From Glamour to Ethics: A PEST Framework Analysis of Ethical

Dilemmas in the Luxury Cosmetics Industry - The Case of SK-II

Huixu Li

Faculty of Business and Economics, University of Melbourne, 3010, Australia

Keywords: Luxury Cosmetics, Animal Testing, Child Labor, Mica, Transparency, Alternative Testing Methods.

Abstract: As the global demand for luxury cosmetics continues to rise, ethical concerns within the industry have gained

increasing attention from scholars, consumers, and regulators. This paper critically examines the ethical

challenges within the luxury cosmetics industry, focusing on four key areas: animal testing, child labor,

economic exploitation, and unethical marketing. Despite their premium positioning, luxury cosmetic brands

are often associated with serious ethical controversies. Politically, animal testing remains a global concern, as

many brands exploit legal loopholes in markets such as China. Economically, inflated pricing strategies

leverage consumers’ desire for beauty while offering limited correlation with production costs. Socially,

manipulative marketing reinforces unrealistic beauty standards, shaping harmful consumer perceptions and

social norms. Environmentally and ethically, the sourcing of mica—a common ingredient—often involves child

labor in countries with inadequate labor protections, raising significant human rights concerns. Through an

analysis of the SK-II case, the paper demonstrates how misleading advertising can erode consumer trust and

trigger regulatory consequences. In response, the study proposes practical recommendations, including

improved transparency in claims, ethical sourcing mechanisms, inclusive marketing reforms, and enhanced

regulatory oversight. These strategies aim to promote ethical integrity and sustainable growth in the luxury

cosmetics sector.

1 INTRODUCTION

The luxury cosmetics sector has experienced

tremendous growth over the past decades, developing

into a strong segment of the global beauty and

personal care sector. Characterized by high-end

branding, luxurious packaging, and niche marketing,

luxury cosmetics resonate hugely with consumers'

desire for exclusivity, performance, and social status.

Luxury brands such as Chanel, Dior, Estée Lauder,

SK-II, and La Mer, among others, not only hold

strong market positions but also influence consumers'

expectations and behaviors profoundly. But behind

the glamorous facade is a series of ethical concerns

that have increasingly drawn the attention of activists,

consumers, and regulatory bodies around the world.

One of the most critical ethical issues in the

cosmetics industry is the sourcing of raw materials,

particularly mica, a mineral widely used to create

shimmering effects in makeup products. A significant

portion of the world's mica supply comes from

regions such as Jharkhand and Bihar in India, where

child labor and hazardous working conditions are

prevalent (Bliss, 2017; Rozani, 2022). Despite

increasing public scrutiny and corporate

commitments to end unethical sourcing, transparency

in supply chains remains limited. This raises

profound ethical questions regarding corporate

accountability and the complicity of consumers who

often unknowingly support exploitative practices

(Martins & Marto, 2023; Das & Goel, 2021).

In addition, luxury cosmetic brands have

historically relied on animal testing to ensure product

safety and efficacy. Although many countries have

imposed bans or restrictions—most notably the

European Union—some, like China, previously

mandated animal testing for imported cosmetics,

creating ethical tensions for global brands (Sine,

2022). While some companies publicly promote their

“cruelty-free” status, legal loopholes and market

pressures result in inconsistent enforcement,

undermining consumer trust and corporate

authenticity (Yurtsever, 2019).

Moreover, luxury brand marketing often

promotes unrealistic beauty standards, reinforcing

narrow ideals that can negatively impact self-esteem

Li, H.

From Glamour to Ethics: A PEST Framework Analysis of Ethical Dilemmas in the Luxury Cosmetics Industry - The Case of SK-II.

DOI: 10.5220/0013843400004719

Paper published under CC license (CC BY-NC-ND 4.0)

In Proceedings of the 2nd International Conference on E-commerce and Modern Logistics (ICEML 2025), pages 315-321

ISBN: 978-989-758-775-7

315

and body image, particularly among adolescents and

young adults (Chelliah, 2017). Marketing campaigns

in the cosmetics industry tend to present flawless

beauty as a societal norm, a phenomenon widely

criticized for contributing to psychological distress

and perpetuating toxic beauty ideals (Deberdt & Le

Billon, 2021).

With these sophisticated ethical dilemmas, this

essay will seek to explore the nuances of luxury

cosmetic brands and their reality of operation.

Applying the PEST (Political, Economic, Social, and

Technological) analytical framework, this essay will

critically analyze the most significant ethical

dilemmas, such as those represented by SK-II's

initially exaggerated product claims. The essay will

also present practical proposals for increasing

accountability and sustainability in practice. These

proposals include boosting advertising honesty,

establishing open and ethically sourced supply

channels, investing in innovative non-animal testing

methods, and increasing oversight from the

authorities with independent audits.

Lastly, this analysis highlights the necessity for

luxury cosmetics brands to reconcile profitability

with ethical integrity, equating the success of the

business with the higher imperative of social

responsibility and sustainable development.

2 MANUSCRIPT PREPARATION

2.1 Political Factors

Political issues feature prominently in the luxury

cosmetics sector, particularly with the issues of animal

testing and child labor. Animal testing, which was

long common for cosmetics for purposes of safety, has

faced stringent international regulatory pressure of

late. The European Union initiated the ban on animal

testing for cosmetics back in 2013, prohibiting the sale

of tested-on-animal cosmetics (Cruelty-Free

International, 2021). Even though this had the effect

of prompting many brands to shift toward cruelty-free

testing across the world, some countries, such as

China, demanded animal testing for imported

cosmetics up to recently, making the ethical stance of

multinational luxury cosmetic brands complex (Li &

Fung, 2022). Brands had the ethical choice of

withdrawing from lucrative markets or making ethical

compromises. For example, even though China

revised its regulations in 2021 exempting some

cosmetics from animal testing, enforcement

differences remain, making ethical compliance

uncertain (Euromonitor International, 2022).

Moreover, child labor and ethical sourcing of

ingredients like mica have become topical

international issues of growing political significance.

Mica, a critical mineral that provides shine and

glimmer to cosmetics, is predominantly mined from

India and Madagascar, with the majority of the work

being performed under hazardous conditions with

child labor. Despite international legislation,

enforcement remains poor, creating ongoing ethical

concerns for luxury brands that remain mica supply-

reliant (SOMO, 2021).

2.2 Economic Factors

Economically, the luxury cosmetics sector is

characterized by excessive pricing strategies

designed to project exclusivity and high quality, yet

these prices tend to be higher than the cost of

ingredients or production (Kapferer & Valette-

Florence, 2018). Luxury brands take advantage of

consumer psychology by using high prices as a

strategy, emphasizing symbolic worth, status of the

brand, and perceived worth. Consumers willingly pay

inflated prices, oblivious of the economic exploitation

behind the supply chain of these products (Tynan,

McKechnie, & Chhuon, 2010). Detractors accuse this

economic exploitation of being unethical because

brands make disproportionate profits by inducing

consumer insecurities with effective advertising and

artificially created scarcity, further enhancing

inequalities of consumer perception and economic

pressure (Arvidsson & Caliandro, 2016).

2.3 Social Factors

Marketing luxury cosmetics tends to emphasize

unrealistic and limited ideals of beauty, promoting

damaging stereotypes and negatively influencing

consumer perceptions of self-worth and identity

(Grogan, 2021). Advertisements for high-end brands

continually present impossibly smooth complexions

and youthful appearances, typically achieved with

digital retouching or exaggerated product claims. SK-

II, for instance, initially marketed its Facial Treatment

Essence as "miracle water" with little scientific merit,

triggering action from the authorities that required the

rewording of advertising copy to be more

representative of product potential (Advertising

Standards Authority, 2018).

The ethical implications of these practices are

serious, as these ads result in consumer

dissatisfaction, encouraging unhealthy behaviors

such as excessive spending, cosmetic dependency,

and body dissatisfaction-related psychological

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distress (Grogan, 2021; Tiggemann & McGill, 2004).

These factors emphasize the social responsibility of

luxury cosmetics advertising.

2.4 Technological Factors

Advances in technology also feature prominently in

ethical cosmetic practice, particularly with the

alternatives for animal testing and sustainable

sourcing of ingredients. Some of the most recent

innovations include in-vitro testing like 3D tissue

culture models, organ-on-a-chip technology, and AI

simulation, providing effective and ethical

alternatives for the traditional animal test (Hartung,

2021). Large players such as Unilever and L'Oréal

invested heavily in advanced lab technologies for the

effective testing of product safety without harming

animals (L'Oréal Sustainability Report, 2022). The

technological advancements indicate a strong ethical

imperative for luxury brands to adopt updated,

humane practices.

Moreover, supply chain traceability technological

innovations, such as blockchain, enable greater

transparency of the sourcing of ingredients, enabling

brands to confirm ethical sourcing processes and

inform consumers of the source of their products

(Saberi et al., 2019). Companies that implement the

use of blockchain technology can attest to ethical

production, ensuring consumers of compliance with

international labor and sustainability standards, hence

creating brand reputation and consumer trust (Saberi

et al., 2019).

Generally, a careful examination of the PEST

factors indicates that luxury cosmetic brands operate

in a sophisticated ethical framework. Politically and

economically driven exploitation, socially

irresponsible marketing, and technological

opportunities for greater ethical responsibility all

suggest the imperative for revolutionary action on the

part of the luxury cosmetics sector.

3 ETHICAL ISSUES & CASE

ANALYSIS

3.1 Ethical Issue 1: Animal Testing in

the Luxury Cosmetics Industry

Animal testing remains one of the most contentious

ethical issues for luxury cosmetics brands despite

public opposition and changing regulations.

Historically, cosmetic companies relied heavily on

animal testing to verify the safety of their products for

human use, subjecting animals such as rabbits, mice,

and guinea pigs to painful procedures (Humane

Society International, 2021). Despite the global

regulatory trends discouraging the practice of animal

testing, loopholes in the law and varying levels of

enforcement permit unethical practices.

One of the most salient examples of this ethical

dilemma comes from the complexities of Chinese

market entry requirements. Until 2021, Chinese law

mandated animal testing for all imported cosmetics,

effectively coercing luxury brands into conducting, or

quietly financing, animal tests for access to the

lucrative Chinese market. Luxury brands like Estée

Lauder, Lancôme, and Chanel were criticized by

consumers globally for ongoing indirect involvement

with animal testing due to these regulatory

requirements, exposing the ethical hypocrisy of their

publicized cruelty-free stance and actual practices

(PETA, 2022). Even with China revising these

regulations to exempt some general cosmetics,

products with functional claims, or specialized

ingredients still require testing, generating ongoing

confusion and ethical compromise (Li & Fung, 2022).

This brings into question the ethical integrity of

the scenario. Luxury brands, with their stringent

standards of responsibility and sustainability, are

caught between profit and ethical considerations.

Consumers, increasingly better educated and

ethically conscious, demand greater levels of

transparency and accountability, creating reputational

risks for brands that will not, or cannot, make the full

commitment to being cruelty-free.

3.2 Ethical Issue 2: Child Labor and

Mica Sourcing

One of the most critical ethical concerns is child

labor, particularly with the sourcing of mica. Mica, a

naturally occurring mineral, is also widely used in

cosmetics, like eyeshadows, foundations,

highlighters, and lip glosses, due to its shiny

characteristic. However, approximately 25% of the

world's mica is sourced from mines in India and

Madagascar, where work conditions tend to ignore

the most basic human rights, with dangerous work

conditions and the mass employment of child labor

(Terre des Hommes, 2020).

Research by organizations like the Responsible

Mica Initiative (2021) revealed that over 22,000 child

workers work in mica mines of the Indian states of

Jharkhand and Bihar, exposed to dangerous work,

excessive work hours, and limited protection. Despite

being aware, the majority of luxury brands still

haven't established fully transparent mica supply

From Glamour to Ethics: A PEST Framework Analysis of Ethical Dilemmas in the Luxury Cosmetics Industry - The Case of SK-II

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chains. Consequently, brands like Dior, Chanel, and

L'Oréal, despite making public appeals for ethics and

sustainability, remain indirectly engaged with

unethical labor practices due to opaque sourcing

arrangements (The Guardian, 2020).

Brands face increasing public pressure to be

totally transparent on sourcing practice and eliminate

unethical suppliers from their supply chains. But this

is still proving challenging, particularly due to the

insufficiency of effective enforcement agencies and

the all-pervading nature of informal or unregulated

mining. The ethical stakes are high, and brands must

take their practice closer to their stated corporate

social responsibility goals if they want to distance

themselves from complicity with human rights

violations.

3.3 Ethical Issue 3: Unethical

Marketing and Unrealistic Beauty

Standards

Unscrupulous marketing is yet another serious ethical

issue for the luxury cosmetics industry. Luxury

brands tend to advertise products with exaggerated

claims of performance or unsubstantiated assurances

of miraculous beauty. These types of advertising

encourage unhealthy standards, making consumers

unhappy with their natural appearance and creating

negative social expectations of beauty standards.

One of the most notable examples of these

problems is SK-II's marketing of their top seller,

"Facial Treatment Essence," also known as "miracle

water." Early marketing campaigns implied

extraordinary improvements in the skin, like extreme

anti-aging and revolutionary changes in the

complexion, with little strong scientific basis for

these claims (Advertising Standards Authority,

2018). As successful as this marketing campaign was

from a business point of view, it was ethically

questionable, capitalizing on consumers' fear of aging

and appearance, and ultimately misleading

consumers. The Advertising Standards Authority

later required SK-II to change its advertising practice

with more realistic, scientifically-based claims,

emphasizing the highest importance of honesty and

accountability for luxury cosmetic advertising.

Moreover, luxury brands reinforce limited beauty

standards by employing models with limited diversity

with regards to ethnicity, body size, and age. The

exclusive presentation of these limited beauty

standards is meant to reinforce negative beauty

norms, exclude greater representation, and encourage

negative self-esteem, body dissatisfaction, and

psychological distress among consumers, especially

youth (Grogan, 2021). Brands thus find themselves

under ethical pressure to adopt more inclusive

marketing practices that reflect realistic and

diversified standards of beauty.

3.4 Ethical Dilemmas and Case

Analysis Synthesis

The three ethical issues of animal testing, child labor

involved in mica sourcing, and unethical marketing

reflect stark ethical dilemmas for luxury cosmetics

brands. The SK-II example is used here to highlight

the broader industry practice of capitalizing on

consumer vulnerabilities with exaggerated product

claims, reflective of a systemic industry problem of

profit-driven disrespect for ethical accountability.

Meanwhile, the continued use of mica sourced from

unethical labor processes indicates a worrying gap

between the sustainability promises of brands and

reality. Finally, animal testing, even with changing

regimes of regulation, is a deeply polarized and

ethically nuanced problem, highlighting a gap

between public-facing values of the corporation and

actual operational practices.

The convergence of these ethical matters

emphasizes the need for luxury cosmetic brands to

implement across-the-board changes, like enhancing

transparency, accountability, and sustainability

across their processes. These changes encompass the

inclusion of ethical values across all aspects—starting

from sourcing raw materials and product testing to

honest, representative advertising strategies.

Ultimately, the solution of these ethical matters is

critical for luxury brands that wish to preserve

consumer trust, ethical integrity, and long-term

commercial viability.

4 SUGGESTIONS

Addressing the ethical issues identified within the

luxury cosmetics industry requires comprehensive

strategies that enhance transparency, accountability,

and ethical conduct. The following recommendations

are aimed at fostering greater responsibility and

integrity within the sector, benefiting both consumers

and brands in the long term.

4.1 Ethical Dilemmas and Case

Analysis Synthesis

Luxury cosmetic brands must prioritize transparency

and authenticity in their advertising strategies. This

involves ensuring that all promotional claims are

substantiated by robust scientific evidence, clearly

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communicated, and accurately represent product

efficacy. As demonstrated in the SK-II case,

exaggerated or misleading claims can lead to

regulatory scrutiny and consumer distrust. Brands

should adopt internal oversight measures, including

regular reviews and validations of marketing

materials, to maintain truthful communication with

consumers (Advertising Standards Authority, 2018).

To enhance credibility further, brands could

consider independent certification by reputable third-

party organizations, such as dermatological

associations or independent consumer protection

agencies. Achieving external verification helps build

consumer confidence and trust, reinforcing brand

integrity. Additionally, incorporating diverse and

realistic beauty representations in advertising

campaigns can significantly mitigate psychological

harm caused by unrealistic beauty standards, thereby

promoting more inclusive and ethically responsible

consumer messaging (Grogan, 2021).

4.2 Establish Ethical and Transparent

Supply Chains

Given the severe ethical concerns surrounding mica

mining and child labor, luxury cosmetics brands must

urgently develop fully transparent and ethical supply

chains. This involves conducting rigorous supplier

audits and openly reporting sourcing practices.

Brands should clearly document and disclose their

raw material sources, publicly sharing details of

supply chain audits and remediation measures.

Technologies such as blockchain can significantly

enhance traceability, allowing brands and consumers

to verify ingredient origins effectively (Saberi et al.,

2019).

Luxury cosmetic companies should actively

collaborate with initiatives like the Responsible Mica

Initiative, ensuring the ethical sourcing of mica and

other raw materials. Such partnerships facilitate

coordinated efforts to improve working conditions,

eliminate child labor, and ensure fair wages in mining

communities. Companies can further demonstrate

corporate responsibility by investing directly in local

community programs aimed at education, poverty

alleviation, and vocational training, effectively

reducing dependence on exploitative labor practices

(Terre des Hommes, 2020).

4.3 Invest in Alternative Testing

Methods

The luxury cosmetics sector should accelerate its

transition toward fully cruelty-free testing

methodologies, leveraging modern technological

advancements. Current scientific developments offer

viable alternatives to animal testing, including in-

vitro methods such as cell-based assays, 3D tissue

cultures, and artificial intelligence-driven predictive

models. These methods not only align ethically but

also often provide superior predictive accuracy

regarding human safety and efficacy compared to

traditional animal tests (Hartung, 2021).

Brands should invest proactively in research and

development collaborations with universities,

scientific institutions, and biotechnology companies

to refine and implement these alternatives. For

instance, L'Oréal ’s significant investment in

developing lab-grown human skin models illustrates

a successful commitment to cruelty-free innovation.

Luxury brands following this example could

significantly improve their ethical profile, appealing

to ethically conscious consumers while remaining

compliant with international regulations and

expectations (L'Oréal Sustainability Report, 2022).

4.4 Strengthen Regulatory Oversight

and Third-Party Auditing

To ensure lasting ethical compliance, luxury

cosmetics brands should voluntarily adopt rigorous

third-party auditing and certification mechanisms.

Independent audits conducted by reputable bodies

such as Ecocert, Leaping Bunny, or Fair Trade

International offer credible validation of ethical

claims, enhancing transparency and consumer trust.

Third-party verification encourages adherence to

international ethical standards regarding labor

practices, environmental sustainability, and animal

welfare, ensuring continuous improvement in ethical

accountability.

Additionally, luxury cosmetic companies should

actively engage with regulatory authorities to develop

and support stricter regulations concerning ethical

practices industry-wide. Lobbying for robust

international standards on animal testing bans, labor

rights, and transparent marketing can significantly

enhance overall industry credibility. Such proactive

participation demonstrates genuine commitment to

ethical leadership and helps shape more responsible

and accountable industry standards.

4.5 Conclusion on Suggestions

To effectively respond to ethical challenges in the

luxury cosmetics industry, brands must move beyond

general commitments and implement targeted,

practical measures. The SK-II case highlights the

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319

need for stricter internal review and scientific

validation of advertising claims to avoid consumer

deception. In supply chains, brands should address

mica-related labor abuses by joining initiatives like

the Responsible Mica Initiative and disclosing audit

results. As demonstrated by L'Oréal, investing in

cruelty-free alternatives such as lab-grown skin

models is a viable solution to animal testing. Lastly,

engaging third-party audits and supporting stricter

global regulations can strengthen accountability.

These actions not only address key ethical risks but

also enhance trust and secure sustainable growth.

5 CONCLUSION

The ethical landscape of the luxury cosmetics

industry is complex, highlighting tensions between

commercial profitability and corporate social

responsibility. This essay has demonstrated that

behind the luxury cosmetics industry's appealing

façade exist critical ethical concerns—animal testing,

child labor in mica sourcing, and the propagation of

unrealistic beauty standards through unethical

marketing. Each of these issues undermines the

ethical credibility and consumer trust essential for

sustained success in an increasingly conscientious

global market.

Politically, inconsistencies in international

regulations and enforcement have allowed unethical

practices like animal testing and child labor to persist.

Economically, luxury brands continue to leverage

premium pricing, often exploiting consumer

vulnerabilities and insecurities. Socially, unethical

marketing has perpetuated harmful beauty standards,

negatively affecting consumer self-esteem and

reinforcing narrow societal norms. Technologically,

however, promising advancements in alternative

testing methods and supply chain transparency

present feasible opportunities for ethical reform.

The case study analysis, notably SK-II's

advertising controversies, exemplifies broader

industry problems — highlighting how misleading

claims and exaggerated promises undermine

consumer trust and ethical integrity. Similarly, mica

sourcing scandals involving prestigious brands

expose significant discrepancies between stated

corporate sustainability goals and actual supply chain

practices.

To meaningfully address these ethical dilemmas,

this essay proposed targeted recommendations:

prioritizing advertising transparency through rigorous

oversight and third-party certification; establishing

fully traceable and ethical supply chains; investing

substantially in cruelty-free, innovative product

testing methodologies; and supporting regulatory

frameworks for stronger industry-wide

accountability. Such proactive steps would

significantly enhance ethical practices within luxury

cosmetics, creating lasting benefits for consumers,

companies, and society alike.

Ultimately, the future of the luxury cosmetics

industry lies in genuinely integrating ethical

responsibility into its core operations, rather than

treating it as a branding tool. By aligning with values-

driven consumer expectations and addressing key

issues— such as mica sourcing, animal testing, and

unrealistic beauty standards—brands can enhance both

reputation and long-term sustainability.

Despite growing awareness, academic research

still lacks empirical studies on the actual impact of

ethical sourcing initiatives, the credibility of cruelty-

free certifications, and how consumers interpret and

respond to ethical claims. There is also limited

investigation into how regional regulations and

digital platforms influence ethical compliance in

global markets.

Future research should focus on evaluating the

effectiveness of transparency tools such as

certification and supply chain audits, the role of

consumer trust in driving ethical behavior, and the

influence of policy and digital activism on corporate

accountability. These areas remain underexplored

and are crucial for understanding how ethical

commitments translate into actual business practices

within the luxury cosmetics industry.

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