Supply Chain challenges in Natural Cosmetic formulation

Natural cosmetics manufacturers have to evaluate numerous factors across the product life cycle, from its (eco)design concept, raw material sourcing, manufacture, and distribution, to consumer use and end-of-life. Each phase contributes to the overall sustainability profile (including the environmental and social impact) of the product, and each factor may be vulnerable to external shocks or supply chain disruption.

To meet both consumer expectations for natural or organic cosmetics, and the criteria set by voluntary third-party certification schemes, manufacturers must consider a range of supply chain challenges. Impact factors influencing the supply chain can include:

• Economics (price volatility, availability, and security of supply)
• Social (transparency regarding labour conditions, and fair practices, rights and wages
• Environmental (sustainability of sourcing, low impact processes)
• Traceability (certification, quality control, and carbon footprint monitoring)
• Scope for innovation (new product development (NPD), stability, efficacy, and performance testing)
• Regulatory requirements (ABS (Nagoya), deforestation regulations, claims, CSR, ESG, and cosmetics-specific legislation)

While the natural cosmetics sector saw healthier growth pre-2020, recent years have been marked by slowdowns due to external shocks. The Covid-10 pandemic and geopolitical instability have stressed global supply chains and strained the availability of natural raw materials, including its derivatives. A recent, and notable, example of the impact of external shocks is sunflower oil, a widely used ingredient in natural cosmetics for skin conditioning, as a solvent or for generating derivatives. Ukraine and Russia accounted for around 60% of global production in 2024-2025, with the EU contributing around 16% ([1]). Conflict-driven disruption, rising costs of agricultural inputs (e.g., fertiliser), product fluctuation, and post-covid driven inflation have led to persistent supply shortages and escalating prices.

An undeniable strain for naturals remains the increasing impact of climate change, particularly as extreme weather fluctuations, resulting in draughts or floods, have led to consecutive years of low production and raising costs for certain commodities such as sunflower or olive oils. Given climate change is borderless, the potential to mitigate its effects through regional sourcing may not be sufficient. As a result, and to avoid persistent supply chain constraints and mounting costs, manufacturers and suppliers may seek out alternative botanical sources globally. This strategy aims to ensure consistent volumes of raw materials and, ultimately, secure the availability of finished products for consumers until market pressures ease. To this end, facilitating and using technologies for naturals, such as biotechnology or carbon capture, could contribute to securing future supply chains for essential raw materials. However, this would depend on the substance(s) and any current issues with regulation, scalability or feedstock sourcing.

Supply chains stresses can influence the natural sector’s ability to maintain a wide palette of natural or certified organic raw materials that are essential to deliver a diverse range of finished cosmetics. Furthermore, the compounded risk for manufacturers who voluntary certify to private standards is raised further, as the formulation palette may be limited by the strict selection criteria related to origin and/or manufacturing processes that are acceptable for raw material approval.

Simultaneously, on-going regulatory actions associated with cosmetic legislation and green claims pose both opportunities and challenges for sourcing, formulation, and substantiation. Indeed, compliance with new requirements – ranging from additional legal obligations to unclear guidance on their implementation - can generate uncertainty and potentially risk to increased costs due to lower availability of compliant materials. A recent example is the EU Deforestation Regulation (EUDR) ([2]). Palm (kernel) oil and its derivatives, which are frequently used for natural cosmetics, fall under the scope of this regulation. However, despite overarching principle of promoting sustainable sourcing and avoid deforestation is positive, the limited availability of compliant quality materials, coupled with challenges in supply chain management, traceability and due diligence issues, generates increased complexity in an already complex system.

Practical transition periods for regulatory implementation are critical to allow the supply chain to adapt, oversee challenges, and mitigate impacts where possible. The original, but now repealed, entry into force date for the EUDR of 30^th December 2024 had already sparked industrial challenges related to the supply chain’s ability to accommodate enough compliant material to meet demand. Whilst non-palm sources of necessary commodities, like fatty acids used for derivatisation to make substances such as natural emulsifiers and surfactants, are available (e.g., coconut), their supply is significantly more limited, often involving lower production volumes and/or higher pricing. Whilst the one-year deferred of the EUDR entry into force may mitigate certain impact factors, regulatory uncertainty can drive market speculation, raise prices, and have a cascading impact across the whole supply chain, including to consumers.

With the entry into force of a suite of new EU legislation - designed to combat greenwashing ([3]), prohibit forced labour ([4]), improve packaging and packaging waste ([5]), as well as setting corporate requirements for sustainability reporting ([6]) and due diligence ([7])-, the necessary stability, transparency and supply chain security for regulatory compliance continues to fall under the spotlight. Even if discussions on regulatory simplification and adaptation continue in some cases, the culmination of events since 2020 requires manufacturers to reappraise their choices and, where necessary, investigate alternatives to mitigate risk.

Indeed, there are clear risks that new components or raw materials facing single stream sourcing can lead to potential disruptions, delays or even cancellation of product development projects. In some cases, supply chain limitations may force reformulation for important NPD projects, leading to time pressures and financial risk. Furthermore, seeking alternatives and reformulation requires reallocation of resources that may already be limited by market and economic pressures.

Given the complexity of the cosmetic supply chain, diversification and security of supply, shared learnings via pre-competitive collaboration, standardisation of best-practices, and third-party certification of quantifiable characteristics can play a vital role. These approaches could help meet both existing and emerging product requirements, support sustainable innovation, and ultimately ensure consumer demands whilst facilitating their trust, accessibility, and continued availability of a wide range of quality products.