Nail Polish Industry ESG Thematic Report, 2023

Environmental, Social and Governance (ESG) in the Nail Polish 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 which are focused on Nail polish industry have been disclosing ESG data and strategies.

This segment has both social and environmental impact, plastic waste out of glasses has been one of the major concerns for investors as it has been one of major causes for plastic and micro plastic pollution. Recently, it said 5.13 million women in the US had used nail polish and had the highest demand in the cosmetic market. Companies have also focused on Organic nail polish as well as nail polish remover as a part of their innovation strategy. Nail polish also has both positive and negative side effects or health impact considering both organic and synthetic nail polishes. Considering material sourcing for nail polish, the primary ingredient is nitrocellulose which is a flammable and explosive ingredient used to make dynamite. Plasticizers are also additives along with color dyes which are mixed in mixing rollers. Raw materials extraction and sustainable sourcing has been one of the main concerns for this segment. The United Nations’ Sustainable Development Goals (UN SDGs) is a comprehensive framework that helps companies in this market obtain a perspective on the impact of their products and operations on ESG parameters.

ESG Trends

As mentioned, main trends for this market are falling under both environmental and social impact, starting off with responsible material sourcing;( SDG 12- Responsible consumption and production) nitrocellulose which is highly explosive, and flammable have been extracted from wood pulp. This material is highly unstable and should be carefully handled while the mixing process is being done. As it is one of oldest non-biodegradable thermoplastic alongside plasticizers and additives it causes various health issues (SDG 3- Health and Wellbeing) like dermatitis, skin disorders and inhalation issues from chemicals like acetone. Nail polish along with its glass bottles have been a significant part in plastic as well as micro plastic pollution. The companies have focused on organic nail polish removers and cuticle oils to reduce impact of fungus or bacterial infection. Glitter Nail polish can harm aquatic animals (SDG 14- Life below water) once they end up in water bodies as the aluminum component of glitter is a neurotoxin which can cause harm to aquatic life.

ESG Challenges

Main challenges are mentioned above, attaining a circular business model along with biodegradable products have been huge challenges for the nail polish industry. As the chemicals also pose serious health threats, many consumers are considering eliminating nail polish from their lifestyle. Nitrocellulose, Neurotoxins, formaldehyde, toluene, acetone have been some of main notable chemical compounds which do pose threat for health, as it has impact ranging from mild damages like dermatitis, skin irritation to serious damage as it carcinogenic in nature. One of the major regulatory bodies is Food and Drugs Association (FDA), which regulates and oversees nail product safety and toxic chemical use and this body has strong and well formulated policies for nail care products. It has been challenging for companies to meet FDA requirements and in the past they have received warning letters from various governing bodies like FDA.

Growth of the Nail Polish Market

To summarize, Nail polish market can sustain if they focus on product innovation supporting safer or better product quality which doesn’t pose any impact to the planet. Integrating a circular business model instead of a linear model can ensure a sustainable business growth. The market has been valued at 14.3 billion USD in 2021 and is expected to have a CAGR of 6.8% by 2030 from 2022.

Key Companies in this theme

    • Unilever

    • Estée Lauder

    • Shiseido

    • Revlon

    • Sally Hansen

    • Wella Operations US LLC (O.P.I.)

    • Cosnova GmbH (Essence)

    • NOTE Cosmetique

    • L'Oréal S.A.

    • Coty Inc

Scope of Nail Polish Industry ESG Thematic Report

    • Macro-economic analysis of the Nail polish industry from an ESG perspective, analyzing the legal aspects, policy, and innovation landscape of the sector

    • Industry Benchmarking, including a detailed SWOT Analysis based on GVR’s proprietary ESG Framework

    • ESG score disclosure including overall industry disclosure score and disclosure score benchmarking

    • Ranking of companies in the industry theme based on GVR’s proprietary ESG disclosure scoring relative to their position

    • Detailed analysis of individual companies discussing their ESG disclosure and impact.

Key Benefits of Nail Polish Industry ESG Thematic Report

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

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

    • Identifying ESG risks and opportunities to business among leading players in the Nail polish

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