The Estée Lauder Companies’ sustainability leader on racial justice, ‘sector-agnostic’ solutions
Mon, 07/27/2020 – 01:30
In the four years since Nancy Mahon assumed responsibility for CSR and sustainability strategy at The Estée Lauder Companies — she’s currently senior vice president of corporate citizenship and sustainability — her team has launched a series of new initiatives that are a “first” among her organization’s sector.
The list includes the company’s first virtual power purchase agreement for 22 megawatts, a move made in pursuit of its 2020 net-zero carbon emission goal. More recently, it energized on-site two solar arrays — one at its Melville, New York, campus that will produce 1,800 megawatt-hours of power annually, and a smaller one at the Aveda brand’s campus in Minnesota.
The New York installation will provide 100 percent of the electricity required for its Joseph H. Lauder office facility, while the Minnesota one will contribute up to 50 percent — the remainder of its power will come from utility-sourced wind power.
Moreover, Estée Lauder Companies also has declared its intention to make 75 percent to 100 percent of its packaging recyclable, refillable, reusable, recycled or recoverable by 2025 — the strategy will depend on the needs of individual brands.
As with many companies heavily dependent on nature for product ingredients, Estée Lauder Companies is developing biodiversity action plans and becoming far more attuned to its role in deforestation, afforestation and reforestation. And befitting its heavily female clientele, the company also funds initiatives focused on raising up girls and women, such as HERProject, a BSR initiative aimed at supporting low-income women in global supply chains.
I recently checked in with Mahon, one of this year’s 25 Badass Women in Sustainability, to get an update on how her priorities have shifted in light of the COVID-19 pandemic and the corporate awakening about systemic racism.
In mid-June, the company issued a series of sweeping new racial equity policies, including reaching “U.S. population parity” for Black employees at all levels of the company within five years, doubling the amount spent on sourcing ingredients, packaging materials and supplies from Black-owned businesses over the next three years, and committing $10 million over the next three years to support racial and social justice initiatives.
“Moving forward, I think where we are energized as a division — it’s become super clear — [is] on how core the work we do is to the business, not only the environmental side, but also the social side,” Mahon told me.
Following are excerpts from our conversations, edited for clarity and length.
Heather Clancy: How has the COVID-19 pandemic changed the focus of the Estée Lauder sustainability team, if at all?
Nancy Mahon: The clear disparate impacts of COVID-19 across countries and communities has really highlighted, and I think really illustrated, the intersection … of gender justice and social injustice, essentially, and racial injustice.
While before that intersectionality might have been a little obtuse for folks, it’s much clearer now that if you come from a community where there’s high rates of pollution, there’s a huge intersection between high rates of pollution, access to healthcare and health outcomes and COVID-19 outcomes.
The speed, the velocity and the ferocity of COVID-19 really highlighted that in a way that both unearthed that underlying reality and threw a spotlight on it. And also for consumers, [it] really allowed an opportunity to focus on what was most important in their lives around healthcare, around their families, and put an emphasis — really, I would say it hasn’t changed it, but it has really accelerated consumer interest, particularly — on supply chains, which is super interesting …
Similar to HIV, there is a question of what [we will] make of this moment and how will we as stewards of funds or stewards of companies or stewards of our families make a difference.
Internally, what it’s allowed us to do in a very agile, very energizing way is move very quickly across different functions to stand up programs that we were planning on setting up. For instance, we created an employee relief fund, and we had targeted that we were going to do it basically this fall. When [COVID-19} happened, we thought, “You know what? We have to do this right away.” We had incredible partnership from [human resources] and [information technology] and legal, and we started up right away, then globalized it.
We also created [an accelerated racial and social justice grants campaign] in a matter of a couple of weeks. In that way, we’ve had opportunities, which hopefully we’ve seized upon. Moving forward, I think where we are energized as a division — it’s become super clear — on how core the work we do is to the business, not only the environmental side, but also the social side.
Clancy: In a previous role, you were very closely involved with addressing the AIDS crisis, which is a humanitarian but also an economic crisis as well. How are you layering that perspective into the strategy as you’re mobilizing around COVID-19?
Mahon: If there is a positive to all of this, it’s that in terms of HIV, it took us well over two decades to have a deep discussion around structural racism or classism or the ways in which structures like a criminal justice system or a healthcare system basically disadvantage certain communities. It was always very hard to get at that discussion. It was much easier to fund street outreach or various research pieces or services than it was to really say, “We have to look at the way we act — either as consumers or as companies — and we might need to give something up, in addition to actually giving.” …
What also then is a big emphasis, understandably, is the movement around action, whether it be FDA approval of drugs or the acceleration of accessibility of healthcare or integration of HIV into other healthcare systems. And we’re seeing that very quickly now, the fact that out of the gate we’re funding a group like Equal Justice Initiative around structural racism and the criminal justice system is exciting.
There has been one difference: The acceleration of funding in the field. I was on a call [recently] and Darren Walker from Ford Foundation, who’s so eloquent, basically said that there is roughly a half a billion dollars now in the field of racial and social justice, whereas last year there was only 10 percent of that.
Mahon: Similar to HIV, there is a question of what [we will] make of this moment and how will we as stewards of funds or stewards of companies or stewards of our families make a difference. How will we change our behavior? The exciting moment that we have. The complexity, of course, is that it’s up against enormous economic loss, a lot of fear — which we always had in HIV, but we didn’t have the economic backdrop that we currently have overall to COVID-19. But there’s a lot of great people who are rowing in the same direction now. The question is how do we integrate ourselves? How do we sit in on committees that are focusing on office reopenings or how we’re doing with COVID? How do we integrate social impact and environmental impact into the way we do business every day, and how we as a luxury company show up in our communities?
One of our strongest brands, Aveda, is in Blaine, Minnesota, and we’ve had town halls and will continue to have town halls with our employees there, and how are they engaging … [and] thinking about how they can help? We spent a lot of time thinking about, well, what are virtual volunteering opportunities? What are the ways that we can basically help our employees channel their passion? We decided that we were going to allow, in our year one [of our response], our employees to give away most of the money.
We created [an internal] five-times matching campaign, and the groups we selected were Black Lives Matter Global Foundation Network, Equal Justice Initiative, Race Forward, NAACP Legal Defense Fund [and Educational Fund]. And we basically said to our employees: Every dollar that you give, [the company] will match it five times. We saw literally over 4,000 employee [donations]. We had a higher engagement rate than we’ve ever seen. People were posting on their social channels. We’ll be giving away [more than] $2.3 million through [company matches].
Clancy: Putting the long-term lens on, have there been any adjustments to your long-term corporate sustainability plans in this period? Have your priorities changed?
Mahon: I don’t think they changed. We have been fortunate in that our overall performance over the last I’d say two years in particular has really accelerated. We’re getting recognized by CDP or MSCI or ISS for that, which we find very gratifying. It feels like directionally we’re headed in the right way. And we certainly see in our brands, our consumers and our employees are basically saying, “We want more of this.”
While it hasn’t changed the direction, it’s definitely accelerated. For instance, our climate work. We hit [RE100] early [in the United States and Canada]. We’re looking to hit our science-based target early…
We are leaning in on our social impact work, which we’re historically very well-known for. We have integration with social justice. That was an area in our social impact work which we hadn’t done in the past. Many of us had done somewhat similar work. We leaned in and spoke with allies and the Ford Foundation and some of the great foundations that are doing this work. We are looking forward to being part of a broader community and trying to leverage our corporate microphone and our company values to play an even bigger role.
So I’d say [we’re moving] faster, perhaps more dimensionalized, and definitely [have a] better understanding not only how do we fund racial and social justice, but how do we as a business take concrete action around hiring and what our creative marketing looks like. So that’s very exciting, because what you don’t want as somebody in my job is to kind of be the nice people that aren’t really integrated into the business.
Clancy: Much of the work on renewable energy has really focused on electricity. Obviously, one of the toughest areas and processes to decarbonize is manufacturing. What solutions are you exploring for your production facilities?
Mahon: Waste and water and energy are all linked together. Within each facility, we have an incredible team that’s been focusing on this for quite some time, which is looking at how efficient is our water use? Is there a way to reduce water use? Have we maxed out solar? And are there internal solutions before we move to offsets that we can buy to reduce our energy use? And the answer there is yes.
It does vary somewhat by country, and by the state of the green energy and green finance in those countries. Also, as you know, the government plays an important role, and of course, being in the U.S., we’ve seen a real rollback in terms of incentivizing green practices …
What you don’t want as somebody in my job is to kind of be the nice people that aren’t really integrated into the business.
The best thing that we can do is help the market grow so there are more alternatives for companies like ours. We don’t have to do any convincing at this point. It’s really about the level of sophistication of what we can invest in, and also kind of a deeper discussion about offsets, the quality of offsets, and where do offsets get us.
Clancy: Can you share your vision for sustainable packaging? How do things like reuse or refillable containers fit into that?
Mahon: What we’re trying to do, really, is to give the brand [presidents] the most flexibility they can to get to sustainable packaging, and while at the same time reducing plastics and reducing carbon footprint. And that’s kind of a juggling act, frankly, because in many instances it involves added cost. We have a five-year glide path for every single brand. The ability to shift from plastic to glass is easier in skincare. Makeup innovation and sustainable packaging is a new frontier, and we’re really active in that. As you likely know, the size of makeup packaging, particularly samples, is too small — it falls through the filters in the MRFs — so it’s one of the areas that we’re really focusing on now, and really inviting innovation.
Clancy: You’re very excited about forestry and forest options as a means of carbon removal. Are there any particular things you’re looking at that you can mention? Can you elaborate?
Mahon: There’s been some companies that have basically supported, through grant funds, the creation and preservation of forests. And so we are looking at that. More directly, though, we would love to have direct investment in forestry as part of our climate portfolio, and an ability to create green energy. It gets somewhat complex, but obviously, we’re a beauty company, and we don’t want to be in the business of running forests …
Those are the discussions that we’re having now, and we’ve been looking at various things over the last couple of years. We don’t have anything specific. We’re basically in the due diligence phase on a couple of things. But because this moves so quickly, it doesn’t really make any sense to name names. But we would love, as a result of the article, to certainly invite both other companies who are looking at this [to talk about this and also have] a larger discussion about private/public partnerships around encouraging investment in forest preservation. We recently published a no deforestation policy, as many companies have, so there’s a nice intersectionality there between no deforestation and improving our climate component.
Clancy: I have two more questions. One is just a thread I hear often. What role will collaboration play in The Estée Lauder Companies’ strategy? What sorts of partnerships are you prioritizing?
Mahon: One of the exciting aspects of our company and our board … is we have folks who’ve worked in all different sectors. We have a lot of folks who’ve worked in government, like myself. We’ve worked in nonprofits. We’ve worked in for profits. So really, in order to move the ball down the field in a meaningful way, whether in social impact form or another form of impact, we have to basically look at this in a sector-agnostic way in which we really have company discussions about what we’re doing in climate.
What does the government bring to the table? OK, there’s tax incentives. They can give various breaks in various laws, regulatory, both the carrot and the stick. What does business bring? Well, business brings enormous amounts of business discipline of understanding markets, understanding consumer needs, understanding how to scale a solution, understanding how to, candidly, abandon a solution if it’s not selling. And then NGOs clearly bring a lot to the table in terms of advocacy.
As we’ve moved so rapidly in the for-profit sector being in favor of green energy and of strong climate solutions, the role I believe of NGOs will be more to be a bridge between government and I would say also private foundations [to come up with solutions].
For instance, in our VPPA, we will have excess green energy. Do we want to be in a position as a beauty company of selling energy, green energy? Or would we rather donate it? We’re having some conversations with the Rockefeller Foundation about, “Well, could we figure out a way where we could just donate it?” That’s where we really do need these cross-sector solutions.
Clancy: My last question is what do you feel is your most important priority as a chief sustainability officer in this moment?
Mahon: At the end of the day, the great pleasure and complexity and entrepreneurism of CSO jobs is that we don’t own the P&Ls generally of the issues we need to influence. So, I would say the biggest priority really is continuing to listen to our key stakeholders with empathy, and be as responsive as we can, to try to run alongside the train of the business …
A lot of what we do is obviously bring a substantive area of expertise, but also integrate as best as we can empathically to the business, and to drive value. At the end of the day, if we drive value for communities and our shareholders and our consumers, then we drive value for the business, and that is I think the great challenge … How do you sit at the table as a business person and understand and have empathy for the great demands being placed for instance on our retail team, and at the same time build climate solutions that help those retail teams, and don’t seem sort of pie in the sky and divorced from the rest of the business?
Ultimately, how do we leverage the passions and the interests of our employees and our consumers and now our investors, which is great. Because that creates an unlimited path.
This article was updated on July 27, 2020, at the request of The Estée Lauder Companies to correct Mahon’s tenure in her current role, and provide more detail about some of the included commitments discussed during the interview. Where changes have been made to her verbatim comments, they are noted with brackets.