2022 Universal Registration Document

Waterloop: see the Waterloop Factory concept in section 4.3.1.1.4. Exceptions to the definition of Waterloop status maybe authorised if they are approved by the Operations Department. These exceptions relate to regulatory constraints such as the requirements of the US Food and Drug Administration, or the Group’s Quality requirements. With production levels at the plant in Mexico increasing significantly, the capacity of the on-site water treatment and recycling facilities was inadequate to support this change. As such, for a few months during 2022, the plant did not satisfy the conditions for achieving Waterloop status. Additional investments have been made since the end of 2022 in order to restore compliance with these conditions.

Waste: L’Oréal classifies as transportable waste everything that comes out of a factory or a distribution centre that is not a finished or semi-finished product for consumption. For a factory, this includes, for example, raw materials packaging or packaging materials, broken pallets etc. In order to improve the system of waste performance monitoring and exhaustively record the waste generated by the use of returnable packaging, a system of recording returnable packaging at source was put in place in 2014. L’Oréal thus records the weight of its returnable packaging at source in transportable waste. Each site maximises the number of times returnable packaging is used. The recording of the weight of returnable packaging at source is a measure intended to encourage rotation of this returnable packaging and contributes, through its reuse, to increasing its useful life. Sites that no longer send any waste for destruction or to landfill are considered to have attained a 100% recovery rate⁽¹⁾.

Since 2021, waste generation no longer includes the sludge from the wastewater treatment plans at the Group’s sites.

Energy: the energy produced by geothermal heat pumps is no longer counted in the Group’s total energy consumption. The energy necessary for the operation of this equipment is, however, included in the Group’s energy consumption.

Biodiversity: inventories that describe the actual situation of the sites in terms of species and habitats present in the zone studied must be carried out by a certified organisation at least every three years.

Hold Flat commitment: with the support of expert firm The Biodiversity Consultancy, a standardised approach has been developed to enable the land-use biodiversity footprint of bio-based ingredients to be calculated each year. This approach is based on three parameters: (1) the ground surface required, (2) the loss of biodiversity due to land use and intensity of agricultural practices and (3) the significance of biodiversity in the ecosystem in question. The first two parameters are multiplied to represent a ground surface area in which 100% of biodiversity is lost (value expressed in Mean Species Abundance per hectare, MSA.ha).

Land-use biodiversity footprint =

• (1) Ground surface x (2) Biodiversity loss due to land use and intensity of agricultural practices (MSA.ha),
• (3) The significance of biodiversity in the ecosystem in question

The required ground surface (1) is estimated in three steps:

• • Step 1: The volumes of raw materials (combined ingredients)are divided into volumes of ingredients made from plants.
  • Step 2: Ingredient volumes are converted to plant volumes using conversion factors based on life-cycle assessment data (Ecoinvent, World Food Database, Agribalyse), supplier data and literature.
  • Step 3: The ground surface required to produce the plants is estimated by multiplying the plant volume by the average yields for each plant. For the main plants, average yields were extracted at the most accurate spatial resolution available in the supply data using the Our World in Data(average yields available until 2018) and MapSPAM (average yields from 2010) spatial databases. A review of the literature was used to estimate the average (global) yield for the other plants. An additional land use area for crop-related infrastructure (roads and farms) was also taken into account for each plant, calculated on the basis of a proportion of the infrastructure surface area specific to each plant (data taken from Ecoinvent).

Ingredients whose traceability is not currently known (plants and/or countries) have been integrated into the footprint using their relative contribution distribution when the data is known.

Biodiversity loss due to agricultural practices (2):

Mean Species Abundance per hectare is a unit of measurement corresponding to the equivalent land surface that has lost 100% of its biodiversity. This metric is used to measure ecosystem integrity.

Biodiversity loss coefficients for land use are derived from the GLOBIO model database (providing average biodiversity loss values according to land-use type and intensity) and then refined for each plant based on a literature review (final values vary between 70% and 90% biodiversity loss depending on the plant). For infrastructure, the biodiversity loss coefficient for land use is also taken from the GLOBIO models (the value for urbanised areas, i.e. 95% biodiversity loss, is identical for each plant).

Focus on the significance of biodiversity in the ecosystem in question (3):

The significance of biodiversity in the production area is assessed using the Species Threat Abatement and Recovery (STAR) metric. STAR assesses the conservation potential in terms of reducing the risk of species extinction in an area of special interest either by threat reduction or habitat restoration. The metric was developed based on data from the IUCN Red List of Threatened Species (STAR mapping in December 2022is based on the 2019.3 version of the IUCN Red List;STAR currently includes mammals, birds and amphibians). The80th percentile was used to represent the presence of high values while avoiding overestimation by taking into account the maximum value only. Each region or country is then assigned to a risk category ranging from very low to very high. As the STAR distribution is highly skewed towards low values(97% of STAR values worldwide are in the very low and low categories), the use of the mean or median is not appropriate. Each region or country is then assigned to a risk category ranging from very low to very high by taking the higher of the following two values: the STAR 80th percentile for threat reduction or the STAR 80th percentile for habitat restoration.

As the distribution of STAR values is very uneven and skewed towards low and very low values, any region or country categorised as medium, high or very high risk represents an important area for biodiversity in which there is a significant risk of impacting rich and vulnerable biodiversity.