Decoding Japanese Beauty Giant Shiseido’s Sustainability Strategy
- Moulishree Srivastava
- Jul 25, 2024
- 10 min read
Shiseido is an iconic company for many reasons: the 152-year-old giant is one of the largest cosmetic companies in the world.
Founded in 1872 in Tokyo, it offers a wide range of luxurious cosmetics, skincare, and fragrance products. Its portfolio includes well-known brands such as Shiseido, NARS, Clé de Peau Beauté, Drunk Elephant, and The Ginza.
With a presence in over 80 countries, Japan’s number one beauty company by sales comfortably ranks in the top 10 global beauty companies, along with the likes of L’Oréal Groupe, the Estée Lauder Companies, Unilever, P&G, and LVMH.
Interestingly, in the last five years, it has transformed itself into a data-driven organization to outdo its competition, reimagining its functions, processes, and systems to create a global operating model.
But is the legacy and innovation enough to stand out in the crowd and resonate with the new generations of consumers? The Japanese corporate titan with a rich history and an even richer consumer base worldwide doesn’t think so. It wants to do much more than that. It wants to do something that creates a larger impact on people and the world.
That is why it has made sustainability the core of everything it does. It has successfully crafted its position as an environment-friendly company focused on sustainability creating value for its customers. This is in line with its original philosophy of “beauty innovations for a better world.” Its official corporate mission is to pursue the creation of a sustainable environment and world where people use beauty care products while being conscious of natural resources.
From procurement of materials and product development to production, use, and disposal, Shiseido wants to enable the coexistence of people and the environment to create new sustainable value for the world.
Before delving into how exactly it is doing that and whether it is able to do that, let’s take a quick look at the company’s journey.
House Of + Where Everything Is Born
Shiseido was started in 1872 by Arinobu Fukuhara as Japan's first Western-style pharmacy in Ginza, the country’s fashion and cultural hub.
The company's name means "house where everything is born," [Shi Sei” means “where everything is born” and “Do” means “house of”]. It was inspired by a phrase in the classical Chinese text, I Ching: “How wonderful are the virtues of the great Earth. From here, all things originate.”
Shiseido's unique concept blends Eastern aesthetics with Western science and technology. It started as a pharmaceutical business but over the years diversified successfully:
1888: Launched Japan's first toothpaste
1897: Entered the cosmetics business with Eudermine
1918: Introduced perfume
1937: Launched its first line of cosmetics
Adhering to five core management principles established in 1921—quality first, co-existence and co-prosperity, respect for customers, corporate stability, and sincerity—
Shiseido began expanding into European and US markets by the late 1970s.
For over a century now, Shiseido's brand-building strategy has depended on creativity and innovation, blending oriental mystique with Western fashion values, using clinically tested formulas, customizing offerings for different markets, and strong distribution strategy. On top of that, Shiseido used acquisitions to grow globally and enter new markets.
One of its most prominent acquisitions in recent years was of the American clean beauty brand Drunk Elephant, which gained a cult-like following within two years of its launch in 2013. Its success can be attributed to weaning out ingredients which it referred to as the Suspicious 6—essential oils, drying alcohols, silicones, chemical sunscreens, fragrances/dyes, and sodium lauryl sulfate—from its product formulations. Shiseido bought a 100% stake in the company for about US$845 million in 2019, apparently beating Estée Laude and strengthening its global presence.
It was around the same time that the company started formulating a structured approach to sustainability, focusing on the environment and society. For at least a couple of decades, it became an intrinsic part of the company’s CSR policy and philanthropic activities.
Shiseido’s Sustainability Strategy
The company had established Shiseido Eco Policy, back in 1992 and set up Shiseido Global Eco Standards in 1997 to ensure group-wide environmental activities in line with its Eco Policy. Eleven years later, in 2008, Shiseido participated in a climate change initiative spearheaded by the United Nations Global Compact. By 2009, Shiseido aligned its environmental activities like carbon and plastic waste reduction and resource conservation under its corporate social responsibility. At the same time, it re-positioned itself as a company that brings “a new lifestyle that connects 'beauty' and 'eco-friendliness'."
However, when the Covid pandemic hit, people began to question whether our world could withstand such widespread disruption and how long it could sustain with the way things were.
Amid the increased consumer awareness of sustainability, Shiseido launched the Sustainability Committee, a dedicated body to ensure timely management decisions related to sustainability and their company-wide implementation, in early 2020.
The company further launched a global sustainability initiative called Sustainable Beauty Actions (SBAS) later that year, built upon three key pillars: “MOTTAINAI” (recycle and reuse), HARMONY (with society and the environment), and EMPATHY (resonate with all).
As things stand today, Shiseido has an elaborate sustainability strategy encompassing three areas—environment, society, and governance. To keep things simple, we are going to dive deeper into what it plans to do for the environment.
Shiseido has made three big commitments to minimize its impact on the environment. In 2021, it was accredited under the Science Based Targets initiative (SBTi) for its goal of reducing greenhouse gas (GHG) emissions.
Commitment 1: Reducing its environmental footprints
1.1 Reducing its CO₂Emissions:
Target
Bring down carbon emissions to 2019 levels (including offsets) at all its sites by 2026.
Reduce CO₂ emissions by 46.2% at all its sites compared with 2019 by 2030 (direct carbon footprints).
Reduce CO₂ emissions by 55% throughout its value chain compared with 2019 by 2030 (indirect carbon footprints).
How it is doing that
Shiseido is improving energy efficiency in its factories by introducing energy-saving equipment, such as LED lighting and heat insulation. The company also utilizes Energy Management Systems to monitor and optimize energy usage.
Shiseido has switched to 100% renewable electricity at all 11 factories and its distribution centers. In addition, it is transitioning to the use of renewable energy at all of its sites worldwide. The company is also increasing the use of solar power generation at its facilities.
Shiseido is collaborating with suppliers and other stakeholders to reduce indirect emissions across its value chain. This includes selecting raw materials like palm oil and paper with lower environmental impact and using recycled resins for developing containers.
To cut down emissions during the transportation of its product worldwide, it is experimenting with joint deliveries with other domestic companies, using electric fleets, improving loading efficiency, and optimizing transportation routes.
Shiseido has introduced an internal carbon pricing system (which tells them the price they will have to eventually bear for emitting carbon) and if they can offset that by investing in decarbonizing initiatives.
Example
Shiseido's Osaka Ibaraki Factory and Distribution Center built in 2020 are located next to each other which reduces CO₂ emissions during product transportation by more than 60 tons per year. The factory has an environmentally friendly building structure with excellent heat insulation properties, which cuts down CO₂ emissions by about 30%.
How it has fared so far
On 2026 target: It has reached a 60% reduction in emissions to come at par with 2019 levels.
It plans to disclose the progress on 2030 targets in 2025.
1.2 Reducing Water Consumption:
Target
Shiseido aims to reduce water consumption by 40% by 2026 compared to 2014 levels.
How it is doing that
Shiseido is implementing water-saving measures in its factories, such as reusing wastewater, optimizing water purification systems, and redesigning cleaning processes.
Examples
At its Osaka Ibaraki factory in Japan, it reuses the cooling water used in manufacturing, saving 65,000 tons of water consumption per year.
At its Gien factory in France, it switched from water-based cleaning to alcohol-based cleaning for its fragrance manufacturing equipment and transportation components.
How it has fared so far
It achieved 46% of its target in 2023.
1.3 Reducing Waste:
Target
Shiseido’s goal was to achieve zero waste to landfill from its domestic factories worldwide by 2022, but it achieved that in 2020 and has maintained this status so far.
How it is doing that
Shiseido focuses on reducing, reusing, and recycling waste throughout its operations. They have implemented waste separation, real-time monitoring of waste disposal status, and recycling of waste plastic, cardboard boxes, and paper from transportation. At the same time, they use optimized packaging designs and reuse shipping boxes.
Examples
Shiseido uses dehydrators and dryers to minimize the amount of sludge generated by its factories during wastewater treatment.
At its Nasu factory, it has switched to using tank trunks to deliver liquid raw material rather than drum cans.
Commitment 2: Developing Sustainable Products
Shiseido is developing sustainable products through a multi-pronged approach.
2.1 Sustainable Ingredients and Formulas
Shiseido is reducing its social and environmental impact by using sustainably and ethically sourced raw materials. It works with its suppliers to reduce CO₂ emissions by shifting to bio-based raw materials in line with the green chemistry principles.
Examples
In 2020, Shiseido released skincare brand BAUM which promotes product packaging from upcycled and recycled wood.
In 2022, Shiseido launched Ulé, a plant-based skincare brand, in France. Ulé focuses on responsible sourcing, product efficacy, safety, and reduced environmental impact. The brand sources its key botanicals (Centella, coleus, and tulsi) and manufactures all products locally in France, ensuring traceability and minimizing transportation impact.
Shiseido joined the CHITOSE Group-led MATSURI project in 2022, exploring algae's potential for sustainability. Algae absorb CO₂ through photosynthesis, while also generating useful proteins, lipids, and carbohydrates. In 2023, Shiseido invested 1 billion yen in the CHITOSE Group and formed an R&D partnership to develop algae-based raw materials for cosmetics, containers, and food industry applications.
2.2 Sustainable Packaging
Target
It aims to switch to 100% sustainable packaging by 2025.
How it is doing that
Shiseido is increasing the use of post-consumer recycled (PCR) materials, bio-based plastics, and other environmentally friendly alternatives for product packaging. At the same time, the company is working to improve the recyclability of its packaging and reduce the amount of plastic used.
Shiseido has also been using refillable packaging to reduce waste from empty bottles since 1926. In 2023, it offered refillable packaging for about 740 products across its 31 brands globally. Approximately 4,200 tons of CO₂ was reduced last year due to the sale of refill products.
Examples
In November 2020, Shiseido launched Ultimate Fountain, a new refill service for Shiseido’s Ultimune Power Infusing Concentrate N at its flagship store in Ginza, Tokyo. Here, customers can bring their empty Ultimune bottles, where they are cleaned in a sanitation-controlled environment before being refilled.
In 2024, Shiseido’s Ulé launched a refillable option made from 100% recyclable materials for cleansing gel Dream of Pure.
Shiseido uses over 72% recycled PET in the bottles of Elixir facial lotion and emulsion.
How it has fared so far
It has achieved 69% of its target.
2.3 Circular Economy
Shiseido is building a circular business model that focuses on recycling and reusing resources. The company actively collects used cosmetic containers in stores for recycling, turning them into new packaging materials. Shiseido is also collaborating with external partners to develop advanced recycling technologies and exploring innovative packaging designs that are easier to sort and recycle.
Example
In 2023, in Japan, the company collected around 49,000 used containers through 88 AEON stores in collaboration with US-based social enterprise TerraCycle. The same year, Shiseido recycled Aupres brand plastic bottles in China, turning them into furniture donated to a Hope Elementary School in Sichuan.
Commitment 3: Promoting Sustainable and Responsible Procurement
Value chain, or procurement in particular, involves various sustainability issues including CO₂ emissions, water resources, biodiversity, and human rights at suppliers. Shiseido is promoting sustainable and responsible procurement through the following initiatives:
3.1 Supplier Assessment Program
In 2020, Shiseido began conducting self-assessments and third-party audits of its tier 1 suppliers to ensure compliance with its Supplier Code of Conduct, which covers environmental, social, and ethical standards.
Example
In 2023, it conducted the self-assessment of all 860 tier 1 suppliers and identified 12 as high-risk suppliers with issues like long working hours and inadequate safety measures at their warehouses.
3.2: Sustainable Raw Materials
Shiseido aims to completely transition to sourcing sustainable raw materials, such as certified palm oil and paper.
Examples
Shiseido has achieved its goal of using 100% sustainable paper (certified or recycled) as of 2023.
In 2023, it replaced 51% of palm oil-derived raw materials with certified palm oil based on the international non-profit organization RSPO’s physical supply chain model. The company plans to reach 100% sustainable palm oil in its products by 2026.
Shiseido is a member of the Responsible Mica Initiative (RMI) and while sourcing mica, ensures there is no child labor or other human rights abuses.
3.3 Traceability
Shiseido is working to enhance traceability in its supply chains, collaborating with other companies to map and track the origins of key ingredients and packaging materials.
3.4 Biodiversity Initiatives
Shiseido is actively engaged in biodiversity conservation efforts, such as the Shiseido Blue Project, which aims to protect the oceans, and its eco-friendly skincare brand BAUM's forest conservation initiatives.
Aside from the environment, society and governance are the two other focus areas under Shiseido’s sustainability strategy.
Society includes strategic goals like advancing gender equality by increasing the number of women in leadership positions in Japan to 50% by 2030 and empowering 1 million women by supporting their education and making them financially independent in the same time frame.
Governance, meanwhile, deals with issues related to accountability, fair business transactions, quality assurance, responsible marketing and advertising, information security and privacy, and preserving the art and heritage of the company.
In 2023, Shiseido was selected by CDP, an international not-for-profit organization, as one of the companies in the A List for its leadership in transparency and performance in the fields of Climate Change and Forests.
Giants like Shiseido have created a primer on how to implement sustainability efforts without compromising on profitability. Brands all around the world can take a leaf or two out of Shiseido’s playbook to successfully navigate the sustainability landscape while driving growth.
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