The Purchasing teams select the most competitive suppliers and in accordance with the responsible purchasing policy. Suppliers’ EHS assessment is managed by monitoring indicators included in the corporate social responsibility criterion, which is one of the five criteria for monitoring supplier performance.
As part of the L’Oréal for the Future programme, launched in 2020 with targets for 2030, the Group has broadened its environmental commitments to its supply chain. The main environmental objectives of the programme concerning suppliers or those that may be related to their business activity are therefore as follows:
For the palm oil and its by-products segment, for which specific “Zero deforestation” status was achieved at the end of 2020, 100% of the supplies were covered by action plans with the suppliers concerned. L’Oréal developed the Sustainable Palm Index (SPI), a tool to evaluate and select suppliers of palm oil and palm kernel derivatives to assess the level of commitment, progress and 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.
The specific feature of the SPI lies in its integration in the purchasing decision process. A supplier in compliance with the SPI will benefit from an allocation of volumes, long-term contracts, and will be favoured in the context of partnerships in land projects.
In 2019, L’Oréal co-founded the collective Action for Sustainable Derivatives initiative in order to share knowledge and methods with other operators to encourage the production and responsible supply of palm oil derivatives. L’Oréal is committed to managing, preserving and rehabilitating forests, prioritising forestry ecosystems that are of primary strategic interest to the Group. The Group has drawn up a Forestry Policy for 2030, which enshrines its ambition and sets out the objectives associated with the sustainable supply of forest-based materials.
L’Oréal ensures compliance among its direct and indirect suppliers by applying due diligence procedures, including a geospatial monitoring tool, community monitoring and checks conducted by a third party. Nusantara Atlas is used to carryout risk assessments at province and district level, and the Global Forest Watch Palm Risk Tool is used to conduct them at plant level. Since 2019, L’Oréal has been working with the Zoological Society of London (ZSL) and Transitions to develop anew add-on for the SPOTT platform to assess the level to which mills and refineries comply with the NDPE (No Deforestation, No Peat, and No Exploitation)(1) principles. For its projects involving small operators in Indonesia, L’Oréal uses specific deforestation surveillance systems to ensure compliance with NDPE. Furthermore, L’Oréal continually monitors complaints made throughout its supply chain using a“palm alert procedure”.
For other streams of renewable raw materials, which represent 22% of the portfolio of renewable raw materials in volume and 86% in number, L’Oréal has defined “sustainable sourcing challenges” indicators to assess the sustainability of renewable raw material streams. These indicators were defined using environmental, social and economic indicators from external databases(2).
These indicators are consolidated within the SCAN (Sustainable Characterisation) index, allowing the Group to prioritise the implementation of its sustainable sourcing action plans. The Group updates the information collected regularly. 71% of the volume of raw materials that the SCAN index has identified as representing sustainable sourcing challenges (i.e.45% of the number of raw materials) are already the subject of plans or improvement initiatives with the relevant suppliers to ensure sustainable supply. The goal is for 100% of the Group’s renewable raw materials to come from sustainable sources.
To achieve this, L’Oréal launched a support and training programme for more than 200 suppliers on the issues of sustainable sourcing of raw materials in order to guarantee the traceability of the raw materials delivered to L’Oréal and ensure the associated streams are secure. Depending on the level of environmental and/or social risk identified on these streams, suppliers are asked to deploy the field audit procedure for producers (88 indicators). This procedure was developed by L’Oréal with the support of the Rainforest Alliance NGO and reviewed in 2019 by EcoCert, The Biodiversity Consultancy and The Danish Institute for Human Rights. They are also invited to rely on sustainable sourcing certifications adapted to the challenges of their streams (Fair Trade, Sustainable Agricultural Network, Organic, etc.).
L’Oréal actively works with its suppliers to help them improve their performance in terms of sustainable development.
(1) The content of these principles is described in full at the following web address: https://palmoilalliance.eu/ndpe-commitment
(2) The UNDP’s IHDI, the EPI from Yale University, and the Verisk Maplecroft Country Index.
