be done at a more strategic level to understand if the current Kiehl’s sustainability initiatives align to what is most important to these consumer groups as well as at a more tactical level to identify which sustainability related messaging or packaging efforts will improve overall perceptions. By doing so, the brand has the opportunity to see a return on investment on their sustainability efforts through converting consumers to Kiehl’s from those they perceive to be less sustainable.

Conclusion

While it is clear that the health and beauty industry needs to take action to address its environmental impact, sustainability is a complex and non-linear journey. Investments must be made in order to make progress, and there are many factors to consider when identifying the business case and strategically assessing the biggest areas of impact. Proactively assessing climate risks, understanding consumer perspectives, and setting up the required processes to monitor and measure environmental impact and performance are important components to advancing any sustainability program.

In this last article, we wanted to shed light on the critical role of transparent sustainability claims and the impact they have within the industry. We hope that this series has provided valuable insights for professionals in the Health and Beauty sector and those looking to grow their brands sustainably. As the industry continues to evolve, embracing these sustainability challenges as opportunities will be key to success in an increasingly eco-conscious market.

ABOUT THE AUTHORS

Tori Chen is a Climate Analyst at CarbonBetter . She joined the company in June 2023, concentrating on analyzing climate data to assist clients in understanding and addressing their environmental impact.

Chrissy Brogan is a leader at Glow , who is responsible for managing clients within the US market. With her expertise in data, research, and consumer goods industries, she is dedicated to empowering businesses with actionable consumer insights for impactful decision-making.

ABOUT GLOW

Glow is a best-in-class on-demand consumer research platform, offering direct access to over 100 million consumers and 6 million B2B audiences globally. The platform empowers businesses to make better decisions by providing robust and affordable market research in real-time. Glow is utilized by brands, consultancies, market research agencies, and marketing agencies worldwide to gather actionable human insights. Their research-tech model delivers high-quality research three times faster than traditional methods, making survey design, deployment, analysis, and collaboration simple and efficient.

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ABOUT CARBONBETTER

We're a privately held firm focused on sustainability & decarbonization services, clean energy & carbon offset project consulting, and energy logistics services for Fortune 1000 companies, utilities, and other organizations that seek to make a positive impact. We're a creative and diverse team tackling the complex climate challenges that are changing our world by helping organizations transition to a net-zero future—accelerating the societal shifts that will save our planet.

We're proud to be the largest minority-owned business in Austin and the 7th largest privately-owned business headquartered in Austin.

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