LOREAL_Registration_Document_2017

L'Oréal’s corporate social, environmental and societal responsibility* THE SHARING BEAUTY WITH ALL PROGRAMME

THE CARBON BALANCED PROJECT: TOWARDS A LOW-CARBON COMPANY BY 2020 At the end of 2017, L’Oréal posted a reduction of -73% in carbon emissions related to its industrial activities for production that has increased by 33% since 2005. This is a major signal: the Group is proving that it is possible to decorrelate economic growth from carbon emissions. In light of the urgent climate situation, the Group pledged to balance its residual CO 2 emissions (Scopes 1 and 2, downstream transportation of its finished products) by 2020, in order to become a Carbon Balanced company. This new ambition reinforces L’Oréal’s low carbon strategy, L'Oréal now applying a twofold approach in order to reduce its carbon footprint: 60% reduction in absolute terms of emissions related to 1. its industrial activities by 2020 compared to 2005, through increasing use of renewable energies and by improving energy efficiency at its industrial sites; Reaching a balance, by 2020, in the remainder of 2. those emissions by reducing carbon emissions from its sustainable sourcing of raw materials, in partnership with its suppliers. Through this new ambition, L’Oréal wants to avoid carbon emissions in an equivalent quantity to these residual greenhouse gas emissions (approximately 400,000 tonnes of CO 2 per annum , in 2014). This innovative programme is being rolled out via various projects structured around three main areas of focus in line with the methodologies developed by international standards and the Kyoto protocol: improvement in energy efficiency; s Reducing emissions related to transportation of products Within the scope of the Sharing Beauty With All programme, L’Oréal has initiated the reduction in greenhouse gas (GHG) emissions engendered by the transportation of its products and has set itself a target of a reduction of 20% per sales unit per kilometre by 2020 from a 2011 baseline. The scope of consolidation covers the transportation flows of finished products from the production sites up to the first customer delivery point (1) . To achieve this objective, a large number of action plans for transportation are being deployed all over the world. In 2017, the sustainable transport strategy was strengthened by the worldwide implementation of Transportation Labs. This first stage was the opportunity to bring together the whole of L’Oréal's transportation ecosystem - the transportation partners together with the experts and main innovators in the area. The Transportation Labs took place throughout the year in the six

promotion of productive, low-carbon agricultural s practices; development of forest management and agroforestry s projects. To evaluate and accompany this new process, L’Oréal has set up a committee of independent experts, who are all carbon specialists, chaired by Christian de Perthuis, Professor at the Paris Dauphine University and founder of the Climate Economics Chair. In 2017, the committee of experts supported L’Oréal in developing the Carbon Balanced programme framework, a methodology to be used in selecting, developing and monitoring projects. This document is shared with all suppliers, project leaders and the auditing bodies involved. It has been estimated that, in 2017, the first four energy and forestry projects that have been put in place since 2015 have made it possible to generate carbon savings of 45,291 teq of CO 2 . Indonesia example: peat land rehabilitation In Indonesia, on the island of Borneo, L’Oréal launched in 2017, with one of its palm derivatives suppliers, a four-year project for the ecological rehabilitation of peat land. For years Indonesian peat land has been being drained then burned in order to be converted into farmland. This activity releases huge quantities of greenhouse gases and is conducive to fires in the dry season. To stop this, the project plans to train village communities in sustainable farming practices on specific land. It also plans to rewet 2,000 hectares in order to regenerate the local biodiversity. In 2017, this project helped to avoid the emission of 31,700 teq CO 2 . regions of the world and brought together 510 participants including 205 suppliers and 17 experts and innovators. The objective was: to share the Sharing Beauty With All commitments and to position sustainable transportation as a priority development focus. During the second stage, specific tools have been developed: recommendations by transportation mode, technical sheets comparing transportation modes, a special procedure governing shipments by air and a simplified tool for simulating CO 2 emissions. They should allow the teams to prioritise sustainable transportation solutions and to select the most advanced partners following this approach. Other initiatives were deployed during 2017 In Europe, multimodal solutions were implemented enabling road journeys to be reduced and to be replaced by less CO 2 consuming solutions such as rail and sea transportation.

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With the exception of the transportation of finished products sold online from the Group’s websites. (1)

REGISTRATION DOCUMENT / L'ORÉAL 2017

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