Double materiality matrix
In 2022, L’Oréal conducted a double materiality analysis in order to anticipate future European regulatory requirements currently in preparation and to continue its dialogue with stakeholders. This analysis was carried out by an external third party(1) and is based on the double materiality principle established by the Non-Financial Reporting Directive and fully enshrined in the Corporate Sustainability Reporting Directive (CSRD)(2). It was developed on the basis of the draft sustainability reporting standards submitted for consultation in April 2022 (ESRS)(3). These standards define materiality in relation to two different dimensions: financial materiality (the impact of sustainability issues on the development, position or financial performance of a company); and impact materiality (the impact of a company on people or the environment).
Identification, evaluation and ranking of issues: First, an analysis of the key environmental, social and governance (ESG) topics was conducted, regardless of whether these topics are covered by the ESRS or are specific to L’Oréal or the beauty sector. 24 material issues were identified. These were then subjected to a double materiality assessment (financial materiality and impact materiality) through:
Following this analysis, the issues were classified in accordance with the extent of their financial and impact materiality.
Results and action plans: All the issues reported in the matrix are the subject of internal action plans, implemented in particular within the framework of programmes such as L’Oréal for the Future or L’Oréal Share & Care. The results of this analysis were shared with the Audit Committee and the Executive Committee in 2022. The double materiality matrix is intended to be updated regularly, particularly with regard to the final version of the ESRS, which is set to be adopted by the European Commission in June 2023.
| Main ESG issues | Examples of policies and action plans | Document section |
|---|---|---|
| Environmental issues: circular economy, preservation of natural resources (packaging, formulas), climate, water and biodiversity. | Environmental issues: circular economy, preservation of natural resources (packaging, formulas), climate, water and biodiversity. Examples of policies and action plans“Transforming our business” pillar of the L’Oréal for the Future programme:
|
Environmental issues: circular economy, preservation of natural resources (packaging, formulas), climate, water and biodiversity. Document section1.3.2. Corporate Social Responsibility (CSR): shared and lasting growth / L’Oréal for the Future: 2022 Results |
| Safety of ingredients and product compliance, including transparency and action on the safety of new ingredients. | Safety of ingredients and product compliance, including transparency and action on the safety of new ingredients. Examples of policies and action plans
|
Safety of ingredients and product compliance, including transparency and action on the safety of new ingredients. Document section4.3.1.3.2 Involving consumers in the Group’s transformation 4.3.1.3.2.A Product quality and safety: a priority |
|
Responsible beauty marketing and advertising. Responsible consumption and consumer adoption of sustainable lifestyles |
Responsible beauty marketing and advertising. Responsible consumption and consumer adoption of sustainable lifestyles Examples of policies and action plans
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Responsible beauty marketing and advertising. Responsible consumption and consumer adoption of sustainable lifestyles Document section4.3.1.3.2.B/ Raising awareness among consumers about sustainable lifestyle choices 4.3.2.6. Promoting Diversity, Equity and Inclusion 4.1.2 Dialogue with stakeholders 4.3.3.1. A commitment of the entire organisation |
| Fair transition, including living wage in the supply chain | Fair transition, including living wagein the supply chain Examples of policies and action plans
|
Fair transition, including living wagein the supply chain Document section4.3.1.3.2 Involving strategic suppliers in the Group’s ambitions 4.3.1.2.1. Due diligence: selection and assessment of strategic suppliers 4.3.3 Human rights policy 4.3.3.6 Measures taken in favour of communities |
(1) GlobeScan: independent research and consultancy firm.
(2) CSRD: Corporate Sustainability Reporting Directive Directive adopted by the European Council on 28 November 2022 and the cornerstone of an ambitious European legislative and regulatory framework aimed at the full integration of Environmental, Social and Governance dimensions into the overall and long-term performance of companies.
(3) ESRS: European Sustainability Reporting Standards. Standards developed by the European Financial Reporting Advisory Group (EFRAG), appointed by the European Commission, in the context of the Corporate Sustainable Reporting Directive. As of April 2022, these drafts were provisional pending public consultation and further review. These standards are set to be adopted as delegated acts by the European Commission in 2023.
(4) SASB: Sustainability Accounting Standards Board.
(5) Definition of decent living wage in chapter 4.3.2.5
