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Opportunity and Risk Management

Oriflame’s strategy takes a value chain approach to managing risk and creating opportunity – see below for what this looks like in practice.


Raw Materials


Managing risk and impact:
We are working to reduce the impact of the raw materials we select for our products. Palm oil and paper have significant negative environmental impacts if not sourced from sustainably managed forests, therefore we work actively with improving our sourcing. We are gradually working to reduce the use of petroleum in formulations, and replace them with plant-based alternatives where possible. Oriflame no longer uses plastic micro-beads in new product developments, since 2014 Oriflame is only using natural origin exfoliants such as castor wax, olive stone, almond shell and sugar. We are continously reviewing and managing contentious raw materials.

Creating opportunity:
Looking at raw materials from a risk perspective and proactively hunting for better substitutes makes us more creative. A proactive approach to finding low-impact alternatives will help us earn and keep the trust of customers and other stakeholders. The work we are doing with plant stem cells is a great example of this, another area is the work to improve the biodegradability profile of our rince-off products.

Suppliers


Managing risk and impact:
A significant share of our impact comes from our supply chain. We are working hard to ensure social and environmental standards are met by those who manufacture our ingredients, components and products. We also want to ensure compliance with our standards further up the supply chain – that is, the people who work with our direct suppliers. For example by making sure that the farmers who supply us with palm oil and forest based products work in acceptable conditions.

Creating opportunity:
When we take this kind of social and environmental approach it makes sense to build longer term relationships with our suppliers. As a consequence, the relationships strengthen and transaction costs are brought down because of an increased level of mutual trust.

Manufacturing


Managing risk and impact:
Although the impact of our own manufacturing sites is relatively low from a product life-cycle perspective, it is symbolically important. Approximately 55% of our cosmetic products are produced internally at different sites in Poland, Russia, India and China.

Creating opportunity:
When we manufacture our own products we have better control over the whole production environment, from the ingredients used to making certain production is efficient and limits waste, and ensuring compliance with internationally recognised standards in relation to labour conditions.

Transportation


Managing risk and impact: Our Consultants and customers are located in over 60 markets, which means we ship products around the world. Transportation therefore has a significant impact on our carbon footprint. The vast majority of shipments are by sea or truck freight - we try to avoid air freight as much as possible.

Creating opportunity:
Managing the environmental impact of transportation has a direct positive impact on the costs of transportation. For example, due to ongoing changes to our packing and loading routines (so that more can fit in each container) we have saved more than €5.5 million since 2010.

Consumer use phase


Managing risk and impact:
We want to help our customers make less impact when they use our products. We are working to reduce the emissions to water from our rinse off products – like shower gell and soap and we still have areas to address such as hair colourants. In 2017 we launched our new Love Nature rinse off range with biodegradable formulations. This is particularly important in countries with underdeveloped water treatment plants. One way we can do this is through finding ways to improve our choice of raw materials.

Creating opportunity:
If we communicate our sustainability efforts and achievements properly, and get our Consultants and consumers to participate in our journey, we will improve our brand image and strengthen our relationship with them. This can lead to improvements in customer loyalty and satisfaction as well as decreased environmental footprint.

Waste


Managing risk and impact:
The packaging we use for our products constitutes a significant share of our waste. We want to reduce waste by using materials more efficiently, by reusing materials wherever possible and by contributing to increase recycling, both within our own operations and among our consumers. For example, we are using post consumer recycled (PCR) plastics where possible in our plastic tubes.

Creating opportunity:
As with transportation, the more waste-efficient we make our packaging, the greater cost savings we will see overall. Working to 'close the loop' drives innovation. For example, we have found ways to use materials for packaging - such as plastic - that has already been recycled.

Our Consultants


Managing risk and impact:
Every year Oriflame invites its top Beauty Consultants to conferences at different locations around the world. These events are a core part of our business model because they provide thousands of leaders with an incentive to achieve new targets. We have started to implement our Sustainable Conference Guidelines, which will help us limit the environmental impact and improve the social impact of our conferences as much as possible.

Creating opportunity:
As well as their environmental impact, these conferences also have a social impact – a positive one. Together with our day-to-day work, they are one of the main channels for us to help Oriflame Consultants build their self-confidence, networks, abilities and knowledge. They also give us a good opportunity to educate and inspire the Consultants on sustainability issues. The new communication concept Beautiful Change is also a tool for us to impact in a positive way. The 3 million consultants, influenced and inspired by our communication, will hopefully make small acts of beauty, together creating massive positive environmental and social change.

Product design


Managing risk and impact:
We are working to incorporate sustainability into our product development right from the design phase. This affects decisions about the materials we choose, as well as ensuring products can be efficiently produced and transported, as well as guaranteeing products can be recycled at the end of life.

Creating opportunity:
Our products bring beauty and wellbeing into the lives of our customers. Our big ambition is to be able to include sustainability into that offer as well. Responsible products will help us attract new customers, strengthen our brand and push us to be more innovative and efficient.