“Where the consumers are not concerned, the industry can just hide”

Rob Harrison, Founder of CNA Insider

“We know perfectly the issue about mica. We have been working on this issue for a number of years. We have been cooperating and engaging with local non-governmental organizations to work on this issue of mica,”

Emmanuel Lulin, L’Oréal’s senior vice-president and chief ethics officer

“People are dependent on mica and if we don’t work here, then we will all die. There are no other options for work.”

Dimpi Devi, mica picker

Introduction

As Nicolas Hieronimus reflected on his first 6 months at the helm of L’Oréal, he couldn’t help but feel a deep sense of satisfaction. After all, the Paris-based beauty and personal care giant had bounced back from a disastrous 2020 marked by pandemic-induced lockdowns and retail store closures in grand fashion. Thanks to buoyant sales in China and strong e-commerce growth, the maker of Lancome and Maybelline cosmetics had reported 13% revenue growth in Q3 2021, following a scorching 33% increase during the previous quarter. L’Oréal was positioned as a shining example of a resilient and adaptable business that had emerged stronger from a period of global economic upheaval.

Hieronimus’ feelings of pride, however, were mixed with some doubt and unease. He knew that, despite impressive numbers and recent positive developments in terms of the company’s success, L’Oréal was not exactly perfectly positioned or free of risk. In fact, one of the greatest risks to the company’s reputation, and the supply chain, came from an unlikely yet vital source: mica.

A key component in cosmetics production, mica has rare properties that gives eyeshadow and lip gloss their sparkle and shine. Mica was cheap and plentiful, but L’Oréal had a history of buying mica from sources which mined the ingredient in an unethical way. Recent exposés on mica mining had revealed to the public that L’Oréal’s mica came from sources which used child labor and exposed miners - including children - to health and safety hazards. Since these articles had been published, L’Oréal had been a driving force behind industry efforts to eradicate abuse and enhance worker safety. Still, the new CEO couldn’t help but wonder whether bolder steps were needed to address this issue and reduce reputational risk (Moloney, 2017).

The Ingredient Mica

Mica, a natural mineral found in many regions around the world, was used by L’Oréal due to its sparkling and glowing qualities for eyeshadow, lip gloss, and many other makeup products. It was listed as an ingredient by the names of ‘Mica’, ‘Potassium Aluminum Silicate’ or ‘CI 77019.’ The richest quality mica was known to be from India and Madagascar.

Within India, the largest mica mining communities were in the states of Andhra Pradesh, Bihar, Jharkhand, Maharashtra and Rajasthan. The regions of Bihar and Jharkhand alone produced 25% of the global total as of 2016 (Kate et al., 2016). These regions were also the site of the most dangerous and deadly mining conditions. The process for mining mica is not easy and has,in fact, been illegal in Jharkhand since 1980. To gather mica legally, it must be sifted through topsoil where it was less abundant and very dusty. The alternative allowed for much more quantity, but it was extremely dangerous. It required going into small underground tunnels and breaking surrounding walls to collect mica stones. The rock was then hammered down and sorted through to gather the highest quality sections of the stone. In 2021, At least 70% of India’s mining output was mined in this illegal, yet more profitable manner (Chia, 2021).

The walk to the mines could be miles and the mining tunnels were unstable and collapsed frequently. In January 2021 alone, there were 3 official reports of mine collapses in Jharkhand although many such collapses go unreported. About 10-20 people lost their lives in these mines each month. The active mine shafts are hard to reach and therefore rarely inspected. An estimated 22,000 children as young as 4 years old work in mica mines in the Jharkhand region (Chia, 2021). According to Schipper & Cowan (2019), “Of all forms of hazardous work, mining is by far the most mortally dangerous sector for children, with an average fatality rate of 32 per 100,000 children between the ages of 5 and 17.”

Mica’s main uses were found in electronics, paints, construction, and cosmetics. Although the cosmetics industry was the 4th most common usage of the ingredient, making up only 10-18% of the mica market, this industry was easy to target because the ingredient is visible on every ingredient label (RMI, 2021). Makeup customers were overall more aware of what they’re putting on their skin than construction workers and manufacturers were about their auto parts and paint ingredients. Additionally, makeup trends were becoming more focused on glittery, shiny, and mica containing products overall, causing a notable increase in demand. The low cost of these products was very attractive in wealthy markets, while poor areas such as Jharkhand suffer the consequences.

L’Oréal’s infamous mica publicity problem started around 2014. Humanitarian groups and research organizations began writing about the dangerous conditions behind the production of beauty products. Being one of the world’s leading beauty companies, L’Oréal was a great example to catch the attention of the consumer market. This publicity was particularly problematic for L’Oréal as the former CEO, Agon, had made the company the booming global business that it is today with a focus on sustainability and inclusion (Abbitt, n.d.).

About L’Oréal

The L’Oréal Group was established in 1909 by the scientist Eugène Schueller. Early CEOs of L’Oréal viewed the company as a scientific venture and designed a wide variety of hair and beauty products. The company became the world leader in cosmetics by 1998 and began specifically focusing on ethics around 2000. They were one of the first companies in France to establish a Code of Ethics, which was available in over 45 languages, and received 3 ethics awards since 2008. When Jean-Paul Agon became CEO in 2006, he had the mission statement of making beauty accessible to all, by all. Throughout his career, he proved to have excellent global strategies, emphasizing product and employee diversity, and sustainable initiatives. He once indicated that, “Delivering financial performance while being a committed corporate citizen is probably our greatest source of pride. This is what motivates us to always go the extra mile” (L’Oréal, 2020a).

As of 2021, L’Oréal owned 36 brands with their 4 product lines being consumer products, luxe, professional products, and active cosmetics. Each of these lines focused on bringing confidence and beauty to different groups of people around the world. Within its consumer products was the world’s leading cosmetic brand, L’Oréal Paris. They had operations in 150 countries where they employed over 85,000 individuals. Over 2,500 of their staff consists of scientists who keep up with the newest trends in the industry (Craft, n.d.).

Their profits followed a historically increasing trend, with the exception of 2020 during the Covid-19 pandemic. During the Covid-19 dip in profits, L’Oréal saw a decrease in sales by 4.43% in 2020 from 2019 profits. This followed their 5.17% increase from 2018 and 8.15% increase from 2017 (Macrotrends, n.d.). This was due to store closures and increased unemployment rates across the globe. In response, L’Oréal turned its focus to improving its online platforms and marketing their products around self-wellness. Instead of focusing on its most popular make-up brands such as Maybelline, L’Oréal turned to its dermatologist products in its active cosmetics line which proved especially successful in China. Its brands that brought the highest profits improvements were Vichy, La Roche Posay and CeraVe (White, 2020). With continuing focus on e-commerce and its digital try-on feature, ModiFace, added in mid-2019, L’Oréal surpassed competition in China such as Louis Vitton and Hermes (L’Oréal, 2020b). Once large economies such as the United States and China began Covid-19 economic recovery, profits surged 20% in its luxury line and 13.1% in overall sales in 2021 Q3. Sales for the first half of 2021 amounted to 15.19 billion dollars, putting them back on track for ongoing profit increases (Spencer & Morland, 2021).

L’Oréal’s continued innovative approach allowed for projected annual growth to amount to 7.98% (Simply Wall St., n.d.). Their latest brand acquisition was a vegan band, Youth to the People, signed on December 8, 2021. This brand recorded about $50 million in 2021 and welcomed another modern brand to L’Oréal Luxe’s growing portfolio. This enhanced L’Oréal’s focus that marketed a fair world with consciousness to the planet (L’Oréal, 2021).

L’Oréal’s online consumer engagement also encouraged their success. To ensure their customers’ awareness of the trendiest products to buy, their digital beauty magazine linked right to their products. Articles posted throughout the year highlighted new and preferred products, with many described as “shiny” and “glittery.” These excellent marketing strategies build a high degree of consumer engagement. L’Oréal knows that their customers love to feel beautiful and stand out… but at what cost?

Mica Mining Communities

Child labor in India sparked international attention around 2005. With the increased interest in mica mining practices, numerous documentaries filmed in India with firsthand accounts of the communities were released. A recent film by CNA insiders published in May 2021 received 2.2 million views on YouTube (CNA, 2021). This documentary discussed the mining system’s dangers and followed the supply chain directly from the mica mines through to the exporter in Jharkhand. The directors of the film risked their lives to enter the isolated areas where illegal mining took place. They interviewed families who suffered from loss of loved ones and explained the link between these lethal hazards and the big industries who source from these areas. Another famous documentary was filmed by Refinery 29 in 2019 with 15.4 million views on YouTube (Lebsack, 2019). In this short film, Lebsack, the senior beauty editor at Refinery29, went undercover into mining communities and had conversations with children about their life and the conditions they worked in. These documentaries, along with many more, demonstrated the severity of the ongoing harmful working conditions, and kept the problem in the public eye. Investigators and journalists were willing to take significant personal risks in order to accurately and powerfully keep this issue from being forgotten or overlooked. With nearly two decades of these issues being public knowledge, it was evident that there was still a lot to be done to change the dangerous process of Mica mining. Thousands of individuals, many of them children, continued to suffer in order to allow consumers to possess all the makeup products that we use.

The global mica market was forecasted to be worth nearly 700 million US dollars by 2024 with 1.2 million metric tons of the mineral being mined annually (Lebsack, 2019). The previously mentioned state of Jharkhand had many rich natural resources such as coal, copper, and mica, yet about half of the population lived in extreme poverty. Many of the individuals working in mines lacked access to education, health care, and safety gear. Each kilo of mica sold for about 10 US cents, with families earning about 2 USD on a good day. To send kids to school and change the lives of many in these communities, about 56 cents per kilo was needed (Lebsack, 2019). With the aforementioned wage, very little money was left for food and other necessities, especially for such physically demanding tasks. With the lack of nutritious foods, more than 40% of children in these areas were malnourished. It was not uncommon to only eat every other day. This targeted indigenous individuals at a much higher rate where their families suffered from being stuck in this cycle for decades, and some even centuries.

Outside of their jobs, many miners were not aware of what mica was used for. Once mined, mica was sifted and sorted, and sold to traders. It was then sold to local stores that more thoroughly sorted through and cleaned the mica. These individuals also suffered from the constant exposure of dust for over 10 hours a day while bringing home about 2 USD a day. This mica was then sent to manufacturing units who processed the mica into powder and shipped it off internationally.

Throughout this entire process, there was a lot of corruption and commercial exploitation. Mines were very isolated and carefully monitored by locals who needed to conceal illegal mining activity. A method used to mask the activity was to sell to traders who sold it under the license of a legal mining community in a different part of the country, such as Rajasthan. This way, the product being sold was not traced back to the child labor or underground mining practices in Jharkhand. A method that warehouses and exporters could take to mask illegal activity was to obtain a certificate of ethical conduct regarding child labor. These were acquired by paying for them from the government, not by demonstrating ethical behavior (Al Jazeera, 2020). In order to respond to this issue, the entire system, including local and international business partners and the local government, needed to be willing and able to cooperate and work together for a better alternative.

Alternatives

L’Oréal was not the only beauty brand who faced criticism for mica usage. Lush Cosmetics, a UK based brand who publicized their use of all natural and organic products, were also quickly targeted in popular media. In 2014, Lush tried to gain supply chain traceability, but found it to be an impossible task. Therefore, they decided to create biodegradable synthetic mica called fluorphlogopite and were completely mica free as of January1, 2018. By replacing mica, Lush was able to guarantee 100% cruelty free products. Some found this solution to be much more ethical, but others criticized the abandonment of the communities in need of income (Lush Fresh Handmade Cosmetics, 2020).

A more affordable mica alternative was plastic mica. This was commonly made up of aluminum and plastic and was categorized as a microplastic. These microplastics were being banned in more and more countries due to their negative environmental impacts. Microplastics were proven to flow into water systems, cycle into marine life that is consumed by humans, and to harm the overall environment. In the United States, the FDA banned these microplastics in “rinse-off” cosmetics such as facial cleansers, but were still allowed in other products such as highlighter and glittery eyeshadows (Siegel, 2017).

While finding substitutions for mica in beauty products avoided negative publicity for mica mining conditions, abandoning the mining communities as a whole was also criticized. Some companies such as Estee Lauder partnered with organizations such as the Kailash Satyarthi Children’s Foundation that connects parents to new income streams. This allowed for more sustainable lifestyles where parents could send their children to school instead of working in life threatening conditions. School education then allowed the children to have more opportunities in the future and break the cycle of poverty and reliance on mining within their families and eventually entire communities.

L’Oréal also adopted some of these practices. To reduce involvement in illegal mines, they increased their United States mica sourcing to 60% of their overall mica usage (Copp, 2017). They also switched to synthetic mica where they are able, in order to reduce the demand of imported mica. Yet, L’Oréal did not substitute all mica in their cosmetics due to mica’s unique glow and protective properties in makeup (Rincón-Fontán et al., 2018). In an effort to continue obtaining real mica in an ethical way, L’Oréal partnered with an organization to stay involved in trade with India, encourage increased income, and enhanced living and working conditions for miners.

Responsible Mica Initiative

In 2016, the first Mica Summit was held in Delhi, India where representatives from all over the world came to speak about these mica mining issues, especially in regards to child labor. The attendance consisted of large cosmetic companies, pigment and coating industries, and civil society organizations. A major participant was Terre des Hommes, a charity organization based in the Netherlands, who focused on humanitarian and children’s rights. They initiated numerous investigations in 2015 surrounding mica mining and were largely involved in organizing the summit. In the conclusion of the summit, they stayed active in pushing the attendees to remain focused on their plans and goals moving forward. They also established accountability in the form of yearly reporting on mica mining progress.

In 2017, 20 representatives, along with Terre des Hommes, met to form the Responsible Mica Initiative (RMI). L’Oréal was one of the co-founders and members alongside some other well-known companies such as H&M, Burt’s Bees, LVMH, Porsche, and Avient. The members established RMI as a non-governmental organization with a mission to eradicate illegal and unacceptable conditions of mining in the states of Bihar and Jharkhand by 2030. Their approach focused on three components: supply chain mapping and workplace standards, community empowerment, and legal frameworks (RMI, 2021). As of 2019, they had 59 members, reached 80 villages, supported over 5,890 households, and enhanced living conditions for over 30,000 children (Fremont, 2020).

However, 70% of mining in Bihar and Jharkhand remained illegal, and eradicating this by 2030 remains a very ambitious, and perhaps unachievable, goal.

Even with the good intentions of the companies who became members of RMI, there was slow progress within the mining communities in years following the establishment of RMI. People within these traditional mining communities still felt unheard. Many felt like they were stuck in an endless cycle, and if they got out, alternative sources of income were sparse and uncertain. Miners continued to perform work in sandals, old clothes, and improper equipment. Yet, they were dependent on the beauty industry and did not want to lose the source of income. Especially in 2020 with the Covid-19 lockdown and decrease in spending, mica mining communities were out of work entirely. People were jobless and scared and received little to no help.

The RMI faced numerous challenges. One was the extreme difficulty in forming a transparent supply chain that could be monitored and inspected. Illegal licensing, hiding children and women during inspections, local child working norms, and lack of government support were some contributing factors to these difficulties. To provide an example, a manufacturing company featured in the CNA documentary was Ruby Mica. This company was a member of the RMI yet a representative of the company acknowledged that the mica they use is mixed and not fully traced, but provided jobs that are needed for thousands of miners that would otherwise have nothing. Another barrier to change was local societal norms around India. Many families do not view child labor as an abhorrent practice, but rather as their children providing a necessary contribution to the family. On a larger scale, many authorities and companies involved in RMI simply deny the wide spread practice of child labor, making honest traceability and working condition documentation inaccurate (CNA, 2021).

L’Oréal’s Ongoing Efforts

In 2021, L’Oréal claimed their mica was 99% sourced from verified sources. This is up from 97% in 2015 (Copp, 2017). L’Oréal claimed that they exclusively use ethical sourcing and that working conditions and human rights were closely monitored. They also reported thousands of independent audits per year to ensure compliance surrounding corruption and child labor (Al Jazeera, 2020).

A major flaw that was identified in this process was the illegally acquired licenses and certificates used at various stages of the supply chain. Local management hid illegal activity in their operations, making it impossible for RMI members to produce accurate reports. For example, the RMI member Merck had subsidiaries that supply mica to L’Oréal. Where there was proof of child labor, traders and exporters deny it. Merck historically denied interviews concerning this issue. In corporate documents, similarly to L’Oréal, they affirmed regulation and verified mine sourcing. When Merck representatives traveled to mining locations for inspections, they warned the exporters of their arrival. The exporters then made sure there were no children or women in the mines that day. The bribes and tactics throughout this system made it difficult to obtain accurate assessments of working conditions, or to hold perpetrators of abuses accountable (Al Jazeera, 2020).

Additionally, there were many claims that change was slow. Communities were still in high poverty, dangerous mining was still taking place, and many children in these communities were still needing to work in order to sustain their families. While L’Oréal liked to uphold their deep concern, in their 403-page 2020 Annual Universal Registration Document including the company’s financial, legal, environmental, and integrated reports, mica was very minimally mentioned. The report contained 8 sentences mentioning their stance as one of RMI’s founding members and a summary of its goals. The document did not state anything about specific initiatives L’Oréal participated in, or if they achieved any of their goals. L’Oréal claims that “as of 2020, 99% of Indian mica used in the Group’s formulas came from suppliers committed to obtaining their supply from verified sources.” This did not mean ethically obtained, just that they knew the licenses come from legal mines. Even then, research proved otherwise (Babule, 2021).

The Dilemma

L’Oréal made the decision to stay to help communities and even co-founded the Responsible Mica Initiative to demonstrate social responsibility. They persisted with their initiative, however, it could be argued that this change was not enough. L’Oréal was sourcing elsewhere through synthetic mica and using mica from the USA when they could. Even their sourcing efforts proved to possess many errors that they did not address. Their claims were therefore misleading to the public.

From a monetary perspective, mica was relatively cheap compared to other natural resources such as gold and diamonds. Therefore, the cost to trace and ensure responsibility did not outweigh the profits of the material. Cosmetics was a minority in the mica market and therefore could not solve these complex issues on their own. Raising awareness of the use of mica in other industries could increase consumer pressure on these industries and therefore drive more wide-ranging change in mining practices.

Should they have invested more in safety and improving living conditions? Was it L’Oréal’s responsibility when other industries make up a much higher portion of the mica market? Should they have left it up to RMI, or taken more of a stand on social responsibility? Should they have altered their investigation strategies to record more accurate information? Would this hurt their partnerships?

Recent documents posed many questions to the public such as these. This issue was not easy to address and did not have an easy answer. Yet, there were many promises being made and companies were responsible for providing accurate information to their consumers.

Another possible approach was to focus on a model mica mining community. L’Oréal could focus on a community that was using legal practices and ensure safety and education in one location for more control of activity. They could train the community on best practices with proper tools that would allow L’Oréal to still meet the demand for their mica. Once proven to meet demand while improving livelihoods and ensuring a 100% ethical supply chain, industries that use a larger share of mica imports could repeat the model and allow for a brighter future and positive public relations publicity. While this had higher upfront costs, the long-term efficiency and easily replicable example could outweigh the costs long-term.

After conducting thorough research on all of the claims, possibilities, and facts, Nicolas Hieronimus was ready for the next steps in combating the child labor, illegal practices, and misinformation throughout this industry.