9 tips to go green with natural ingredients for cosmetics

European consumers are becoming more aware of the environmental impact of the cosmetics products they use. This has increased the demand for and interest in sustainable beauty products. As consumers expect more information about a product’s impact on the planet, plant and producer, industry players are needing more information about production, processing, logistics and packaging. This study highlights how you can prepare to make your business more environmentally friendly whilst ensuring that it will remain competitive and be attractive to European buyers.

1. Check implications of green legislation and requirements on your business

In the EU, several policies are in place to promote sustainable, green production. The main policy is the EU Green Deal. This plan for a climate-neutral Europe includes a roadmap containing actions aimed at reducing greenhouse gas emissions by at least 55% by 2030. The EU Green Deal further aims to preserve and restore ecosystems and biodiversity, to achieve zero pollution of the environment and to implement the concept of circular economy. This concept is based on the ‘3 R’s’ (Reuse, Reduce, Recycle) for waste, as well as on the use of renewable resources and recovery.

As outlined in Figure 1 below, the scope of the EU Green Deal is broad, and not all of its provisions are directly mandatory for all EU importers. This is because the broad policy framework sets out a vision with clear objectives for achieving a more sustainable and climate-friendly Europe. Some regulations related to the European Green Deal may nevertheless be relevant for SMEs operating within the natural ingredients sector. First, the proposal for a law (‘directive’) on Corporate Sustainability Due Diligence throughout global supply chains. According to this proposal, larger European companies will be required to identify and, where necessary, prevent or mitigate adverse impacts on human rights and on the environment throughout their supply chains.

Another EU regulation aims to ensure that products imported to the EU have not contributed to deforestation or forest degradation (EU Deforestation Regulation, EUDR). Within the natural ingredients sector for cosmetics, the EUDR is of relevance for palm oil, cocoa, coffee and their derivatives. In these supply chains, EU importers will be required to document the origin of their products and demonstrate that they are not related to deforestation. In addition, for natural cosmetic ingredients that are not covered by the EUDR, clients from Europe may ask about origins and production conditions within the context of due diligence for ecological sustainability. It is therefore best to prepare to respond to such inquiries.

These regulations will oblige importers to assess the production conditions of suppliers from outside the EU. This will increase the need for accountability, traceability and transparency. As an exporter, you may be asked to provide information on what you are doing to protect the environment (for social safeguards, see Tips to become a socially responsible exporter) and to adapt to certain requirements when doing business with European clients.

Figure 1: The European Green Deal

Source: The European Commission, 2020

Tips:

• Read the Union for Ethical Biotrade’s Biodiversity Barometer (Biodiversity Reckoning 2022) report to learn about consumer opinions concerning biodiversity awareness within the context of cosmetics.
• View the Preferred by Nature’s webinar, which explains what you need to know about the new EU Regulation on Deforestation.
• Speak with your import partners about their expectations about due diligence and responding to the demands of the EU Green Deal, as well as about how you can jointly prepare and benefit.
• Read our study to see how the EU Green Deal could impact your business. 

2. Collaborate on location with your producer to achieve green production

To begin your journey as a sustainable supplier of natural ingredients for cosmetics, you must assess the environmental conditions at the very beginning of your supply chain. This is what your international clients require, as they often lack information on what is possible in the production of natural ingredients for cosmetics. The area in which you can make the greatest difference is at the beginning of the supply chain: at the production level. At this point, you often possess far greater knowledge than European companies and consumers.

As an exporter with the closest relationship to the producer, you play a key role within the supply chain in terms of promoting sustainable harvesting and production methods. For example, you could contact producers and communicate the new requirements of the EU Green Deal. You could also discuss the options for sustainable harvesting and the market opportunities, as well as the challenges that producers might envision with regard to meeting them. At the same time, you should discuss with your European client the possible improvements that could be made for environmentally friendly production and how they could be achieved together.

Although this may seem like a lot of work, demonstrating awareness of environmental sustainability requirements could place your company in an excellent position. It could help you become more attractive to European companies that are interested in sourcing sustainably cultivated natural ingredients for cosmetics.

Note that demonstrating awareness and discussing these themes is not enough. It may be necessary for you to change your current purchasing practices (for example, by reducing your dependence on local distributors and increasing your engagement with the producers at the level of production). In addition to providing access to new green markets, close collaboration with producers offers several further benefits for your business

The following are several ways in which exporters could benefit from working closely with producers:

1. Creating your story of going green
   Working closely with producers allows you to develop feasible concepts for improving production for ecological sustainability. This knowledge forms the basis of your story about going green
2. Better quality control
   Working closely with producers makes it easier to ensure that the production meets the given quality standard. This reduces material waste.
3. Cost savings
   Working together to improve production processes can lead to better use of raw material, higher productivity and cost savings for both parties.
4. Faster delivery
   Working closely with producers can reduce delivery times and facilitate meeting tight deadlines.
5. Better knowledge of competition
   Closer collaboration could place you in a better position to compete with other local traders who may be trading in the same product as you.
6. Flexibility for adaptive management
   Knowing what happens on the ground makes it easier for exporters to adapt to changing production conditions and react to new market requirements.

One example of an export company working well with producer communities is SD Fores, a company trading in Siam Benzoin gum from Laos. After experiencing several years of purchasing through local traders, SD Fores decided to engage directly with the producers. They invested in re-establishing direct partnership with the production villages, offering training on quality standards and direct purchase. These efforts improved quality and yielded benefits for both parties. The fully traceable production generated new business partnerships with European clients, with whom they tested pilot experiences for the production of Benzoin gum in regenerative agriculture systems. Producers have traditionally used slash-and-burn techniques to prepare the land, resulting in negative impacts on soil and biodiversity. This method has been replaced with the new concept of growing Benzoin trees in agroforestry with coffee, which allows soil and biodiversity to recover. In addition to improving various ecological aspects, therefore, the collaboration has enhanced the producer’s economic opportunities through product diversification.

Tips:

• Prepare for a field trip. Go to the areas where your raw material is being produced, and meet with producers. Work alongside them as equal partners, and ask them to show you the production process, including how the plants are grown, as well as the energy sources and other inputs used.
• Encourage producers to reflect on challenges associated with environmentally friendly production and ideas for improving. Demonstrate that you will communicate options and problem areas to your clients abroad in order to find joint solutions that benefit all stakeholders.
• Communicate transparently about your objectives for improving product quality, including the social and environmental aspects for enhanced market options with shared benefits for all actors. This is important, as some actors in the supply chain may not want to share information about where or how the production takes place, for fear of being passed over in the supply chain.

3. Offer traceable and deforestation-free products

Classic agriculture products (such as fruits, nuts and oilseeds) can be destructive to forests, and they are one of the main drivers of deforestation. As EU regulations on environmental sustainability become stricter, European importers will want to know the origins of your products and their impact on forests. They will ask you for this information, and you must thus be able to prove the origins of the products you are selling.

To this end, you could set up your own traceability system: an instrument that allows you to prove the origins of your products and the conditions under which they were produced. This kind of system makes it possible to share how your business engages with producers to improve quality and how the production contributes to maintaining natural vegetation and forests, adaptation to climate change and biodiversity conservation.

There are many different ways to set up a traceability system. If you are not experienced in this, do not make it too complicated. It is sufficient to design a system that is easy to apply with your suppliers and that documents where the products are grown and who is involved. It is helpful to assign a unique code to each producer and annotate the volume participation in each batch, which also receives its own code. These batch codes can be used during further handling. Although traceability can be documented by hand on paper, it is much more efficient to enter the data into digital files.

Major advantages with regard to exporting to the EU can be achieved by enriching your traceability system with the geographic location of the production areas. This allows you to prove that your production is located within the previously established agriculture frontier and free of any deforestation or forest degradation. It could be that production is taking place close to a protected area and you might be contributing to the conservation of natural biodiversity by preserving the value of natural vegetation and keeping it within a buffer zone. These positive features of your business are all in line with going green, and you should share this information with your clients.

Tips:

• Consider running some trials in the field to arrive at the right traceability system for your company. This is an important step, as each product and supply chain has its own challenges. Keep in mind that there is no fixed system, and it is common for exporters to adapt their systems according to initial field trials.
• Invest time and money in training your suppliers in the operation of the traceability system. You could even ask your European clients to share the costs of setting up the system.
• Read this blog about traceability in the cosmetics industry.
• Learn how to set up a traceability system in natural ingredients supply chains by reading this article by the Initiative for Sustainable Agricultural Supply Chains.
• See our study on how to become more socially responsible to learn how to integrate smallholder producers into your traceability system.

4. Differentiate yourself from competition

As sustainability becomes mainstream in the European market, buyers are always looking for new approaches to sustainability. This also sets them apart from their competitors. Working with suppliers who are truly committed to sustainable practices and are able to communicate their unique approaches may translate into a competitive advantage for your company.

Explore concepts like ‘nature positive’ and ‘regenerative production’

Consider exploring concepts like ‘nature positive’, ‘regenerative production’ and ‘net zero’. Stated simply, these concepts refer to halting and reversing the loss of biodiversity, increasing biomass and reducing the use of fossil energy in the production system. If you are exporting a natural ingredient that is harvested wild or obtained from cultivated trees or shrubs, you may already be contributing to these concepts without even knowing it.

Develop a clear picture of production conditions

It is advisable to develop a clear picture of the production conditions (cultivation, harvesting and processing) associated with your natural ingredients, as well as of features that could potentially qualify them as green products. If you have a raw material that offers a specific environmental advantage, you could take advantage of this feature and highlight it in your production story. Several examples of ways in which European cosmetic brands and retailers are highlighting the sustainability aspects of their natural ingredients in their promotional materials are displayed in Table 1.

One example of a company that has worked on its sustainability proposition is the Pelere Group, a Ugandan exporter of shea butter. The company worked closely with female harvesters and communities to improve the harvesting process of shea nuts. As a result, farmers have refocused their activities from environmentally destructive practices (burning shea trees for charcoal) to the sustainable harvesting of trees and the long-term conservation of the forest. To this end, the company communicated that the trees should be preserved in order to ensure income opportunities for their children and future generations. The farmers are now operating sustainably and preserving the forest in the process.

Table 1: Promotion of the environmental features of natural ingredients for cosmetics by various companies.

Natural ingredient	Plant part used	Examples of companies including environmental features in their marketing campaigns	Promotional feature relating to ecological sustainability
Jojoba oil	Seed of a shrub grown in arid regions	Weleda (Germany) Jojoba Desert	Biodynamic afforestation in arid regions Trees require very little water and bring life to the desert Creation of habitat for biodiversity: birds, insects and mammals Soil regeneration through litter accumulation High oil-extraction rate: maximum utility
Shea butter	Seed of a tree growing in dry regions	OKA Cosmetics (Burkina Faso)	Carbon sink: ‘Shea butter as a key pro-poor carbon-fixing engine in west Africa’ Soil improvement and conservation of local hydrological regimen Conservation of natural forest and tree biodiversity, as trees are more productive when surrounding vegetation is maintained (for pollination) Habitat creation for natural fauna
Frankincense oil and myrrh	Resin/gum of small trees	Arbor Oils of Africa (Kenya), which has a detailed understanding of the habitat, biodiversity and production system	Harvested wild harvested in natural, open, semi-desert forests Promotion of a sustainable harvest system to ensure the long-term conservation of trees and livelihood for local communities Carbon sink and soil conservation Habitat for birds, insects and mammals
Illipe butter	Tree seed from tropical rainforest	Forestwise (Indonesia/Netherlands) ‘#Stop Deforestation – choose rainforest value’	Harvested wild from an endemic tree of a natural tropical rainforest Alternative to the forest-destructive production of palm oil in Borneo, which poses the greatest threat to the biodiversity of rich local forests Conservation of endemic tree species, unique biodiversity, soil and natural habitat Carbon sink

Source: ProFound and Christine Woda, 2023

Regenerative agriculture

Regenerative agriculture aims to increase carbon storage, soil health, water holding capacity, crop resilience and nutrient density.  

Practices associated with regenerative agriculture include:

• No-till or minimum tillage. Application of cover crops, crop rotations, compost and animal manure to increase soil fertility
• Reduction of chemical inputs and implementation of measures for water and soil conservation (horizontal cropping to avoid erosion)
• Avoidance of slash-and-burn practices and shifting to permanent production systems through intercropping, mixed plantations and agroforestry systems
• Increased genetic biodiversity of the target species
• Ensuring that wild-harvesting systems are managed in line with sustainable harvest quota.
• Preserving spaces within the production area for biodiversity conservation, and allowing spontaneous vegetation
• Promotion of well-managed grazing practices that stimulate plant growth, soil carbon deposits and the overall productivity of pastures and grazing lands
• Training producers in rural waste management and exploring options for reducing greenhouse gas emissions

Consider including these practices in the production of your ingredients.

Tips:

• Become familiar with the details of the production system for the natural ingredients you export, and map out their features in relation to sustainable, nature-positive production.
• Participate in the Lush Spring Prize programme, which celebrates and promotes projects that promote social and environmental regeneration, and particularly those focused on sustainable agriculture and food production.
• Remember that, even if the production systems for your natural cosmetic ingredients are already contributing to biodiversity and climate conservation, you can always do better. For example, consider the possibility of promoting regenerative and nature-positive production amongst your producers. 

5. Use a green technology for processing

Going green is not limited to the production level. It also concerns the post-harvest processing of natural ingredients. Green technologies use energy and resources more efficiently, produce less waste and reduce the ecological footprint of the final product. For natural cosmetics ingredients, typical processing steps include the drying of seeds or other plant parts, the extraction of fat and the cleaning of gums and resins. Processing is often done in a traditional way, based on the use of fuel wood as an energy source and chemicals for extraction.  

You should consider implementing more sustainable processing practices. As a first step, examine your energy source and options for saving energy through solar-drying techniques. In addition, assess your water-consumption level and options for completely eliminating water from your processing. Many European companies are currently developing ‘waterless products’.

It is important to analyse these steps together with your client, as cosmetics companies depend on homogenous quality. Any change in the processing could potentially affect the quality of the final product.

One example of a company utilising a green processing method is Crozier Green Business, a local trader of Styrax gum in Honduras. Traditionally, producers heated the gum on an open fire to clean and filter it. The gum often got burnt, however, impacting its smell and subsequent quality for the perfumery industry. Together with the export company, Polco, Crozier Green Business developed a simple method for cold-filtering the gum. With this method, the gum is now warmed in the sun and then filtered. This reduces the use of fuel wood and increases the quality of the product.

Another example of a company utilising a green processing method is Forestwise, a producer and exporter of illipe butter, which is obtained from the seeds of a tree in Indonesia. Traditionally, the seeds were smoke-dried on an open fire. In the process, plant fat was contaminated by carcinogenic substances, and the producers (mainly women) were exposed to smoke. The company trained producers in the solar drying methods for seeds. The elimination of firewood reduced the producer’s workload, improved health conditions and contributing to the company’s climate-mitigation efforts. The solar-dried product is now free of any contamination, and it can be exported as organic. Forestwise is now able to position itself in higher market segments with better prices for producers.  

Tips:

• Aim to improve your understanding of how waste is processed and various options for using waste as compost or fertiliser. You could highlight such efforts in your marketing story.
• Develop all improvements for green technology in partnership with your client. This will ensure that the final product continues to meet your client’s quality standards, and it could help to increase the product quality. Your client may have useful knowledge on technical improvements that you could implement. Brainstorm together.
• Collaborate with European companies. Many are willing to contribute to Sustainable Development Goal 17: ‘Partnerships for sustainable development’.

6. Green your logistics: Avoid plastic-packaging and apply sustainable transport solutions

Plastic pollution is another important global challenge, and plastic cosmetics packaging is a notorious part of the problem. Some European governments (for example, Spain) have started to impose taxes on the import of plastic products as a way of combatting the use of plastics in products. In addition, European consumers are becoming more concerned about this, and they are increasingly looking for products that have been produced in an environmentally friendly way. According to a survey conducted by McKinsey and Company, 70% of all consumers in North America and Europe would be willing to pay more for sustainably packaged products.

Although consumers do not see how raw materials are exported, your clients in Europe will appreciate your efforts in relation to sustainable packaging. For this reason, it would be wise to consider options for using renewable, biodegradable and recyclable packaging. These options include innovative fibres, such as algae, bamboo, wood-based paper and carton-based materials. Although glass and metal may also work, the weight of these materials may offset efforts to reduce shipping weight to save fuel in transports.

Large European companies are also taking steps in this regard, and they are incorporating their efforts into their Corporate Social Responsibility (CSR) policies. A global leader in the flavour and fragrance industry, the  Firmenich company has developed circular solutions to ensure that their packaging can be reused and recycled. These goals are captured in their Environmental, Social & Governance (ESG) ambitions (see Figure 2 for more information). Although you may not have the same financial power as many European companies, try to discuss your ideas with your clients in Europe. They might be willing to join forces with you to reduce plastic packaging and waste along the supply chain.

Taking care to ensure sustainable transport solutions is an important further step in the process of going green and reducing the carbon footprint of the supply chain. When possible, choose sea freight over air freight. According to the European Environment Agency (EEA), the carbon emissions of shipping are approximately 30 times lower than those of air transport for the same distance travelled. Sea freight is also cost-effective and reliable, in addition to having fewer restrictions on the transport of hazardous materials. You could also partner with other exporters and share containers or work closely with importers to investigate the possibility of bundling multiple raw materials into a single shipment. Given that the International Maritime Organization (IMO) has set targets to reduce the carbon intensity of international shipping by at least 40% by 2030, green logistics should be a priority for any exporter.

Figure 2: Firmenich’s ESG Ambitions 2025–2030

Source: Firmenich, 2023

Tips:

• Consider whether the use of specific metal drums that can be cleaned and reused would be interesting for your company. This could be particularly useful if you are exporting hazardous and volatile oils for the cosmetics industry.
• Encourage your clients to implement long-term planning to avoid last-minute purchases that would require air freight services to arrive in time. Despite its sustainability advantages, sea freight does take time.
• Consult with your client about any changes in packaging to make sure that they will correspond to their expectations and make processing and handling easier.

7. Implement circular-economy practices and upcycling within your business

The EU Green Deal places strong emphasis on circular economy as a key component of efforts to achieve a carbon-neutral economy by2050. In March 2020, the EU introduced the Circular Economy Action Plan, which outlines how it intends to support businesses in the implementation of circular business models. The aforementioned company Firmenich (Switzerland), one of the EU’s largest flavour and fragrance companies, has set a goal to reach zero waste-to-landfill at all manufacturing and non-manufacturing locations by 2050. As stated in Firmenich’s sustainability report, ‘the way to a low-carbon economy is through sustainable production patterns that produce less waste’.

It is important to be aware of how Europe’s largest and most influential cosmetics companies are deciding to approach the issue of environmental sustainability. As an exporter, you can take steps to optimise waste streams and show your commitment. If you do this, your business is likely to be more attractive to European businesses, who will continue to increase their financial contributions to green projects.

One of the most important trends in recent years is the concept of ‘circular economy’, which refers to efforts aimed at minimising waste and maximising the utilisation of resources. By implementing circular economy concepts within your export business, you could reduce the negative impact of your operations on the environment, whilst using waste material from the production process as a source of clean energy in your business. Put simply, circular economy practices encourage businesses to use waste as a resource, instead of disposing of it.

Another emerging concept, ‘upcycling’, refers to taking by-products or waste materials and turning them into new, higher-value products, instead of disposing of them. Upcycling can generate additional revenue for farmers and export businesses. In Europe, the use of materials derived from food waste in cosmetics is showing growth. For example, the German cosmetic brand C!RCLY uses upcycled ingredients for their products. For example, their lip balm is made using upcycled coffee oil.

Figure 3: Upcycled Certification can be used for upcycled food ingredients and products

Source: Upcycled, 2023

Upcycling is closely related to having an adequate waste management system. The following are several steps you could take to implement a waste management system in your company:

1. Conduct a waste audit: The results could provide insight into the amount and type of waste generated by your company. The audit could be done at the production level.
2. Develop a waste management plan based on the audit: It should set out your objectives, goals and actions aimed at minimising waste generation and maximising recycling.
3. Educate your employees and producers on your waste management policies: They should be aware of your plan.
4. Implement waste reduction initiatives: Examples include reducing packaging and reusing materials.
5. Set up a recycling programme: This will make it possible to separate recyclable materials from waste.

These measures could help to reduce your environmental footprint, whilst demonstrating your commitment to sustainable business practices. There are many different ways to use waste from production processes. Try to make the most of the options available. 

Rugofarm, a Burundian producer and exporter of patchouli, have expanded their operations and are now harvesting eucalyptus. Although the wood is used as charcoal for cooking, the leaves often go unused and are disposed of. Rugofarm are currently working with 1,500 families to extract essential oil from the eucalyptus, thereby turning a typical waste product into a high-value by-product. This provides extra income for producers, their families and the export ventures of Rugofarm.

8. Check options for financial support in going green

To support your efforts in going green, there are many opportunities for finding organisations or private investors who would be willing to provide financial support. Many governments offer grants to businesses involved in exporting natural ingredients for cosmetics. These funds are provided for a variety of activities, including product development and supply chain management. For example, the International Climate Initiative (IKI) offers grants to businesses in developing countries who acting to mitigate and adapt to climate change, as well as to conserve forests and biodiversity. 

The following are several other initiatives that you could consider for financial support:

• Oiko Credit provides loans to organisations active in financial inclusion, agriculture and renewable energy in Africa, Asia and Latin America.
• Root Capital provides credit and capacity-building to small and growing agricultural businesses around the globe.
• Impact Finance provides loans to companies focusing on five sub-categories: small-scale producers, agro-forestry, financial inclusion, circular industry and integrated farming.
• Consult the database of The Global Environment Facility (GEF), a fund that provides grants and financing opportunities for country programmes and, in some cases, for individual SMEs.
• Explore EU programmes to support countries in the area of climate, environment and energy.
• Contact your local Agriculture Development Bank. They might offer loans for climate finance, as well as for equipment purchase and other capital needs you might have.

9. Bring all these tips together and offer your clients a unique selling point (USP)

European cosmetics companies usually purchase their raw materials from large international traders, who have the advantage of access to nearly limitless stock. In most cases, however, these traders do not trace product origins, conditions of production or impact on the environment. You can make a difference in this regard by offering your clients a fully traceable supply chain and the story about the production of your products.

Opening up the ‘black box’ about production background could be a decisive turning point for your business, which could become your USP. Tell your story in your own unique way, and share it with your clients, possibly using Figure 4 as a reference. The figure shows how the L’OCCITANE Group prioritise activities based on their own vision of CSR, as well as the demands that their stakeholders have for them. The closer the dot is to the upper right corner, the more important this element is for L’OCCITANE and their stakeholders. You could use this diagram to help make strategic changes within your business, in order to align more closely to the main goals of cosmetics companies in the European market.

Elements to include in your story could relate to how you are engaged in green and ecological production, your contributions to the conservation of biodiversity, soil and water, and how you support the improvement of local livelihoods. Explain where your products are sourced, who is involved, under what conditions and how your interventions contribute to sustainability. For this to work, it is crucial to document these aspects and provide evidence of them to your clients.  

You can further incorporate your efforts to minimise waste and to avoid plastic packaging and greenhouse gas emission into your marketing strategy and company manifesto. This is consistent with the focus of many current marketing campaigns in the European cosmetics sector with regard to green production, nature-positive and regenerative farming, zero-waste production, palm-oil free products and low-emission transport.

Figure 4: Prioritisation of activities for L’OCCITANE

Source: L’OCCITANE, ESG Report 2022

Canaan Palestine, a producer and exporter of a range of cosmetics ingredients, are working with more than 1,000 family farms across 43 different villages. They engage with these communities year-round, and they are committed to building long-term partnerships based on the principles of fair trade, which ensure transparency, fair payment, fair prices and purchase guarantees from their producers. They further ensure the application of regenerative agricultural practices to bring about ‘reciprocity between people, plants, animals, insects and microorganisms’. Watch the video on their website to learn how they communicate their operations through storytelling marketing techniques.

This study was carried out on behalf of CBI by Christine Woda and ProFound – Advisers In Development.

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