ENVIRONMENTAL AND SAFETY PERFORMANCE (page 2/2)

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 five 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.

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) certified pulp fibers.
• 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 Modified 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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