This episode is audio from Nancy Mahon's keynote address to the Engelberg Center's Conspicuous Consumers Symposium. It was recorded on October 16 , 2025.
Announcer 0:01
Welcome to Engelberg Center Live!, a collection of audio from events held by the Engelberg center on innovation Law and Policy at NYU Law. This episode is audio from Nancy Mahon's keynote address to the Engelberg Center's Conspicuous Consumers symposium. It was recorded on October 16, 2025
Jeanne Fromer 0:25
thank you all for being here. I am happy to kick off the conference with a fantastic speaker. So I wanted to introduce Nancy Mahon. Nancy is just amazing, and you're gonna get to hear from her in a moment. She's the Chief Sustainability Officer at sa Lauder. She's had many roles that I just want to share, because the range of what Nancy's accomplished, I think, informed so much of what she does. She's a non executive public board and Audit Committee member at TPG pace beneficial finance. She's a former chairperson of the Presidential Advisory Council on HIV AIDS. She's the former CEO of God's Love We Deliver. And very importantly, a graduate of this Law School, where she excelled as a rutilden scholar, among other things, and she's a wonderful trustee of this law school as well. I could go on, but I will shut up, because it would be more interesting to hear from Nancy than to hear from me about this. So please, welcome Nancy. I
Nancy Mahon 1:44
All right. Well, thank you. Thank you. And thank you Professor Frommer, who I know as Jeannie, and also professor Dreyfus, she gave me a sort of coaching session on Friday as to how to do this talk. So I am proud member of class of 1989 and deeply, deeply grateful for everything that NYU did for me and all that I learned. So I'm happy to participate today. So my career generally, has shifted in between social impact and environmental work on both the foundation side, the government side and also the private side. But for today, what I'm going to really talk with you about is circular economy. So we're living through some interesting times in many ways, but particularly in my field, as we're seeing a shift in how companies think. Companies like mine think about ownership and collaboration. For example, consumers aren't just asking for green or sustainable products. They're asking specifically for circular economy, a system based on the reuse and regeneration of materials or products and collaboration. As Chief Sustainability Officer at Estee Lauder, I'm all for this, but as a former lawyer, I know that circularity doesn't just challenge business models. It challenges our regulatory system, our legal frameworks, from intellectual property to Competition and Consumer Protection Law. So today I'm going to touch on three things. What does Circular Economy mean? Why it's reshaping how we think about regulations in the law, and then lastly, how we at Estee Lauder are dealing with this firsthand and putting these ideas into practice. And my hope is that I can, you know, power through this, so that we can spend some time talking. I always find Q and A to be the most interesting part of talk, so I look forward to that. So what is circular economy? Well, the traditional consumption model is what's is linear, take, make, dispose, circular economy flips this. It's about keeping materials in circulation, designing waste out from the start. It's about reuse, repair, refill and regeneration. So success in that model depends on eco design, how products are built to be disassembled, refilled or recycled. It also involves sharing, leasing, reusing, repairing, refurbishing, lots of reasons my job and recycling existing materials and products for as long as possible. So consumers are the primary force driving this shift. Actually, when Jeannie first asked me this. I said, you know, don't love the word conspicuous. We call them conscious consumers, but regulatory. But regulators are investors are also reinforcing this. I spend about a third of my time with investors, and what we see is that consumers prefer brands that make reuse easy and visible. And generally investors, you know, there's the old hockey adage of, you know, you have to know where the puck is going. So generally, investors have been way out ahead through the ESG movement of understanding where consumers were. So basically, what we see is that expectations are growing, but there are a ton of questions about who pays. For these systems, consumers, manufacturers or government, and we still have not settled that. So how does Circular Economy interact with the law? Well, I'm not an IP professor, but clearly IP was built around control and exclusion. You invent, you patent, you protect and you prevent copying. Fact, there's a whole chunk of my legal department that does that the circular economy values access and longevity. You design for reuse, refurbishment and shared ownership, so these two systems collide. So can someone repair or refill your product without infringing on a patent who owns the IP in a refurbished or remanufactured product? How do we protect safety and brand integrity while promoting reuse. This tension sits at the heart of modern IP. But it doesn't stop there. Circularity also tests the limit of competition law. If one company controls the tools, this sounds a little like a legal exam, the tools, parts or data needed to repair or refill a product, it can effectively limit reuse markets. So think of how Apple limits third party repairs, citing safety and brand integrity, but also shaping market access. Or Patagonia actually walked past their store yesterday. They are really, have really nailed it in terms of how this shows up at retail, but they protect its materials technology by inviting repairs and resale expanding rather than constraining the market, and they've integrated it into their retail model, because they basically want you in that store, because the likelihood when you go in that store to get something repaired is you're going to buy something else. So antitrust principles like interoperability, access and fair competition now have real environmental consequences. The circular economy requires open ecosystems, not closed ones, and competition law can either enable or restrict that. Circularity also challenges consumer protection law. Consumers rely on claims like recyclable, refillable yet the legal standards vary widely. Regulators are responding the FTCs updated green guides in the US to the EU's green claims directive for companies like Estee Lauder, it means aligning marketing and design and disclosure. In fact, we're using AI to try and track what ingredients need to be formulated out of ingredients, what regulations we will have if we use non recycled plastic to essentially try and economize and also comply with regulation. So for companies like us, it means aligning marketing design and disclosure so that when we say something is circular, it truly is. You might have seen a couple of weeks ago, actually, that Sephora got fined by the state of California. There is for reasons. I won't go into cosmetic waste in California is considered basically priority waste that has to be handled, similar to sharpies medical waste. And Sephora was making claims and was not actually doing that, and so they got fined $775,000
Nancy Mahon 8:06
by the state of California. So but as consumers demand this shift, the question becomes, how can our legal frameworks, IP Competition and Consumer Protection evolve from the tools of control to enablers of circular innovation, the law must balance protection and participation, protecting creativity and brand integrity, ensuring open and fair markets and giving consumers truthful, comparable information. And beneath it all lies a fundamental economic question, how do we allocate the costs and the responsibilities of circularity fairly across consumers, producers and policymakers, particularly in this age of incredible inflation and low economic growth. So what's our perspective? Well, I think we think about these questions every day, because the circular economy doesn't live in a single silo. It's a shared challenge across design, compliance and consumer experience. One of our foundational principles is that the consumer is always right, and if so, and if some consumers want circularity, it's our job to deliver it. We listen closely to consumer sentiment, both by region, by country, by age, group, by ethnicity, and it's clear that consumers expect reuse, refill and responsibility, and we're already delivering it on several levels. Our packaging, we have really leaned in on an open face packaging goal, open facing packaging goal, it has a lot of reason it, because recycling law is controlled, as you will likely know, on a local level. So our packaging has to be recyclable, refillable, reusable, recycled or recoverable. We also have integrated circular economy into our retail model. So I was just talking to Rochelle Dreyfus about back to Mac. It's essentially and I used to run that program when I was at MAC Cosmetics. Basically, if you bring in five empties, you get free stuff. Well, people love free stuff. What we also saw, though, as we really studied, is that that customer is very loyal, and there's something that we refer to as share of basket that customer buys, Rochelle buys a lot of stuff, comes back often, and so that is actually helpful to the brand, but at the same time, we're serving an environmental purpose. So as we move forward, you also probably know our brand, le labo, we have refillables. Refillables are a critical part of their commercial model. It actually only comprises about 10% of their actual business. But we find also, for instance, that those those customers would rather than they'll order something, they'll get a refill. And if they get something new online, they want to pick it up at a local store. They don't want it to be shipped. So again, what we're trying to do is create as much affordable, eco friendly options as we can. So I think as we move forward, the question would be for IP law, how to share designs or refill systems without losing proprietary innovation, how to open and repair refill markets without creating unfair advantages or risks, and for Consumer Law, how to communicate in a byzantinely complex world about recyclable and sustainable and be truthful across all jurisdictions. One of the things that happens for big companies like ours is we actually have to design for one global product to the highest standard. And what we do see is that there is a bit of a split between the EU the UK and the US, with higher demand on circularity and sustainable attributes in the EU and the UK, although recent Wall Street Journal survey said that 56% of American consumers would not buy a consumer goods product if they thought it was in a container that was not recyclable. So definitely moving forward. So in terms of who pays for circularity, that's one of the biggest open questions. What we've why circularity is more expensive is we have to get to a certain level of scale. In other words, who has the responsibility versus the right to pay for refills and recycling? For instance, PCR consumer recycled plastic is now significantly more expensive than virgin plastic. And will consumers pay a premium for recycled or refilled products? And we have found the answer is yes, at least in our category. So the evolving role of regulation, one of the complexities now, as I'm sure you've seen, is that environmental regulation has become part of some of the tariff discussions, and what we found is that pretty consistently, we don't see the EU stepping back the EU on issues like urban wastewater, waste generally. These countries, I think, are economically challenged, as many are, particularly their municipalities, and at the end of the day, they don't they want American companies to pay for the waste, the water and the recycling. And so we do not see that changing also the US law is super fragmented. We always say California is its own state, own country. California is way ahead on many, many areas. Again, we have to operate our business in every state like in California, because we have one, one standard and so. So so the key issue isn't just how much regulation we need, but how consistent and enabling it can be. One of the difficulties we've had, and I oversee our ESG investor work, is that with so many voluntary standards and so many different standards, it's very expensive to comply with multiple standards. So accurately, actually, even though I never thought I would say it, I actually welcome regulation, because that would be one standard. What would be great is to have one global standard, which doesn't seem likely, given all this going on. So in terms of where we see challenges are, one is infrastructure gaps. So many recycling systems still can't process or compile or compost beauty packaging. I don't know if you guys have ever been to a Murph. A Murph, where they actually, literally sort recyclable stuff. What happens with our little packages is they fall through the belt. So that's why Nespresso does the Take Back mail in. And so we're looking at a similar program liability and quality if a third party refills or repairs a product who's responsible for safety or performance. How do we protect consumers and brand integrity while supporting legitimate reuse, consumer participation, circularity really depends upon behavior change at scale, companies like mine that sell things, we spend a lot of time thinking about consumer behavior. We don't spend as much time talking about how they recycle. For instance, One fun fact, most, 80% of consumers dispose of beauty products or skincare products in their bathroom, and it's very rare to have a sorting waste paper basket in your in your bathroom. I. Also the vast majority. If you took people Washington Square Park and stopped them and asked about recycling laws, the vast majority of people don't understand them. And so what we really need to do as an industry is partner more with municipalities and clarify what the recycling laws are. So ultimately, the circular economy will require legal innovation and collaboration, share standards clearer consumer guidance and frameworks that reward access and reuse rather than restrict some so some closing thoughts, sustainability isn't simply an ethical choice, it's redefining the very rules of the law, innovation and ownership. You all the next, the current and next generation of legal thinkers will need to integrate IP competition, consumer protection and environmental law to enable a truly circular economy. And there's some very, very exciting work going on in Europe, Eastern and Western Europe on this as well as in the UK. And then each of those frameworks must evolve to reward not just innovation, but collaboration. Thank you. All
Nancy Mahon 16:07
right, so what do you guys think I saw? Some head nods, some doubts. What do you guys do and why is this of interest to you?
Speaker 1 16:17
Okay, thank you. I'll use my indoor voice we all know kind of, given the economic situation, a lot of folks are having a hard time making ends meet. There's probably another group who are just philosophically against circularity, recycling, whatever it is. How do you think about engaging with those groups who are either just financially under the pressure so they can't pay a premium, or who just have a philosophical opposition to, you know, to the mission.
Nancy Mahon 16:46
So, I guess so one is nobody, nobody feels sorry for big luxury companies, and nobody should. But we are in a era of, you know, post covid, there was this huge boom in consumption, and so we were like in our business and previous to covid, we were seeing 10, 15% double digit growth, which candidly made it much easier to pay for sustainable practices for big companies, particularly US companies, in terms of consumers, what we are seeing is a lot more price point sensitivity we have seen actually, Interestingly, in China in particular, refills are incredibly popular, you know, I don't know, and we've spent a lot of time thinking about, how can we make more refills available at more sizes? We've reduced sizes. The reduced size again, because of the recycling, we're introducing paper sachets. Two of our brands, Aveda and Lila Beau or particularly, I'm sorry, and Aveda, Aveda and origins are very environmentally friendly, so what we tried to do is offer more value through refills and through smaller sizes. We also do see more people, you know, what they call shopping, high and low so and a lot of what people refer to as promiscuous shopping, which is that you're not seriously monogamous with one brand, but you're mixing up and down. And so what we've tried to do again is produce better products at more value. And what we also do is we give our country managers enormous power to decide on assortment, and so that, I think, makes it much more regionally relevant and much more attuned to what we're seeing economically, because it really does vary by country. You know, something that you might see in Dubai you won't see in, you know, in Pittsburgh, sure.
Jessica Silbey 18:38
Okay, Hi, I'm Jessica, and I an IP lawyer, but and law professor, so some of your questions really interested me, but I think the thing that I'm most interested in about your interesting talk was how you think about changing consumer behavior, like how your company thinks about persuading people to act differently. And so I was interested in your comment about Nespresso and the mail back pies, right? So they make that very easy, because they have prepaid labels, and you just have to bring it to a local place to but, you know, part of me also thinks that all the I should just buy local coffee and not make use my espresso Nespresso. I mean that there's, you know, you know, so you know. How are you thinking about getting people to what is your messaging to consumers about how to change their behavior, to recycle more, for example, or to, I'm just interested in the in the story you're telling to people have to buy into it. You know, it's not only going to be easy, it's not just a recycling thing under your sink in your bathroom. They actually, they have to believe that what they're doing is virtuous at some level. I think, I don't know, I don't know if you're thinking about that that way. But,
Nancy Mahon 19:56
you know, we think about it a lot, and so. So in terms of changing behavior, one is, we have to make it easier. So for instance, Amazon, there's a there's a subsection of Amazon called climate friendly pledge, and that all of those products in beauty sell at 9% higher rate than non climate friendly pledge. And so and and the way Amazon is influencing behavior is it now has an AI algorithm that if you've bought a climate friendly pledge product in the past, then when you go to another category, it will throw up one of like so for instance, several of our lines have climate friendly pledge products. So that's one area our job, on our side is to get our team is to get our products into those categories. Essentially, we also think a lot about the marks, you know, B Corp, FSC, and we've done a lot of consumer insights about that. What we basically do, folks know what a B Corp is? It's a public corporation. It involves an enormous amount of actually, legal work, governance, work, transparency, two of our brands, Aveda and lelebo, are both B Corp. It's very expensive to do that process, so we spent a lot of time thinking like, Okay, well, what is this really worth to consumer? And what we found was saying something as a B Corp alone is worth nothing. If you say lelebo is a B Corp, it definitely sort of encourages that environmentally socially conscious consumer into lelevo. We've also looked at other marks, like actually cruelty free is probably the most popular in beauty that drives traffic. So one is we try and situate our products as best we can for our consumers to make choice. And the way we think about sustainable attributes is very similar to like red lipstick. You know, you can't say consumers will buy red lipstick. Some consumers will buy red lipstick, or maybe they don't like your red and so what we do is we've been trying to radically mainstream sustainable attributes into our consumer insights. Another thing we've done is we have a sustainable store design program where we're looking at which we think is true that consumers will spend more time in those stores because they're more pleasant and they're more environmentally friendly.
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