Perfume Industry ESG Thematic Report, 2023

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

The perfume industry's impact on the environment and society is directly or indirectly influenced by ESG issues. The issues are mainly related to the components that make up the final product. As we continue our analysis, we will cover various perfume-related topics.

Perfume is part of the personal care and cosmetic industry, which has direct and indirect effects on both the environment and human health. Brands/organizations and many innovative alternatives have come across to tackle such issues. Speaking about the impact if to be told in a summarized way starting from the components like the chemicals, resources that are sourced and extracted, the packaging contributes to the environment and health impact. When considering the ESG factors for the perfume industry it's mostly the environmental and social factors involved, and which are impacted.

Detailed Analysis of Impacts Caused By Perfume

According to the above reference to the effects, the first and foremost impact is the use of chemicals. These chemicals are toxic by nature and can have further implications on health, causing allergies and asthma. In addition, the materials used, such as musk, have adverse effects on the environment since they do not degrade readily. Further, this substance attaches itself to the fatty tissues of aquatic organisms and then accumulates throughout the entire food chain. Moreover, wastewater treatment also does not effectively remove these substances from water, which negatively impacts the marine ecosystem. Due to their volatile nature, many fragrances break down into other compounds when released into the air, and these compounds often have more serious environmental and health implications than the fragrance compound itself.

As we all know, perfume bottles are made up of glass, which is further made from sand, although it's a natural resource. It does have impacts on the environment. The high percentage of requirements in glass manufacturing causes the depletion of sand supply. This leads to multiple consequences as the microorganisms that live on the sand are impacted. Additionally, the depletion increases the risk of erosion and flood damage. Furthermore, the production process of glass also causes several adverse effects as glass is made from natural resources. During the manufacturing process, non-renewable resources are used, contributing to the emission of damaging gases into the air that cause air pollution and further affect the ecosystem.

ESG Trend

Increasing personal grooming trends, as well as the growing trend for youth-oriented and exotic fragrances, contribute to the market growth of perfumes around the globe. Moreover, product diversification is attracting a growing number of consumers.

Sustainable Perfume And Initiatives By Brands In Perfume Industry

Sustainability is the next big thing in the market as people are becoming more aware of the environmental and health impact that is caused by using traditional perfumes. In the case of a sustainable option for perfume, the manufacturing methods used during production do not result in any environmental impact. The manufacturing is done in such a way that it can be recycled, replaced, or repurposed later, further reducing waste. Perfumes that are sustainable ensure the quality of the product, as well as the impact it has on the planet.

The increasing trend towards sustainability has led brands to transition and produce a product that is more environmentally friendly. Leading fragrance houses use organic alcohol made from beets, one of the many alternatives adopted by the companies. Other techniques include packaging the product in refillable bottles made from glass that has been recycled post-consumer usage. Another thing that the companies adopted was the use of recycled glass bottles. In addition to the recyclability of the glass, a sustainable biodegradable cap was also developed, which is a crucial component of perfume.

Furthermore, one of the innovations that cause less impact on the ecosystem is the transition towards going totally vegan and using plant-based alcohol as well as 97% naturally sourced ingredients. Additionally, the product packaging is made from 100% biodegradable and recyclable materials and printed with vegetable-based inks. These are some of the innovative techniques implemented by globally recognized brands.

ESG Challenges

It can be challenging to source ingredients that are truly sustainable and cruelty-free. The ingredients can be expensive, which makes it difficult to use them in a product at a reasonable price point. Additionally, the companies that market their products as sustainable may not actually be that transparent about how they define being sustainable. Furthermore, another risk area of concern is the supply chain, which is complicated and multi-layered making it difficult to trace the origin of materials used in the product. This can be due to the complexity of the supply chain or simply because it is challenging to find out where those materials were sourced from.

Growth of the Perfume Market

The global perfume market size was valued at USD 31.4 billion in 2018 and is expected to expand at a CAGR of 3.9% from 2019 to 2025. The market growth is attributed to the growing trend of personal grooming, coupled with increasing demand for luxury and exotic fragrances. In addition, the global market is being driven by increasing consumer spending on premium and luxury fragrances due to the growing income levels and the rising standard of living. Furthermore, the research also highlights key aspects of the perfume market.

Key Companies in this theme

    • Avon Products Inc

    • Natura Cosmticos SA

    • Chanel SA

    • Coty Inc

    • LVMH

    • L’Oreal Groupe

    • Estee Lauder

    • Elizabeth Arden, Inc

    • Puig SL

Scope of the Perfume Industry Sector 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 the Perfume Industry Sector ESG Thematic Report

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

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

    • Identifying ESG risks and opportunities to business among leading players in the perfume industry Obtaining a clear and relevant understanding of company actions, progress, and impact and find opportunities for investment