On Friday — during NYC’s Climate Week, running September 17-24 — global cosmetics company L’Oréal announced the launch of its Climate Emergency Fund. The purpose of the €15 million ($16 million) endowment fund is to proactively support low-income and minority communities by developing resiliency in the face of climate disasters through preparedness and environment repair programs. This fund is one of the first of its kind by a consumer products company.
L’Oréal will provide grants to local partner organizations and international humanitarian organizations on the ground. The organizations, like the humanitarian action company Start Network, have extensive expertise in disaster readiness and rapid response. The selected organizations’ fund amounts are chosen based on their ability to help the climate emergencies that are most urgent.
“We often try to find new innovative ways, including in financing, to support social or environmental solutions,” said Alexandra Palt, global chief of corporate social responsibility and sustainability officer at L’Oréal. “In the last couple of years, together with this Climate Fund, we have invested nearly €200 million ($214 million) in developing new responses to the climate and social crisis.”
The number of annual worldwide disasters has increased by 5x in the last 50 years, owed, in part, to climate change. The Intergovernmental Panel on Climate Change (IPCC) also found that 3.3 billion people are vulnerable to climate disasters.
L’Oréal already had multiple social and climate sustainability projects, like the Fund for Women, the L’Oreal Fund for Nature Regeneration and the Fund for the Circular Economy. Learnings from the Fund for Women project, which launched in 2020 and has helped support 240 frontline non-profits, have proven to the company that working with on-the-ground NGOs can be more impactful than making wide-ranging donations.
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“The smaller community organizations that are on this ‘last mile’ to the disaster-impacted people are who we want to support,” said Palt. “They are very efficient, but they have a lot of difficulty accessing funding. That’s because, today, rather than what can help quickly, corporations and big foundations want impact analysis and a lot of elements that need a lot of paperwork.”
The Climate Emergency Fund operates on a two-tier strategy: preparing for the climate crisis and repairing the damage caused. Although the main focus of the Fund is to help vulnerable people, Palt said there is also a benefit to the company to invest in preparation so that the repair component is smaller.
Funds that prepare communities for disaster include the Star Network, which operates early warning systems leveraging analyses.
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One of the first two organizations to be funded through the Climate Emergency Fund is the Solutions Project, which operates a support network for small Black, Indigenous and POC-led community organizations in the U.S. that specialize in climate disaster-related solutions.
“It’s not going to be possible to avoid all disasters, so we have also to be able to intervene and repair when a disaster has already happened,” said Palt. L’Oréal and Palt will measure the success of the Fund based on the number of people helped, the reduction of damage and the amount of knowledge that can be shared with other companies to launch similar programs.
“There are other foundations that support these kinds of programs, but it’s mainly NGO-led or international organization-led programs,” said Palt. “We are one of the few contributors in this space.”
This news comes on the back of the Maui land fires and their devastating impact. As brands often face business repercussions as a result of such disasters, they’re realizing that action in the name of preparedness is needed.
It’s worth nothing that, in a new lawsuit reported on August 24, Maui County officials publicly blamed Hawaii’s largest electric utility, Hawaiian Electric, for the wildfires that killed at least 115 people. They claimed in a lawsuit filed on Thursday that the “intentional and malicious” mismanagement of power lines caused the fires.
“More companies will launch similar funds in order to preserve raw materials and to prepare people,” said Diane Verde Nieto, founder of Positive Luxury, which works with brands on their ESG practices. “However, open source innovation is also important so that these funds are not as necessary.”
At this time, more brands are opting for funds such as L’Oréal’s, seeing them as more accessible aids to climate issues than avoiding the impact of production. “We have a responsibility to support people, especially against changes that we provoked,” said Palt.
