L'Oréal - 2018 Registration Document

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

For other channels of raw materials of plant origin (17% of volumes and 41% of total renewable raw materials), L’Oréal, based on environmental, social and economic indicators from external databases (IHDI of the UNDP, PPE Yale University, Verisk Maplecroft country index), has defined indicators of “sustainable sourcing challenges” to evaluate renewable raw material channels in respect of their sustainability. These indicators are consolidated within the SCAN index (Sustainable CAracterizatioN), allowing the Group to prioritise the implementation of our sustainable sourcing action plans. The Group updates the information collected regularly.

64% of volumes and 23% of raw materials identified as representing sustainable sourcing challenges according to the SCAN index are already the subject of plans or improvement initiatives with the relevant suppliers to ensure sustainable supply. Within three years, the goal is to reach 100%, notably by rolling out more widely a field audit procedure for producers (88 indicators), developed with the support of NGO Rainforest Alliance.

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In 2018, 43% of new or updated products had an improved social/environmental profile due to a new formula including sustainably sourced renewable raw materials or raw materials respecting the principles of green chemistry.

MADAGASCAR: SUSTAINABLE SOURCING OF VANILLA ESSENTIAL OIL In collaboration with its suppliers, local NGOs and producer communities, L’Oréal has launched a new Solidarity Sourcing project for its purchases of vanilla essential oil in Madagascar. The objective is to develop a sustainable, traceable and high-quality supply chain that respects the integrity of natural “Zero deforestation” commitment L’Oréal consumes less than 370 tonnes of palm oil every year, but nevertheless consumes almost 71,000 tonnes of derivatives of palm oil (which come from the palm fruit pulp) and palm kernel oil (extracted from the palm fruit kernel). These two oils are used to produce glycerine, fatty acids and fatty alcohols which form part of the composition of the Group’s products. As part of its “zero deforestation” commitment, L’Oréal is rolling out a specific strategy for palm oil derivatives, in partnership with all stakeholders (producers, NGOs and suppliers): 100% of purchases of palm oil, and palm oil and palm s kernel derivatives have been certified as sustainable according to the RSPO criteria (www.rspo.org) since 2012; 74% of the main derivatives come from sources that are s identified (as far as the mills). In terms of certification, 100% of the volumes of palm oil used by L’Oréal meet the standards and procedures of the Roundtable on Sustainable Palm Oil (RSPO), via one of its most demanding traceability models, the SG (Segregated) model. For derivatives, which are also fully certified, L’Oréal had increased the proportion of its physically certified purchases to 54% of the Mass Balance of its purchases by the end of 2018,

ecosystems and helps improve living conditions in producing communities based in the Loky Manambato Protected Area. In 2018, the project had 154 producers split between two cooperatives, which benefited from training in responsible agricultural practices and fair remuneration. By 2020, the goal is to increase harvests and the quality of the vanilla, while bringing twice as many producers into the project.

compared with 51% in 2017 and 34% in 2016 ; the remainder continues to be covered by the RSPO “Book & Claim” model. Within the framework of its “Zero deforestation” commitment made in 2014, the Group had pledged to trace the main palm and palm kernel derivatives that it uses as far as the mills by the end of 2015. This is a difficult task as the process for transformation of the derivatives involves a large number of players and many branches of the supply chains. An initial phase involving a survey was conducted in 2014, with the support of a firm of independent experts, of L’Oréal’s strategic suppliers, who supply more than half its palm and palm kernel derivatives. Since 2015, L’Oréal has progressively updated and enriched its data collection by extending the scope to cover all suppliers in order to be able to trace and identify the origin of 100% of its main palm and palm kernel derivatives. The results of this work show that Malaysia and Indonesia are the main countries from which supplies are obtained and that, for 2017, 97% of these volumes of palm and palm kernel derivatives can be traced to the refineries, 85% to the mills and 25% as far as the plantations. In 2018, on the basis of this work, and with a goal of greater transparency, L’Oréal published the list of the 1,300 mills indirectly connected to its derivatives supply chain.

REGISTRATION DOCUMENT / L'ORÉAL 2018

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