2022 Universal Registration Document

Because of its global presence, L’Oréal is exposed to epidemics or other public sanitary crises in the 80 countries in which it operates.

The main risks identified cover different segments of the Group’s operations:

• impairment of the health, safety and security of employees in the context of their duties and their business travel, and confinement of the population that prevents employees from entering their work site, particularly at the manufacturing and distribution sites;
• difficulties for the company to operate normally because of the restrictive measures established by the authorities, which restrict employee access to the Group’s sites, or as a result of the unavailability of individual protective equipment necessary to protect them;
• supply difficulties, unavailability or increased prices of raw materials and components, and limited capacities to produce and distribute products related to the restrictive health measures established by the authorities of the countries in which the Group operates;
• reductions in product demand related to the impact of the measures to restrict movement on access to physical points of sale, particularly in the Travel Retail network that is particularly sensitive to sanitary crises;
• financial difficulties for suppliers and clients as a result of a drastic reduction in their levels of business

Thus 2022 was marked by the impacts of the Covid-19 health crisis in a number of geographic zones in which the Group operates, particularly China.

Depending on its duration, geographic expansion and the resulting economic and social consequences, a sanitary crisis may have a material impact on the Group’s activities, its performance and its reputation.

L’Oréal has set up a crisis management process led by a unit at Group level that can prevent and limit the impacts of undesirable events on all its entities

Facing a sanitary crisis, the Group’s priority is to protect the health, safety and security of its employees. The Group responds through compliance with the directives of the authorities in the countries in which it operates, the application and adaptation of its worldwide, high management standards for health and safety at its operational sites and in business travel situations

The Group’s information systems allow large-scale development of flexible and remote work methods and are the subject of adequate safety protection processes (see section 4.3.2.4.).

The policies to manage supply chain and inventories, and the business continuity plans of the industrial and logistics sites, allow the Group to anticipate the actions necessary to manage disturbances. The long‑term relations with the Group’s strategic suppliers, the policies to diversify sources, and operational continuity plans, limit the impacts of these crises.

The Group’s presence in all distribution channels, particularly online sales capacities developed with diversified partners (owned sites, e-retailers, pure players), as well as its expertise in digitised consumer relations, help to maximise development opportunities in disturbed contexts.

Finally, the Group’s worldwide and balanced presence in terms of geographic areas, product categories and distribution channels, the very high responsiveness and capacity for adaptation of its teams through its strategically centralised and operationally decentralised organisational model with a strong entrepreneurial spirit, as well as its robust financial position, contribute to its ability to face the economic consequences of these crises.