Key takeaways from ACI’s 11th Annual Cosmetics and Personal Care Legal, Regulatory and Compliance Forum

CosmeticsDesign recently participated in the 11th Annual Cosmetics and Personal Care Legal, Regulatory and Compliance Forum hosted by the American Conference Institute (ACI). The conference program, held in New York City, focused on a wide range of pressing topics for the beauty and personal care industry, which included “sessions on implementing MoCRA, protecting brands from class action lawsuits, navigating PFAS and Prop65 compliance, interpreting the guidelines FTC endorsements, examining ESG and sustainability in the beauty industry, and addressing challenges related to intellectual property, data privacy and generative artificial intelligence issues,” the event website reads.

The conference was co-chaired by Monique Forrest, a seasoned attorney with extensive North American legal experience at Beiersdorf, and Aleen Tomassian, global marketing advisor at Estée Lauder Companies, Inc. Featured speakers include Victor Mencarelli, Director – Regulatory Affairs at Orveon Global, Gary Mozer, Vice President and Global Legal Leader for Digital Data and Privacy at Shiseido Company, Limited, Joseph Aquilina, Senior Director and Deputy General Counsel of the Consumer Brands Association , Marietta Jo, General Counsel at Supergoop! and Brandee Winikoff, deputy general counsel for health and wellness at Unilever, brought her wealth of knowledge and experience to the discussion.

During the two-day conference, numerous speakers discussed the current state of regulation regarding cosmetics and personal hygiene products. Below are the key takeaways from this year’s annual ACI Legal, Regulatory and Compliance Forum on Cosmetics and Personal Care Products.

Current ESG trends and their impact on industry stakeholders

In a discussion titled “ESG in Practice: Charting a Greener, More Sustainable and Socially Responsible Path for Cosmetics and Personal Care Products,” speaker Stefanie Fogel, partner at DLA Piper LLP, presented her findings on the current landscape of environmental, social, and governance issues, i.e. ESG trends in today’s cosmetics and personal care products industries.

As outlined in her presentation, Fogel identified the following as the most important contemporary ESG trends: increased ESG regulation and disclosure, climate transition plans, increasing ESG-related disputes and shareholder activism, ESG in mergers and acquisitions (M&A), business and law human and sustainable development finance.

Referring to her critical conclusions about ESG trends, Fogel emphasized the importance of cosmetics and personal care product manufacturers learning about these trends. She explained that these trends, such as increasing ESG regulation and disclosure, climate transformation plans, growing ESG litigation and shareholder activism, ESG in mergers and acquisitions (M&A), business and human rights, and sustainable finance , are not just buzzwords, but important factors that may impact the industry’s reputation, consumer confidence and financial results.

She also presented best practices to industry stakeholders to ensure compliance with global mandatory sustainability disclosure regulations and the FTC Green Guides by understanding the current ESG framework, which is divided into three parts: assessment, accountability and action.

Within this framework, the assessment includes an ESG assessment, gap analysis and reporting framework; responsibility includes tracking progress and audits, investigations, disputes and enforcement, and scanning the horizon for risk; and activities include management system, strategy design and disclosure of information in reports. By operating effectively within this framework, cosmetics and personal care stakeholders can successfully position themselves in current ESG trends.

Know the potential pitfalls of upstream supply issues

During the same panel discussion, Maggie Spicer, attorney and director at SourceBeauty ESG, emphasized the importance for beauty and personal care industry stakeholders to remain aware of current issues facing the industry early in the supply chain. “Establishing a clear sourcing policy that is consistent with an ESG profile is critical,” Spicer said, as “many of these issues relate to emerging areas of supply chain compliance and legal risk, including those related to greenwashing.” which should be a top concern for companies of all sizes.”

She explained: “Once an ESG profile has been created, it is important to engage all relevant stakeholders at all stages of the value chain.” This is crucial, she stressed, because “upstream supply chain problems start at the raw material stage, where most emissions also occur.” Therefore, “understanding the impact across the entire value chain is therefore crucial to addressing both environmental (e.g. greenhouse gas emissions) and social (e.g. forced labor) issues,” she said.

In her presentation, Spicer showed that these issues are especially important when it comes to packaging materials. As an example, she cited California Senate Bill 343, which “prohibits the use of chasing arrows or any other recyclability indicators on products and packaging unless certain criteria are met.”

This legislation “prohibits manufacturers and others from selling products or packaging marked as recyclable unless the items are regularly collected and processed for recycling in California,” she explained. Businesses that use “recycling symbols or claims that do not meet the requirements of SB 343 are considered ‘deceptive or misleading claims’ and are a misdemeanor punishable by up to six months in prison or a fine of up to $2,500, or both.”

Spicer also cited FTC Green Guidance § 260.12 Recycling Claims, which “provides that an unqualified recyclable claim is acceptable if: (1) recycling facilities are accessible to a substantial majority of consumers at the point of sale of the product.” (i.e. 60% or more of consumers or communities); (2) the entire product or packaging, except for small, incidental components, is recyclable; and (3) the shape, size, and components must be approved by the material recovery facility,” which is another example of where problems can arise because issues upstream in the supply chain are not addressed.

She advised that to remain compliant and avoid problems, “if recycling facilities are accessible to less than a large majority of consumers or the communities in which an item is sold, marketers should qualify all recycling claims.”

MoCRA: what lies ahead

In a panel discussion titled “MoCRA – One Year Later: Exploring How the Cosmetics Industry is Adapting to the New Regulatory Framework and Addressing Current Implementation Challenges,” featured speakers: John WM Claud, Advisor at Hyman Phelps, Victor Mencarelli, Director of Global Affairs at Orveon Global and Laura Rich, general counsel at Venable, provided important information regarding upcoming noteworthy MoCRA requirements for manufacturers and suppliers of cosmetics and personal care products.

One of the most important aspects of this presentation was what to expect in 2024 regarding upcoming MoCRA regulatory implementations. First, the panelists highlighted that “OCS announced that it intends to develop, in collaboration with the FDA Office of Regulatory Affairs, two key guidance documents for industry regarding mandatory product recalls and access to documentation by the end of the year.”

Second, the panelists explained that “MoCRA required FDA to issue a notice of proposed rulemaking by December 29, 2023, regarding testing methods for the detection and identification of asbestos in talc-containing cosmetic products.” As a result, “according to the Office of Management and Budget website, the draft NPRM was sent to OMB for review.”

Third, the panel found that “MoCRA requires FDA to issue a proposed rule on allergens in fragrances by June 29 and a proposed GMP rule by December 29, 2024, but neither proposed rule appears to be included in the unified program published in February”.

Recognizing these expectations, the panel recommended that industry stakeholders take the necessary actions to ensure continued compliance with MoCRA’s evolving requirements. First, the panelists explained that “when it comes to registration and listing requirements,” cosmetics and personal care companies must “know what MoCRA requires.”

For example, they cautioned: “the delay in enforcing the registration and listing provisions should not be assumed to apply to all remaining requirements that entered into force on December 29, 2023.” Instead, industry firms “must have a way to demonstrate compliance, such as reporting adverse events,” and “must provide adequate safety justification,” the panelists said.

Additionally, the panelists advised that industry firms should “understand that currently, given the lack of real requirements, we are in a state of ‘regulation by enforcement’.” Therefore, they collectively stated: “One way to potentially reduce risk is to demonstrate that you are making progress towards the requirements and that you have a planned timeline (which you are following) for achieving compliance.

Finally, the panelists said, “microbial safety appears to be a major concern for the FDA.” As a result, they suggested that companies producing cosmetics and personal care products “consider re-examining current procedures and manufacturing practices to ensure they are appropriate” as a best practice for the coming months.