Consumers Are Demanding Greater Transparency From Beauty Brands. What Does That Really Mean?

“Accessibility and transparency build trust,” declared Hilary Duff’s character Kelsey Peters in a pitch to investors during a recent episode of the TV Land show “Younger” called “It’s All About The Money, Honey.”

She was talking about posting behind-the-scenes peeks at her hectic, yet endlessly fashionable life running fictional book publishing imprint Millennial on Instagram Stories, a social media strategy that actual companies have taken to forge deeper connections with their audiences. But consumers aren’t satisfied with peeks alone, and have been increasingly demanding beauty brands in particular be completely open with them about product contents and business practices.

In survey results on women’s facial skincare considerations released last month, The NPD Group discovered skincare brands publicly vowing ingredient transparency like Deciem and Drunk Elephant are gaining share of mind. The market research firm reported over half of women hunt for skincare products featuring organic ingredients, and 46% purchase products without sulfates, phthalates and gluten, a six-point lift from two years ago.

Au Natural Cosmetics
Au Naturale Cosmetics founder Ashley Prange doesn’t believe beauty brands can be transparent unless they meticulously track their supply chain from farm to finished product.

“These engaged consumers are looking to become more educated about the ingredients in their skincare regimen, particularly in those more basic products such as cleansers, moisturizers and anti-aging serums,” said Larissa Jensen, executive director and beauty industry analyst at The NPD Group, in a statement. “Consumers are using their spending power to ensure their voice is heard and supporting brands that commit to natural ingredients and transparency.”

As a buzzy concept, transparency isn’t new. The social media age and digital distribution catapulted it into the marketing stratosphere as startups dispensed information previously kept hush-hush through their direct lines of communications with consumers to distinguish themselves from mysterious conglomerates. Articulated by Ray Dalio, founder of hedge fund Bridgewater Associates, the notion of radical transparency was adopted by Everlane, a clothing brand divulging the true costs of its T-shirts, and Patagonia, the outdoor wear dynamo detailing the path of the cotton and wool that go into its merchandise from field to factory.

Despite the transparency hype, its impact on consumer behavior remains uncertain. Everlane’s functional minimalism was probably a bigger contributor to its success than its cost calculations. Still, it’s doubling down on its ethical approach and has pledged to eliminate the use of virgin plastic by 2021. Some data provides evidence that consumers, especially millennials and members of gen Z, are willing to pay a premium for transparent products and show fealty to transparent brands.

In the beauty industry, the picture is clouded by confusion around the definition of transparency. Clean beauty brands frequently tout ingredient transparency, but both they and their conventional counterparts operate under the same Food and Drug Administration rules for disclosure. Cosmetic ingredients have to be listed on labels in descending order of their concentrations, although ingredients at less than 1% concentrations can be listed willy-nilly following the heavier-hitting compounds. Fragrance and incidental ingredients aren’t required to be disclosed.

“Consumers are using their spending power to ensure their voice is heard and supporting brands that commit to natural ingredients and transparency.”

Gay Timmons, president of organic ingredients distributor Oh, Oh Organic, chalks up ingredient transparency assertions to being “mostly about marketing.” She elaborates, “Since most of us have no idea how chemicals are made—and this includes things like simple oils—the term ‘transparency’ doesn’t mean much. Transparency can include how they are made, the quality of the oil, the origin and the potential for adulteration.”

Jensen suggests ingredient transparency advances beyond the rudimentary action of a brand spelling out its products’ ingredients. She says, “There’s a marked difference between simply disclosing ingredients and having a poignant conversation with consumers about what is in your product and what is not in your product and why. Transparency is about full disclosure, not just listing ingredients.”

Laurel Whole Plant Organics engages in conversation with its customers by diving into its sourcing methods on its website and social media. The skincare brand prefers to secure ingredients from biodynamic farms within 100 miles of its Sausalito, Calif., headquarters. The skincare brand Apoterra has a batch number system chronicling the production dates of products, the countries the ingredients in them were grown, and ingredient certifications.

“I don’t hear my customers using the word ‘transparency’ exactly, but they ask me more complex questions often, which tells me they are seeking as much information as possible,” says Laurel founder Laurel Shaffer. For those familiar with the application of transparency in beauty, she adds, “To customers, it means honesty and integrity. They want to make informed choices for themselves and not just be sold something.”

Laurel Whole Plant Organics
Laurel Shaffer, founder of Laurel Whole Plant Organics, shares details of her skincare’s sourcing methods on its website and social media. She finds her consumers hunger for information about what goes into the brand’s bottles.

At clean beauty store Ivy Wild in Washington, D.C., the term “transparency” isn’t uttered regularly either. Rather, customers attempt to circumvent the so-called Dirty Dozen cosmetic ingredients such as parabens and formaldehyde or the Suspicious Six, a phrase coined by Drunk Elephant to encapsulate its avoidance of essential oils, select alcohols, chemical sunscreens, silicones, fragrance and dye, and SLS. They’re focused on vegan and cruelty-free products, too.

Ivy Wild founder Rachel Mulcahy says, “We all want brands to make ingredients simpler to navigate. That means sharing a complete list as well as making it very clear which ingredients they do not contain at a category level: No parabens, no phthalates, no SLS or PEGs.” Many brands and retailers are trying to present ingredients in a straightforward manner. SpaRitual, for instance, has enlarged the font of its ingredient listings to help consumers read them. Five Dot Botanics and S.W. Basics purvey products with five or fewer ingredients. Sephora, Beautycounter, Credo, QVC, and other retailers and brands created lists of ingredients banned from clean beauty products to clarify what shouldn’t be in their formulas.

Clean beauty brands promoting transparency are generally doing so in reaction to what the entrepreneurs behind them view as marketing deception by competitors. “Brands are using the word ‘zero waste’ when they are not. They are far from it. They are using words like ‘superfood’ when they are not using food-grade ingredients,” says Tina Hedges, founder of zero-waste brand LOLI Beauty. “They are using clean and conscious, but they are not living up to it.”

Marketing claims may obfuscate the truth, but brands aren’t always cognizant of the truth. They’re seldom entirely knowledgeable about the stuff their stuff is made from. Vendors along the supply chain can, surreptitiously or not, conceal ingredients and manufacturing, sourcing or labor practices from brands. Several brands have sought to control these practices to enhance transparency. LOLI Beauty sources its own ingredients instead of depending upon a third-party factory to funnel ingredients into its products, and Au Naturale Cosmetics constructed an in-house lab to handle its production.

“What’s really important to me about transparency is it’s not what brands say is in their product. It’s not the story that they want to tell that fuels transparency. It’s reality. Consumers want to know what is really happening with your products and what’s really in them.”

“I do not believe that a brand can be transparent unless they can follow their supply chain from farm to finished product, and communicate their production and sustainability processes,” says Au Naturale founder Ashley Prange. “It’s difficult for me to believe a brand is transparent when they use a filler or third party for manufacturing as these entities do not allow for transparency by citing their sourcing and processes as proprietary.”

Beauty industry suppliers are becoming sensitive to their beauty brand clients seeking to be transparent. Ingredient supplier Croda has developed a farm-level traceability program that connects the ingredients it sells to beauty companies to their origins. It gets sea grapes from the Philippines and kumquats from France, for example.

“Consumers are very aware of products’ environmental and social impacts, so they want to know more about what companies are doing to minimize any negative impacts on the environment and the communities where ingredients come from,” says Alejandra Camacho, business development manager at Croda. “In the case of botanical products, this means following the raw material all the way to the farm. Our direct relationships with our farmers allow our customers to know more about these impacts and also brings a human dimension to our products that they can later on share with their customers.”

External certifiers assist in keeping vendors in check and validating brands’ transparency messages. Through procedures to obtain Made Safe certification, True Botanicals uncovered that retinol in two of its products contained butylated hydroxytoluene, a preservative the certifying organization says is linked to health concerns. The retinol supplier hadn’t revealed to True Botanicals that the retinol was preserved in butylated hydroxytoluene prior to the involvement of Made Safe. The skincare brand reformulated the retinol products as a result of the certifier-stoked sleuthing.

True Botanicals
True Botanicals founder Hillary Peterson says, “For the health of the beauty industry, I personally don’t feel regulation should be all about self-reporting. That’s why we chose the Made Safe certification.”

“What’s really important to me about transparency is it’s not what brands say is in their product. It’s not the story that they want to tell that fuels transparency. It’s reality. Consumers want to know what is really happening with your products and what’s really in them. I don’t see transparency as gray. I see it as very black and white,” says Hillary Peterson, founder of True Botanicals. “For the health of the beauty industry, I personally don’t feel regulation should be all about self-reporting. That’s why we chose the Made Safe certification.”

Historically, certifications haven’t resonated substantially with beauty consumers with the exception of cruelty-free certifications like Cruelty-Free International’s Leaping Bunny certification. That may be changing, though. During the entrepreneurial education conference BeautyX Capital Summit last month, Annie Jackson, co-founder and COO of clean beauty retailer Credo, said customers are far more interested in an array of certifications than they were even a year ago. Speaking of the relevance of USDA Organic certification, Vickie Natale, founder and CEO of organic certification preparer ORG&NICS, says, “The consumer knows that your brand is policed by a trusted government agency similar to what the FDA does with drugs, and so what you say is in your products is truly in your products.”

Beauty brands’ discussion of transparency is primarily centered on ingredients, but it doesn’t stop with them. It extends to the money pouring into beauty businesses, their ecological footprints, supplier partnerships, charitable giving and reactions to problems. “While ingredient transparency is one of the biggest components of this trend, the consumer perception about how these brands deal with business practices is also part of the transparency definition,” says Jensen. “Transparent brands use social channels not only to disseminate information and advertise, but also to tackle controversies head-on and communicate with their consumers about key topics such as product development and philanthropy.”

To LOLI Beauty, transparency entails being frank about areas in which it could do better. The brand incorporates plastic caps, and Hedges says it freely explains to consumers, “It’s the only plastic we use. We are exploring materials that are fully compostable that we hope to move into. The technology is not there and the size of our orders aren’t there yet to get a supplier to do it for us.” In an unrelated matter, LOLI Beauty decided to recall the product Pank Micellar Water it collaborated on with the podcast Natch Beaut due to an aesthetic issue that didn’t meet its quality standards. Once it did, the brand refunded purchasers of the product, set up a dedicated email to field questions, and Hedges wrote to the consumers who bought it.

“If you are really going to be on the path of a transparent brand, you have to be fully active and engaged in living up to that promise.”

“We could have just waited to see if anyone noticed it or cared, but the act of doing nothing is the act of doing something,” she says. “If you are really going to be on the path of a transparent brand, you have to be fully active and engaged in living up to that promise.”

Clean beauty brands and retailers sense the forthcoming frontier in beauty industry candor is sustainability. “We are seeing a shift to customers demanding transparency around packaging materials the we—and our brands—use,” says Credo director of marketing Lydia Kandel. “From the raw ingredients to the Credo package that arrives on your doorstep, customers are going to want to know where everything came from and how to recycle/compost it.” Mulcahy agrees, saying, “Consumers have really started to care about the safety of ingredients related to our own health. Next, I think they’ll shift focus to understanding the impact of production on animals, the environment, and native sourcing/small producers.”

Of course, transparency is unlikely to infiltrate the industry unless there is a significant sales upside to being transparent or serious repercussions for not being transparent. That’s because it can be hard and expensive. Audits could be necessary, and brands may have to expose elements of their businesses posing risks to them. Fragrance brands predominantly don’t want to fess up about their fragrance recipes in the off chance a rival could steal their formulas, but transparency mandates exposure. Brands don’t usually let consumers in on product flaws lest they receive a backlash, but transparency mandates they be vulnerable to criticism.

A transparency transformation could take place if consumers and powerful influencers step up their scrutiny of the lack of honesty. They’ve decried brands for falling short on inclusivity and animal testing abstention, and have begun to complain about excessive packaging and shipping materials. Will they do the same for non-disclosure of ingredients, supply chain mishaps, poor employee conditions and funding from investors at odds with brands’ broadcasted missions?

Ivy Wild
Rachel Mulcahy, founder of clean beauty store Ivy Wild, says, “Consumers have really started to care about the safety of ingredients related to our own health. Next, I think they’ll shift focus to understanding the impact of production on animals, the environment, and native sourcing/small producers.”

Prange believes that, if consumers push for greater transparency and punish beauty brands that don’t deliver on it, there will be beauty brands that don’t pass muster. “Should consumers demand more transparency and hold brands accountable to their claims, we will see a deep shift in how beauty businesses run and operate,” she says. “There will be no more smoke and mirrors, and this will put some brands out of business.”

Key Takeaways

  • In a survey of women skincare consumers, The NPD Group discovered skincare brands publicly pronouncing ingredient transparency are gaining share of mind. The market research firm reported over half of women look for skincare products made from organic ingredients, and 46% purchase products without sulfates, phthalates and gluten, a six-point lift from two years ago.
  • Clean beauty brands often promote ingredient transparency. However, they have to follow the same rules guiding ingredient disclosure as their conventional beauty counterparts. When they tout ingredient transparency, they’re often referring to avoiding misleading marketing claims.
  • Ingredient transparency is a tricky endeavor in a beauty industry in which the supply chain is complex, and suppliers aren’t always providing the beauty brands they serve with complete information. Au Naturale Cosmetics founder Ashley Prange says, “It’s difficult for me to believe a brand is transparent when they use a filler or third party for manufacturing as these entities do not allow for transparency.”
  • Third-party certifiers can delve into the supply chain of beauty brands and help shine a light on otherwise hidden practices. As interest in transparency rises, it appears that certifications are increasingly resonating with beauty consumers.
  • Demands for transparency don’t stop at ingredients. Clean beauty retailers and brands foresee that sustainability will be of mounting concern to consumers holding brands accountable for their actions. Consumers may also pay greater attention in the future to brands’ vendor partnerships, the sources of their investment and employee conditions.
  • Offering complete transparency and committing to ethical positions requires business audits, sharing hard truths on social media, and difficult, sometimes costly decisions on the parts of beauty brands.