3 These objectives are accompanied by monthly reporting of detailed indicators used to monitor evolutions in results in each of these areas and to identify potential anomalies and incidents. Furthermore, the Group is engaged in a process of continuous improvement of EHS performance through its operated sites in order to sustainably anchor the EHS policy: ISO 45001 for the management of employee health and safety and improvement in their working conditions; ISO 14001 for the management of environmental impacts and improvement in environmental performance; and ISO 50001 for energy management and energy performance improvement. Moreover, “culture” audits are conducted by internal EHS specialists in order to assess the deployment level of the EHS culture with all employees at Subsidiaries: the results of these audits provide information on the level of knowledge of EHS management tools and the maturity of audited sites with regard to the safety and environment culture at all structural levels. Detailed information on these additional actions is available in Chapter 4 “L’Oréal’s Social, Environmental and Societal Responsibility” of this document. (ii) Additional actions intended for Suppliers The Purchasing teams select the most competitive suppliers in accordance with the responsible purchasing policy. The EHS performance of Suppliers is managed by monitoring indicators included in the corporate social responsibility criterion, which is one of the five criteria for monitoring supplier performance. As part of the L’Oréal for the Future programme, launched in 2020 with targets for 2030, the Group has broadened its environmental commitments to its supply chain. The main environmental objectives of the programme concerning suppliers or those that may be related to their business activity are therefore as follows: • Climate: by 2030, strategic suppliers will reduce their direct greenhouse gas emissions (scopes 1 and 2) by 50% in absolute terms compared to 2016. • Water: by 2030, all strategic suppliers will use water responsibly in the areas where they operate. • Biodiversity: • By 2030, 100% of the biobased ingredients for the Group’s formulas and packaging materials will be traceable and will come from sustainable sources, with none linked to deforestation. • By 2030, the footprint on the ecosystems vital to the sourcing of its ingredients will be maintained at 2019 levels. • Sustainable sourcing of raw materials: For the palm oil and its by-products segment, which are the subject of a specific “Zero deforestation” approach at year- end 2020, 100% of the supplies were covered by action plans with the suppliers concerned. L’Oréal developed the Sustainable Palm Index (SPI), a tool to evaluate and select suppliers of palm oil and palm kernel derivatives to assess the level of commitment, progress and achievements of its direct suppliers in favour of sustainable palm oil. This tool is used annually to evaluate suppliers’ progress towards the Zero Deforestation objective and their level of compliance with the Group’s requirements. The specific feature of the SPI lies in its integration in the purchasing decision process. A supplier in compliance with the SPI will benefit from an allocation of volumes, long-term contracts, and will be favoured in the context of partnerships in land projects. In 2019, L’Oréal co-founded the collective Action for Sustainable Derivatives initiative in order to share knowledge and methods with other operators to encourage the production and responsible supply of palm oil derivatives. For other streams of renewable raw materials, which represent 17% of the portfolio of renewable raw materials in volumes and 74% in number, L’Oréal, on the basis of environmental, social and economic indicators from external databases (IHDI of the UNDP, EPI from Yale University, Verisk Maplecroft Country Index), has defined indicators of “sustainable sourcing challenges” to assess renewable raw material streams with regard to their sustainability. These indicators are consolidated within the SCAN (Sustainable Characterisation) index, allowing the Group to prioritise the implementation of its sustainable sourcing action plans. The Group updates the information collected regularly. 79% of the volume of raw materials that the SCAN index has identified as representing sustainable sourcing challenges (i.e. 36% of the number of raw materials) are already the subject of plans or improvement initiatives with the relevant suppliers to ensure sustainable supply. The goal is for 100% of the Group’s renewable raw materials to come from sustainable sources. To achieve this, L’Oréal launched a support and training programme for more than 200 suppliers on the issues of sustainable sourcing of raw materials in order to guarantee the traceability of the raw materials delivered to L’Oréal and ensure the associated streams are secure. Depending on the level of environmental and/or social risk identified on these streams, suppliers are notably asked to deploy the field audit procedure for producers (88 indicators), developed by L’Oréal with the support of the Rainforest Alliance NGO and reviewed in 2019 by EcoCert, The Biodiversity Consultancy and The Danish Institute for Human Rights. They are also invited to rely on sustainable sourcing certifications adapted to the challenges of their streams (Fair Trade, Sustainable Agricultural Network, Organic, etc.). • Plastics and advertising displays: • By 2030, 100% of the Group’s plastic packaging will be recycled or bio-sourced (target of 50% by 2025). • By 2025, 100% of the Group’s plastic packaging will be refillable, reusable, recyclable or compostable. • By 2025, 100% of the Group’s advertising displays at points of sale will be eco-designed, taking into account the principles of the circular economy for managing their end of life. • Commitment of suppliers to self-assess and move forward with action plans through the CDP. L’Oréal actively works with its suppliers to help them improve their performance in terms of sustainable development. L ’ ORÉAL I UNIVERS AL REGISTRATION DOCUMENT 2021 149 RISK FACTORS AND CONTROL ENVIRONMENT Vigilance Plan