Sunscreens – a big business with big impacts

The sun care products market could grow from USD14bn in 2022 to USD20bn by 2030.

Rising demand for more expensive environment-friendly items with a higher sun protection factor (SPF) and higher consumption due to skin cancer concerns are the key drivers. HSBC thinks this increased consumption will bring enhanced stakeholder focus on environmental impacts of sunscreens, as it is estimated that between 6,000 and 14,000 tonnes of sunscreen wash into the ocean yearly.

In HSBC’s view, investors should consider how common chemicals used in sunscreen products threaten corals and other marine life. Chemical (organic) sunscreens often include active ingredients to absorb the ultraviolet rays, such as oxybenzone (benzophenone-3) or octinoxate (ethylhexyl methoxycinnamate). Research suggests that corals, for example, have an increasing rate of bleaching in response to high concentration of oxybenzone due to loss of zooxanthellae (single-celled algae that live within most types of coral polyps and help the coral survive by providing it with food resulting from photosynthesis).

Also, chemicals can affect fertility and cause other issues to marine life. While some countries and territories banned the sale or use in some places of sun protection products that contain marine life-damaging chemicals (e.g. Hawaii, the U.S. Virgin Islands, Thailand, the island of Bonaire), they continue to be allowed for use in cosmetic products worldwide.

HSBC thinks investors could make a difference by scrutinising manufacturers’ approach to reducing the environmental impacts of sunscreens. Many companies now claim that their products are “biodegradable” or “reef safe” when based on zinc oxide or titanium dioxide (so called physical or mineral sunscreens that reflect ultraviolet rays from the sun). However, according to the OECD, the label “ready biodegradable” can be given to a product that reached a sufficient (but not full) extent of biodegradation in one of the OECD 301 tests within a 10-day window.

Studies also suggest that nanoparticulate forms (micronised to less than 100nm in size) of zinc oxide or titanium dioxide, the use of which has increased in the last decade due to their less opaque appearance, can damage marine mussels, algae and other sea creatures. Furthermore, these inorganic UV filters are often coated with other chemicals that also can change their physiochemical properties and affect the aquatic environment.

As implementing new environmentally friendly ingredients into sunscreen formulations is crucial but quite difficult due to human safety concerns and regulations regarding animal testing, HSBC thinks the focus on non-micronised versions of the active ingredients is key in recreational water activities.

Organisations such as the Environmental Working Group provide a database of sunscreens and their ingredients to help stakeholders assess the environmental impact of sun care products. For example, some brands (e.g. Suntribe, Thrive, Thinksport, Stream2See) state that they use only non-nano or clear (e.g. Badger) zinc oxide or titanium dioxide in their sunscreens.

As researchers work on new methods to produce zinc oxide – making it less energy-intensive and cheaper as a result, HSBC thinks more manufacturers will revisit their formulas soon.

In HSBC’s view, stakeholder attention on reducing the impacts of packaging will continue to increase, as many plastic sunscreen bottles are difficult to recycle and may not be accepted for home recycling.

Some brands now use recyclable “green” bio-plastic containers (e.g. Coral Sure, created by farming sugarcane on sustainable land), plastic-free recyclable packaging such as aluminium, tinplate (Sol de Ibiza) or glass (e.g. UpCircle), and refill options (e.g. SurfDurt). HSBC thinks these moves will help reduce the percentage of plastic packaging ending up in landfills.

In HSBC’s view, investors should continue to scrutinise companies’ commitments in the water sports and sunscreen industries; future improvements should focus on recycling and extending wetsuit and board life, developing innovative materials, implementing non-micronised and new environmentally friendly ingredients in sun care products. Over time, investor input could, this bank thinks, help make recreational water activities more sustainably enjoyable.