Loreal Sustainability Commitment Flipbook
2013-2020 closing report
THE L’ORÉAL SUSTAINABILITY COMMITMENT 2013 - 2020 CLOSING REPORT
2020 CLOSING REPORT EDITORIAL BY JEAN-PAUL AGON 03 CONTENTS Chairman and Chief Executive Officer EDITORIAL BY ALEXANDRA PALT 06 Chief Corporate Responsibility Officer and Executive Vice-President of the Fondation L’Oréal SHARING BEAUTY WITH ALL, 07 L’ORÉAL’S SUSTAINABILITY COMMITMENT 2020 IN FIVE KEY FIGURES 08 SHARING BEAUTY WITH ALL, 2020 RESULTS 09 INNOVATING 11 SUSTAINABLY PRODUCING 13 SUSTAINABLY LIVING 15 SUSTAINABLY DEVELOPING 17 SUSTAINABLY Partager la beauté avec tous STAKEHOLDERS TESTIMONIES 19 ALLER PLUS LOIN SUR LE WEB Retrouver plus en détail la stratégie, les A RECOGNISED NON-FINANCIAL PERFORMANCE 20 engagements et les actions de L’Oréal en matière de développement durable sur www.loreal.fr/sharing-beauty-with-all La version PDF du rapport d’avancement The pdf version of this document complies est conforme aux normes IO with the requirements of ISO 14289-1 on the pour l’accessibilité des contenus du accessibility of online content. It has been €eb, elle est adaptée aux personnes déficientes visuelles ou en situation de adapted for people with sight ƒandicap moteur„ impairments or motor disabilities.
EDITORIAL JEAN-PAUL AGON Chairman and Chief Executive Officer Sharing Beauty with All created a fundamental paradigm shift, aiming to reinvent the way we design, make and market our products, and more generally the way we do business. 3
2020 CLOSING REPORT We are proving that it is possible to deliver economic performance while reducing our impacts on the environment. 2020 was a crucial year for the Group in Committee. And each one of our employees seized the the area of corporate responsibility. The opportunity to make a difference. All roles and Covid-19 pandemic revealed the departments within the organisation got involved in this magnitude of the health, environmental great revolution. From product design to supply chain, and social risks that weigh on humanity. production, packaging and marketing, the whole value It also highlighted the fundamental role chain has been transformed. that companies must play, alongside • Thirdly, we have always thought that we could only reach public authorities and civil society, to help our objectives through collaboration and partnerships. build a more responsible, sustainable and From the beginning, we have maintained a dialogue with inclusive world. all our stakeholders to co-create our commitments. Additionally, we have relentlessly sought to challenge our When the pandemic struck, our absolute priority was of achievements, through the critical observations of a course the health and safety of our employees. We also took ‘Panel of Critical Friends’, an external governance action, together with our partners, to help address the crisis, initiative established in 2014 and composed of figures of and provided support to health workers across the world. international importance. And throughout these years, we have built strong partnerships with our suppliers and And this year marks the end of our sustainability distributors to find innovative solutions, based on the programme, Sharing Beauty with All. conviction that it’s only together that we will be able to In seven years, we have achieved the majority of our goals, move the needle and create a real impact. even exceeding some of them. For example, we reached Today, sustainability is at the heart of the Group’s strategy, an 81% reduction in CO emissions, surpassing our 60% governance and performance. But we know that we must 2 reduction goal. At the same time, we have grown our go further. The decade before us is critical for the planet. production by 29%. In this way, we are proving that it is The urgency is there. We collectively have a decade to act. possible to deliver economic performance while reducing Our new programme, L’Oréal for the Future, launched in our impacts on the environment. And while for some other the midst of the pandemic, reflects the deeper goals, there is still a little further to travel, the dynamic of transformation that we want to deliver. It is an even more transformation has begun. profound transformation of our efforts to ensure that the This non-financial performance, which is audited in the company enlists in the only scenario possible for humanity: same way as our financial results, has been recognised by the respect of planetary boundaries across the whole independent organisations which place the Group at the lifecycle of our products. top of leading ESG ratings. Additionally, we have been This change is profound because we must consider the identified as one of the 41 LEAD businesses, an accolade impact we create beyond our own company. We must reserved for the most advanced companies in terms of support our nearly 1.5 billion consumers in making responsible business conduct and contribution to the sustainable choices, and continuously empower our Sustainable Development Goals. suppliers and customers to become more involved in this dynamic. Over these last few years, three overarching principles have Finally, even more profound, we are going to donate guided our efforts: €150 million to support vulnerable women and the • Firstly, the desire to set highly ambitious goals, without environmental crisis, two causes that reflect the Group’s certainty of achieving them. In this way, Sharing Beauty values and longstanding commitments, and that will be with All created a fundamental paradigm shift, aiming to at the core of the next decade. reinvent the way we design, make and market our We want to take more responsibility, engage our entire products, and more generally the way we do business. ecosystem and show that companies can be part of the This is an approach that has generated a real virtuous solution to the challenges facing the world. circle, prompting us to be ever bolder, more creative and more innovative. L’Oréal won’t be able to change the world alone, but the • Secondly, the whole company rose up to help. We world also needs actors like us to reinvent itself. And we will embedded this ambition at the highest level, integrating rise to the occasion. the function of sustainability within our Executive With the ambition: a better future for all. 4
SHARING BEAUTY WITH ALL A FINAL REVIEW As we reviewed Sharing Beauty with All, established in 2013 with goals towards 2020, L’Oréal’s teams shared their results and provided their analysis of the profound sustainability transformation enabled by the programme. This dynamic now flows through every project and is embraced by every employee, and L’Oréal is committing to accelerating progress in the years to come, in order to always go further towards sustainable beauty. 5
2020 CLOSING REPORT EDITORIAL ALEXANDRA PALT Chief Corporate Responsibility Officer and Executive Vice-President of the Fondation L’Oréal Very early on, L’Oréal realised the urgent need to take action to address the challenges of the global environmental crisis. As a business, we began by targeting the environmental impacts of our sites, a priority and first step necessary to begin our process of transformation. In 2013, we launched Sharing Beauty with All - we wanted to put sustainability at the heart of our activities and we set a series of goals to achieve by 2020. In seven years, we have completely reinvented our businesses, our practices and our mindset. Today, sustainability has become every employee’s business. In that respect, this first programme was a real success. We have demonstrated an unrelenting resolve, overcoming the inherent challenges to meet the pressing need to deliver results. We can be proud of the progress we have achieved. We also know that this is no longer enough. Since 2013, the world has changed. Our In seven years, ambitions must be in line with the unprecedented scale of the challenges we face – we must do more we have and faster. If we don’t rapidly change our lifestyles, our economic activities and the way we consume, completely we will endanger our own existence. In June 2020, we launched the second phase of our reinvented our sustainability commitment, L’Oréal for the Future. Our vision is to accelerate our sustainability businesses, our transformation to help ensure that our activities respect planetary boundaries, while contributing to addressing the social and environmental practices and challenges facing our world. Importantly, this ambition encompasses both our direct impacts our mindset. and our indirect impacts, those linked to our suppliers’ activities, for example, and the use of our products by consumers. We have just ten years before us to act. We must show the change is possible. 6
SHARING BEAUTY WITH ALL L’ORÉAL’S COMMITMENT TO SUSTAINABILITY As part of L’Oréal’s sustainability sustainably, producing sustainably, sustainability strategy and co-create its programme, Sharing Beauty with All, living sustainably and sharing growth initiatives. This sustainability launched in 2013, the Group has set with employees, suppliers and the programme, along with its strong itself a series of tangible commitments communities with which L’Oréal commitment to ethics, its policy of towards the end of 2020. They address interacts. Every year, L’Oréal measures promoting diversity and inclusion, and all its impacts and engage its whole its progress quantitatively, making its its philanthropic activities (conducted value chain – from product design to results available to everyone. By with the support of the Fondation distribution – including the production upholding its commitment to L’Oréal and by its brands), enable the process and the sourcing of raw continuous improvement, L’Oréal Group to contribute to 16 of the 17 materials. These commitments are maintains an ongoing dialogue with its Sustainable Development Goals organised into four pillars: innovating stakeholders, in order to share its defined by the United Nations in 2015. L’ORÉAL’S CONTRIBUTION TO THE UNITED NATIONS’ SUSTAINABLE DEVELOPMENT GOALS 7
2020 CLOSING REPORT 2020 IN FIVE KEY FIGURES - 81% 96% We have reduced the CO emissions 96% of products launched or renewed in 2 of our plants and distribution centres 2020 have an improved social or by 81%, in absolute terms, compared environmental profile. Each time a product is to 2005, while increasing our created or renovated, its contribution to production volume by 29% sustainability is now taken into account, in in the same period. addition to its performance and profitability. 100,905 100% The number of people from The proportion of our brands that have underprivileged communities who have conducted an assessment of their gained access to employment through environmental and social impact. one of our Group’s programmes. 3A In 2020, for the fifth year running, our Group was awarded a triple ‘A’, the best possible score, in each of the rankings conducted by CDP on three key topics: fighting climate change, managing water sustainably and protecting forests. We are the only company worldwide to have achieved 3 ‘As’ from CDP five years in a row. 88
SHARING BEAUTY WITH ALL 2020 RESULTS The year 2020 marks the end of the Sharing Beauty with All programme, the Group’s first generation of sustainability commitments, established in 2013. This programme placed sustainability at the heart of the company’s strategy, and set concrete commitments to achieve by the end of 2020, from product design and raw material sourcing to production and distribution. The following table provides an overview of the programme’s final results. Social, societal, environmental and health and safety data in this report was verified by the Group’s auditors Deloitte & Associés and PricewaterhouseCoopers Audit, and are indicated throughout by symbols highlighting the level of audit assurance: (moderate) and (reasonable). Please refer to the methodological note and 2020 Assurance Report published in the ‘Publications’ available at: loreal.com/en/publications/sharing-beauty-with-all-publications/ Innovating sustainably 2020 TARGETS 2020 RESULTS 2019 RESULTS 100% of L’Oréal products will have an improved environmental 96% of new or renovated products or social profile. have an improved environmental or social profile. Every time the Group creates or renovates a product, it will 85% improve the product’s environmental or social profile with regard to at least one of these four criteria: • the new formula reduces the product’s 39% of new or renovated products now have an improved environmental footprint, particularly with regard environmental profile due to a new formula with a lower 46% to water use; environmental footprint. • the new formula uses renewable raw materials 69% of new or renovated products now have an improved that are sustainably sourced or derived from environmental profile due to a new formula incorporating 59% green chemistry; renewable raw materials that are either sustainably sourced or respect the principles of green chemistry. 49% of new or renovated products now have an improved • the new product has a positive social impact; social profile, as they incorporate raw materials from Solidarity 40% Sourcing programmes. • the new packaging has an improved 85% of new or renovated products now have an improved environmental profile. environmental profile due to packaging with a lower 67% environmental footprint. Producing sustainably 2020 TARGETS 2020 RESULTS 2019 RESULTS L’Oréal will reduce the CO emissions generated 2 -81% reduction in CO emissions from plants and by its plants and distribution centres by 60% in 2 - 78% absolute terms, compared to 2005. distribution centres since 2005. L’Oréal will cut the CO2 emissions linked to the -24% reduction in CO emissions linked to the transport transport of its products by 20% (in gram of CO per 2 2 of products (in gram of CO per sales unit per km) since 2011 - 12% sales unit per km), compared to 2011. 2 with 434,293 tonnes of CO2 emitted in 2020. L’Oréal will lower its water consumption by 60% -49% decrease in water consumption at plants - 51% per finished product, compared to 2005. and distribution centres since 2005 (in litre/finished product). L’Oréal will reduce its waste generation by 60% -37% reduction in waste generated from plants and - 35% per finished product, compared to 2005. distribution centres since 2005 (in gram per finished product). L’Oréal will send zero industrial waste to landfill. * The 0 waste to landfill goal (beyond regulatory requirements) for all factories and distribution centres was achieved in 2018. *Beyond local regulatory requirements and with the exception of food waste at two sites. 9
Living sustainably 2020 CLOSING REPORT 2020 TARGETS 2020 RESULTS 2019 RESULTS L’Oréal will evaluate the environmental and social 100% of new or renovated products in 2020 profile of all its products using an assessment tool. * All brands will make this information publicly available were assessed using our product assessment tool . to allow consumers to make sustainable choices. The indicator of the percentage of brands that communicate 100% information arising from the SPOT tool to consumers will be completed as soon as the social and environmental display system is finalised. The system is currently being developed and implemented. All brands will assess their environmental and social impact 100% of the international brands present in the Group and make commitments to improve it. in 2013 have assessed their social and environmental impact. 99% Including the acquisitions since 2013, the percentage would be 89%. Every brand will report on its sustainability progress 79% of brands conducted a consumer and raise consumer awareness of its commitments. awareness initiative. 57% Consumers will be able to influence L’Oréal’s sustainability In 2020, in an extension of the advisory committee established in efforts through a consumer advisory committee. 2016, L’Oréal continued its policy of actively listening to consumers on sustainability topics. This encompassed multiple studies conducted among American, Indian and European consumer panels, enabling the Group to understand their expectations and refine its policies. Innovating sustainablyDeveloping sustainably… 2020 TARGETS 2020 RESULTS 2019 2020 TARGETS2020 RESULTS2019 RESULTS RESULTS … with communities 100% of L’Oréal products will have an improved environmental96% of new or renovated products or social profile.have an improved environmental or social profile. 85% By 2020, L’Oréal will enable more than 100,000 people from Every time the Group creates or renovates a product, it will underprivileged communities to gain access to employment 100,905 people from underprivileged communities gained 90,635 improve the product’s environmental or social profile withthrough the following programmes: access to employment. people regard to at least one of these four criteria: • the new formula reduces the product’s39% of new or renovated products now have an improved • Solidarity Sourcing programme;81,138 people gained access to work through 70,912 environmental footprint, particularly with regardenvironmental profile due to a new formula with a lower 46%the Solidarity Sourcing programme. people to water use;environmental footprint. 69% of new or renovated products now have an improved • vocational training in the beauty sector; 18,386 people in situations of significant vulnerability 18,443 • the new formula uses renewable raw materialsenvironmental profile due to a new formula incorporating were trained in beauty professions. people that are sustainably sourced or derived fromrenewable raw materials that are either sustainably sourced or 59% green chemistry;respect the principles of green chemistry. • equal opportunities for people with disabilities. 1,381 people with disabilities work for L’Oréal. 1,280 49% of new or renovated products now have an improved people • the new product has a positive social impact;social profile, as they incorporate raw materials from Solidarity 40% Sourcing programmes.… with suppliers • the new packaging has an improved85% of new or renovated products now have an improved L’Oréal will assess and select all strategic suppliers environmental profile due to packaging with a lower 67% ** environmental profile. on the basis of their environmental and social 97% of the Group’s strategic suppliers have been environmental footprint. performance. assessed and selected to date on the basis of their 87% *** environmental and social performance . All strategic suppliers will assess their own sustainability 99% of strategic suppliers have completed policy, with L’Oréal’s support. a self-assessment of their sustainability policy with 96% **** Producingsustainably L’Oréal’s support. All suppliers will have access to L’Oréal training Our dedicated online training platform was launched at the end 2019 tools to improve their sustainability policies. of October 2016. It is firstly being made available to strategic 2020 TARGETS2020 RESULTSRESULTS suppliers, before being gradually implemented more broadly. L’Oréal will reduce the CO emissions generated 2-81% reduction in CO emissions from plants and 20% of strategic suppliers will support by its plants and distribution centres by 60% in2- 78%the Solidarity Sourcing programme. 22% strategic suppliers are involved in 17% absolute terms, compared to 2005.distribution centres since 2005. the Solidarity Sourcing programme. L’Oréal will cut the CO emissions linked to the 2-24% reduction in CO emissions linked to the transport … with employees transport of its products by 20% (in gram of CO per2 2of products (in gram of CO per sales unit per km) since 2011 - 12% sales unit per km), compared to 2011.2 with 434,293 tonnes of CO2 emitted in 2020.Employees will benefit from health cover that reflects 96% of the Group’s permanent employees benefit from best practice in their country of residence. health cover that reflects best practice in their country of 94% L’Oréal will lower its water consumption by 60%-49% decrease in water consumption at plants residence. per finished product, compared to 2005.and distribution centres since 2005 (in litre/finished product).- 51%Employees will benefit from financial protection in the 92% of the Group’s permanent employees have access event of a life-changing accident. to financial protection in the event of a life-changing accident 91% L’Oréal will reduce its waste generation by 60%-37% reduction in waste generated from plants and - 35% (death or permanent disability). per finished product, compared to 2005.distribution centres since 2005 (in gram per finished product). Every L’Oréal employee will be able to attend at least 100% of the Group’s employees benefitted from 96% one training session per year, wherever they are in the world. at least one training session in 2020. L’Oréal will send zero industrial waste to landfill.* The 0 waste to landfill goal (beyond regulatory requirements) for all factories and distribution centres was achieved in 2018. * The scope includes products made by L’Oréal (except full-buy, recent acquisitions, testers and samples, etc.) since the beginning of the Sharing Beauty with All program in 2013. ** ‘Strategic suppliers’ are suppliers whose added value is significant for the Group by contributing to L’Oréal’s strategy through their weight, innovations, shared goalsand geographical representation. *** The number of suppliers assessed represents more than 85% of direct purchases by value (raw materials, items of packaging and sub-contracting). Elsewhere, in 2020, 1,268 audits were conducted, bringing the total to more than 13,600 since 2006. **** The percentage is derived from the calculation of the number of suppliers that had, in 2020, had their social, environmental and ethical policies (as well as the implementation of these policies among their own suppliers) assessed by Ecovadis. 10
INNOVATING SUSTAINABLY Innovating sustainably means taking full advantage of the fundamental trends transforming the universe of Research and Innovation, in order to best serve consumers and the environment. Whether it’s reducing the environmental footprint of formulas, respecting biodiversity thanks to a sustainable, responsible sourcing policy for raw materials, eco-designing packaging, or pursuing zero deforestation commitments – over these last few years, our teams Barbara Lavernos, have taken multiple opportunities to address the environmental Chief Research, Innovation crisis and offer our consumers more sustainable products. and Technology Officer 2020 RESULTS IMPROVING ENVIRONMENTAL RAW MATERIALS SOCIAL IMPACT PACKAGING PRODUCTS FOOTPRINT AND BIODIVERSITY OF PRODUCTS OF FORMULAS 96% 39% 69% 49% 85% of new or renovated of new or renovated of new or renovated products now of new or renovated of new or renovated products in 2020 present products present an have an improved environmental products have an improved products present an an improved social or improved environmental profile thanks to a new formula social profile as they include, improved environmental * profile, thanks to a new incorporating renewable in particular, raw materials environmental profile. formula with a reduced profile, thanks to packaging raw materials that are either produced through Solidarity with a reduced environmental footprint. sustainably sourced or respect the Sourcing programmes. environmental footprint. principles of green chemistry. See page 9 to learn more about the audit of indicators. * This relates to new products, i.e. for which new formulas have been developed and produced for the first time within the Group’s factories, or products for which packaging was created or renovated in 2020. 11
2020 CLOSING REPORT OUR ACHIEVEMENTS Reducing the environmental impact of formulas and helping to ensure respect for biodiversity AN ECO-DESIGN TOOL FOR FORMULAS All the products made by the Group have been categorised in line with the benefits offered to the consumer, and we have already assessed 40,000 formulas, through an eco-design tool, called SPOT (Sustainable Product Optimization Tool), created in order to improve the environmental footprint of formulas. Used by all our formulation teams, this tool has notably helped to improve the biodegradability of formulas and to further integrate ingredients of natural origin. Today, 59% (by volume) of raw materials used by L’Oréal are renewable, meaning they are largely of plant origin. This represents around 1,600 raw materials derived from nearly 350 plant species from around 100 countries. 87% (by volume) of these renewable raw materials are * derived from certified sustainable sources. Optimising packaging RESPECT, REDUCE AND REPLACE Since 2007, L’Oréal has deployed a policy of responsible packaging called the ‘3Rs’, based on three pillars: Respect, Reduce and Replace. We implemented a global and systematic process of eco-design for the packaging of finished products and transport packaging. This initiative has extended to publicity materials on point of sale (POS) displays since 2015. We undertake a systematic analysis of the environmental profile of packaging, using SPOT, the assessment tool that L’Oréal and our partners launched to develop the products and packaging of tomorrow. Achieving zero deforestation Since 2007, L’Oréal has implemented action plans in order to guarantee a sustainable supply of agricultural raw materials that may be vulnerable to causing deforestation, including palm oil, soya oil and wood fibre-based products. L’Oréal has a specific strategy for palm oil derivatives, in partnership with all stakeholders (producers, NGOs and suppliers): 100% of our palm oil, palm oil derivatives and palm kernel oil supplies have been certified sustainable 2025 PLASTIC REDUCTION according to RSPO criteria since 2012, and 92% of the main derivatives come from known sources (traceable back to COMMITMENTS the mills). Since 2018, the Group has been a partner of the In 2020, 100% of the soya oil used by L’Oréal and sourced Ellen MacArthur Foundation, with an ambition that from Latin America was certified sustainable. Elsewhere, 100% of our plastic packaging will be refillable, 100% of the paper used for product instructions and 100% reusable, recyclable or compostable by 2025. of the cardboard for product packaging was derived Elsewhere, we have committed to ensuring that from responsibly managed forests (with an FSC or PEFC 100% of our plastic is derived from recycled or certification). bio-sourced materials by 2030. * The list of recognised certifications was defined with the support of the NGO the Rainforest Alliance in 2017. This list respects L’Oréal’s sustainable sourcing criteria (which comprise 88 indicators). It was reviewed in 2019 by Ecocert Expert Consulting, The Biodiversity Consultancy and The Danish Institute for Human Rights. 12
PRODUCING SUSTAINABLY Improving the environmental impacts of our sites and distribution centres has been a priority, and a vital first step in catalysing our process of sustainable transformation. Reducing greenhouse gas emissions, water consumption and waste, and lowering transport impacts, have become fundamental criteria of our manufacturing performance. In ten years, we have achieved a profound operational transformation, together with our entire ecosystem, and we’ve shown Antoine Vanlaeys, that decoupling growth from impact is possible. Chief Operations Officer 2020 RESULTS CO EMISSIONS FROM WATER CONSUMPTION CO EMISSIONS WASTE WASTE REUSED WASTE SENT 2 2 GENERATION IN *** PLANTS AND DISTRIBUTION IN PLANTS AND LINKED TO OR RECYCLED TO LANDFILL * PLANTS AND CENTRES SINCE 2005 DISTRIBUTION CENTRES TRANSPORT DISTRIBUTION ** (kilo tonnes in absolute SINCE 2005 SINCE 2011 CENTRES SINCE terms, based on GHG (in litres per (in grams of CO per Protocol methodology, finished product) 2 2005 Scopes 1 and 2) sales unit per km) (in grams per finished product) zero -81% -49% -24% -37% 96% industrial 347,942 tonnes of manufacturing waste of CO emitted in 2020. waste reused or 2 recycled. sent to landfill. 242.6 51.8 46.0 0.723 0.353 0.365 23.6 15.3 14.9 2005 2019 2020 2005 2019 2020 2005 2019 2020 See page 9 to learn more about the audit of indicators. * Indicator calculated according to the ‘market-based’ methodology defined by the GHG Protocol. These values take into account the emissions connected to refrigerant leaks. ** Indicator excludes the upstream transport of raw materials and semi-finished products, along with journeys linked to direct e-commerce and returns. The figures have been st st consolidated for the period from 1 November 2019 to 31 October 2020. *** Beyond local regulatory requirements and with the exception of food waste at two sites. 13
2020 CLOSING REPORT OUR ACHIEVEMENTS Reducing greenhouse gas emissions Reducing water consumption IMPROVING ENERGY EFFICIENCY WATERLOOP FACTORY GOAL For more than 20 years, the design and insulation of buildings, the optimisation In addition to reusing, treating and recycling of industrial processes and the use of less energy intensive technologies have used water in our factories, we continue to enabled us to reduce the energy consumption of our industrial sites. In this deploy technologies enabling factories to way, between 2005 and 2020, we lowered our consumption by 33% (in kWh becoming ‘waterloop factories’. This concept per 1,000 finished products). The Group has also undertaken to achieve ISO consists in only using public water supplies for 50001 (energy management) certification for all its factories. By the end of human consumption and for the production of 2020, 69% of its factories (or 27 factories) held the certification. high quality water used as an ingredient in our L’Oréal is growing its use of renewable energy thanks to initiatives adapted products. All the water needed for production to each site and the purchase of electricity and renewable gas. By the end processes (cleaning equipment, producing of 2020, 50 of the Group’s industrial sites had achieved carbon neutrality, steam etc.) is entirely derived from water including 19 factories. recycled. We first put the ‘waterloop factory’ concept into action in 2017 at our Burgos factory Elsewhere, our sustainable transport strategy is based on three pillars: reducing in Spain. In 2020, we also applied the concept air freight and the introduction of the Global Freight Cockpit programme; the at our sites in Settimo, Italy, Vorsino, Russia, Green Last Mile (GLAM) programme, a collection of initiatives to reduce the Libramont in Belgium and Mexico City in Mexico. environmental impact of transport in urban environments; and finally, the We will progressively implement this concept implementation of solutions enabling us to reduce CO emissions on long throughout all our factories. 2 distance road transport routes, known as Greener Lanes. Reducing waste A HIGHLY AMBITIOUS POLICY We are applying a rigorous waste management policy, which goes well beyond compliance. This is an ambitious challenge, in terms of L’Oréal’s stringent definition of waste, which is effectively any solid item that is not a finished product destined for consumption, whatever its subsequent treatment or future use might be. This includes, for example, raw material packaging or product packaging, or even the sludge from wastewater treatment plants. We are therefore implementing ambitious efforts to reduce waste at source, while ensuring that any residual waste is recovered for reuse or recycling. This has enabled the Group to reduce the volume of waste generated at its manufacturing sites by 37% since 2005 (in grams per finished product). Elsewhere, across our value chain, we are seeking to promote eco-design, resource efficiency and local waste management. Wherever we operate, the Group seeks to integrate itself within circular economy networks, creating industrial synergies with other local stakeholders. NET ZERO CO 2 EMISSIONS BY 2050 In September 2019, L’Oréal joined the UN’s Business Ambition for 1.5°C initiative and committed to zero net carbon emissions by 2050, contributing in this way to keeping global warming below 1.5°C compared to pre-industrial levels. 14
LIVING SUSTAINABLY Listening to consumers’ expectations for environmental responsibility but also for natural products, so we can help them make more sustainable consumption choices, sits at the heart of our concerns. To do that, we gather all the information on the environmental and social impact of our products, and evaluate the footprint of every product, adopting an approach of continuous improvement. Our brands also draw on their ability to influence to lead awareness campaigns, and improve Alexis Perakis-Valat, consumption practices and habits around their products. We want to President, Consumer Products make sustainability desirable, inviting everyone to act with us, and enter into a virtuous chain of responsible consumption. 2020 RESULTS PRODUCTS EVALUATED EVALUATION AND REPORTING RAISING AWARENESS AMONG CONSUMERS In 2020, through the ongoing consultative committee established in 2016, L’Oréal has continued its active listening policy among consumers on sustainability topics, undertaking multiple studies among panels of American, Indian, 100% 100% 79% Chinese and European consumers to understand of new or renovated products in of brands have evaluated their social of brands conducted their expectations and 2020 were evaluated using the and environmental impact. a consumer awareness initiative.** refine our policies. product assessment tool.* Including acquisitions since 2013, ** the percentage would be 89%. See page 9 to learn more about the audit of indicators. * The scope covers products produced by L’Oréal (except full-buy, recent acquisitions, testers and samples, etc.). **Percentage calculated compared to consolidated sales for 2020. 15
2020 CLOSING REPORT OUR ACHIEVEMENTS Assessing product footprints Mobilising our stakeholders SPOT: A UNIQUE EVALUATION TOOL ENGAGED AND ENGAGING CAMPAIGNS Between 2014 and 2016, L’Oréal’s Sustainability, Conscious of the influential capacity of its brands, L’Oréal Packaging and Research teams worked encourages them to raise awareness and foster action among on developing an innovative tool allowing its partners, customers and consumers on today’s major social them to assess the social and environmental and environmental issues. Each brand must therefore identify performance of the Group’s products, and a cause of their own and conduct awareness campaigns. In integrate, for the first time, social as well as * 2020, 79% of brands conducted this type of activity. environmental criteria. The Group implemented the tool, known as the Sustainable Product Significant brand causes were launched in 2020: Optimisation Tool (SPOT), in 2017 across all L’Oréal Paris and the organisation Hollaback! joined forces its brands. In 2020, the Group evaluated the to fight against street harassment, through the Stand Up social and environmental profile of all the programme. In this way, the brand has launched training products developed during the year using ** campaigns using the ‘5D methodology’, in order to this tool. L’Oréal shared its evaluation method encourage women and men to intervene in a confident for the environmental footprint of packaging, way if they experience or witness harassment in the street. as developed through SPOT, with the SPICE The programme reached more than 100,000 people initiative in 2018, co-created by L’Oréal and globally in 2020. the consultancy Quantis, in order to help standardise methods for evaluating the Through its Brave Together programme, the Maybelline New environmental footprint of packaging. York brand participates in the fight against anxiety and depression for young people. The goal is to offer one-to-one A METHODOLOGY CO-CREATED WITH EXPERTS support and accompany those who are in difficulty, as well as To create the tool, L’Oréal convened a panel their loved ones. The brand supports the Crisis Text Line, which of 11 international experts, who contributed offers free and confidential advice. Maybelline New York has to developing the methodology – in line with committed to investing $10 million during the next five years in European Product Environmental Footprint organisations working to promote mental health worldwide. standards – in order to ensure that the final Yves Saint Laurent Beauté has committed to contributing to methodology would lead to a relevant and the fight against domestic violence by launching a global robust assessment of impacts. programme called Loving without abusing. The goal is to raise awareness among 2 million people of the signs of domestic violence by 2030, through partnerships with local NGOs. RAISING AWARENESS OF SUSTAINABLE CONSUMPTION Evaluating and reducing the impacts of our products is an integral part of our sustainability transformation. It is also important that we share this information with our consumers so they can make more sustainable, informed choices. That is why L’Oréal’s teams have developed a social and environmental display mechanism for products, accessible via our product web pages. We launched it in July 2020, starting with Garnier’s haircare range in France. *Percentage calculated compared to consolidated sales for 2020. ** Distract , Delegate, Document, Direct, Delay. 16
DEVELOPING SUSTAINABLY Developing sustainably means demonstrating solidarity and responsibi- lity towards the Group’s stakeholders, but also towards society. Throughout the world, we wanted to guarantee that our employees would benefit from best practice in social innovation, involve our suppliers in our sustainability efforts, and help promote access to employment for people in situations of vulnerability. This social and societal policy forms part of the Group’s longstanding values. Integrating Jean-Claude Le Grand, it within the Sharing Beauty with All programme was a natural step. Chief Human Relations Officer 2020 RESULTS TOTAL BENEFICIARIES SOLIDARITY SOURCING VOCATIONAL TRAINING HIRING PEOPLE IN THE BEAUTY SECTOR WITH DISABILITIES* 100,905 81,138 18,386 1,381 people from people gained people in situations of serious people with disabilities underprivileged access to employment, vulnerability participated in work for L’Oréal. communities who gained thanks to an free vocational training in access to employment. inclusive purchasing the beauty sector through programme. the Beauty For a Better Life programme, supported by the Fondation L’Oréal. OUR ACHIEVEMENTS Promoting access to employment and social inclusion Our Solidarity Sourcing programme, established in 2010, directs a proportion of the Group’s global purchases to suppliers who give people who are typically excluded from the job market access to work and a sustainable income. This includes companies that employ people from economically underprivileged communities, firms that may not typically be able to access major international calls for tenders, and micro-enterprises. The Solidarity Sourcing programme is active across all the regions where L’Oréal operates and covers all types of purchases, including raw materials, contract manufacturing and promotional items. In 2020, it enabled 81,138 people from communities facing social or financial challenges to gain access to or retain a job and a decent income. Through Beauty For a Better Life, the Fondation L’Oréal offers free vocational training in beauty sector skills, drawing on the Group’s expertise in fields such as hairdressing and make-up. It supports people in difficult living situations, and women who may be particularly vulnerable socially or economically. In another effort to promote inclusion, L’Oréal counted 1,381 people with disabilities among its employees in 2020. 17
2020 CLOSING REPORT 2020 RESULTS SELECTION 97% SELF-ASSESSMENT 99% We launched a dedicated training 22% of strategic platform at the end of the Group’s strategic of October 2016. of strategic suppliers suppliers** have been assessed suppliers** have Initially open to are involved in and selected based on their completed a strategic suppliers, Solidarity Sourcing environmental and social self-assessment of it will gradually be programmes. performance. They represent their sustainability implemented more 85% of direct purchases (raw policy, with L’Oréal’s widely. materials, packaging and support. contract manufacturing). 2020 RESULTS *** *** *** HEALTHCARE FINANCIAL SECURITY TRAINING **** **** 100% 96% 92% of the Group’s permanent of the Group’s permanent of the Group’s permanent employees employees benefit from employees benefit from financial benefited from at least one training health cover in line with best protection in line with best practices session in 2020. practices in their country of in the market, in the event of a residence. life-changing accident, including death or permanent disability. Placing employees at the centre of Group commitments PROMOTING EMPLOYEE Launched in 2013, the L’Oréal Share & Care programme was implemented with the ambitious ENGAGEMENT aim of achieving a common foundation for social protection in all the countries where the Group has L’Oréal invites its employees to participate in Citizen Day subsidiaries, and for L’Oréal to become one of the most each year, a day of citizen action. high-performing companies in each regional market In 2020, given the Covid-19 health crisis, Citizen Day across all four areas of the programme: adapted to the situation and undertook a remote • Care: healthcare, with health cover and access to solidarity effort. On the agenda were e-volunteering high-quality care for employees and their families; missions, online solidarity hackathons, payroll giving and • Protect: a social protection scheme to provide charity crowdfunding campaigns. financial support in the event of an unexpected life This solidarity effort engaged nearly 7,600 L’Oréal accident; employees, delivering 19,000 hours of volunteering, • Balance: parenthood, to enable them to live enabling us to support 275 organisations in 24 countries. maternity and paternity to the full, while pursuing their careers; • Enjoy: quality of life at work. Empowering suppliers With approximately 28% of the Group’s carbon footprint arising from its suppliers’ activities, L’Oréal has encouraged suppliers to work with CDP, within the scope of the CDP Supply Chain programme, since 2009. In this way, we have encouraged suppliers to develop carbon emissions reduction goals and communicate their action plans towards 2020. In 2020, 484 L’Oréal suppliers undertook an initiative of this kind, which represents 87% of the Group’s direct purchases. Voir page 9 pour en savoir plus sur l'audit des indicateurs. * This figure takes into account the total number of disabled employees (with permanent and fixed-term employment contracts) as of 31 December 2020. This indicator only takes into account employees who wanted to declare their disability and have it recognised, as all the employees concerned do not systematically wish to do so. **Strategic suppliers are suppliers whose added value is significant for the Group. They make a long-term contribution to L’Oréal’s strategy through their weight, innovations, shared goals and geographical representation. st ***The Venezuela subsidiaries were deconsolidated on 31 December 2015. Certain acquisitions or subsidiaries (Azzaro Mugler, Modiface, Stylenda Japan, Ivory Coast, Bangladesh) for which the information management system has not yet been integrated within the Group system, are excluded from this report. They represent 0.36% of the Group’s employees. **** The (beauty) Group’s permanent employees, except, in certain countries, part-time contracts of less than 21 hours per week, temporary contracts, beauty advisors and store employees, while noting that the integration of recent acquisitions and new subsidiaries is gradual. 18
TESTIMONIES OF OUR STAKEHOLDERS “L’Oréal is showing truly market-leading ambition and holistic thinking with a suite of ambitious new targets across climate, water, biodiversity and resource use, covering the whole value chain and building on L’Oréal’s sciencebased target, which is aligned with a 1.5°C future. To achieve a sustainable economy that prospers within planetary boundaries, this is what we need all companies to be doing.” Dexter Galvin, Global Director of Corporations & Supply Chains, CDP “We began working with L’Oréal in 2017 when we were seeking partners to join us in developing and commercialising our innovative enzymatic PET recycling technology. L’Oréal rapidly wanted to play a more significant role in our group our partners, which immediately showed us that the company’s sustainability commitments translate into concrete actions and the provision of human, technical and financial resources, which is regrettably not always the case within corporate collaborations.” Martin Stephan, Deputy Director General of CARBIOS “We are pleased to see L'Oréal build on the New Plastics Economy Global Commitment 2025 targets, raising their ambition level further for 2030. Reducing their packaging intensity through innovations in reuse models, concentrated products, and packaging design, along with fully decoupling their use of plastics from virgin fossil resources by 2030, will significantly contribute towards a circular economy for plastic, in which it never becomes waste or pollution.” Sander Defruyt, New Plastics Economy Lead at the Ellen MacArthur Foundation “We started working with L’Oréal about five years ago on their Carbon Balanced programme. Focused on insetting, the programme is among the most ambitious and forward looking in the world of corporate sustainability and positively impacted ecosystems and communities around the world. No wonder many other companies are now following L’Oréal’s leadership and are employing insetting strategies themselves. Beyond climate, L’Oréal has a very holistic sustainability strategy, encompassing forest conservation, communities, water and biodiversity among other topics. At South Pole, we feel very honoured to be able to support L’Oréal to realise their ambitious sustainability visions.” Christopher Politano, Sustainability Adviser, South Pole “L’Oréal and DB Schenker share the same view on sustainability challenges, and therefore for many years have collaborated to reduce both the negative social and environmental impacts of their shared logistics networks. As a business leader in transport and logistics, DB Schenker has supported L’Oréal in implementing its sustainability strategy, Sharing Beauty with All. In the same way, L’Oréal’s initiatives have enabled DB Schenker to make further progress in this area.” Tariel Chamerois, Head of Sustainability, France & Maghreb, DB Schenker
2020 CLOSING REPORT REPORTING A RECOGNISED NON-FINANCIAL PERFORMANCE Every year, we communicate transparently, providing data on our corporate social and environmental responsibility strategy, challenges and results in three reports: the Universal Registration Document, L’Oréal’s annual report to the United Nations Global Compact (UN Global Compact), and its Sharing Beauty with All Progress Report. More than ever in 2020, L’Oréal’s sustainability performance and its reporting via robust, reliable indicators verified by external auditors, have enabled the Group to be recognised by the most demanding global organisations in this area. In 2020, for the fifth year running, L’Oréal supports the UN Global L’Oréal achieved an ‘A’ score in all Compact, and in 2015, joined its three of the rankings conducted by LEAD programme, which brings CDP, for its efforts for its efforts to fight together the companies that are the climate change, manage water most committed to sustainability. sustainably and protect forests. L’Oréal is the only company in the world to have been recognised for For the ninth year running, the achieving the highest level of extra-financial rating agency performance for five consecutive ISS-Oekom presented L’Oréal with years. CDP is an independent, Prime status, which recognises the international organisation that best performing companies. evaluates companies’ environmental performance. In December 2020, the extrafinancial rating agency Vigeo The Group is ranked among the 380 Eiris once again included L’Oréal in businesses listed on the 2021 Bloomberg multiple Euronext Vigeo Eiris indices. Gender- Equality Index, for the fourth year running. The index highlights 380 companies in 44 countries and regions, This ethical reputation index ranked and is based on multiple criteria, notably L’Oréal as No. 5 globally. This female leadership, talent management, ranking comprises world’s largest parity, inclusivity and policies on sexual companies and takes into account harassment. environmental, social, governance and human rights topics. The Ethisphere Institute, global leader in In 2020, L’Oréal was rewarded with defining and advancing the standards an AAA rating (on a scale of AAA of ethical business practices, ranked to CCC) in the ranking of MSCI L’Oréal for the twelfth time as one of the Indexes on ESG, governance and ‘World’s Most Ethical Companies’. human rights.* Prepared and edited by L’Oréal’s Corporate Responsibility Department. Photo credits: © Sebastian Doltze / Getty Images (cover, p.5) © Paolo Verzone / Agence Vu / L'Oréal (p.2, p.11) © Beini Zhao (p.2, p.13) © L’Oréal (p.2, p.15) © L’Oréal (p.2, p.17) © Thomas Lainé / L’Oréal (p.4) © Reinhard Oehner (p.6) ©Pierre-Olivier / CAPA Pictures / L'Oréal (p.11) © Paolo Verzone / Agence Vu / L'Oréal (p.12) ©L’Oréal (p.13) © RealizeProd (p.14) © Jean-François Robert / L'Oréal (p.15) © Raphael Creton © Jean-François Robert / L'Oréal (p.17) © LL28 Photography / Getty Images (p.18) © David Madison / Getty Images (p.18) ©Julian Mollema / EyeEm / Getty Images (p.18) © X. Accessible version by: ® The paper on which the 2020 Progress Report is printed is 100% recyclable and FSC -certified (Forest Stewardship Council). * The use by L’Oréal of any MSCI ESG Research LLC or its affiliates (“MSCI”) data, and the use of MSCI logos, trademarks, service marks or index names herein, do not constitute a sponsorship, endorsement, recommendation, or promotion of L’Oréal by MSCI. MSCI services and data are the property of MSCI or its information providers, and are provided ‘as-is’ and without warranty. MSCI names and logos are trademarks or service marks of MSCI. 20
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