L'Oréal - 2018 Registration Document

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

In 2016, L’Oréal rounded out its evaluation and selection tools for palm oil and palm kernel derivative suppliers with a specific tool known as the Sustainable Palm Index to assess the level of commitment, progress and the 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. It was first made public in 2016 to enable it to be used by all players in the supply chain. In 2018, to take its commitment further, L’Oréal initiated the development of a new tool in collaboration with ZSL (Zoological Society of London) and Transitions, to evaluate refineries and INDONESIA: LAUNCH OF A PROJECT IN THE BERBAK REGION In 2018, L’Oréal, in collaboration with Dutch NGO SNV (Netherlands Development Organisation), established a sustainable sourcing project for palm derivatives in Berbak, in Jambi province on the Indonesian island of Sumatra. Reducing the environmental footprint of formulas Most of the ingredients used in the formulas (> 90%) have an end of life in domestic wastewater, and are treated by more or less advanced sanitation systems depending on the country. All formulas marketed by the Group are safe for the environment. However, some of the ingredients used in formulas may have a significant environmental impact, which is why L’Oréal opened its first environmental research laboratory in 1995 to evaluate and reduce the environmental footprint of its formulas. Through this initiative, the Group has developed expertise with regard to the potential impacts of its cosmetic products on aquatic environments. Raw materials used in the formulation of products from the design stage are evaluated in such a way as to allow a strict selection of ingredients. Measuring the environmental impact of formulas In 2013, an index was developed to quantify the environmental performance of a cosmetic formula in respect of the aquatic

crushers (which extract the oil from the kernels), based on their reporting, their policies and their procedures. The indicators used for this assessment are aligned with the Group’s standard requirements in respect of deforestation. This tool will be available at the end of 2019 and will be made public. At mill level, since 2016, the L’Oréal Group has relied on Global Forest Watch’s risk assessment tool to ensure that no derivative traced to mills is linked to deforestation. In 2018, the procedure for dealing with cases of non-compliance with our zero deforestation commitment by direct or indirect suppliers was also made public. The project aims to support 12,500 independent small farmers in the coming 5 years in the improvement of production practices with the goal of preventing deforestation activities, while improving their standard of living (increasing and securing their income). The involvement of all stakeholders in the supply chain to support the project, from the mill to the derivatives manufacturer, reinforces traceability and improves the control of production practices to ensure the absence of deforestation. environment. To do this, a calculation method for the Water Footprint specific to cosmetic products was also applied to the entire portfolio of formulas (performance index for a formula based on the environmental profile of its ingredients in terms of biodegradability and aquatic eco-toxicity). This methodology has now been integrated into the SPOT tool. For several years, L’Oréal has carried out life cycle assessments of its products in order to identify, evaluate and improve their environmental impact. Since 2017, the SPOT tool, applied to all of the Group’s brands, has been used to calculate the full environmental and social footprint of new or updated Group products. In 2018, 48% of new or renovated products have an improved environmental profile due to a new formula with a lower environmental footprint.

In 2018, 48% of new or updated products have an improved environmental profile due to a new formula with a lower environmental footprint.

100%

REGISTRATION DOCUMENT / L'ORÉAL 2018

182