L’Oréal presents its Corporate Social Responsibility strategy(1) in order to meet the requirements of the Non-Financial Information Statement(2) in particular. This Statement sets out the Group’s main non-financial risks and describes the policies implemented to address them.
Performance indicators follow and measure these policies and their results. This presentation refers to the Group’s business model, set out in section 1.2. As L’Oréal has had a long‑standing commitment to CSR, section 4.3. also incorporates the policies and actions voluntarily implemented beyond a response to the main risks.
The main environmental and social risks, the main risks related to Human Rights and the main corruption risks(3) are detailed(4 ) to the extent necessary to gain an understanding of the Company’s position, business development, economic and financial results, and impacts of its activity.
Chapter 3 presents the Group’s significant risks, i.e. risks that cover all areas of the Group’s activities and that could have a material impact on its business, financial position or outlook. They have been established in conjunction with the Group risk mapping (see section 3.5.2.).
Some of these risks are specific to non-financial issues. Others are broader and may stem from environmental or societal causes: these are the CSR risks. The principal ones have been selected within the meaning of the NFIS following a detailed analysis. This analysis was carried out based on the work of Group experts, in conjunction with the Ethics, Risk and Compliance Department and in compliance with the Group’s business model. This work also draws on the double materiality analysis, the climate study on environmental risks, the Group’s Human Rights and corruption mapping, and corruption mapping conducted for each country. It takes into account the risk analysis carried out in connection with the Vigilance Plan (see section 3.4.).
The risks associated with climate change are subject to a long‑term approach – more than 10 years – given their specific nature. The main risks have been validated at the highest level of responsibility of the organisation by the relevant General Managements.
The main risks in respect of CSR, Human Rights and corruption identified by the Group are detailed below. Other risks, of which the Group is not currently aware or which it does not consider material at present, could have a negative impact. The approach is based on double materiality: the concept of risk covers both risks related to the impact of the Group’s business activities on its ecosystem and the risks of the impact of climate change in the short and medium-term on its business model, activity and financial performance(5).
Main environmental risks |
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Industrial risksAs with any production, distribution, research and general administration activity, L’Oréal is exposed to a variety of industrial risks that may impact the environment and safety: fires, explosions, technical failure of facilities, safety system installations, or even human failure in the operation of existing facilities (such as those dedicated to the treatment of wastewater and/or their discharge), or when managing exceptional works. These events can generate accidental pollution (surface and underground water, air, soils, etc.) and have consequences inside or outside the sites, which are sometimes located near an inhabited area. Physical and transition risks associated with climate changeThe Group is exposed to risks of natural origin in many countries. Risks of natural origin are those related to the occurrence of extreme weather events such as cyclones or floods, or those resulting from long-term climate change such as the rise in average temperatures, noticeable change in precipitation levels and the reduction of available water. The increase in these risks could impact the availability of finished products by disturbing the Group’s operations and/or supply chain. To be sold, the products manufactured by the Group must be available on the market on the dates scheduled to respect consumer demands and launch plans, in a cosmetics market where the need for responsiveness is growing constantly. A major stoppage of activity at a factory or distribution centre could therefore have an adverse effect on the achievement of commercial objectives. These risks may impact the Group directly on its sites, or indirectly via the sites of suppliers and subcontractors, thereby reducing the availability of raw materials or filling and packaging components necessary to manufacture products. For instance, an exceptionally steep rise in the price of basic raw materials because of their scarcity, or in the energy costs necessary for their production due to carbon taxation, or even their total unavailability or the resulting failure of suppliers, could affect the Group’s performance.. Risks related to the use and end of life of productsThe use of cosmetics and their disposal after use by consumers and professional customers (mainly hairdressers and beauticians) generate environmental impacts. So-called “rinsed” formulas, shampoos in particular, require water for their use, and the ingredients used in their composition can be found after use in domestic wastewater. The treatment of this water is dependent on existing sanitation systems in place in the relevant geographic areas. Insufficient consideration of these impacts related to the usage phase during the design of products could represent a risk in certain areas of the world affected by water stress or the lack of adapted infrastructures for the collection and treatment of wastewater. Similarly, the use of predominantly plastic containers may represent an environmental risk with regard to the disposal of plastic waste, depending largely on the collection and treatment channels available. |
(1) The acronym “CSR” refers to Corporate Social Responsibility.
(2) NFIS – Prepared pursuant in particular to Articles L. 225-102-1 and L. 22-10-36 of the French Commercial Code, resulting from French Order no. 2017-1180 which transposed Directive 2014/95/EU of the European Parliament and the Council of 22 October 2014 on the disclosure of non-financial information.
(3) In accordance with the regulations, information on the fight against tax avoidance is given in section 4.3.5. “Tax policy”.
(4) In application of the European Directive of 22 October 2014 on the disclosure of non-financial information, as transposed into French law.
(5) Pursuant to French Financial Markets Authority (AMF) recommendation no. 2018-12 of 29 October 2018, the 2019 AMF report on the “Corporate social responsibility of listed companies”, and the Guidelines of the European Commission on Climate of 20 June 2019.
