L'Oréal - 2018 Registration Document

L’Oréal’s corporate social, environmental and societal responsibility POLICIES, PERFOR MANCE INDICATORS AND RESULTS

SOCIAL AUDITS: A RIGOROUS AND CONTINUOUS IMPROVEMENT PROCESS The social audit procedure was thoroughly reviewed in 2018: The base of the questionnaire was extended to cover Health, Safety and Environment risks in the same way as in the Group’s sites, and the purchasing categories requiring audit were expanded. For instance, outsourced distribution centres and electronic objects have been added to the scope. At the same time, a global monitoring tool for social audits common to all purchasing areas provides for a shared database of audits and an analysis, notably of audits performed in comparison with the scope determined in the procedure. Lastly, the new procedure and tool served as the basis of an e-learning module available to all purchasers as an adjunct to the Sourcing Discovery training module, which Since 2009, L’Oréal has associated its suppliers with the process for measuring and reducing its greenhouse gas emissions by encouraging them to work with the CDP, within the framework of the CDP Supply Chain programme. This NGO, of which L’Oréal has been a member since 2003, invites companies to publish their environmental impact and provides them with measurement, evaluation and communication tools. Within the framework of the Sharing Beauty With All programme, participation by L’Oréal’s strategic suppliers in the CDP Supply Chain has now become essential. In 2018, 85% of the suppliers asked to participate have responded positively (90% for strategic suppliers). They have been selected in the 6 fields of purchases (raw materials, packaging items, production equipment, subcontracting, POS advertising/promotional items and materials and indirect purchases), all over the world. They are suppliers involved in industries that generate CO 2 , and may be large industrial groups or small and medium-sized businesses. In December 2015 at the time of the COP21, L’Oréal pledged that suppliers representing 80% of direct purchases: will participate in the CDP Supply Chain ; s set targets for reducing greenhouse gas emissions; s will communicate on their action plans to succeed in s reaching this target. As of the end of 2018, the suppliers fulfilling this commitment represent 58% of direct purchases. L’Oréal continues to be recognised by the CDP as one of companies that is the most committed to reducing Inciting strategic suppliers to reduce their greenhouse gas emissions

explains to every new purchaser the importance of the social audit programme, and the way in which purchasers must make it part of their daily lives. The Group’s purchasers accordingly promote the continuous improvement of their suppliers in line with the Group’s standards. Key figures 7,309 supplier sites have been subject to social audits since the reporting tool was rolled out in 2006 (see 2.8.5.2. “Results of the application of the plan to suppliers”): 1,369 audits ; (1) were carried out in 2018, making a total s of over 10,800 since 2006; 48% of the audits in 2018 were carried out in Asia; s Thus 85% of the supplier production sites requiring audits s have been audited at least once. greenhouse gas emissions. The large number of the Group’s suppliers who are partners of the CDP testifies to this fact. This growing commitment results in particular from the strong commitment of L’Oréal’s Purchasing and Environmental teams who transmit results with comments and opportunities for improvement to the suppliers who participated. CDP Supply Chain performance is at the heart of the discussions during the annual business reviews, but also throughout the year. In addition to their participation, L’Oréal pledged to ensure that its suppliers would make progress. In order to achieve this, in 2018, the Purchasing and Environmental teams: organised together with the CDP, meetings to explain and s train on climate change, in particular for suppliers of direct purchases, transport and distribution centres; led online conferences for suppliers wishing to know more; s continued to develop online toolboxes to help suppliers to s gain an understanding of these subjects. The average of 2018 supplier scores has been “C” since 2016 (with new modifications to the rating system by CDP for the third consecutive time). In 2018, 82 additional suppliers agreed to participate for the first time in the CDP Supply Chain programme. The total number of suppliers working on climate change in this way is 437 (of the 516 invited this year). The participants in the CDP Supply Chain programme account for 82% of expenditure on direct purchases. Among them, 25 suppliers have assigned their emissions to L’Oréal. The average scores of suppliers accounting for 80% of direct purchases are C- in the Americas, B- in Asia, and B- in Europe.

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; The Statutory Auditors have expressed reasonable assurance with regard to this indicator. Audits where the auditor was unable to access the site or where data were insufficient are included in the number of social audits carried out. They (1) represent 3.7% of the total number of audits. (Note that these cases are excluded from the analysis of non-compliance by chapter as described in the vigilance plan.)

REGISTRATION DOCUMENT / L'ORÉAL 2018

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