July 18, 2022
Three years ago, several makeup products at Claire’s, the national retail chain beloved by teenagers, tested positive for the presence of asbestos—a mineral that has been known for decades to be linked to several types of cancer and lung disease, reports Fortune.
The Food and Drug Administration did what it could legally do about the fact that teenagers had been applying asbestos to their faces and possibly absorbing it through their pores: It recommended Claire’s recall the products. Claire’s disputed the test results, but ultimately recalled the products, even though the FDA had no further authority to act.
“To be clear, there are currently no legal requirements for any cosmetic manufacturer marketing products to American consumers to test their products for safety,” then-FDA Commissioner Scott Gottlieb wrote candidly in a March 2019 statement with Susan Mayne, director of the Center for Food Safety and Applied Nutrition at the agency.
Not much has changed since then. Federal law regulating the beauty industry hasn’t been updated since 1938—the year that Adolf Hitler marched into Austria and set off the Second World War.
“Cosmetics is the least regulated category in the marketplace: There are more restrictions on the pesticides that we spray on crops to kill weeds than the stuff we spray on our bodies every day,” said Scott Faber, head of Government Affairs at the Environmental Working Group (EWG).
All the same, Congress, where several female legislators—including Sen. Dianne Feinstein of California, Sen. Susan Collins of Maine, Rep. Jan Schakowsky of Illinois, and Sen. Patty Murray of Washington—have introduced bipartisan proposals to update the laws, expand FDA authority to oversee beauty brands, and ban the most harmful chemicals.
Last month, those proposals were tucked into the FDA Safety and Landmark Advancements Act—legislation that would reauthorize the agency’s user fee agreements related to prescription drugs and medical devices. Since this reauthorization needs to pass, the ride-on cosmetics regulations have their best chance in over eight decades to move through a gridlocked Congress.
The proposals have widespread support from the beauty industry, including Unilever, Johnson & Johnson, L’Oréal, Sephora, and Procter & Gamble, because many mainstream brands and retailers have already started moving into the clean-beauty space.
Olivia Tong, an equity analyst at Raymond James who follows Ulta Beauty, Estée Lauder, Sally Beauty, and other cosmetics and personal care companies, said regulations could establish some consistency in what “clean beauty” means.
“It’s a little bit of the Wild Wild West right now with anything that has a label of ‘clean,’” Tong said. “Investors along with consumers are typically on board with some consistency in terms of what everybody is talking about.”
David Swartz, equity analyst at Morningstar who covers Ulta, said big retailers don’t have much to fear when it comes to proposed regulations. “If anything, it would allow Ulta to promote its brands and bolster its links with the key suppliers,” Swartz said. “There could be some negative impact on Amazon and others that sell counterfeit and unauthorized beauty products, which could benefit Ulta, Sephora, and other stores.”
Indeed, while not everyone in the industry welcomes stricter regulation, it’s clear that current law has fallen far behind global industry standards and consumer preferences. Clean beauty was the fastest-growing segment as of May, according to NPD Group. Clean-beauty market revenues are up 19% from last year, while vegan makeup revenue is up 27%, and vegan skin care 23%, the market research firm told Fortune.
“There’s way more concern for what goes into products today than there was even ten years ago,” said Larissa Jensen, industry adviser and vice president at NPD Group.
In response to growing consumer demand, the nation’s largest retailers, including Ulta, Sephora, and Target, are launching clean-beauty standards and disclosing more information about how these products are made.
There are no legal definitions for “clean,” “natural,” or “green” beauty products—so companies can use those terms as they wish without fearing legal consequences. “Organic” is the only industry label regulated in the United States.
The nonprofit advocates for stronger regulation of the beauty industry and has launched the Skin Deep cosmetics database as an alternative way for consumers to check ingredients in the products they use in the interim. An accompanying mobile app makes it possible to scan barcodes in a store to see how an item rates.
Credo, a San Francisco–based clean-beauty retailer, has established a Clean Standard for the products it carries. It bans the use of 2,700 mainstream beauty ingredients that raise safety and sustainability concerns; restricts animal-derived ingredients and animal testing; and poses questions about ethics, sustainability, and transparency.
“The standard is really the nexus of how we evaluate ingredient and material safety, sourcing, sustainability, and ethics,” said Mia Davis, vice president of Environmental and Social Responsibility at Credo. The company explains on its website that it created the standard because current law is so limited.
Yet the brand does not think the standard is a stand-in for federal action. Instead, it’s one of the industry advocates pushing for Congress to act. The tide has turned in favor of regulation, and many mainstream cosmetics brands also supported an earlier bill introduced by Feinstein and Collins that is the foundation of the current proposal.
As is often the case in Congress, the extent of the regulation is the crux of debate. The Personal Care Products Council, which represents manufacturers, distributors, and suppliers of beauty products, says the industry is very responsible and responsive to consumer concerns about safety and sustainability. While critics point out that the European Union has banned over 1,600 ingredients; and the United States. fewer than a dozen, PCPC vice president Jay Ansell says the statistics are misleading.
“Nearly all of those ingredients banned in the EU have never been nor would ever be used in cosmetics, including jet fuel, radioactive substances, pesticides, pharmaceuticals like chemotherapy drugs, chloroform, hemlock, cyanide, and LSD,” Ansell said
.However, Credo’s Davis agreed that not all of the EU-banned ingredients are present in American products, but she added that the EU’s approach is demonstrably more precautionary than the one taken by U.S. regulators. Some beauty brands change the formula of their products for the European market, and she believes those versions are safer.
“This industry enjoys a lot of secrecy,” she said. “There’s very little federal information required of the industry. We need more in order to protect the consumer and the planet.”
Still, Tong of Raymond James noted that many other priorities are front and center for multinational beauty brands right now—including economic pressures, inventory and supply-chain challenges, and shifts in consumer behavior amid the pandemic. That means regulations are not the focus—at least not until current proposals advance further in Congress.
Research contact: @FortuneMagazine