Blue gold: Why tackling water challenges is a key lever for mitigating impact and risk in the cosmetics and personal care industry

In brief:

• The world’s water is in a perilous state, with demand outstripping supply.
• The cosmetics and personal care sector is particularly at risk given the amount of water used in both production and sourcing, and the use phase of products.
• Prioritizing action to address water quality and quantity issues — both upstream and downstream — is critical for building long-term resilience, protecting human rights to water and sanitation, avoiding reputational risk and maintaining a positive connection with consumers. 
• Water use can be addressed at the product design and development phase, focusing on product innovation that encourages consumers to use less water.
• Tackling water challenges demands a new business mindset and ambitious target setting, integrating water stewardship with efforts to address wider environmental impacts. After all, water plays a vital role in mitigating and adapting to the effects of climate change, as well as preventing biodiversity loss.

Freshwater is a precious natural resource: it’s the backbone of life and economic and social stability. But it’s one that we often take for granted. 

Though global water demand already outstrips supply, demand is expected to increase an additional 20-30% above current levels of use in the next two decades. According to a report from BCG and WWF, 46% of global GDP will be coming from high water risk regions by 2050. In the short-term, two-thirds of the world’s population is expected to face water shortages in the next three years. What’s more, humanity is having a profound impact on the water cycle. In April 2022, the world surpassed the planetary boundary for green water (rainfall, soil moisture and evaporation), which is critical to ecological, atmospheric and biogeochemical processes.  

Both highly dependent on water and a major driver of water-related impacts, the cosmetics and personal care industry has a critical role — and a vested interest — in delivering a water secure future. To reduce consumption, limit dependence and curb pollution, while meeting the needs of consumers, cosmetics and personal care businesses need to prioritize sound water resource management from formulation to manufacturing and beyond.

Impact and risk go hand in hand

Not only do cosmetics and personal care companies have a crucial role to play in addressing water challenges, they also have a serious vested interest in doing so — impact and risk go hand in hand. 

Water is a key element in the formulation and manufacturing of products. It’s needed at all stages of a product’s life cycle: not only is it the core of most formulas (accounting for up to ⅔ of the volume of a formula for many creams, lotions, shower gels and shampoos), but it’s also required to grow raw materials, in processing and manufacturing, sanitation and packaging production. Consumers also need water to use many of these products.  There’s no doubt that momentum is gathering, with more and more brands making commitments and setting goals to tackle water challenges. CDP data shows that private sector water impact disclosure has grown exponentially in the last decade, with an 85% increase in the number of companies disclosing in the last five years.

However, water continues to be a blind spot for many companies, with too few brands taking sufficient action to reduce their dependencies and impacts. The same CDP analysis shows that, in 2022, 55% of respondents failed to disclose a single water-related opportunity, despite being relevant to their sector.

This is likely due, at least in part, to the fact that water is a readily available and inexpensive resource, which has created the perception that water is cheap, expendable and unlimited. But with current pressures putting the world’s water resources at risk, this is a dangerous mindset that could put the future vitality of the industry at risk. 

Water challenges (including changes in availability and quality of water) driven by climate change (e.g., changes in temperature and precipitation patterns and an increase in the variability of extreme hydrological phenomena) and the unsustainable management of water resources (consumption and pollution), both by cosmetics and personal care companies and linked industries, such as agriculture, will have long-term implications for the sector.

Already, an increase in the occurrence of droughts is impacting the beauty industry, leaving many companies searching for ways to reduce their water footprints and ease pressure on dwindling water supplies resulting from climate change, overconsumption and pollution.  Prioritizing water management to reduce the sector’s impact and dependence on water is critical. Ambitious and robust water stewardship strategies can help companies increase value chain resilience, contribute to global water security and accelerate their progress on other sustainability goals too, such as climate change and biodiversity. Those that fail to address water should brace themselves for disruption and financial loss. The cost of taking action is estimated to be around 18 times less than doing nothing.

Focusing action where it matters most

To effectively tackle water-related impacts and risks, cosmetics and personal care companies need to focus efforts where they’ll have the greatest impact: upstream, downstream and product end of life.  

Upstream

Much of a product’s impacts are determined during the development and design phase. As such, this is where companies have a major opportunity to optimize water use and prevent pollution, taking consumption patterns and increased pressure on water resources across the value chain into account. This requires considering not only product formulas (including how to improve their biodegradability), but also raw materials sourcing, manufacturing processes (including heating and cooling processes for chemical processes, drying, sterilization and distillation), packaging and distribution.

Cosmetics already draws heavily on science to enhance product quality and safety. Using it to design sustainable products is a natural evolution.

Downstream

The water needed by consumers to use and enjoy their cosmetics and personal care products is often overlooked when it comes to addressing water access, quality and availability. Yet, given the large amount of water needed for rinse-off products, such as shampoos, the way products are actually used could well be a company’s largest area of impact. Suntan creams and body washes are also a major contributor to water pollution in many parts of the world too.

Much of this impact can be addressed during the design phase, accounting for the resources needed in the use phase, including water and energy. A leave-on shampoo (a smart alternative to rinse-off shampoo), for example, might have a similar water impact in the production phase. But its water footprint will be significantly lower when use-phase metrics are considered. 

Similarly, make-up products that can be removed with reusable makeup remover pads, rather than rinsed off with water, will have a much lower overall water footprint. Fast-lathering shower gels will demand much less water be used too. 

End of life

Cosmetic and personal care products continue to impact the environment even after their use, with rinse-off products and formulas entering watercourses and adding to pollution. Very little is known about the impact of chemical pollution on ecosystems, especially in regions with little regulation. But the impact of products on water quality is becoming an acute regulatory and reputational issue in many parts of the world.

During the formulation phase, brands have a chance to consider the end-of-life of a product’s ingredients. Again, the water footprint in the production and processing phase might be minute, but some ingredients can cause significant impacts in wastewater systems because of their ecotoxicity — which is why it’s critical to approach sustainability in a holistic way.

Microbeads, commonly used in exfoliators, are well publicized agitators of environmentalists and ocean-lovers everywhere. Oxybenzone, a chemical used for sun protection, can cause damage to coral reefs, even at concentrations as low as the equivalent of one drop of water in 6.5 Olympic-sized swimming pools. (It is, of course, worth noting that climate change is the biggest threat to coral reefs.) Zinc Pyrithione, the active ingredient in anti-dandruff shampoo, is another potentially ecotoxic ingredient.

Taking ingredient ecotoxicity into account is more important in some regions than others, depending on the state of the water treatment infrastructure.

Tackling water as a strategic business priority

It’s time for cosmetics and personal care companies to turn the tide on water risk. Below, we’ve outlined the key steps brands should take to respond to the challenges that lie ahead. It’s important to note that water strategies need to be set in coordination with climate, land and biodiversity targets to maximize results and avoid transfer of impacts.

Foster water stewardship and understand your risks 

For companies to achieve socially equitable, environmentally sustainable and economically beneficial use of water for everyone, they must start by assessing and quantifying potential water risk factors.

These risks will be tied to a host of local factors, including regional water scarcity, regulation and site-specific water quantity and quality issues. Cosmetics and personal care brands should start by assessing and estimating their value-chain-wide impacts and dependencies on water. Conduct a comprehensive water footprint and risk assessments using tools, such as WWF’s Water Risk Filter, Aqueduct and Water Risk Monetizer, to gather data and develop a list of potential issue areas and locations for target setting. The Science Based Targets Network (SBTN) also offers guidance to support corporate assessments. 

Set ambitious goals through context-based water targets

The data you have gathered can be used to inform strategy planning and goal setting. By using established water-related frameworks, such as the science-based targets for water methodology by SBTN, you can set ambitious science-based targets. Align your ambitions to what is necessary and establish KPIs to help you measure progress. Prepare to disclose data too as transparency is increasingly necessary to address reputational and regulatory risks.

Work collectively on water stewardship challenges

It’s crucial that cosmetics and personal care brands optimize water consumption in their operations and reduce the water footprint per finished product. They must also ensure that water quality is conserved and maintained across all sites and from the sourcing of raw materials. 

Water stewardship drives innovation within your own walls. But it should not stop there. Establishing sustainable, equitable policies and investments across water catchment areas will help to motivate collaboration among suppliers and local stakeholders.

Innovate with new technologies 

By considering the entire lifecycle of a product, companies have a chance to reinvent how products are made, used and disposed of for the benefit of water tables, communities and ecosystems everywhere. For example, powder cleansers, exfoliators and face masks avoid the need for water as a product filler, thereby reducing weight and waste. Active ingredients, like vitamin C deteriorate over time when mixed with water. But if they are maintained in powder form, their purity can be preserved. Water-free products don’t require preservatives either, which are one of the main causes of skin irritation.

Shift towards an integrated approach

Businesses that are serious about operating in alignment with nature won’t be able to do so by acting on climate alone. Water plays a vital role in mitigating and adapting to the effects of climate change, as well as preventing biodiversity loss and supporting human health, dignity and well-being. And it’s time for cosmetics and personal care  companies to adopt ambitious strategies and accelerate action to respond to the water challenges.

Once targets are set, companies should prepare to transform the mindset of their organizations to align with targets, and with the UN SDGs, respecting the human rights to water and sanitation. In collaboration with key stakeholders such as investors, customers, sites, suppliers and communities, develop clear water action plans to direct decision making to support your set targets. You can use the volumetric water benefit accounting to implement your water stewardship activities, measure their value, and increase the likelihood of generating social, economic, and environmental benefits by solving shared water challenges.

The state of our water has reached a critical point. By deploying new business models, innovations, operational initiatives, and location-relevant strategies that will reduce water use and pollution, you have an opportunity to become the water stewards our world desperately needs. By taking action now, the cosmetics and personal care sector will be better resourced to respond, adapt, and thrive in a rapidly changing world.