Anti-Plastic Sentiment and the Accompanying Insurance Considerations

By May 2020, plastic cotton buds should have disappeared from our shelves, following a new ban, continuing the spirit of that placed on micro-bead use within cosmetics production.

Bans like this may become the norm and will undoubtedly be accompanied by a heightened focus on plastics recycling. Whilst we have all become used to recycling kitchen waste, only around a half of us (52%), recycle bathroom items. This is at odds with the fact that a third of consumers assess a brand’s social and environmental impact when making purchases. Consequently, it is unsurprising to find cosmetics brands trying to solve the dilemma between convenience of use and recyclability.

Mass-production has supported ease of use, but now, more agile smaller firms are abandoning this, so as to adopt techniques such as hand-filling of tubes. Packaging materials are likely to switch from low-cost plastic to higher-cost glass, metal, even wood pulp. It is a sector in evolution.

A family-run beauty-sector manufacturer based in North Lanarkshire in Scotland – Beauty Kitchen – launched in 2014 to take on the big-brand names. Its new range of Seahorse Plankton+ products is packaged in returnable glass and aluminium, allowing returned bottles to be washed and re-used. This is not the only eco-friendly thing about Beauty Kitchen. Labels for its ranges are tree-friendly, made from an alternative option of bleach-free waste limestone rock. The company even takes the unwanted packaging of other brands, using it for its ranges rather than dumping unnecessary waste at landfill sites.

Within dynamic environments undergoing speedy change, like the cosmetics sector, it is wise to have insurance in place, just in case a slip-up unwittingly occurs. Legal issues could face those who unknowingly or accidentally sell a product containing plastic after a ban has been introduced. If that occurs, there can at least be a sigh of relief if there is legal expenses cover in place.
But where there is rapid product innovation, there can also often be associated product recalls, particularly if product claims prove to be unsubstantiated. Product recalls are time-consuming, hugely expensive logistically and a painful blow to profitability. Having product recall insurance in the armoury can often lower the financial impact considerably.

Using new materials means potentially introducing new hazards and new production methodologies that need to be mentioned in risk assessments and staff training sessions. Any claims arising from such changes – either lodged by a member of the public or an employee – could be covered by public and employer liability policies.

As we have already noted, new materials being used in packaging may be necessary, to keep the consumer’s goodwill, but are probably not appreciated by the firm’s financial controller, who will probably struggle to pass higher costs on to the consumer, at least in the short term. This may put added pressures on cash flow, particularly if new suppliers wish to be paid very quickly. In this scenario, it may be wise to consider Trade Credit Insurance, to get your own customer invoices paid without delay and keep cash flowing through the business.

The public mood is very much against plastic – in fact, 89% of people support the ban on plastic-stemmed cotton buds. Cosmetics’ businesses should be looking to reduce or remove their use of plastic, whilst ensuring that, in so doing, they are not opening themselves to risks that are not covered by insurance protection. If you need help with this, please get in touch.