Biodiversity Compliance in the Cosmetics Sector

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Central Government gives a unique opportunity for cosmetic companies that use biological resources in their supply chains to comply with Indian Biodiversity Laws 

  • Does your company’s commodities portfolio contain natural ingredients?
  • Are you compliant with Indian Biodiversity Laws?
  • If not, you have another 2 months to regularize your activities in a unique opportunity being given by the Central Government. 

Many cosmetic products contain natural ingredients which derive from plants and animals. Among these are:

  • essential oils
  • pigments
  • surfactants
  • substances of biological origin

Every cosmetic and skincare company that uses biological resources at some point in its supply chain will need to check the applicability of the Biological Diversity Act, 2002, Biological Diversity Rules, 2004 and Access and Benefit Sharing (ABS) Guidelines of 2014 to their business. Compliance means: 

  • Filling form I and form A towards approval for use of the biological resources used
  • Paying ABS fees (maximum 0.5% of the relevant product’s annual ex-factory gross value) to the relevant regulatory authority

For many reasons, compliance under this law has remained low in the country. With rising awareness of biodiversity issues especially in international trade and global supply chains in the cosmetics sector, compliance under this law becomes doubly relevant.

The Central Government, vide a circular dated September 10, 2018 has given a unique opportunity for those companies who haven’t been compliant with the biodiversity laws. There are several cases where prior approval was required (for using Indian biological reosuces) and a company has not obtained such an approval. Such cases can now be heard by the National Biodiversity Authority to regularize the company’s operations under these laws. A company has roughly another 2 months to do so, after which it will be a violator of Indian laws. 

Non-compliance under the Act could mean: 

  • Penalties ranging from INR 5 lakh to INR 10 lakh
  • Imprisonment

 

Cosmetic companies can choose to go a step beyond compliance by opting to have a strategic management of their supply chains that allows for the continuous improvement of the biodiversity performance of the company. These can include:

  • Full compliance under Indian Laws
  • The company’s corporate goals supporting objectives of the UN Biodiversity Convention
  • Harmonising operations with global good practices
  • Signing up with a global standard such as the UEBT to ‘source with respect’
  • Creating a positive case study to be presented to other companies and being a market leader in the sustainable sourcing of resources for competitive advantage

The integration of the topic into the corporate target system and anchoring it both strategically and operatively in the company is the basis for successful biodiversity management. Because cosmetic companies can be extremely dependent on biological raw materials and ingredients from regions of high biodiversity as well as on the use of materials from protected or endangered species, the corporate management should adapt its environmental policy to support global and Indian biodiversity goals, particularly for a market where the consumer is becoming more aware of issues around sustainability.

For more information, please contact: ipshitachaturvedi@candcadvisors.in

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