Sourcing of raw materials is of fundamental importance to Oriflame. As a Company that prides itself on the use of natural ingredients, the Company is taking action to better manage natural resources and significantly lower its ecological footprint.
Palm oil: We will continue to pursue our goal of purchasing all our palm oil from certified sustainable sources. During 2010, this goal was approached through the purchase of Green Palm credits.
Paper: By 2015, 75 percent of the wood fibre used in our publications and our paper and board packaging will come from credible certified sources and/or be of recycled origin. By 2020, our goal is 100 percent.
Animal Welfare: We will continue to pursue our policy of never using ingredients in our cosmetic formulations derived from dead animals or which cause harm or suffering to animals.
Packaging: By the end of 2011, all newly specified cosmetic display cartons and leaflets for global products will be FSC certified.
Climate change is one of the most serious issues facing the world. During the coming years, it will have a growing impact on society in general and on businesses, including Oriflame. Our business operates in some of the regions of the world most exposed to climate risk. Our operations impact on the world’s climate in a multitude of ways; through manufacturing, transportation and travel. We measure and report on our greenhouse gas emissions annually via the Carbon Disclosure Project and have built an understanding of where our greatest impacts lie. We are now taking action to reduce our carbon footprint through a number of initiatives across the business.
Greenhouse Gas Emissions: We will reduce greenhouse gas emissions from our factories by 20 percent by 2015 (per unit produced based on the 2010 baseline).
Greenhouse Gas Reduction Targets: During 2011, we will present a comprehensive set of greenhouse gas reduction targets that will have a wider scope than our current manufacturing targets and consider the overall Oriflame footprint.
Energy Use: We will reduce energy use at our factories by 15 percent by 2015 (per unit produced based on the 2010 baseline).
Travel: By the end of 2011 Oriflame will roll out an online communication tool to all our office-based employees and provide them with relevant training in order to reduce travel.
LEED certification: We will reduce future greenhouse gas emissions at our new facilities by actively working to pursue LEED green building scheme certification for all our new production facilities.
The majority of Oriflame’s products contain significant amounts of water and the Company relies on water at all stages of the manufacturing process. With operations in countries where water stress is a major issue, such as India and China, Oriflame is committed to responsible water stewardship. In addition at the end of their useful life a large percentage of our products will end up in the local sewage system. Reducing water use and emissions to water are therefore key priorities for Oriflame.
Responsible Water Use: We will reduce water use at our factories by 10 percent by 2015 (per unit produced based on a 2010 baseline).
Biodegradability: In order to reduce the environmental impact at the end of product life, we will pursue our existing policy with only use readily biodegradable primary surfactants and conditioning agents in our cosmetic formulations.
Education: To reduce the environmental impact during the use phase and at the end of product life, we will start to communicate with our more than 3 million consultants worldwide on environmental issues relating to water consumption and pollution.
LEED certification: We will reduce water use and emissions to water at our new facilities by actively working to pursue LEED green building scheme certification of all our new production facilities.
Oriflame is committed to minimising the waste produced throughout its supply chains. Product packaging makes up a significant proportion of generated waste, and several initiatives are therefore underway to address this. Our aim is to reduce waste by using materials more efficiently, by reusing materials where possible and by contributing to increased recycling, both within our own operations and among our consumers.
Manufacturing waste: We will reduce waste at our factories by 10 percent by 2015 (per unit produced based on the 2010 baseline).
Recycled Plastic: We will increase the use of post-consumer recycled (PCR) plastic in our cosmetic packaging materials. In 2011, all new coloured PET bottles will specify PCR material and we will start to implement the inclusion of PCR material in tubes and jars.
Education: In order to encourage end-of-life recycling of our packaging materials and catalogues, we will start to communicate with our more than 3 million consultants worldwide on environmental issues relating to waste.
Facilitate recycling: We will increase the availability of recycling facilities at our service centres worldwide as part of the roll-out of the upgrade of our service centres commencing in 2011.
LEED certification: We will reduce construction waste at our new facilities by actively working to pursue LEED green building scheme certification of all our new production facilities.
STRIVING FOR OPERATIONAL EXCELLENCE
39 | Oriflame Annual Report 2010
Spotlight on current issues
To generate meaningful performance improvements, sustainability needs to be integrated into the product development process. When formulating new products, Oriflame strives to design innovative products that, where possible, use ingredients with a low environmental impact that are ethically sourced. All Oriflame’s primary surfactants and preservatives have a good biodegradability profile and scientific reports on environmental issues are continuously monitored to ensure that action is taken to replace ingredients or packaging materials wherever possible.
In addition to continuously improving the environmental profile of existing product ranges, Oriflame will launch a new range of environmental, natural and ethically sourced beauty products during the coming year.
The life-cycle assessment study revealed that a large proportion of the environmental impact of Oriflame products occurs beyond the direct scope of the Company’s operations. Sourcing of raw materials is therefore a critically important impact area.
Paper and wood-based products are Oriflame’s number one raw material,used in packaging materials as well as in publications such as catalogues. In 2010, Oriflame started working in collaboration with the Rainforest Alliance, a global conservation organisation, to develop a responsible global paper sourcing strategy and set ambitious sustainability targets. The ultimate aim is to ensure that all Oriflame paper and board packaging and publications are sourced from credibly certified sources and/or from recycled origins.
Oriflame uses palm oil as an ingredient in numerous cosmetic formulations. Palm oil contributes to the economic development of the producing countries. Nonetheless there are environmental pressures on its rapid expansion to eco-sensitive areas. It is vital that production and use of palm oil must be conducted in a sustainable manner based on economic, social and environmental viability. In 2010, Oriflame joined the Round Table on Sustainable Palm Oil (RSPO) and made a commitment to strive towards buying all of the palm oil consumed in the Company’s products from certified sustainable sources. On the way to achieve this goal, for 2010, Oriflame helped to fund sustainable palm oil production through the purchase of Green Palm certificates covering 100 percent of its total palm oil consumption.
Oriflame implements strong animal welfare policies. Oriflame cosmetic products have never been tested on animals, and no Oriflame cosmetic products contain ingredients that cause suffering to animals.
Factories and Suppliers
Oriflame manufactures about 60 percent of its cosmetics product volumes in-house. Five Oriflame-owned factories produce skin care creams and liquids, foundations, mascaras, lipsticks and lip-glosses, personal care and hair care products as well as fragrances. A sixth facility is manufacturing food supplements for the Chinese market. Increasing the sustainability profile of Oriflame’s own facilities and operations is therefore a key priority. Audits are being conducted at the current manufacturing sites for improved profiles in regard to energy use, CO2 emissions, waste control and water consumption. Each of these areas has ambitious targets to be met by 2015. During 2010 many actions have been carried out in each of these areas. For example, we have reduced energy use and water use by approximately one fifth and the total effluent produced by approximately a quarter per unit produced during the past year. As for the new production facility under construction, Oriflame is actively working to pursue LEED Green Building Certification, and is currently developing a strategy for greening offices and conferences to engage employees and consultants in the Company’s sustainability work.
External suppliers in Europe (including Russia), the United States and Asia produce the remaining part of the product range, including cosmetics, accessories and food supplements. Local sourcing of accessories for sales actions and recruitment campaigns is particularly challenging as the products are selected on short notice and the suppliers are constantly changing, limiting control of content and working conditions. As a consequence, the sourcing of the products for sales actions and recruitment campaigns will be increasingly channelled through the central purchasing functions. Moreover, supplementary audits are being conducted at accessories suppliers in China, to ensure that they comply with ethical policies.
| Oriflame Annual Report 2010
STRIVING FOR OPERATIONAL EXCELLENCE
Oriflame is currently implementing a supply and sourcing strategy for logistic operations in addition to the existing ISO Cosmetic Good Manufacturing Practice Standard (GMP), integrated in Oriflame’s Code of Practice. The general strategy is to move sourcing of products and printing of catalogues closer to the current and future Group Distribution Centre facilities and major markets to improve transportation routines to reduce lead times, transportation cost, CO2 emissions and energy consumption.
Oriflame favours sea shipping, truck freight and railway cargo and attempts to limit air shipments to the extent possible. The packaging and loading routines for ship containers are being reviewed to improve space usage, thereby reducing energy consumption and transportation costs. As for truck freight, demands have increased on the choice of vehicles, aiming at the Euro5 standard for all road transport.
Oriflame’s strategy is to consolidate the warehouses, i.e. inventory group distribution centres (GDCs) to eliminate unnecessary cargo, optimise transportation cost and minimise inventory levels. Consultants are served directly from the GDCs whenever possible. Previously, each market has had stock-holding in local market warehouses.
Community involvement – empowering future generations
Oriflame takes a strong stance on important social and ethical issues. The ten principles of the United Nations Global Compact, applying to the areas of human rights, labour standards, the environment and anti-corruption, have been integrated into the Code of Conduct to ensure that they permeate all aspects of the business.
Oriflame’s view of corporate social responsibility includes applying a responsible business model, which empowers people and provides them with tools to enrich their lives. Becoming a sales consultant for Oriflame provides financial opportunities from the first day, without risk. Apart from providing employment and business opportunities, Oriflame contributes to local communities by supporting good causes on a local, regional and global level. As a responsible Company, it is what society expects from Oriflame and it also reflects its long-term commitment to pursue ethical business principles throughout its operations and to fulfil people’s dreams.
For many years Oriflame has tried to support the most responsible non-governmental organisations and charities around the world. This includes World Childhood Foundation, founded by HM Queen Silvia and co-founded by Oriflame and the Af Jochnick Foundation, a relationship which continues to this day. In order to reach its full potential, all of Oriflame’s philanthropic work is now being co-ordinated centrally.
The mission of the Oriflame charity work is to help children and young women through a wide range of educational initiatives, providing opportunities for them to change their lives for the better and be empowered to turn their dreams into reality. Efforts are focused on various activities beyond traditional classroom-based education; from building social skills and mentoring to supporting orphans and foster families. Examples of existing projects are Oriflame’s Contemporary Girls’ Initiative in Turkey to help young girls complete their secondary education, and social rehabilitation for teenagers in Latvia through the Livslust Foundation.
Co-ordinating all the philanthropic activities from one platform is a way to improve communications and collaboration between the different projects and to increase the overall level of community investments across different markets. All employees and consultants are encouraged to engage in local charity projects and each employee is offered one day per year of paid leave to do volunteer work for good causes in their markets.
Oriflame will support projects in different markets of operation through the sale of regionally selected cosmetic products and specially-developed, global accessories. This will be supplemented by local fundraising events organised by Oriflame employees and sales consultants.
| Oriflame Annual Report 2010