4.3.1.4.2. Climate commitments relating to Scope 3
The Group’s commitments to low-carbon operations management have led to initiatives and achievements aimed at reducing the important categories under Scope 3:
- Since 2009, L’Oréal has involved its suppliers in the process of reducing its carbon footprint by encouraging them to participate in the CDP Supply Chain programme(see section 4.3.1.2.2.).
- In 2013, L’Oréal committed to reduce the carbon impact of downstream transportation of its finished products by 20%per unit sold per kilometre between 2011 and 2020(see section 4.5.2.1).
- In 2015, L’Oréal undertook to define Science-Based Targets(SBTs) to reduce its greenhouse gas emissions across its entire value chain and over the long term, in accordance with the Paris Agreement on climate change. In December2017, the SBT initiative validated the Group’s proposal:by 2030, L’Oréal is committed to reducing by 25% in absolute value the greenhouse gas emissions of Scopes 1,2 and 3 compared to 2016 (with full coverage of the items of Scope 3, in accordance with the definition of the GHG Protocol). By 2025, the Group is also committed to reducing greenhouse gas emissions from all sites it operates by 100%through energy efficiency programmes and a supply made up exclusively of renewable energy. These commitments were revaluated in 2019 over Scopes 1 and 2 by the SBT initiative and considered to be in compliance with the new SBT 1.5°C criteria. Roadmaps were deployed within the different business lines (packaging, research, sourcing, supply chain etc.) so that each one contributes to the reduction of CO2 emissions in Scopes 1, 2 and 3. Specific tracking allows each of the segments to monitor its own performance;
- In September 2019, L’Oréal joined the Business Ambition for1.5°C initiative, a call to action for the climate launched by a broad coalition of companies, civil society and UN leaders. The Group has committed to zero net CO2 emissions by 2050 and, in this way, is contributing to limiting the increase in global temperature to 1.5°C above pre-industrial levels.
- in June 2020, in the context of the launch of L’Oréal for the Future and in line with its SBT commitment, the Group set out its roadmap for 2030. L’Oréal is committed to a reduction, compared with 2016, of 25% per finished product in the emissions associated with the product use phase, a 50% reduction in the direct emissions of its strategic suppliers and a 50% reduction per finished product in the emissions associated with product transportation.
In 2022, L’Oréal reduced its Scopes 1, 2 and 3 greenhouse gas emissions by 5% in absolute terms compared to 2016.
4.3.1.4.3. The Group’s alignment with the Task Force on Climate-Related Financial Disclosures (TCFD) principles
Conscious of the climate emergency, L’Oréal hopes to transition to an innovative low-carbon company model and will make increasing contributions to combating climate change. The Sharing Beauty With All programme, rolled out globally in 2013, has helped establish a culture in which environmental impacts and climate change are taken into account in the decision-making process of each of the Group’s business activities.
The acceleration of the environmental and social challenges requires a more radical transformation. Since 2015, L’Oréal has been one of the 100 leading companies to join the SBT initiative by aligning its path to decarbonisation with climate science. In June 2020, L’Oréal announced its new L’Oréal for the Future programme. It includes a new set of very ambitious objectives over the entire value chain for 2030: efforts to combat climate change, preservation of water resources, forestry and biodiversity.
In 2020, L’Oréal publicly committed to adopt the recommendations of the TCFD. The Group committed to incorporate climate issues in their strategy and to provide consistent, reliable and clear information to allow investors to take into account climate-related financial risks in their decisions.
Along with this dynamic move towards a low-carbon transition, L’Oréal intends to fully manage the risks and opportunities related to climate change, anticipate their effects and ensure its resilience. L’Oréal is adapting its business model, governance and decision-making processes, research and Operations in respect of its values and sense of purpose:“Create the beauty that moves the world.”
Governance
Every year, the L’Oréal Board of Directors determines the Group’s strategic orientations, which integrate the challenges, risks and opportunities of climate change and, more generally, the issues of sustainable development (see sections 2.3.2. and 2.3.4.).
The Chief Corporate Responsibility Officer (CSO) (1), who is a member of the Executive Committee, reports directly to the Chief Executive Officer. She reports on the Group’s activities every year to the Board of Directors or to the Strategy and Sustainability Committee.
The Chief Sustainability Officer is responsible for defining and implementing the sustainable development strategy. Her tasks include:
- assessing and managing the climate-related risks and opportunities through sustainability programmes (Sharing Beauty With All and L’Oréal for the Future);
- leading an internal sustainability committee, which includes experts responsible for the rollout of these programmes and their associated policies. These experts come from the Operations, Research, Public Affairs, Communication, Divisions and Brands departments;
- guaranteeing the implementation of the orientations and decisions adopted by this Committee;
- defining annual climate-related objectives and ensuring their deployment throughout the L’Oréal value chain; and
- assessing the level of commitment of all of the Brands, Country Managers and subsidiaries in implementing the climate and sustainable development strategy. This implementation determines a portion of the variable remuneration of the Brand and Country Managers(see section 4.1.).
The mission of the Sustainable Finance Department, created in 2020, is to integrate the climate change-related environmental and social challenges from a financial standpoint. This Department, which reports to the Chief Financial Officer and the Chief Sustainability Officer, aims to develop and direct Sustainable Finance actions. This primarily involves enabling the Group to manage sustainable and financial development performance in an integrated manner and to coordinate their actions globally.
In 2022, this Department was in charge of updating the study assessing the financial impacts of climate change risks for the Group (see section 4.1.).
