Chief risk and compliance officer at Ulta Beauty says they use feedback to take ESG report to next level

• Jodi Caro, general counsel, chief risk and compliance officer at Ulta Beauty, says its 2021 ESG report incorporated feedback from investors, brands, and consumers that showed a desire for more data on DEI.
• Ulta Beauty's second-annual ESG report, titled "Leaving a Positive Legacy for Our World" focuses on four pillars: People, Product, Environment and Community.
• The report highlights the company's Conscious Beauty program to "educate, guide, and simplify the landscape of clean ingredients, ethical practices, and environmental benefits for Ulta Beauty guests."

Ulta Beauty, the Illinois-based retail beauty leader with over 1300 US locations, 600 brands and 40,000 associates, has long focused on environmental, social and governance issues.

"It's part of our DNA," Jodi Caro, general counsel, chief risk and compliance officer, told Insider. But as formal ESG reporting has drawn increased interest from investors, associates, and consumers, Ulta Beauty realized they had a unique opportunity to talk about their work and get feedback on how they could improve, she said. That led to the publication of the company's first ESG report in 2020 and a recently-released 2021 report titled "Leaving a Positive Legacy for Our World."

"Beauty is an industry uniquely connected emotionally to its consumers," Caro said. "So it's important to be transparent about our efforts."

Ulta Beauty's 2021 ESG report focuses on four pillars: People, which includes championing "inclusion and opportunity in beauty for all"; Product, which focuses on empowering guests and offering a "broad product assortment" including clean beauty and sustainable products through its "Conscious Beauty" offering; Environment, which includes committing to reducing emissions and managing energy, water and waste footprints; and Community, which focuses on improving the lives of women and families in communities the company serves.

Within those areas, the company is working to stay focused and take a targeted approach to disclosure. "Our investors always have more questions than we can possibly answer," said Caro. "How companies talk about ESG really is all over the map, so we want to share information that's helpful and doesn't clutter the landscape."

Ulta Beauty sought feedback from all stakeholders before releasing both ESG reports, but it was also essential that the reports were readable, added Caro. "For example, we included more data this year because that's something people are looking for, but we also put some of that in the appendix and added a fact sheet," she explained.

In the body of the ESG report, storytelling is prominent. "We wanted to tell the story of the very important work we're doing in diversity, equity and inclusion, which crosses multiple areas that are priorities to us – work with our brand partners including advancing BIPOC and black-owned brands; making sure we reflect what our consumers are looking for," Caro said. The report also brings to life Ulta Beauty's associates and leadership, including opportunities for women to advance.

"We are a company that's over 90% female, so that is something we want to celebrate in our ESG report," she explained.

In addition, the company's Conscious Beauty platform, launched in fall 2020, is highlighted in the 2021 ESG report and reinforces the company's commitment to sustainability and transparency. "We know guests are looking for this," she said. Conscious Beauty includes five key pillars – Clean Ingredients, Cruelty Free, Vegan, Sustainable Packaging and Positive Impact – and brand partners have an opportunity to certify in any one or more of those pillars.

Going forward, Caro said Ulta Beauty will build upon its ESG efforts in 2022 to "make sure our guests, associates, partners, and communities feel reflected and connected." In February, the beauty retailer committed to invest $50 million in 2022 DEI investments, with $25 million going to multicultural media platforms and a brand-focused accelerator program for BIPOC brands. The company will also invest $5 million in a fund that invests in BIPOC entrepreneurship; $3.5 million into merchandise to support more diverse brands; and $8.5 million to help market black-owned-and-founded businesses.

"It's all about thinking how we continue to amplify and share the work we're doing," said Caro about future ESG reports. "We are early in our journey, particularly in our environmental work — that's a very complex area for companies, especially companies like Ulta Beauty who are retailers that sell brands.

The company thinks about ESG issues in terms of its overall corporate strategy, she added. "This is a journey for us and we collaborate with our brand partners, vendors, and associates to make sure that the work we're bringing to life is reflected in our ESG report," she said. "But really, it's a function of what we're doing every day."