Value creation

In line with its dual vision of excellence, L’Oréal aims to combine first-rate financial performance with social and environmental exemplarity, since the two are now more inextricably linked than ever before. The Group’s long-term investment strategy allows it to create sustainable value while preserving its profitable business model and share it with stakeholders. To achieve this, L’Oréal relies on innovation and continues to develop its human capital.

What is L’Oréal’s recipe for creating sustainable value and stepping up its positive contributions to society and environmental protection? Alexandra Palt, Chief Corporate Sustainability Officer and CEO of the Fondation L’Oréal, and Christophe Babule, Chief Financial Officer, explain how the Group creates value.

Dual excellence – financial performance on the one hand and environmental and social exemplarity on the other – forms the backbone of our strategy.

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Highlights

People and innovation are the keys to value creation

L’Oréal’s investment strategy focuses on two areas: on the one hand, people, who have been the beating heart of the company for over 110 years; and on the other, innovation, which helps the Group to meet all consumers’ beauty needs and complete its transformation to a more sustainable model.

Capitalising on the Group’s assets to build for the future

With the ambition to provide an inspiring and inclusive workplace environment for employees, L’Oréal continues to invest in training and career development for its human capital. All Group employees benefited from training in 2022, and more than 261,000 hours of digital training were completed. L’Oréal is transforming its business to anticipate market changes by accelerating training in areas that have become indispensable. For example, since 2015, more than 67,500 employees have received initial or advanced digital training. Since 2021, 17,000 employees have completed targeted training on the principal challenges of ecommerce, and 4,300 learned about the ins and outs of the metaverse and gaming in 2022. Through continuing education, the Group is preparing the workforce of the future and enhancing its employees’ employability. By prioritising wellness in the workplace, motivation and career development, L’Oréal is doing its utmost to enhance its appeal as an employer, unite teams, build loyalty and attract new talent.

L’Oréal’s roots are firmly embedded in science, and innovation is an integral part of its DNA. The Group invested more than €1.1 billion in Research & Innovation in 2022, with more than 4,000 researchers worldwide and 561 patents filed. L’Oréal invests the resources needed to develop increasingly highperformance formulas that are safe and sustainable, and to roll out Advanced Research programmes that lead to progress for beauty in all its forms. With between 10% and 15% of sales generated through new or revamped products each year, the Group is committed to being the leader in cosmetics innovations.

L’Oréal also invests in its manufacturing facilities, information technologies and operational infrastructure to ensure they are perfectly calibrated to the growing demand for beauty worldwide, and able to meet the expectations of increasingly demanding consumers.

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These facets of its business are constantly changing to keep pace with new consumer trends and distribution channels. For example, L’Oréal has created fulfilment centres to provide nextgeneration distribution hubs equipped with cuttingedge technology to constantly enhance agility and efficiency for customer deliveries.

Empowering a global ecosystem of innovative partners

L’Oréal’s value creation strategy is also underpinned by its investment fund, BOLD – Business Opportunities for L’Oréal Development, which purchases minority stakes in promising companies and brands or technologies that will help build the future of beauty. This approach dovetails well with L’Oréal’s existing expertise. For example, in 2018, the year it was founded, BOLD invested in Carbios, a pioneer in the field of biotech processes for recycling PET plastic. The fund also backs inclusive initiatives like Female Founders, which supports women startup founders in the beauty industry, with an initial investment of €25 million. In 2022, BOLD invested in several different countries, including Japan, where it purchased a minority stake in Sparty, a personalised beauty startup, and China, where L’Oréal China Corporate Venture Capital (Shanghai Meicifang Investment Co., Ltd) bought its first stake in the Chinese luxury fragrance brand Documents. With Microphyt, a startup that specialises in microalgae, the Group is also investing in the quest to discover new properties for use in cosmetics.

Through these investments, L’Oréal is driving the cosmetics market more than ever and honing its lead to invent the future of beauty.

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