Aromatherapy Industry ESG Thematic Report, 2023

Environmental, Social and Governance (ESG) in the Aromatherapy Industry

Integrating ESG into decision making and business strategies contributes to an effective due diligence and a better investment decision for the company as well as relevant stakeholders. Companies operating in the aroma therapy market have been discussing ESG data for a while.

This market theme has been growing in demand due to women and millennials alike, because of its wide range of positive health impact including treatment for cardiovascular disorders, respiratory disorders, skin disorders, cold and cough, anxiety, wound and acne. The companies have policies which are in place to ensure as well as prohibiting use of toxic chemicals. In addition to this, companies are focusing on more sustainable and responsible sourcing procedures such that the product doesn’t harm both the planet and people. To reduce carbon footprint and eliminate waste, sustainable packaging which are eco friendly, and recyclable has also been a key focus for companies operating in this sector.

Aromatherapy products have experienced a surge during COVID-19 as it was the source of redemption from cough and cold as well as improving lung healing from the perspective of some people. Moreover, there has been a trend in shift to organic and natural products in the past few years thereby creating a positive /negative impact in terms of the United Nations Sustainable Development Goals (UN SDGs).

ESG Trends

There are both Social as well as Environmental impact for Aromatherapy, as mentioned it has a positive health impact in terms of the UNSDGs (SDG 3- Health and Wellbeing). Generally, aroma therapy improves both physical and mental wellbeing of users, studies also show that it could alleviate side effects of chemotherapy, improve digestion, boost immunity, and offer treatment for migraine and insomnia. Generally, essential oils include clary sage, cypress, lemongrass, lavender, rosemary, ginger, mandarin, eucalyptus etc. which are cultivated and used for aromatherapy as per national association for holistic aromatherapy (NAHA).

As natural products are being used, there has been assurance that no toxic chemicals have been used. Also many companies are focusing on organic farming (SDG 13 climate action) with careful harvesting and crop rotation. One of the main foci is sustainable and a responsible sourcing (SDG 12- Responsible Consumption and production) procedure that has been offered by this sector. One of the companies had made a statement to not sell or use endangered species like Rosewood and Spikenard in accordance with the International Union for Conservation of Nature (IUCN). In addition to this, companies are engaging in local community farming as well as better harvesting practices that minimizes carbon footprint as well as contributes to inclusion (SDG 10 – Reduced minorities) Sustainable packaging has been an additional observation as majority of companies are in transition to recyclable, sustainable packages especially glass bottles or paper.

ESG Challenges

Even though there are huge positive health impacts, not everyone can use all essential oils. Some essential oil can include side effects like rashes, asthma attacks, headaches, allergic reactions, skin irritation etc. It is not advisable to people who are having asthma, epilepsy, high blood pressure, hay fever, eczema, and psoriasis. Consulting dermatologists is necessary, prior to any such treatment. In terms of affordability, it varies with region, and it can be not affordable for many weak sections of society thereby creating a challenge for companies in terms of achieving UN SDG 10 (Reduced Inequalities).  Consultation can cost up to $100 for an initial consultation and around $50 for follow up. Synthetic oils are also a prevailing market, even though companies have mentioned natural and organic product usage, this offers potential array of side effects with a bigger torsion when used thereby negatively impacts UN SDG 3: Good Health and Wellbeing.

Growth of the Aromatherapy Market

The segment is experiencing a surge due to urbanization, lifestyle pattern and preference for consumers as it is a complementary treatment procedure. In addition to this, consumers are preferring more natural and organic products which are having more positive health benefits, which in turn enhances thearomatherapy market cap. Revenue generated in 2020 was estimated to be 1.6 billion USD and it is expected to have a CAGR of 11.6%.  

Key Companies in this theme

    • doTERRA

    • Young Living Essential Oils

    • Edens Garden

    • Mountain Rose Herbs

    • Plant Therapy Essential Oils

    • Rocky Mountain Oils, LLC

    • FLORIHANA

Scope of Aromatherapy Industry ESG Thematic Report

    • Macro-economic and ESG-variable analysis of the industry, including regulatory, policy, and innovation landscape

    • Key insights on infrastructure developments and ESG issues affecting the theme

    • Identify key initiatives and challenges within the industry

    • Identify ESG leaders within the industry

    • Understand key initiatives and the impact of companies within the sector to fuel an informed decision-making process.

    • Analysis of industry activities based on multi-media sources, including significant controversies and market sentiment

Key Benefits of Aromatherapy Industry ESG Thematic Report

    • Developing a comprehensive understanding of macro-economic, Policies & Regulations and innovations affecting the market, globally

    • Key insights into environmental developments and ESG issues affecting the theme

    • Identifying ESG risks and opportunities to business among leading players in the aromatherapy industry

    • Obtaining a clear and relevant understanding of company actions, progress, and impact and find opportunities for investment into the sector