2022 Universal Registration Document

At the same time, L’Oréal is still working on different methodologies for assessing the impact of its activities on developing biodiversity in France and worldwide. As such, the Group takes part in the work of the Science-Based Targets for Nature network’s Corporate Engagement Programme, CDC Biodiversité’s B4B+ club ⁽¹⁾ and the One Planet Business for Biodiversity (OP2B) collective.

In 2022, L’Oréal refined the footprint calculation methodology and the databases used, and also improved its traceability data through constant exchange with its suppliers.

Thanks to the quality of its traceability data, L’Oréal was able to analyse the importance of biodiversity relative to its supply areas, using the STAR metric based on IUCN data (see details in the methodological notes). This analysis shows that:

• approximately 70% of the land use related to the sourcing of the Group’s bio-based ingredients occurs in countries where the risk of significant impact on biodiversity is very low or low; and
• 30% of bio-based ingredients come from regions where the risk of significant impact on biodiversity is medium, such as Indonesia and Malaysia for palm oil or the Philippines for coconut.

These results will enable us to refine the supply strategy for each plant and each country, but also to work on innovative alternatives.

“Zero Deforestation” commitment

In its “Zero Deforestation” policy published in 2014, the Group pledged that by 2020 it would no longer include any product linked to deforestation in its ingredients or raw materials. Since2007, L’Oréal’s action plans have promoted a sustainable supply of agricultural raw materials that could be a cause of deforestation (palm oil, soybean extract, fibrewood-based products, etc.).

In 2021, aware of the increasingly critical global threat to forests and the social and environmental consequences of deforestation, the Group renewed its goals following a consultation with its stakeholders. These new goals can be found in its 2030 Forest Policy.

Capitalising on past achievements in the areas of palm, soy and wood fibre, the 2030 Forest Policy covers more raw materials, prioritised according to their strategic importance and the social and environmental risks identified. It is based on sustainable and responsible management throughout the supply chains and on the preservation and rehabilitation of natural ecosystems adjacent to production areas. It is therefore incorporated into the Group’s sustainable sourcing strategy for its ingredients and sets new goals that are specific to these raw materials.

In addition to the environmental dimension, the 2030 Forest policy focuses on Human Rights and improving the living conditions of the communities affected.

Results for raw materials

Palm: In 2022, L’Oréal consumed 284 tonnes of palm oil and88,156 tonnes of palm oil and palm kernel derivatives. These derivatives come from the pulp or the kernel of palm fruit respectively. These oils are used to produce glycerine, fatty acids and fatty alcohols which form part of the composition of the Group’s products.

As part of its “Zero Deforestation” commitment, L’Oréal is rolling out a specific strategy for palm oil derivatives, in partnership with all stakeholders (producers, NGOs and suppliers):

• 100% of purchases of palm oil, and palm oil and palm kernel derivatives have been certified as sustainable according to the RSPO ⁽²⁾ criteria since 2012; and
• 96% of the main derivatives come from sources that are identified (as far as mills).

Palm – certification: 100% of the palm oil used by L’Oréal meets the standards and procedures of the Roundtable on Sustainable Palm Oil (RSPO) according to the SG (Segregated)model, the most demanding traceability model of the RSPO.100% of the derivatives are also certified.

L’Oréal had increased the proportion of its physically certified purchases to 99% RSPO Mass Balance by the end of 2022,up from 98% in 2021 and 95% in 2020. The remainder is covered by the RSPO Book & Claim model.

To complete its certification objectives, L’Oréal made a commitment for at least 30% of its volumes to be physically connected to field projects that support small, independent planters. In 2022, 25.4% of these volumes were physically connected to sustainable sourcing projects in Indonesia and Malaysia.

Palm – traceability: In 2014, within the framework of its“Zero Deforestation” commitment, the Group had pledged to trace the main palm and palm kernel derivatives that it uses as far as the mills by the end of 2015. This was a complex task as the process for transforming derivatives involves a large number of players and many branches of the supply chains.

With the support of a firm of independent experts, an initial phase involving a survey of L’Oréal’s strategic suppliers was conducted in 2014. These suppliers represented more than half of the volumes of palm and palm kernel derivatives supplied to L’Oréal. Since 2015, L’Oréal has updated and enriched its data collection by extending the scope to cover all suppliers in order to be able to trace and identify the origin of 100%of its main palm and palm kernel derivatives. The results of this work show that Malaysia and Indonesia are the main countries from which supplies are obtained. It was also established that, for 2021, 98% of these volumes of palm and palm kernel derivatives could be traced back to the refineries, 96% to the mills and 48% as far as the plantations.

In 2022, on the basis of this work and with the goal of transparency, for the fifth consecutive year, L’Oréal published on loreal.com the list of the 944 mills (928 in 2021) indirectly connected to its supply chain (over 90% of its palm derivative volumes) and the list of its direct suppliers of derivatives.

Palm – measurement tools: In 2016, L’Oréal sought to round out its evaluation and selection tools for suppliers in this stream by developing a specific tool, the Sustainable Palm Index. Every year, it is used to assess the commitment, progress and achievements of direct suppliers in favour of sustainable palm oil. It also evaluates the progress made towards the “Zero Deforestation” objective and suppliers’ compliance with the Group’s requirements. First made public in 2016, this tool is available to all players in the supply chain.