L'Oréal - 2018 Registration Document

Corporate Governance RISK FACTORS AND CONTROL ENVIRONMENT

BUSINESS \ SECURITY RISKS Risk identification

Risk management

In order to permanently protect these resources (or Group assets) against malicious acts, the Security and Safety Department helps in the preventive implementation of technical, HR and operational procedures to limit the residual risk of malicious damage and support the Group’s international development in high-risk countries. For this purpose, the Security and Safety Department: has implemented a watch and evaluation of the state of security in the countries in which s the Group is active; carries out evaluation visits in the countries in which it is present; s creates country security brochures for international travellers; s defines the security standards and minimum protection to be implemented to protect the s Group’s activities. The security measures are adjusted and reassessed based on the local situation and the level of exposure of employees and sites. Beyond compliance with the legal provisions and regulations applicable to health and safety in the various countries where it operates, the Group has also set ambitious objectives in terms of its employees’ safety. This safety culture has led to high standards being set, which often exceed legal obligations, and to the involvement of employees at all levels of the Company which is an essential factor. Within the scope of this EHS policy, prevention is based on the Safety Hazard Assessment Procedure “SHAP” carried out by employees on the ground under the responsibility of the Site manager. This programme helps identify dangers both overall and for each workstation, and assesses the corresponding risks. The SHAP method thus makes it possible to draw up a risk map for the sites, assess the level of risks and put in place the necessary oversight measures. It is based on a dialogue between those in charge and contributes to a significant collective improvement in risk management. This approach is constantly evolving and is updated regularly in line with changes at Sites and experience on the ground. EHS audits are conducted every three or four years in each plant and distribution centre. The risk mapping is reviewed within the scope of this audit. In 2018, 14 plants, 13 distribution centres, 3 research centres and two administrative sites were subject to an EHS risk audit. Each Site Manager is assessed with regard to their ability to deploy the Health and Safety policy and their results. As at 31 December 2018, 33 plants out of 40 are certified OHSAS 18001 (or equivalent) for their safety policy. Employee health is at the heart of the “Care” pillar in L’Oréal’s “Share & Care” programme, launched in 2013 and now deployed in all the Group’s subsidiaries. This programme is based on four pillars: social welfare, health, parenthood and quality of life at work. In the health area, access to a quality health system is provided to employees and their families, and individual and collective prevention actions as well as training in stress prevention and the ergonomics of work stations have been implemented (for more details see section 3.3.2. “Human Resources Policy”). Risk management

The Group’s presence in 73 countries and at more than 448 sites (excluding stores and the point-of-sales outlets of distributor customers) exposes it to a variety of risks inherent to the environments it works in (geopolitical, economic and social, malicious acts, climate and natural disasters). The direct and indirect consequences of these risks may adversely affect the Group’s resources: namely, people and tangible and intangible assets.

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BUSINESS \ EMPLOYEE HEALTH AND SAFETY RISKS Risk identification The protection of employees’ health and safety is one of L’Oréal’s priorities and is an integral part of the Health and Safety and Environment (EHS) policy and the Group’s human and social relations policy. It is rooted in the evaluation and prevention of professional risks in the Company as described in detail in chapter 3. Nevertheless, the risk of accidents at the workplace or occupational diseases cannot be entirely ruled out.

REGISTRATION DOCUMENT / L'ORÉAL 2018

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