Climate Change Data

Environmental Metrics

ESG Focus Areas

• Responsible Sourcing
• Efficient Operations
• Product, Package and Service Innovation
• Social Impact
• Employee Wellbeing

Environmental Achievements

• 32.1% reduction in Scope 1 and Scope 2 greenhouse gas emissions per unit of revenue in FY2015 from a FY2008 baseline
• 87% recycling rate in FY15 for company-owned manufacturing and distribution facilities

Social Achievements

• Raised over $6 million for breast cancer awareness and research through the BCA Campaign
• Raised $49 million through the M∙A∙C AIDS Fund's VIVA GLAM Campaign
• 42,857 employee volunteer hours globally in FY15

Governance Achievements

• 100% rating on the Human Rights Campaign’s 2016 Corporate Equality Index

Climate Goals & Targets

Environmental Challenges

• Increased emissions due to business growth in retail operations
• Managing water resources effectively across global operations
• Reducing waste in affiliate distribution centers

Mitigation Strategies

• Implementing energy efficiency projects in retail stores
• Conducting water footprint analysis and upgrading HVAC equipment
• Conducting gap assessments at affiliate distribution centers to improve waste management

Supply Chain Management

Supplier Audits: 46 independent, third-party supplier social compliance audits conducted in FY15

Responsible Procurement

• Supplier Code of Conduct, Sustainability Scorecards, Sustainability Award

Climate-Related Risks & Opportunities

Physical Risks

• Rising energy demands and costs, other impacts from climate disruption

Transition Risks

• Not disclosed

Opportunities

• Reducing dependence on fossil fuel-derived plastic packaging

Reporting Standards

Frameworks Used: GRI

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Culture
• Social Investments
• Sustainable Design Practices

Environmental Achievements

• Reduced carbon emissions intensity by 36.3%
• Achieved 87.8% diverted or recycled waste materials
• Developed new strategies to reduce use of virgin and oil/gas derived plastics

Social Achievements

• Achieved a perfect score on the 2017 Corporate Equality Index
• Breast Cancer Campaign raised $7.3M exceeding its goal by 20%
• ELC Good Works (U.S.) employee matching gifts and volunteerism platform delivered a 33% engagement rate
• M∙A∙C Cosmetics raised more than $33 million for the M∙A∙C AIDS Fund

Governance Achievements

• Progress on Sustainability is reported to the Audit Committee of the Board of Directors

Climate Goals & Targets

Environmental Challenges

• Meeting the 90% waste diversion goal
• Achieving net-zero carbon emissions by 2020

Mitigation Strategies

• Implementing energy conservation initiatives
• Investing in clean and renewable energy
• Purchasing carbon offsets
• Improving waste management and water usage practices

Supply Chain Management

Responsible Procurement

• Sustainable palm oil sourcing; addressing child labor in mica mining industry

Climate-Related Risks & Opportunities

Awards & Recognition

• 2017 Sustainable Beauty Awards Winner, Sustainability Leadership: Aveda
• 2017 Beauty ID Awards Winner, Package Innovation, Sustainability: Aveda/Tulasara series
• 2017 ADF & PCD New York Innovation Awards Winner, Packaging Sustainability Innovation for Skin Care: Aveda Tulasara Wedding Masque
• 2016 Printing Industry of Mid-West Star of Excellence Awards Certificate of Merit, Print Excellence and Environmentally Sound Materials: Aveda Travel Retail Cartons and Aveda Daily Light Guard Carton
• 100% Score on the Human Rights Campaign Foundation’s 2017 Corporate Equality Index
• Included in Working Mother Media’s 2017 Diversity Best Practices Inclusion Index

Environmental Metrics

ESG Focus Areas

• Climate Change
• Sustainability
• Packaging
• Supply Chain
• Renewable Energy

Environmental Achievements

• Reduced both emissions intensity and absolute emissions from owned and operated facilities. Achieved 39% progress towards Net Zero goal in FY19 through renewable energy utility contracts, renewable energy certificates, and on-site solar.
• In FY19, approved a $2.1M investment to add solar panels to our Lachen campus. In addition, spent approximately $1.4M on energy efficiency (lighting, compressed air, HVAC) in FY19.

Social Achievements

• Implemented a new process to monitor existing supplier performance via the EcoVadis tool, rolled out to more than 150 suppliers in FY19.
• Continued to develop an ethical framework for sourcing from biodiverse areas.

Governance Achievements

• Board-level oversight of climate-related issues. Executive Chairman and CEO directly oversee an internal Sustainability committee responsible for setting citizenship and sustainability policies, including those pertaining to climate change.

Climate Goals & Targets

Environmental Challenges

• Increased indirect (operating) costs due to carbon pricing mechanisms.
• Decreased revenues due to reduced production capacity from water stress.
• Increased capital expenditures due to increased severity and frequency of extreme weather events.
• Reputational risk associated with being identified as a laggard by not meeting the IPCC’s guidelines for Greenhouse Gas emissions reductions.

Mitigation Strategies

• Aiming to decarbonize our energy supply by installing solar panels and committing to achieve RE100 by the end of 2020.
• Constructing a new chiller system to eliminate groundwater use at the Melville campus.
• Purchasing insurance for facilities to protect against extreme weather events.
• Setting Science Based Targets (in line with the IPCC's guidelines) and ambitious targets to purchase 100% of our electricity from renewable sources by the end of 2020.

Supply Chain Management

Supplier Audits: 85% of suppliers by number, 48% of total procurement spend

Responsible Procurement

• Supplier Code of Conduct
• EcoVadis assessments

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events (hurricanes, typhoons, floods)
• Water stress

Transition Risks

• Carbon pricing mechanisms
• Regulatory changes

Opportunities

• Reduced indirect (operating) costs from using lower-emission sources of energy
• Reduced direct costs from more efficient buildings and production processes

Reporting Standards

Frameworks Used: GRI, SASB, TCFD

Certifications: ISO 14001

Environmental Metrics

ESG Focus Areas

• Climate Change
• Sustainability
• Responsible Sourcing
• Circular Economy

Environmental Achievements

• Achieved Net Zero carbon emissions for direct operations in FY20 through renewable energy, energy efficiency, and carbon offsets.
• Set new Science Based Targets covering Scopes 1, 2, and 3 emissions.
• Sourced 100% renewable electricity in 2020 (RE100 target achieved).

Social Achievements

• Implemented a new process to monitor existing supplier performance via the EcoVadis tool, rolled out to over 460 suppliers.
• Increased the number of suppliers with verified Science Based Targets.

Governance Achievements

• Board-level oversight of climate-related issues through the Board Chair, CEO, and Nominating and Governance Committee.
• Established a Net Zero Steering Committee to drive emissions reduction strategy and govern investments.

Climate Goals & Targets

Environmental Challenges

• Increased indirect costs due to carbon pricing mechanisms.
• Decreased revenues due to reduced production capacity from water stress.
• Increased capital expenditures due to acute physical risks (extreme weather events).

Mitigation Strategies

• Investing in energy efficiency and renewable energy initiatives (solar panels, renewable electricity contracts).
• Investigating alternative cooling systems to reduce reliance on groundwater at Melville plant.
• Developing business continuity plans to address potential disruption from climate change impacts.
• Monitoring potential changes in laws, regulations, and enforcement relevant to the industry.

Supply Chain Management

Supplier Audits: Over 460 suppliers using EcoVadis

Responsible Procurement

• Code of Conduct
• EcoVadis assessments
• CDP Supply Chain engagement

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events
• Water stress
• Changes in precipitation patterns

Transition Risks

• Carbon pricing mechanisms
• Regulatory changes

Opportunities

• Reduced indirect costs from lower-emission energy sources
• Reduced direct costs from energy efficiency improvements
• Cost savings from more efficient production and distribution processes

Reporting Standards

Frameworks Used: TCFD, Science Based Targets initiative

Certifications: ISO 14001

Environmental Metrics

ESG Focus Areas

• Energy and Emissions
• Waste
• Employee Safety
• Responsible Sourcing
• Packaging
• Ingredient Transparency/Green Chemistry
• Social Investments and Employee Engagement
• Inclusion and Diversity
• Learning and Development

Environmental Achievements

• Achieved Net Zero carbon emissions and sourced 100% renewable electricity globally for direct operations.
• Achieved zero industrial waste-to-landfill for 100% of global manufacturing, distribution, and innovation sites.
• Set Science Based Targets (SBTs) for reducing Scope 1, 2, and 3 greenhouse gas (GHG) emissions.

Social Achievements

• Programs and grants positively impacted the lives of more than 20 million individuals worldwide over the past two years.
• 76% of brands focused on an environmental or social cause.
• Launched the $10 million ELC Cares Fund to provide financial relief to employees impacted by COVID-19.
• Racial equity commitments announced, focusing on U.S. operations.

Governance Achievements

• Updated Supplier Code of Conduct to reflect new social, environmental, and governance trends.
• Executive compensation linked to ESG goals.

Climate Goals & Targets

Environmental Challenges

• COVID-19 pandemic and its impacts on business operations and communities.
• Systemic racial injustice.
• Complex supply chains and potential impacts on people and the environment.
• Balancing sustainable packaging with product protection and luxury consumer experience.

Mitigation Strategies

• Established the ELC Cares Employee Relief Fund and made significant donations to support COVID-19 relief efforts.
• Announced a series of commitments to address racial equity.
• Implemented robust responsible sourcing practices, including the use of blockchain technology to trace vanilla supply chains.
• Developed Sustainable Packaging Guidelines and launched initiatives to reduce tertiary packaging and increase the use of recycled materials.

Supply Chain Management

Supplier Audits: 67 third-party on-site audits in fiscal 2020

Responsible Procurement

• Supplier Code of Conduct
• Supplier Sustainability Guidelines
• EcoVadis supplier assessment

Climate-Related Risks & Opportunities

Physical Risks

• Changing precipitation patterns

Transition Risks

• Regulatory changes increasing the cost of energy

Opportunities

• Energy efficiency projects and renewable energy investments

Reporting Standards

Frameworks Used: GRI Standards: Core option, TCFD, SASB Household and Personal Products Standard

Certifications: ISO 14001

Third-party Assurance: Apex Companies, LLC

UN Sustainable Development Goals

• SDG 3
• SDG 5
• SDG 10
• SDG 12
• SDG 13

Initiatives contributing to gender equality, reduced inequalities, responsible consumption and production, climate action, and good health and well-being.

Sustainable Products & Innovation

• Origins GinZing™ Into the Glow Brightening Serum (90% naturally derived)

Awards & Recognition

• EcoVadis Sustainable Procurement Leadership Awards 2020 (Best Internal Stakeholder Engagement)

Environmental Metrics

ESG Focus Areas

• Climate Change and Greenhouse Gas (GHG) Emissions
• Employee Health and Safety
• Inclusion, Diversity & Equity
• Product Quality and Safety (including ingredient transparency)
• Product and Packaging Design (including green chemistry and plastics)

Environmental Achievements

• 71% of packaging is now recyclable, refillable, reusable, recycled, or recoverable
• Achieved carbon neutrality across Scope 1 and Scope 2 greenhouse gas (GHG) emissions for the fourth consecutive year
• Sourced 100% renewable electricity globally for direct operations for the fourth consecutive year
• 51% reduction in Scope 1 and 2 emissions relative to the 2018 baseline

Social Achievements

• Expanded ELC Good Works platform to additional global markets, enabling further opportunities for employee giving and volunteerism
• Spent $162 million with women-owned businesses in fiscal 2023
• ELC continues to be the largest corporate donor to BCRF, funding research grants worldwide. In fiscal 2023, the ELC Charitable Foundation (ELCCF) made a $15 million commitment over five years that will fund a new BCRF research initiative.
• Globally, ELC had a total incident rate of 0.20 in fiscal 2023

Governance Achievements

• Appointed the Company’s first Chief Sustainability Officer (CSO)
• Incorporated specific goals tied to the Company’s broader social impact and sustainability strategy into the identified business goals for top executives

Climate Goals & Targets

Environmental Challenges

• Scope 3 GHG emissions reduction
• Accurately measuring Scope 3 GHG emissions
• Achieving 95% of palm-based ingredients certified sustainable from RSPO physical supply chains due to market factors
• Decreasing the total incident rate to 0.15 by the end of calendar year 2025

Mitigation Strategies

• Developing a Climate Transition Plan outlining reduction strategy
• Strengthening supplier relationships and investing in innovative solutions
• Monitoring market trends, communicating with suppliers, and adjusting purchasing
• Implementing a risk-based approach to safety and compliance, including hazard risk assessments, culture surveys, and employee focus groups

Supply Chain Management

Supplier Audits: 97/year

Responsible Procurement

• Supplier Code of Conduct
• Supplier Sustainability Guidelines
• EcoVadis assessments
• CDP Supply Chain questionnaire
• Supplier Diversity program

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather
• Flooding

Transition Risks

• Regulatory changes
• Market shifts

Opportunities

• Development of energy-efficient products
• Renewable energy investments

Reporting Standards

Frameworks Used: GRI, SASB, TCFD

Certifications: ISO 14001

Third-party Assurance: PricewaterhouseCoopers LLP

UN Sustainable Development Goals

• Goal 3
• Goal 5
• Goal 6
• Goal 10
• Goal 12
• Goal 13
• Goal 15

The company's initiatives contribute to these goals through various programs and strategies outlined in the report.

Sustainable Products & Innovation

• Aveda Botanical Repair hair care collection
• Estée Lauder Nutritious Skincare collection
• La Mer Moisturizing Soft Cream

Awards & Recognition

• Best Portfolio Improvement Award from EcoVadis
• CDP Supplier Engagement Leaderboard
• 75 Safety Awards from the National Safety Council

Environmental Metrics

ESG Focus Areas

• Climate Change and Greenhouse Gas (GHG) Emissions
• Employee Health and Safety
• Inclusion, Diversity & Equity
• Product Quality and Safety (including ingredient transparency)
• Product and Packaging Design (including green chemistry and plastics)
• Sourcing
• Nature and biodiversity
• Human rights
• Water

Environmental Achievements

• Surpassed water withdrawal reduction targets (23% reduction vs. 20% target)
• Achieved carbon neutrality across Scope 1 and 2 GHG emissions for the fifth consecutive year
• Sourced 100% renewable electricity globally for direct operations for the fifth consecutive year
• Published first corporate ingredient glossary
• Reached palm oil sustainability targets ahead of schedule (95% RSPO certified)

Social Achievements

• Met global pay equity commitment, including Point-of-Sale employees
• Women representation at SVP+ level reached 49.7%
• Continued to be the largest corporate donor to the Breast Cancer Research Foundation® (BCRF)
• ELC employees contributed $24.2 million to nonprofits through ELC’s social impact and sustainability engagement program

Governance Achievements

• Incorporated ESG goals into executive compensation decisions
• Published an Enterprise Modern Slavery statement
• Launched modern slavery prevention training for employees

Climate Goals & Targets

Environmental Challenges

• Emissions increased due to temporary generators at a new manufacturing facility in Japan
• Industry-wide challenges with PCR cost and availability
• Temporary decline in FSC performance due to changes in calculation methodology
• Unforeseen operational challenges with waste process facilities used by external partners resulting in 99.8% waste diversion from landfill instead of 100%

Mitigation Strategies

• Awaiting completion of electrical substation at Japan facility
• Continued progress towards enhanced PCR goal despite challenges
• Addressing methodology changes for FSC calculation
• Working to resolve operational challenges with external waste partners

Supply Chain Management

Supplier Audits: 124

Responsible Procurement

• Supplier Code of Conduct
• Human Rights Policy
• Modern Slavery Statement
• Timber Action Plan
• NDPE Policy
• RSPO Certification
• EcoVadis assessments
• CDP Supply Chain participation

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather
• Flooding

Transition Risks

• Regulatory changes
• Market shifts

Opportunities

• Development of energy-efficient products

Reporting Standards

Frameworks Used: GRI Standards, SASB, TCFD, TNFD

Certifications: ISO 14001, LEED, WELL, RSPO, FSC

Third-party Assurance: PricewaterhouseCoopers LLP

UN Sustainable Development Goals

• Goal 3: Good Health and Well-being
• Goal 5: Gender equality
• Goal 6: Clean water and sanitation
• Goal 8: Decent work and economic growth
• Goal 10: Reduced inequalities
• Goal 12: Responsible consumption and production
• Goal 13: Climate action
• Goal 15: Life on land

Initiatives mapped to relevant SDGs throughout the report.

Sustainable Products & Innovation

• Products formulated with greater emphasis on naturally derived ingredients
• Refilllable packaging

Awards & Recognition

• Inclusion on Dow Jones Sustainability Index for North America
• Human Rights Campaign’s ‘Best Place to Work for LGBTQ+ Equality’
• Newsweek’s ‘America’s Most Responsible Companies’
• Fortune’s ‘World’s Most Admired Companies’
• 3BL Media’s ‘100 Best Corporate Citizens’
• CDP ratings of A in Climate Change, A- in Forests, Palm Oil, and Water Security
• Fast Company’s list of the World’s Most Innovative Companies in corporate social responsibility