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Corporate Social Responsibility Report 2007
The Estée Lauder Companies Inc.
THE BEAUTY OF SUSTAINABILITY
THE EMPLOYEES OF THE EST{E LAUDER COMPANIES ARE COMMITTED TO
• Being responsible citizens in every community we serve
• Understanding that we are part of a larger whole and that our actions have consequences
• Striving to continuously look for new and better ways to do things to constantly raise our standards
• Providing consumers with innovative cosmetic products of the highest quality and safety standards
• Delivering outstanding service by treating each individual as we ourselves would like to be treated
• Building partnerships with our stakeholders based on fairness and trust
• Pursuing profi t — but never at the expense of quality, service or reputation
• Most of all, staying committed to working safely together with uncompromising ethics and integrity
THE BEAUTY OF SUSTAINABILITY
Dear Stakeholders,
We are proud to present The Estée Lauder Companies’ fi rst Corporate Social Responsibility Report. We
are one of the world’s premier marketers and manufacturers of prestige beauty products; our products are
sourced and sold in the four corners of this world. Since Estée and Joseph Lauder founded this Company
in 1946, we have focused on Bringing the Best to Everyone We Touch. We take our responsibilities to
our consumers, employees, shareholders and our planet seriously. We strive to be good corporate —
and global — citizens.
Sustainability crosses many avenues in our Company. We strive to optimize our use of natural resources
and reduce our carbon footprint. We assess our ingredient sourcing and safety standards policies
regularly. Our commitment to the communities in which we work and the health and wellness of our
consumers and employees is engrained in our corporate culture. Among the information highlighted in
this report is our commitment to the safety and health of our consumers and employees, bio-diversity,
energy conservation and good corporate ethics.
• We installed one of the largest non-utility solar energy systems in the United States.
• We are a founding member of the Sustainable Packaging Coalition. In fact, our Origins brand
developed a line of packaging that is manufactured, printed and folded using 100% renewable
energy resources.
• In Fiscal Year 2006, we reduced our total waste generated and disposal costs.
• We recently implemented an array of smart transportation initiatives to combine shipments and reduce
the amount of outgoing materials shipped via air freight.
• Our Last Resort Program distributes excess materials and personal care products to people in need.
We are focused on the need for us to do our part to ensure a healthy future for our consumers, our
employees and the communities in which we live and work — and we are committed to doing our part.
Sincerely,
William P. Lauder
President and
Chief Executive Offi cer
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OUR COMPANY AND OUR BRANDS
“Bringing the Best to Everyone We Touch.”THE EST{E LAUDER COMPANIES BRANDS
The Estée Lauder Companies Inc. (ELC) was founded in 1946 by Mrs. Estée Lauder, a woman with a
vision. Mrs. Lauder built her business with an unwavering commitment to being the best in all aspects
of the beauty business. The fl agship brand, Estée Lauder, was soon joined by new brands — Aramis,
Clinique, Prescriptives and Origins — each with its own distinctive identity and consumer base, and each
grown from the Company’s innovation and creativity.
The Estée Lauder Companies became a public company (NYSE: EL) in 1995 and has acquired a number
of beauty companies that reach even more diverse populations and fi ll underserved niche markets.
As a result, we have become a more valuable investment to our shareholders.
For more information on our brands, please go to www.elcompanies.com
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OUR HISTORY
1946 EST{E LAUDER
1964 ARAMIS
1968 CLINIQUE
1979 PRESCRIPTIVES
1987 LAB SERIES SKINCARE FOR MEN
1990 ORIGINS
1994 TOMMY HILFIGER TOILETRIES
1995 BOBBI BROWN • KITON • LA MER
1997 AVEDA • DONNA KARAN COSMETICS
1998 M.A.C
1999 JO MALONE
2000 BUMBLE AND BUMBLE
2003 MICHAEL KORS BEAUTY • DARPHIN
2004 AMERICAN BEAUTY • FLIRT! • GOOD SKIN
2005 GRASSROOTS • MISSONI PROFUMI
2006 SEAN JOHN • DAISY FUENTES • TOM FORD BEAUTY • MUSTANG
2007 COACH • OJON
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A SELECTION OF 2006-2007 AWARDS
The Estée Lauder Companies and its brands are recognized around the world for excellence and
inno vation. Between 2006 and 2007, both the parent company and its brands have been privileged
to be the recipients of numerous global awards from our peers, our stakeholders, our consumers
and the media.
HIGHLIGHTS:Citizenship and excellence have long been a hallmark of The Estée Lauder Companies. Estée Lauder
herself was post-humously awarded the Presidential Medal of Freedom, the United States’ highest civilian
award. While it would be impossible to list all of our awards on a global basis, following is a short selection
of awards we have won for our commitment to excellence, innovation and community support.
Fortune magazine’s Most Admired Companies
Criteria included: Innovation, People Management, Use of Corporate Assets, Social Responsibility,
Quality of Management, Financial Soundness and Product Quality.
Marie Claire Prixe D’Excellence
Estée Lauder Advanced Night Repair Concentrate won the First Annual Marie Claire U.K. Prixe
D’Excellence jury prize — one of the industry’s most coveted awards for product excellence
and achievement.
Editors’ Choice Awards: Cosmetics/Personal Care Packaging magazine
Each year, the editors of CPC Packaging review hundreds of product launches from the previous year in
order to choose packaging winners in color cosmetics, fragrance, personal care and sampling. In 2007,
Donna Karan Gold, Aveda Scalp Remedy and Clinique Derma White C-10 Anti-Aging Clarity Formula
received top awards in their respective areas.
Origins’ Dr. Weil for Origins Plantitude Collection won in sustainable packaging. This new category
recognizes the efforts and progress being made by beauty companies to reduce the impact of
packaging on the environment.
Human Rights Campaign’s Corporate Equality Index for GLBT Employees
We received a perfect score and were named one of the Best Places to Work for gay, lesbian, bisexual
and transgender employees for two consecutive years.
AmeriStar Packaging Awards
Estée Lauder, Aveda, Clinique and Donna Karan won fi ve of eight awards in the Health and Beauty Aids
category at AmeriStar Awards. The honor, given by the Institute of Packaging Professionals, is based on
innovation, protection, economics, performance, marketing and environmental impact.
Specifi c product winners included: Estée Lauder Perfectionist Correcting Concentrate, Aveda Scalp
Remedy, Aveda Earth Month Limited Edition Candle 2006, Clinique Derma White Powder Makeup and
Donna Karan Eau de Parfum.
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The 3M Integrity Award
The Aveda Earth Month Limited Edition Candle 2006 also received the 3M Integrity Award for its
environmentally friendly packaging design, based on having the highest scores in economics,
environmental impact, product protection and marketing.
Minnesota Safety Council Governor’s Award for Safety
Our commitment to ensuring the safety and well-being of our employees led to our two Minnesota
facilities receiving this award.
British Safety Council Award
Our United Kingdom manufacturing facility was recognized with the British Safety Council award for the
19th consecutive year in Fiscal Year 2006.
Lighthouse International Volunteer Recognition Awards
In April 2007, The Estée Lauder Companies was honored with The Corporate Partnership Award in
recognition of our consistent commitment to volunteer service within our community, and in particular
to the Lighthouse International.
amfAR Award of Courage
amfAR, The Foundation for AIDS Research, honored John Demsey, Chairman, M.A.C AIDS Fund, and
Group President, The Estée Lauder Companies, for his role in leading the M.A.C AIDS Fund in its vital
and distinctive contribution to the global struggle against AIDS and HIV.
We will continue our commitment to corporate philanthropy, providing generous support to health
initiatives, research, education, environmental causes and the arts.
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A WORLD OF SHARED INTERESTS
The Estée Lauder Companies is proud of its role as the global leader in prestige cosmetics and personal
care products. No company operates in isolation. Our interests coincide with the interests of the larger
community and of the world. In cosmetics research, we use the term “cascade of events” to describe
the skin’s reaction to certain stimuli. Similarly, our performance as a Company creates a reaction that
ripples throughout the communities in which we work and the environment in which we live. Our goal
is to make our effect on the world as positive as it can be.
As a Company, we are responsible to a variety of stakeholders. These include our employees, our
shareholders, our communities, our suppliers, our retail customers and — always — our consumers.
We are committed to making innovative products of the highest quality that are good for people and
that have the least impact on our planet.
We acknowledge our shareholders’ desire to profi t from their ownership in our Company, and we will
do our utmost to fulfi ll this desire while practicing good world citizenship.
We will continue our commitment to corporate philanthropy, providing generous support to health
initiatives, research, education, environmental causes and the arts.
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ASSESSING OUR PROGRESS
Our Company is committed to disclosing our economic, environmental and social performance.
Drawing from the guidelines of the Global Reporting Initiative, the FTSE4Good Index Series and other
agencies, we continually track, assess and update our progress in many areas of sustainability to achieve
a degree of transparency that aligns with our ethical standards and provides clear benchmarks for
the future.
This is our fi rst Corporate Social Responsibility (CSR) report. Please note that some of the facts and
fi gures may have changed by the date of publication, and the timing of some data may vary according
to availability.
SOME ISSUES DISCLOSED IN OUR REPORTING
Economic
• The Company’s economic impact on society
• The fl ow of capital among stakeholders
• Organization-wide economic policies
• Strategies for implementing policies or achieving performance
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Environmental
• The Company’s impact on ecosystems, land, air and water
• Performance related to biodiversity, environmental compliance, etc.
• Environmental indicators such as recycled materials, energy consumption, water use, greenhouse gas
emissions, waste, etc.
Social
• The Company’s efforts to begin to monitor impact on communities and social systems
wherever it operates
• Occupational safety and health indicators, such as employee training and accident statistics
Information on many of the economic indicators is included in The Estée Lauder Companies’
annual reports, found in the investor relations section of our Web site:
www.elcompanies.com/investor_relations/fi nancial_reports/annual_reports.asp
For more information on sustainability reporting go to:
http://www.globalreporting.org/Home
http://www.ftse.com/Indices/FTSE4Good_Index_Series/index.jsp
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SCIENCE AND SAFETY: THE BEAUTY OF OUR PRODUCTSOur products defi ne our Company.
They refl ect our values and determine our reputation.
Products are our most direct and intimate link with the public.
We will not compromise on their quality.
SAFETY ASSURANCES — THE STANDARD OF COMPLETE CONFIDENCE
Because our products touch, treat and enhance the skin of our consumers, it is imperative that they are
safe to use, as well as effective.
At The Estée Lauder Companies, we take safety evaluations to an extremely high level. We are proud of
our stellar 60-plus years of safety.
Safety is our primary concern in the manufacture of products. We hold ourselves to standards that often
exceed those of regulatory bodies around the world. We feel it is our moral responsibility to produce the
safest, most scientifi cally sound products for our consumers.
Each fi nished product is evaluated for its safety in terms of skin health, comfort and performance. To reach
this level, we expend considerable extra effort in product formulation and clinical testing.
The primary responsibility for safety testing lies within our Research and Development Department,
which carries out an extensive review process for every ingredient, formula and product. Our scientists
take many factors into consideration, including physical and chemical properties, chemical structure,
general toxicological profi le and specifi c application.
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Specifi c consideration is given to products intended for populations with special skin care needs.
We conduct in-vitro biological assays and clinical testing of our formulations. New formulas are
evaluated for their potential effects on human health, including skin irritation and sensitization.
Only those products which meet our high standards of safety and performance are released for
distribution. These standards apply not only to skin care products but also to every formulation for lip
products, foundations, blushes, eye makeup, shampoos, conditioners, styling aids and the fragrances
that we send out into the world. This is followed by post-marketing surveillance to ensure continued
quality control.
We continuously evaluate our formulas against the latest fi ndings in peer-reviewed science and update
formulas on a regular basis, as we deem necessary.
Our Global Regulatory Affairs Department administers an integrated product safety and compliance
pro gram that includes ingredient analysis, pre-formulation review and clinical testing of formulas and
fi nished products that takes into consideration the requirements of the 135 countries and territories
where we sell our products.
Our Company maintains laboratories in North America, Europe and Asia as part of our effort to
develop products that refl ect a global perspective on innovation and a desire to meet the needs of
consumers worldwide.
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ETHICAL CONSIDERATIONS
Animal testing. It is the corporate goal of The Estée Lauder Companies to seek the complete elimination
of animal testing on cosmetic products and ingredients worldwide. It is our policy not to test on animals
nor to ask others to test on our behalf except where required by law. We were one of the fi rst companies
to mandate complete replacement of animal tests on fi nished products. We voluntarily stopped testing
our products on animals nearly 20 years ago. We have been in the forefront of efforts to devise and use
in-vitro and clinical tests that do no harm to living entities while ensuring safe, effi cacious products for
our customers. We partner with associations and institutions worldwide to achieve our corporate goal.
Supplier conduct. We expect our suppliers of raw materials to meet the same stringent standards of
occupational conduct that we set for ourselves.
We are currently updating our Raw Materials Coding Package to help our suppliers work with us to
provide us with the fi nest ingredients that meet our strict environmental and safety standards.
In addition, new vendors must agree to operate under a detailed supplier agreement that we will monitor
for compliance. Key components address:
• Child labor
• Minimum wages and overtime compensation
• Safe working conditions
• Observance of local occupational regulations
• Environmental responsibility
Precautionary Principle: The traditional defi nition of the Precautionary Principle has three elements:
threat of harm; scientifi c uncertainty; and preventive, precautionary action. According to experts in this
area, the fi nal test for knowing when to apply the Precautionary Principle is the combination of threat of
harm and scientifi c uncertainty.
At this time, ELC is reviewing this complex process which must take into consideration the differing
regulatory obligations in the countries where we operate, the shifting nature of information and opinion
on environmental matters, and our responsibilities to all of our Company’s stakeholders, including our
consumers. In the meantime, we comply with applicable worldwide regulations, continuously monitor
our products for safety and actively analyze peer-reviewed research.
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SCIENTIFIC BREAKTHROUGHSThe Estée Lauder Companies is constantly engaged in basic research that may lead to the development
of more effective skin care products. Our Biological Research Department, which is part of The Estée
Lauder Companies’ Research and Development Group, is staffed by scientists with advanced degrees
in disciplines related to the skin and its functions. Their studies are regularly published in dermatological
journals; their papers are presented at prestigious conferences, academic colloquia and medical school
grand rounds.
As a result, The Estée Lauder Companies has been a pioneer in products that address skin damage
caused by oxidation and environmental pollution, and we were among the fi rst to use effective natural
ingredients such as alpha-hydroxy acids. We are proud to say that our research has contributed
to the body of knowledge that helps us understand how to make the most effective beauty
products possible.
COMMITMENT TO BIO-DIVERSITYELC actively supports ideas and sources ingredients from indigenous communities as a way to conduct
business in a socially and environmentally responsible way.
In April 2007, members of the ELC Research Laboratories team traveled to China to meet for three
days with experts in Traditional Chinese Medicine to explore the potential of TCM ingredients in
cosmetic formulations.
In May 2007, the Aveda division of ELC partnered with the United Nations Development Program,
Equator Initiative, Tribal Link Foundation and other organizations to exchange ideas and discuss
issues facing indigenous entrepreneurs. Aveda also hosted an event focused on bio-diversity and
climate change.
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Origins has partnered with Dr. Andrew Weil to develop a line of products that is based on the principles
of integrative medicine, a proactive approach to wellness that takes into account the whole person
(body, mind and spirit), including all aspects of lifestyle. Integrative medicine is a healing-oriented
approach that emphasizes the therapeutic relationship and makes use of all appropriate therapies, both
conventional and alternative.
In July 2007, The Estée Lauder Companies became the owner of the Ojon Corporation, a hair and skin
care company that makes products with community-sourced, equitably-priced indigenous (wild-crafted)
ingredients collected by the Tawira, a Central American community whose name means “people of the
beautiful hair.” ELC is totally committed to carrying on Ojon’s tradition of working in partnership with
local people and non-governmental agencies to help develop local sustainable businesses and grassroots
work to preserve local bio-diversity.
The Estée Lauder Companies is a major supporter of science in cosmetics and dermatology.
We are sponsors and co-founders of scientifi c foundations and research centers in the United States,
Europe and Asia. Please visit www.elcompanies.com for information on The Kobe Institute, a core
basic research center in Japan, and the Shanghai Innovation Center in China, which researches the use
of ingredients from traditional Chinese remedies. See www.clinique.com/landing/weill_cornell.tmpl
for information on The Clinique Skin Wellness Center at Weill Cornell Medical College in
New York.
In addition, between 2006 and 2007, the Company has commissioned approximately 25 independent
research grants with leading academic and research institutions around the world to study various
aspects of skin science.
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CORPORATE CITIZENSHIP
The Estée Lauder Companies recognizes our responsibility to be contributing members of the
com munities in which we live and work. We continually demonstrate this citizenship in many ways and
on many levels: as a Company, through our brands, in our affi liate offi ces around the world, at our local
facilities, as corporate departments and as individuals.
Our corporate positions on environmental affairs and safety are founded on an ethical bedrock and built
on pragmatic business decisions. The former underlies our decisions and actions; the latter provides
the resources to make our efforts meaningful on a global level. As we see it, our responsibilities to a
sustainable world are twofold:
• maintaining our own “house” in a way that reduces negative impact on the environment;
• extending our infl uence as active members of the sustainability movement to people, projects and
causes outside our own Company.
The Estée Lauder Companies realizes that to ensure the long-term success of our Company, our
fi nancial goals need to be integrated with the human and ecological impacts of our business.
The goal of corporate citizenship is to increase both shareholder and community value. The
progress of our environmental and safety programs, coupled with our philanthropic initiatives, helps
to make certain that The Estée Lauder Companies will be able to continue to “Bring the Best to
Everyone We Touch.”
GOVERNANCE
Our Corporate Environmental Affairs & Safety Committee acts as the unifying force and focal point for
programs, initiatives and communications related to environmental performance, workplace safety and
associated issues. A sixth sub-committee called the Supplier Compliance Monitoring Committee has
recently been created to ensure the integrity and environmental performance of our supply chain.
EST{ELAUDERC O M P A N I E S
Board of Directors
Product Compliance &Sustainability Subcommitee Corporate
Environmental Affairs &Safety Commitee
Supplier Compliance Monitoring Subcommitee
Facility Compliance &Sustainability Subcommitee
Packaging Sustainability Subcommitee
Employee Safety & HealthSubcommitee
Shareholder Interest Subcommitee
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ENVIRONMENTAL AND SAFETY PERFORMANCE
ELC’s Global Environmental Affairs and Safety Department is responsible for working with departments
within the Company to ensure that we run our business in an environmentally friendly and socially
responsible manner, as well as to maximize the safety and well-being of our employees. We offer many
wellness programs for our employees around the world, ranging from free mammograms to weight loss
and preventative care.
Our Fiscal Year 2006 Management Review on Environmental Affairs and Safety provides quantitative and
qualitative data on our programs and progress in many areas. The full Review, including the Company’s
performance in meeting its environmental and safety objectives and goals for 2007, is available at:
www.elcompanies.com/citizenship/citizenship.asp
Unless otherwise noted, the information in the report refers to The Estée Lauder Companies’ Global
Operations facilities. We are currently in the midst of expanding some of the programs piloted in our
main facilities to cover all of the Company’s businesses.
ENERGY CONSERVATION
Overall our energy use has increased due to the construction of new distribution centers and the
continued automation of our manufacturing processes. However, projects launched as part of our Energy
Conservation Program have reduced the Company’s energy usage by over 84,000,000 kWh in total —
a reduction of over 52,000 tons of CO2 equivalent from the atmosphere. We have reduced our annual
electricity use by over 15.9 million kWh. This is a savings of over $1.5 million dollars per year.
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AIR EMISSIONS
All of our facilities are in compliance with regulatory limits for air emissions. Since we utilize low amounts
of EPA-regulated hazardous materials in our operations, our air emissions are minimal. We continue to
evaluate our equipment and new processes to ensure that we conduct our operations with respect for
the environment.
WATER CONSERVATION
The Estée Lauder Companies has implemented many programs to reduce water use in our cleaning
processes. These include the use of spray-ball technologies in our cream and lotion manufacturing
facilities and water-free cleaning processes at our powder sites. Our Environmental Performance
indicator tracking wastewater discharge per kilogram produced increased slightly in Fiscal Year 2006
because of a management decision to reduce batch size leading to more cleaning cycles. This is due, in
part, to the unique nature of certain of our products, which require special manufacturing conditions.
GREENHOUSE GAS EMISSIONS
Greenhouse gas (GHG) emissions from direct and indirect energy usage at our Global Operations’
facilities and employee business travel were estimated to be 53,000 metric tons in Fiscal Year 2006. We
plan to calculate the complete carbon footprint of the Company and develop goals for reduction by
increasing the effi ciency of our operations and through the optimization of our incoming and outgoing
materials shipments and use of renewable energy sources.
19
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WASTE MANAGEMENT
In Fiscal Year 2006, our total waste generated and disposal costs were reduced. Of our operations waste
that could not be re-used and/or reclaimed, 54% was recycled and the remainder was processed at
waste-to-energy facilities.
OCCUPATIONAL HEALTH AND SAFETY
We have reduced our accident frequency rate by 73% since 1995 at our Global Operations facilities,
although in Fiscal Year 2006 we had a slight rise in our accident indicators. To further our commitment to
workplace safety, we have implemented a corporate goal to reduce our TIR (Total Incident Rate) to 1.0
within the next fi ve years by intensifying our safety training and maximizing communications between
our facilities. We hope that these steps will lead us to our ultimate goal: an accident-free workplace.
MATERIAL USE
We have increased the recycled content of our shipping cartons to 90% in the majority of our U.S.
locations. In addition, we redesigned our shipper layout and drastically decreased the weight of shipping
material per product. To date, these initiatives have saved the equivalent of approximately 700,000 trees.
TRANSPORTATION
We have recently implemented a number of smart transportation initiatives that will reduce the
number of incoming shipments of raw materials and packaging into our buildings by working with our
suppliers to combine their shipments and decrease the number of outgoing materials that are shipped
via air freight.
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PACKAGING
The Estée Lauder Companies designs its packaging under a “cradle-to-cradle” philosophy, with the goal
of maximizing the use of renewable and recycled source materials, designing for recovery at the end of
product life and manufacturing our packaging using renewable energy.
In Fiscal Year 2006, we increased the number of brands using renewable and recycled source materials:
• Aveda uses 80 to 100% post-consumer recycled (PCR) content in all hair care bottle and jars, and
35% PCR in tubes.
• All brands use a minimum of 80% PCR liner board in their holiday and promotional set boxes.
• Estée Lauder uses 100% PCR content in promotional bottles.
• All brands use 80% PCR in carriers.
• Origins uses cartons made from 50% PCR and 50% Forest Stewardship Council (FSC) certifi ed
pulp fi bers.
• All brands use 80% recycled content in matte and satin anodized aluminum parts.
• Clinique uses 80% recycled content in its skin care jar caps.
• Donna Karan Gold developed a unique package, that allows the parts to be separated for recycling.
• Aveda launched “Pure Privilege” gift card using Genetically Modifi ed Organism (GMO) free,
wheat-based bio-resin.
• Four suppliers moved to production using renewable energy.
• Aveda uses FSC wood for its color cosmetic pencils.
• Origins has committed to manufacture its folding cartons from renewable energy.
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PARTNERSHIPS
We work extensively with environmental groups and government agencies such as the Environmental
Protection Agency to improve our programs and performance.
• Energy Star — ELC joined the US EPA’s Energy Star Buildings Program in 1998. We have integrated
this program across our Global Operations facilities to help implement energy conservation and
effi ciency projects.
• Department of Energy — The Company tracks and voluntarily reports greenhouse gas emission
reductions as part of the Energy Information Administration’s 1605 B program.
• Sustainable Packaging Coalition — ELC is a founding member of the Sustainable Packaging Coalition
and has taken a leadership position in driving its initiatives.
• Forest Ethics — Since 1998 we have partnered with Forest Ethics to ensure that we only purchase
wood fi ber products from managed sustained yield forests or recycled sources.
• Smartway Transport Partnership — Aveda partnered with Smartway to reduce the greenhouse gas
emissions generated by the distribution of it products. The rest of the Company is integrating our ware-
house management systems so that we will be able to quantify the data needed to join the program.
• Green Power Partnership — Aveda was named a United States Environmental Protection Agency Green
Power Leader in 2007 for its work in offsetting its manufacturing and distribution electricity use.
• Last Resort Program — ELC developed the Last Resort Program to distribute excess materials to people
in need. This includes providing personal care products to community assistance programs such as
battered women’s shelters and donating collateral materials (i.e., unused displays, baskets) to emerging
artists aligned with cultural enhancement organizations. In Fiscal Year 2006 we were able to redistribute
1,060 pallets, or 185.3 tons of materials in 42 trailer loads to these organizations.
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AN ENVIRONMENT OF BEAUTY
As citizens of the Earth, we are also its stewards. We embrace our responsibility for preserving the
environment by using resources wisely, replenishing them where possible and protecting our planet’s
potential to support and nurture future generations.
PRINCIPLES AND POLICIES
• To minimize our impact on the environment, we are committed to preventing pollution
and minimizing waste through the respectful development, production and distribution of
our products.
• In fact as well as in principle, we provide safe, clean, healthy workplaces for our employees
throughout the world. We comply with the letter and the spirit of local workplace safety regulations
and exceed them wherever possible.
• We cultivate in our employees a profound consciousness of every individual’s role in carrying
out the Company’s environmental policies, and we encourage them to volunteer personally for
programs that promote an improved environment.
When it comes to our impact on the communities we touch, we use the same standards of excellence
to examine our environmental footprint that we use for our products. Just as we are concerned with
bringing our loyal consumers the latest in anti-aging technology, we are as concerned about how
we can also prevent our environment from aging prematurely. The Beauty of Sustainability lies in
our goal to keep our natural resources as beautiful as we fi nd them. We recognize that our program
is not perfect. No sustainability effort can be, but we are committed to constantly improving our
efforts and results.
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ACTION• For Clean, Green Facilities, Against Excessive Energy Use. Through conservation and effi ciency
improvements, we have reduced the energy used to distribute our products and power our plants.
We continuously monitor new technologies to try to fi nd ways to enhance the effi ciency of our
existing operations or redesign processes to create less waste.
• For Clean Energy, Against Global Warming. We have installed solar powered systems to partially
power both of our fragrance-fi lling facilities, and have partnered with DomeTech to install one of
the largest non-utility solar energy systems in the United States at our fragrance manufacturing
facility in New Jersey. More than 3,200 solar panels, which are designed to supply half of the
plant’s daytime energy needs, will offset the production of 10,000 tons of carbon dioxide over
the life of the system.
• Additionally, Aveda has partnered with Xcel Energy’s Windsource Program to purchase
electricity from wind power to offset the electricity used at its Minnesota manufacturing and
distribution facilities.
• The Origins brand has provided wind power to their North American retail and U.S. manufacturing
facilities since July 2007.
For Responsible Packaging, Against Waste. We believe that cosmetics packaging must be sustainable
as well as beautiful. Our Cradle-to-Cradle philosophy requires that we fi nd ways to make our packaging
available to be re-used as a resource after the product has been consumed.
Our Environmental Packaging Design Protocol, (www.elcompanies.com) in effect since 2001 and
updated regularly, mandates the use of bio-based or technical materials that can be recycled, composted
or recovered in a waste-to-energy facility.
• It bans the use of materials from old growth forests and favors recycled paper and fi ber products,
or materials from sustainable sources.
• We avoid PVC in our packaging wherever practical.
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• The Company requires all of its packaging suppliers to test and certify materials to minimize heavy
metals and other noxious substances in compliance with regulations such as the European Union’s
Essential Requirements for Packaging.
Origins, working together with Mohawk Paper and Johnson Printing & Packaging, developed a
package for the Dr. Weil product line that consists of 50% post-consumer recycled (PCR) content
and 50% Forest Stewardship Council (FSC) certifi ed paperboard. Additionally, this paperboard is
manufactured, printed and folded using 100% renewable energy resources. In Fiscal Year 2006,
using the Mohawk board, total air pollution has been reduced by approximately 33,000 pounds,
which is equivalent to not using 14 barrels of crude oil or planting approximately 6,310 new trees.
• For Bio-Diversity and Indigenous Entrepreneurship, Against Poverty. Aveda is an industry
leader in exploring ingredients and knowledge from indigenous sources. With local business part-
ners in countries including Brazil and Australia, Aveda encourages local efforts to reduce poverty
by supporting environmentally sound community business initiatives.
• For Resource Conservation. Environmentally sound waste management practices are integral to
The Estée Lauder Companies. Where we can, we reuse our waste materials. When they cannot be
reused in our operations, we recycle where markets for these materials are available. If we are
unable to reuse or recycle our material, we dispose of our waste at one of our contracted waste-to-
energy recovery facilities. The Estée Lauder Companies does not landfi ll any of its Operations’ waste.
• For the Safety and Well-Being of Our Employees. Global standards have been enacted to ensure
that all of our employees have a safe workplace and are trained in all aspects of their jobs.
• For Responsible Information Sharing. Three years ago, The Estée Lauder Companies made a
commitment to print the Annual Report on FSC-certifi ed post-consumer paper. Environmental
benefi ts may be found on the inside back cover of the report.
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OVERSIGHT
ELC Global Operations continuously works to ensure compliance with all applicable international,
national and local standards and regulations. To enhance compliance, ELC maintains an ongoing system
of regular inspections, internal audits and independent third-party auditing of our Global Operations,
retail stores and supply chain.
All of our major manufacturing facilities have been independently assessed and registered by
Underwriters Laboratories to have Environmental and Safety Management Systems in accordance with
the ISO 14001 Environmental Management System standards and The Estée Lauder Companies’ own
occupational safety and health standards. Additionally, the environmental health and safety program
has been expanded to include visits to our retail stores to ensure their compliance with all regulations,
thereby assuring our employees a safe workplace.
For more information on ISO 14001, please visit http://www.iso.org/
For more information on The Estée Lauder Companies’ environmental initiatives, please go to
www.elcompanies.com/citizenship/environmental_health_safety.asp
UPCOMING CHALLENGESREACH is the Regulation for Registration, Evaluation, Authorization and Restriction of Chemicals.
It entered into force on June 1, 2007, to streamline and improve the former legislative framework on
chemicals of the European Union (EU). REACH places greater responsibility on industry to manage the
risks that chemicals may pose to health and the environment. http://reach.jrc.it/about_reach_en.htm
26
At The Estée Lauder Companies, we strongly believe that the health of our consumers and the
environment is our top priority, and we are actively participating in the industry effort for the prepara-
tion and implementation of REACH.
As a global Company, we adhere to the product testing and safety regulations of the countries in which
our products are produced and sold. We continue to cooperate with the efforts of the EU to develop
effective tests for ingredient and product toxicity.
NANOTECHNOLOGY
The Estée Lauder Companies continues to develop products that maximize the use of innovation and
the technology available, but not without regard for the safety of our consumers.
There is a growing interest in the use of nanotechnology to enhance the benefi ts and performance of
personal care products. Consumers should understand that this is a broadly used term that has a wide
range of applications. The nanoparticles used in biomedical science, where the bulk of this cutting-
edge technology is used, are of a much different caliber than the micronized particles commonly used
in cosmetics. Substantial research is still being done to assess the use of these particles in personal
care products.
For more information on The Estée Lauder Companies’ product safety initiatives, please go to
www.elcompanies.com/citizenship/product_safety_testing.asp
27
PHILANTHROPY: GLOBAL AND LOCAL
The philanthropic history of ELC began with our founding family’s determination to benefi t the communities it served. Today, this commitment has become a powerful engine for good, an expression of our corporate concern for health and human services, the environment, education, the arts and individual enterprise. As philanthropists, we operate locally as well as globally, on micro as well as macro levels, benefi ting individuals as well as entire populations.
In Fiscal Year 2006, ELC and its subsidiaries contributed more than $35 million, as well as more than $6 million in product donations.
• Breast Cancer Awareness and Research This is one of our top priorities. There is no way to calculate the number of lives that have been saved since 1993 by the efforts of ELC to promote early detection of breast cancer and fund clinical and diagnostic research. The Breast Cancer Research Foundation is the benefi ciary of all proceeds from our internal fund-raising programs, the sale of specialized prod-ucts and corporate giving. Since 1994, the combined efforts of The Estée Lauder Companies brands’ Pink Ribbon products, employee fundraising activities, and the special Retail Partner initiatives, have contributed close to $27 million to The Breast Cancer Research Foundation.
• People Helping People “Bringing the Best to Everyone We Touch” is The Estée Lauder Companies’ Vision Statement. Included in that vision is our role as responsible corporate citizens in the communities we serve. We are proud to support a multitude of institutions and programs that refl ect the interests and concerns of our employees and customers, and that we feel best respond to the most pressing needs in our communities. In addition to corporate philanthropy in the form of funding, we provide product contributions and numerous other resources.
The Estée Lauder Companies has a thriving Employee Volunteer Program. Employees are given the opportunity to contribute their time, enthusiasm and talents to a number of causes, including the NYC Public Schools, Coalition for the Homeless, The Fresh Air Fund, New Alternatives for Children, Breast Cancer Awareness and many more. In 2006, more than 50% of our employees participated in at least one of our programs.
28
• Aveda Earth Month Every April, Aveda aligns with organizations promoting clean air, clean water and other environmental priorities in a month-long global campaign to raise awareness and participation. For more information, please visit http://aveda.aveda.com/protect/you/earthmonthpartners.asp
• Materials for the Arts The Estée Lauder Companies supports this vibrant program that serves artists, educators and community organizations throughout New York City. By donating computers, offi ce equipment and art supplies it no longer needs, ELC reduces waste and landfi ll while helping to nurture education and the arts.
• Origins Natural Resources will support the Bashat (CBF) organization through the United Kingdom charity Fauna & Flora International. This initiative will help protect the snow leopard cubs in the Tien Shan (Heavenly) Mountains that are being driven from their natural habitat.
• Origins Natural Resources also continues to increase its support of integrative health and wellness by building strong partnerships with not-for-profi t organizations that share similar beliefs. Origins Natural Resources joined forces with Project Sunshine in 2005 to develop the Origins Oasis by Project Sunshine, a not-for-profi t organization that provides free social, educational and recreational programs to children and families affected by medical challenges.
• Bobbi Brown As part of her commitment to help women realize their fullest potential, Bobbi Brown, President of the ELC brand that bears her name, supports organizations like Dress for Success and the Jane Addams Vocational High School. She has helped to raise more than $500,000 through direct and in-kind donations for Dress for Success since her involvement began in 2001. Every year, she serves as Principal for a Day with the Jane Addams Vocational High School in addition to providing mentors for students and products for various school programs.
• The Ojon Corporation limits the annual harvest to protect the natural resources and ensure authenticity. Wild-crafted Ojon oil continues to be harvested and extracted by hand in the traditional way as a guarantee of purity. The Tawira tribes are consulted on all aspects of the business — from product development to marketing. A portion of the profi ts from the sale of Ojon goes directly to the Tawira Indian tribes in Central America. This portion helps the Tawira preserve their traditional lifestyle and the region’s rainforests.
29
M.A.C Cosmetics has raised $100 million worldwide for the M.A.C AIDS Fund, a pioneer in
HIV/AIDS funding that supports organizations working with underserved regions and communities
worldwide. M.A.C Cosmetics generously donates 100% of the selling price of its Viva Glam lipsticks
and lipglasses to the Fund.
Please visit www.macaidsfund.org for more information.
COMMITMENTS TO OUR WORKERSELC takes pride in being an employer that rewards people for ability and achievement, regardless
of race, gender, religion, age or sexual orientation. Every ELC employee, from top executives to the
people who develop our products, run our production lines, plan our marketing and sell at our counters,
is a valued resource. We have pledged to provide safe, healthy working environments for all and to
maintain conditions that foster job satisfaction. Beyond these basics, we offer many opportunities for
our employees to improve themselves, their positions and their world.
In Fiscal Year 2006, more than 2,300 employees of all levels received professional development training
through the 40-plus programs that are offered free of charge to employees. Our President and CEO
fi rmly believes that “To Lead Is to Teach” and encourages all of our senior management to support our
Global Management Strategies Programs by taking the time to teach a course.
A corporate Diversity Offi cer has been named to generate programs that give minority employees the
tools to fulfi ll their potential within the Company. A special Coach Me program brings executive level
coaching to women early in their careers, teaching them the subtle skills and unwritten rules necessary
for advancement and helping them realize their professional aspirations. A series of Diversity Focus
Groups was held earlier this year. A Diversity Talent Management program offers senior managers
guidelines for hiring, developing and promoting promising candidates from all backgrounds.
30
TO THE FUTURE
This Report is the fi rst step in demonstrating how far The Estée Lauder Companies has come, as well as
a roadmap for our journey toward a sustainable future. In the months and years ahead, we look forward
to publishing updates that outline our progress as a Company and as stewards of the Earth.
ELC is currently implementing our Strategic Modernization Initiative to help transform our business,
enhance shareholder value and support the goal of aggressive, sustainable growth by integrating the
Company across brands and regions. This will help us align all of our business units by increasing
efficiencies and communication while reducing waste and fostering process and technology
improvements across the organization.
Our Corporate Social Responsibility (CSR) program goals are to continue to develop, market and
sell the world’s fi nest beauty and personal care products in a manner that meets or exceeds all legal
requirements, ensures the safety and well-being of our employees and customers and leaves no
long-term negative environmental impact.
Among our key objectives is a defi nition of what sustainability means for each department and a
Company-wide calculation of every department’s sustainability “footprint.” Based on this “map,” we
can work more precisely and effectively to continue to improve our interaction with the environment
and our stakeholders.
GOALSThe Estée Lauder Companies is committed to protecting the environment and the communities in which
we operate by striving for excellence and the continuous improvement of our operations.
31
32
Our environmental efforts increase the effi ciency of our operations by minimizing waste and help
maintain our businesses viability for the future. We have recently joined the United States Environmental
Protection Agency’s Climate Leaders Program to help further quantify our Carbon Footprint and
implement realistic goals and measures to ensure that we can continue to reduce our greenhouse gas
emissions in line with our expanding business. We hope to publish our global greenhouse gas emission
reduction goals in 2008.
We intend to convert every ELC Global Operations facility to green-powered electricity by the end of
2007. Every new factory, offi ce and distribution center we construct in the future will be based on a
green design philosophy.
We are implementing a new packaging roadmap based on the Sustainable Packaging Coalition’s
defi nition of sustainable packaging. It will drive our design and sourcing decisions and allow us to set
goals and monitor our progress going forward.
The Estée Lauder Companies believes that our packaging must be beneficial and safe for
individuals and communities throughout its life. Our environmental goal is to design our packaging
so that it:
• Meets marketing criteria for performance and cost
• Is sourced, manufactured, transported and recycled using renewable energy
• Maximizes the use of renewable and recycled source materials
• Is manufactured using clean production technologies and best practices
• Is physically designed to optimize materials and energy
• Can be effectively recovered for re-use as a resource after our product has been consumed
33
We have challenged our Global Operations facilities to raise the overall recycling rate to 60% within
the next fi ve years.
We have challenged our facilities to develop programs that will lower our Total Incident Rate to 1.0
within the next fi ve years.
We are strengthening our supplier oversight programs to further ensure that they meet our standards for
worker rights, occupational safety and environmental performance.
We will continue to develop our Employee Wellness Programs in order to improve the health and
well-being of our employees, improve morale and productivity, reduce healthcare and lost time costs
and improve the bottom-line performance of our Company.
The ultimate objectives of our CSR programs are Zero Waste (100% effi ciency of energy, material and
human resources) and Zero Accidents.
LAST WORD
Our long-term challenges include maintaining the proper balance between environmental, social
and economic goals while assessing the effects of climate change on our operations, the decreasing
availability of natural resources for fuel, packaging and ingredients, and the ever-changing regulatory
environment associated with new and innovative ingredients. By doing our best to overcome these and
other obstacles we will continue to allow future generations to feel and be beautiful as The Beauty of
Sustainability continues to be our guiding light.
For more information on corporate responsibility and sustainability for The Estée Lauder Companies,
please contact us at — [email protected]
THE EST{E LAUDER COMPANIES
QUICK FACTS
As of the publication of this Report:
• Our products are sold in more than 135 countries and territories
• We have 28 brands
• We have 28,500 employees worldwide
• Our net sales for Fiscal Year 2007 were over $7 billion
• Our net reported earnings for Fiscal Year 2007 were $448.7 million
• We have Research and Development facilities in Melville, New York; Oevel, Belgium;
Tokyo, Japan; Markham, Ontario; Blaine, Minnesota; Shanghai, China; and Kobe, Japan
• We have manufacturing facilities in the United States, Belgium, Switzerland,
the United Kingdom and Canada
• We have 35 affi liates around the world
• The Estée Lauder Companies is a publicly traded company (NYSE: EL)
• The Company was founded in 1946 by Estée and Joseph Lauder
• Currently, the Lauder family is represented by the second and third generations of family
members who hold various senior positions within the Company and its brands
• We are partners in the largest solar powered plant in New Jersey
• With the purchase of renewable electricity for all of its operations facilities by the end of 2007,
The Estée Lauder Companies will be the only beauty company to use green power for all of
its manufacturing
• Origins made a commitment to produce its folding cartons using only renewable energy and to
add consumer communication to its packaging
• In Fiscal Year 2007, Aveda moved to 95% PCR plastic in the launch of its new men’s line
34
APPENDIX
AIR EMISSIONS IN METRIC TONS
Contaminant Fiscal Year 2004 Fiscal Year 2005 % Change
VOC 45.2 48.8 7.9%
PM 0.5 0.3 –32.0%
WASTE / POLLUTION PREVENTION
42.00%
44.00%
46.00%
48.00%
50.00%
52.00%
54.00%
56.00%
Fiscal Year 2003
% o
f Was
te R
ecyc
led
46.57%
Fiscal Year 2004
46.30%
Fiscal Year 2005
53.98%
Fiscal Year 2006
54.02%
EHS COST VS SALES
0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
$ Disposal / $1 Million Sales Sales ($ Millions)
Energy Cost / $1 Million Saless Work-Related Disability Compensation / $1 Million Sales
35
OCCUPATIONAL HEALTH AND SAFETYLost time frequency rate. Number of lost time cases per 100 employees.
0
1
2
3
4
5
6
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
FISCAL YEARS
PACKAGINGAverage weight of packaging per unit.
0
50
100
150
200
250
300
Kilo
gram
s
Aramis
Aveda
Bumble an
d bumble
Bobbi Bro
wn
Clinique
La M
er
Darphin
Estée
Lauder
Jo M
alone
Kate Sp
ade
M. A
. C
Orig
ins
Prescri
ptives
Fiscal Year 2004 Fiscal Year 2003 Fiscal Year 2005
GREENHOUSE GAS EMISSION
Sources Emissions (metric tonnes)
Direct and Indirect Energy Usage1 40,911
U.S. Employee Business Travel2 12,072
Non U.S. Employee Business Travel NA*
Material Purchasing and Product Distribution NA*
Non-Operations Energy Usage NA*
Employee Commute NA*
Totals 52,983
* The Estée Lauder Companies has recently joined the U.S. EPA Climate Leaders Program and is currently working to calculate our full carbon footprint.
36
OPERATIONS TOTAL ENERGY USE Fiscal Year 2005 Fiscal Year 2006 % Change
Electricity Use (kwh) 66,216,047 68,649,239 3.67%
Electric Cost (US$) $6,616,766 $ 7,910,987 19.56%
Gas Use (Therms) 1,662,237 1,737,289 4.52%
Gas Cost (US$) $1,698,464 $ 2,137,615 25.86%
Oil Use (Liters) 1,195,739 1,093,658 -8.54%
Oil Cost (US$) $ 463,636 $ 585,570 26.30%
Elec Cost/kwh $0.0999 $0.1152 15.32%
Gas Cost/Therm $1.0218 $1.2304 20.42%
Oil Cost/Liter $0.3877 $0.5354 38.09%
Elec Use / Sq. Ft 17.18 17.82 3.67%
Energy Cost / Sq. Ft $2.28 $2.76 21.13%
Total Energy Cost $8,778,866 $10,634,173 21.13%
Equivalent CO2 Emissions (MT) 40,576 40,911 0.83%
Total Energy Use (MBtu) 436,376 448,408 2.76%
OPERATIONS WASTE DISPOSAL METHODS
46%
54%
Recycling Energy Recovery
37
GLOBAL OPERATIONS FISCAL YEAR 2005–FISCAL YEAR 2006WASTEWATER ENVIRONMENTAL PERFORMANCE INDICATORCubic meters of wastewater discharged per kilogram of product.
0
1
2
3
4
5
6
July Aug Sept Oct Nov Dec Jan Feb March April May June
Fiscal Year 2005 Fiscal Year 2006
GLOBAL OPERATIONS FISCAL YEAR 2005–FISCAL YEAR 2006COMPARISON WASTEWATER DISCHARGECubic meters of wastewater discharged.
0
2,000
4,000
6,000
8,000
10,000
12,000
July Aug Sept Oct Nov Dec Jan Feb March April May June
Fiscal Year 2005 Fiscal Year 2006
38
THE EST{E LAUDER COMPANIES INC. CORPORATE SOCIAL RESPONSIBILITY REPORT ENVIRONMENTAL FIGURES
The Estée Lauder Companies Inc. Corporate Social Responsibility Report is printed on recycled paper that contains 100% post-consumer recycled (PCR) fi ber. This recycled paper is made from fi ber sourced from well-managed forests and other controlled wood sources and is independently certifi ed by SmartWood, a program of the Rainforest Alliance, to the Forest Stewardship Council (FSC) standards.
76.03 trees preserved for the future 219.55 lbs. waterborne waste not created32,296 gallons wastewater fl ow saved 3,574 lbs. solid waste not generated7,036 lbs. net greenhouse gases prevented 53,856,000 BTUs energy not consumed
SAVINGS FROM THE USE OF EMISSION-FREE WIND-GENERATED ELECTRICITY:3,656 lbs. air emissions not generated
DISPLACES THIS AMOUNT OF FOSSIL FUEL:2 barrels crude oil unused
THIS AMOUNT OF WIND-GENERATED ELECTRICITY IS EQUIVALENT TO:Not driving 3,960 miles or planting 247 trees
Sandy Alexander Inc., an ISO 14001:2004 certifi ed printer with Forest Stewardship Council (FSC) Chain of Custody Certifi cation, printed this report with the use of Green-e certifi ed renewable wind energy resulting in nearly zero greenhouse gas (GHG) emissions.
SAVINGS DERIVED FROM USING 100% ELECTRICITY FROM GREEN-E CERTIFIED RENEWABLE WIND ENERGY SOURCES FOR THE PRINTING OF THE EST{E LAUDER COMPANIES INC. CORPORATE SOCIAL RESPONSIBILITY REPORT:3,463 lbs. air emissions of greenhouse gases not generated (CO2, SO2 and NOx), a major contributor to global warming.
SAVINGS DERIVED FROM WIND-GENERATED ELECTRICITY IS EQUIVALENT TO:2,977 miles not driven in an automobile or 234 trees being planted.
The Estée Lauder Companies is proud to be partners with the following organizations:
PHOTO ON PAGE 30 COURTESY OF PARTNERS IN HEALTH (RWANDA) & M.A.C AIDS FUND
767 FIFTH AVENUE NEW YORK, NEW YORK 10153 T H E E S T { E L A U D E R C O M PA N I E S I N C .
