Since we utilize low amounts of EPA-regulated hazardous materials in our processes at our manufacturing facilities, our operations have minimal environmental releases to the air and water. However, we are continuously evaluating the efficiency of our operations to reduce any potential discharges to the environment.

Wastewater Effluent


All of our manufacturing facilities follow local governmental requirements for the discharge of industrial wastewater. Industrial wastewater is generated from the cleaning and sanitization of our process equipment and general water use from our laboratories. All of our facilities also generate sanitary sewage from lavatories and cafeteria operations. Monitoring of compliance with applicable regulations and permit conditions is an integral part of our ISO 14001 management system. In addition we are currently reviewing the processes at each facility that generate wastewater to determine if there are any ways to decrease product loss from these activities.

Air Emissions

Several of our manufacturing facilities have air emissions that are below government permitted activity levels and are exempt from permit requirements. One of our perfume filling operations is permitted for the release of Volatile Organic Compounds (VOCs) from the vapor recovery of alcohol and fragrance oils. This facility has installed a state of the art pollution control unit that captures and recovers the VOCs emissions. In addition, four of our larger manufacturing sites have government approval for the release of VOCs from cleaning and manufacturing processes and particulate matter from the on-site combustion of fossil fuels in boilers or HVAC units. Overall our VOC emissions decreased from Fiscal Year 05 to Fiscal Year 06 by 6.4% due to the increased availability of quantitative data from our manufacturing operations.

Currently, the Company is able to calculate the actual or potential to emit air emissions for 10 of the 11 global manufacturing facilities. In Fiscal Year 07 we will have collected air emission data from all of the Estée Lauder manufacturing operations. The Company will continue to monitor this data and examine our processes to investigate additional opportunities for further minimizing our air emissions.

AIR EMISSIONS IN METRIC TONS
Contaminant	FY04	FY05	FY06
Volatile Organic Compounds	45.2	48.8	45.7
Particulate Matter	0.5	0.3	0.3

Climate Change
The 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 environmental programs. Climate change has potential negative consequences on our operations, including natural disasters affects on our stores and facilities and the continued access to botanical ingredients and clean water. For these reasons we have integrated our Climate Change strategy within our ISO 14001 certified Environmental and Safety Management System and our Global Business Continuity Programs.


Greenhouse gas emissions from direct and indirect energy usage at our Operations’ facilities and employee business travel were estimated to be 53,000 metric tons* in Fiscal Year 2006. In order to minimize our own contributions to climate change, The Estée Lauder Companies has recently partnered with the United States Environmental Protection Agency’s Climate Leaders Program. We hope to use this partnership to calculate our full carbon footprint and put together long term goals to reduce our overall impact. Our Fiscal Year 2008 Carbon Footprint goals are

• Calculate full carbon footprint of organization
• Eliminate inefficient uses of resources internally and within supply chain
• Examine existing processes to determine if there is a better way
• Install on-site renewable energy to power facility where economically feasible
• Offset electricity use where we cannot reduce or create our own clean electricity
• Publicly quantify GHG reduction goals and strategy

While we will utilize our Climate Leaders partnership to help us better quantify our current greenhouse gas emissions and programs to minimize these. Our current business strategy has many programs in place to reduce our climate change contributions. These include

• Regional manufacturing – Programs are in place to reduce the number of products that are shipped across markets.
• Freight minimization programs—We have partnered with our supply chain to reduce the number of incoming shipments delivered to our buildings while have been working to optimize efficiencies to ensure that outgoing shipments are shipped by ground or ocean freight whenever possible
• Sustainable sourcing—We have been partnering with our suppliers to utilize more environmentally friendly raw materials and to review the sourcing and harvesting methods of our botanical ingredients.
• Sustainable packaging—We have been encouraging our suppliers to utilize renewable energy to power their facilities and to include post consumer recycled content within our base packaging.
• Energy conservation—We have continued our energy conservation program at our Operations’ facilities and have begun to work with our retail and office departments to ensure that all of our facilities’ are as efficient as possible. Projects launched as a result of our energy conservation program have been reported to the United States Department of Energy as part of the Voluntary Reporting of Greenhouse Gas Emission Program.
• Green building and purchasing specifications—We have recently adapted a new green building design guideline to use as the basis of new construction and retrofits of existing Operations facilities.
• Employee Commute and Travel—On a site by site basis, The Company offers alternative transportation methods ranging from car and vanpooling to bicycle parking to minimize pollution from employee commute. The Company has installed and utilizes video conferencing and other communication technologies to minimize employee travel between sites.
• Carbon offsets—In December of 2007 we will be the first beauty company to offset 100% of its Operations’ electricity usage.

(*)Emission Estimates based on information from local utilities regarding energy mix and US EPA AP-42 Emission Calculations for Fuel Oil and Natural Gas Combustion