Key insights from ACI’s 11th Annual Legal, Regulatory, and Compliance Forum on Cosmetics & Personal Care Products

Recently, CosmeticsDesign attended the American Conference Institute (ACI)’s 11th Annual Legal, Regulatory, and Compliance Forum on Cosmetics & Personal Care Products. Held in New York City, the conference’s agenda focused on a wide range of pressing topics for the cosmetics and personal care industries, which included “sessions on implementing MoCRA, safeguarding brands against class actions, navigating compliance with PFAS and Prop65, interpreting FTC guidance on endorsements, exploring ESG and sustainability in the beauty industry, and addressing challenges related to IP, data privacy, and considerations of generative AI,” according to the event’s website.

The conference was co-chaired by Monique Forrest, a seasoned legal professional with extensive experience in North America Legal Affairs at Beiersdorf, and Aleen Tomassian, Global Marketing Counsel for The Estée Lauder Companies, Inc. The featured speakers, including Victor Mencarelli, Director – Regulatory Affairs at Orveon Global, Gary Mozer, Vice President and Global Digital Data & Privacy Legal Leader at Shiseido Company, Limited, Joseph Aquilina, Senior Director & Associate General Counsel for the Consumer Brands Association, Marietta Jo, General Counsel at Supergoop!, and Brandee Winikoff, Assistant General Counsel for Unilever Health & Wellbeing, brought their wealth of knowledge and expertise to the discussions.

Throughout the two-day conference, numerous speakers discussed the current state of the cosmetics and personal care product regulatory landscape. Below are our key takeaways from this year’s ACI Annual Legal, Regulatory, and Compliance Forum on Cosmetics & Personal Care Products.

Current ESG trends & their impact on industry stakeholders

In a discussion entitled “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, covered her takeaways on the current landscape of environmental, social, and governance, or ESG trends in today’s cosmetic and personal care product industries.

As outlined in her presentation, Fogel identified the following as today’s most significant ESG trends: increasing ESG regulations and disclosures, climate transition plans, increasing ESG litigation and shareholder activism, ESG in Mergers and Acquisitions (M&A), business and human rights, and sustainable finance.

Regarding her critical takeaways from ESG trends, Fogel emphasized the importance of cosmetics and personal care product manufacturers familiarizing themselves with these trends. She explained that these trends, such as increasing ESG regulations and disclosures, climate transition plans, increasing ESG litigation and shareholder activism, ESG in Mergers and Acquisitions (M&A), business and human rights, and sustainable finance, are not just buzzwords, but significant factors that can affect the industry's reputation, consumer trust, and bottom line.

She also provided best practices for industry stakeholders to ensure their compliance with Global Sustainability Mandatory Disclosure Laws and the FTC’s Green Guides by understanding the current ESG framework, which is broken down into three parts: assessment, accountability, and action.

Under this framework, the assessment includes ESG assessment, gap analysis, and reporting framework; accountability includes progress tracking & audits, investigations, disputes & enforcement, and horizon scanning for risk; and action includes management system, strategy design, and reporting disclosures. By operating successfully within this framework, cosmetics and personal care product stakeholders can successfully position themselves within the current ESG trends.

Familiarity with the potential pitfalls of upstream supply issues

In the same discussion panel, Maggie Spicer, Attorney & Principal at SourceBeauty ESG, highlighted the importance of cosmetics and personal care product stakeholders maintaining familiarity with the current upstream supply chain issues facing the industry. “Establishing a clear material sourcing policy that aligns with an ESG profile is critical,” Spicer said, as “many of these issues relate to emerging areas of supply chain regulatory compliance and legal risk, including those related to greenwashing, which should be top of mind for companies of all sizes.”

She explained, "Once an ESG profile has been created, engaging with all relevant stakeholders and across all stages of the value chain is important.” This is crucial, she emphasized, because “upstream supply chain issues begin at the raw material stage, which is also where the majority of emissions occur.” Therefore, “understanding impact across the full value chain is therefore critical to address both environmental (e.g., GHG emissions) and social (e.g., forced labor) issues,” she said.

In her presentation, Spicer illustrated that these issues are particularly relevant to packaging materials. She cited California Senate Bill 343 as an example, which “prohibits the use of the chasing arrows or any other indicator of recyclability on products and packaging unless certain criteria are met.”

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

Spicer also cited the FTC Green Guides § 260.12 Recyclable Claims, which “provides that an unqualified recyclable claim is acceptable if: (1) recycling facilities are available to a substantial majority of consumers where the item is sold. (i.e., 60% or more of consumers or communities); (2) the entire product or package, excluding minor incidental components, is recyclable; and (3) the shape, size and components must be accepted by a material recovery facility,” as another example of where issues could arise from failing to address upstream supply chain issues.

She advised that to remain compliant and avoid issues, “when recycling facilities are available to less than a substantial majority of consumers or communities where the item is sold, marketers should qualify all recyclable claims.”

MoCRA: what lies ahead

In their panel discussion entitled “MoCRA – One Year Later: Examining how the Cosmetics Industry is Adapting to the New Regulatory Framework and Addressing Current Implementation Challenges, speakers John W. M. Claud, Counsel at Hyman Phelps, Victor Mencarelli, Director of Global Affairs at Orveon Global, and Laura Rich, Counsel at Venable provided vital information regarding upcoming noteworthy MoCRA requirements for cosmetics and personal care product manufacturers and suppliers.

One of the most crucial aspects of this presentation covered “what to expect in 2024” regarding upcoming MoCRA regulatory implementations. First, the panelists highlighted that “OCS has announced that by year-end, it expects to develop, in collaboration with FDA’s Office of Regulatory Affairs, two key guidances for industry on Mandatory Recalls and Records Access.”

Second, the panelists explained that “MoCRA required FDA to issue a notice of proposed rulemaking on testing methods for detecting and identifying asbestos in talc-containing cosmetic products by December 29, 2023.” As a result, “according to the Office of Management and Budget’s website, the draft NPRM is with OMB for its review.”

Third, the panel shared that “MoCRA requires FDA to issue the fragrance allergen proposed rule by June 29 and the GMP proposed rule by December 29, 2024, but neither proposed rule appears to be on the Unified Agenda that published in February.”

Acknowledging these expectations, the panel then advised that industry stakeholders can take vital actions to ensure continuing compliance with MoCRA’s evolving requirements. First, the panelists explained that “regarding the registration and listing requirements,” cosmetics and personal care companies need to “know what is required by MoCRA.”

For example, they cautioned, “do not assume that the delay in enforcement for registration and listing applies to all of the other requirements that came into effect on December 29, 2023.” Instead, industry companies “need to have a way to show compliance with requirements like adverse event reports,” and further, “need to ensure [that] safety substantiation is adequate,” the panelists said.

Additionally, the panelists advised that industry companies should “understand that currently, given the lack of actual requirements, we are in a state of ‘regulation by enforcement action.’” Therefore, they shared, “One way to potentially reduce risk is to show progress towards the requirements and have a planned timeline (that you follow) for getting into compliance.”

Finally, the panelists said, "microbiological safety appears to be a key focus for FDA.” As a result, they suggested cosmetics and personal care product companies “consider reexamining current manufacturing procedures and practices to ensure they are adequate” as best practice for the coming months.