Like the chief digital officer, the role of chief sustainability officer at large corporations is something that was virtually unheard of two decades ago.
Now, the executive role is increasingly common at the world’s largest corporations, and its parameters are constantly evolving as companies set the standards for it. It also frequently comes under scrutiny from both sides of the political aisle, with left-wing critics on the lookout for greenwashing and right-wing pundits and politicians against the idea that companies should take on any sort of ESG (environmental, social, governance) efforts at all.
In the beauty industry, L’Oréal Group appointed lawyer and human rights activist Alexandra Palt as its chief sustainability officer in 2012. Now the group’s global chief corporate social responsibility and sustainability officer, she officially joined the C-suite in 2019 after previously being described by CEO Jean-Paul Agon as an “internal activist” in the company. Recently, Palt sat down with Glossy to discuss how her role has changed over the past decade, how ESG fits into the company’s business model and where consumer demand is at for sustainability.
How has your role evolved, in terms of its place in the company?
“That is very important, because a lot of companies in the U.S. and all around the world, are still saying that ESG is ‘just one issue that we add to the other issues.’ In the maturity [process for] companies, that is really the beginning of it, because that means you look at how you are compliant, how you manage risk and how you impact society, but you do not transform your business model. And that’s normal when companies start to work on the issue, because it’s quite difficult to think, ‘We have to transform everything we’ve done and do very differently if we want to be aligned with planetary boundaries, if we want to create value for societies,’ because creating value is not just financial or economic value. In the moment, very often, when companies create economic value, they destroy other value.
So that is a whole mindset shift [for] the whole business model. In the beginning, very often, [ESG is] like an add-on, then it becomes a little bit more important strategically, because now investors ask for a lot. And then when a company starts really to get mature on the issue, it becomes part of business. It is understood that you have to really transform the model. And that is what happened at L’Oreal.
We were very lucky because we had a visionary CEO. Jean Paul Agon said in 2013, ‘The 21st century is going to be about digital, tech and sustainability.’ He took on the issue directly very early. In 2015, I started to report directly to him. He was always really supportive in a way by saying, ‘I want an internal activist. I want somebody who pushes the borders, who understands that this has to be tackled differently and who disturbs also a little bit.’ And now with the years and with everything that is happening around us, I think at L’Oréal, people have really understood how strategic and central it is. And so in 2019, I joined the C-suite.
Now, it is integrated in everything — every manager’s performance evaluation; every country, every brand has its KPIs; it is completely part of how we see our business. And there is still a long way ahead, because we also have to transform the whole model. And sometimes the world is not ready to transform. Consumers are not ready to transform. The solutions are not there to transform. So the way is long, but everybody is aware of what it will take to get there.”
What was that “internal activist” role like when you first started?
“Let’s face it: We all live in an economic system where we were brought up with the idea that there are infinite resources, infinite consumption, infinite waste.
There was a lot of work to raise awareness to make people understand that this is not just some other crisis, but it’s something that is really very essential to the survival of the human species. It was important to make them understand that everybody has the responsibility to act.
So, of course, in the beginning, there was not a lot of interest. It was very helpful as a French company to have the Paris Agreement. In France, [everyone was] talking about climate change in 2015-2016. … And so, in [recent] years, there has been an enormous mindset shift. That ‘activist’ part [of the role], in the last few years, really became very small.”
What is the messaging to investors on all this? How do you explain that this creates shareholder value?
“I would like to understand how people think that they will be able to create shareholder value without doing sustainability. I turn it back to people: How do you imagine that you create value in societies in an environment that is in breakdown, where you do not have access to resources and where you have risks that will disrupt your businesses completely? … I do think that investors — the smarter ones — have understood that.”
Are there challenges in getting the business world to take on this longer-term thinking, when they’re thinking quarter-to-quarter?
“At L’Oréal, we have a huge advantage. We still have family shareholders who want this company to be there in 100 years, because it’s already been here for more than 100 years.
And so this model of really transforming our model, really taking into account people’s needs, of defending living wages, defending value creation, for society, thinking long term — all this pays off, and it will in the future even more. I know that, especially in the U.S., it’s quarter-to-quarter. It’s difficult to get out of that model. But if people don’t get out of that model, there is no value creation at all that’s going to happen in the future.”
How do you reach your carbon-neutral goals? Do you use offsets?
“L’Oréal has the policy of no offsets. Of course, everybody knows that if you want to be carbon-neutral in 2050, it will not work without offsets because the solutions are not there. But for the moment, we haven’t done any offsetting because we think that [using offsets] won’t make our teams look so intensively for new solutions.”
Across the brand roster — when you’re looking at the luxury division versus the mass division, for example — is one area more of a challenge, in terms of meeting these goals?
“There are different challenges because, for example, for a lot of luxury consumers, packaging is important. Packaging is a huge footprint in luxury. People are not always aware that it’s not better because it’s heavier or bigger.
The issue that is true, for all consumers, is that they say they want sustainability. But when it comes to their concrete action, they do not change their behavior so easily.
That will come to a tipping point, and then people will be ready to do what is needed. … For us, the consumer is an important partner in this. And we have to put the right products on the market, at the right price and with the right desirability.”
What do you see as the role of L’Oréal Group in changing consumer demand?
“We want to influence or at least propose something else. For example, nobody asks for refills, but 22% of our perfumes will have a proposal of refill. That means that we push it.”
This interview was edited and condensed.