L'Oréal - 2018 Registration Document

3 L’Oréal’s corporate social, environmental and societal responsibility NON-FINANCIAL RISKS

MAIN NON-FINANCIAL RISKS 3.2.

L’Oréal presents its strategy in terms of Social, Environmental and Societal Responsibility (1) with a view to meeting the new requirements of the Non-Financial Information Statement (2) . This declaration sets out the Group’s key extra-financial risks and then describes the policies implemented to address them, monitored and measured by performance indicators and their readings. This presentation draws on the Group’s business model, set out in Chapter 1 of this document. L’Oréal has a long-standing commitment to corporate social responsibility; section 3.3 also describe policies and actions implemented voluntarily other than in response to key risks.

RISK IDENTIFICATION PROCESS 3.2.1. In application of the Directive of 22 October 2014 on the disclosure of non-financial information, as transposed into French law, the main environmental, social and Human Rights risks and a discussion of the fight against corruption are presented in detail in this section 3.2 to the extent necessary to understand the Company’s situation, business development, economic and financial results, and activity. The Group’s significant risks, i.e. those liable to have a material impact on its business, financial position or outlook, are described in Chapter 2 of this document (see section 2.8.5 “Risk factors and risk management”) and have been prepared in reference with Group risk mapping (see section 2.8.5.2 “Risk mapping”). These risks bear on all areas of the Group’s activities. Some of them are specific to non-financial issues; others are broader, and may stem from environmental or societal causes. These so-called “CSR” risks were the subject of detailed analysis in order to select the main CSR risks within the meaning of the Non-Financial Information Statement, based on the work of the Group’s experts, in conjunction with the Group’s Risk Management Department, and consistent with the Group’s business model as described in Chapter 1 of this document. This work also draws on the sustainable development materiality analysis, the Group’s Human Rights and corruption mapping, also achieved by each country on corruption, as well as on the risk analysis carried out within the framework of the Vigilance Plan (see section 2.8.4 “Vigilance Plan”). The main risks have been validated at the highest level of responsibility of the organisation by the relevant General Managements.

The Group’s policies, described in section 3.3, address the need to prevent the main risks and to mitigate their impact. These policies also reflect a proactive approach that factors in stakeholder expectations.

MAIN RISKS IN RESPECT OF 3.2.2.

SOCIAL AND ENVIRONMENTAL RESPONSIBILITY, HUMAN RIGHTS AND CORRUPTION

The main risks in respect of social and environmental responsibility, Human Rights and corruption identified by the L’Oréal Group, as described in section 3.2.1, are set out below. The Group’s policies, described in section 3.3, notably address the need to identify the main risks, to prevent them and to mitigate their impact. For the main environmental risks, the concept of risk covers both risks related to the impact of the Group’s activity on its ecosystem and the risks of the impact of climate change on its business model, activity and financial performance (3) . By contributing to preventing and controlling the risks to which the Group is exposed, these policies are intended to contribute to the Group’s sustainable growth in a controlled environment suited to its business lines. There are however limits inherent in any system and process. These limits result from a number of factors, in particular the uncertainties of the outside world or malfunctions that may occur due to technical or human failures.

In this chapter, the acronym “CSR” refers to corporate social, environmental and societal responsibility. (1) Prepared pursuant in particular to Article L. 225-102-1 of the French Commercial Code, resulting from order no. 2017-1180 which transposed (2) Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 on the disclosure of non-financial information. In line with AMF recommendation 2018-12 of 29 October 2018. (3)

REGISTRATION DOCUMENT / L'ORÉAL 2018

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