An annual reporting system is used to monitor the implementation of the Ethics and Human Rights programme. The Global Ethics, Risk & Compliance Department informs subsidiaries of their potential areas for improvement. Ethics risks are systematically reviewed during audit assignments, through individual interviews conducted separately with the Country Manager and the Administrative and Financial Director.
For prospective acquisitions, the Ethics and Human Rights questionnaire helps to determine whether the target company takes account of risks, particularly those related to business ethics.
A specific and compulsory e-learning course on ethics is available in all subsidiaries. As at 31 December 2022, 87%of the employees with access to the training had completed this course. The Ethics, Risk and Compliance Department also provides face-to-face training as part of the ongoing training of managers and certain business functions (Country Managers, Buyers, Human Resources).
The evaluation of the overall performance of employees takes into account compliance with the Code of Ethics and Ethical Principles. Regular communication with stakeholders and the setting up of internal working groups help to incorporate Ethics into new policies and strategic decisions (for example, the Reliable Artificial Intelligence Policy in 2022).
The Group’s whistleblowing line ( www.lorealspeakup.com ),available to all Group stakeholders, as well as a procedure to collect and process reports, make it possible to manage any violations.
In 2022, 510 potential ethical violations were identified either via the secure website, or via the Ethics Correspondents or local or international management. After reported cases have been thoroughly examined, appropriate measures are taken, where applicable. The global number of reports of discrimination, harassment (including sexual harassment) and corruption received at Group level worldwide is notified to employees on a regular basis, as is the number of fully or partially substantiated cases and the corrective measures taken.
The Group has held Ethics Day since 2009. During this online event hosted by the Chief Executive Officer, Group employees can ask questions and discuss the day-to-day application of the Ethical Principles. Each member of the Executive Committee and each Country Manager organises local ethics discussions. In 2022, with nearly 35,000 people logging on and more than 7,600 questions, employees showed that they were heavily engaged with this subject. Furthermore, they receive regular information about the Group’s Ethical policy and have access to a dedicated Intranet site.
For many years, L’Oréal has adopted an ambitious CSR policy, through its sustainability programmes and its commitment to the Science-Based Targets(1) initiative, in particular.
In this context, the Group has developed a strong governance structure (see section 4.1.), which includes the establishment of sustainable development Coordinators worldwide. They are tasked with helping the Country, Zone, Division and Brand Managers to implement the sustainability programme within their entities. The progress of local implementation of the Group’s commitments is monitored by means of an annual reporting system.
Internal Audit regularly reviews CSR risks, as well as the extent to which any policies adopted to address such risks have progressed. The results are then reported to the Audit Committee. Since 2019, in collaboration with the Ethics, Risk and Compliance Department, L’Oréal’s CSR Department has conducted a deeper assessment of the risks related to climate change on the Group’s operations. Relying in particular on the scenario analysis method, the Group intended to improveits ability to anticipate and mitigate the impact of these risks.It should be noted that the financial risks related to the effects of climate change and the Group’s measures to reduce them are described in chapter 4.
The quality and skills of female and male employees are key components of the Internal Control system. L’Oréal’s Human Resources (HR) Department has always had the mission of supporting the Group’s growth and supporting its transformation initiatives. In order to be sustainable, L’Oréal’s growth relies first and foremost on the women and men in the Company, who are the key drivers of the Group’s success. Built this conviction, the Group’s human and social project is based on individualised management of employees an don collective strength.
L’Oréal’s HR policy is based on the identification, recruitment and development of employees throughout their career, and on the rewarding and commitment of all, as well as on an active policy on diversity and inclusion. Dedicated policies are developed within the Group in each of these areas (see section 4.3.2.).
The Group’s Global IT Department issues strategic orientations for its IT systems and information systems security (ISS) guidelines. The systems incorporate “ERP (Enterprise Resource Planning)”, a management software application used by the vast majority of commercial subsidiaries. The worldwide roll-out of this integrated software package reinforces the reliability and security of producing information, including accounting and financial information. In pursuit of the same objective, the deployment of an integrated production and management solution in the Group’s manufacturing entities is continuing.
(1) These policies and commitments are summarised in section 1.3.2. and set out in detail in chapter 4.
