2023 universal registration document

3. Risk factors and risk management

(i) Additional actions intended for Sites of Subsidiaries

At its own sites, L’Oréal implements the LIFE (Life threatening Incident or Fatality Event) programme, which covers activities on all its sites that, if not controlled, could result in potentially serious injury and illness. The Group extends the ambition of moving towards “zero accidents” by ensuring the sustainability of actions and defining post-incident emergency preparedness requirements.

The Sharing Beauty with All programme has helped to reduce the environmental footprint of the Group’s sites: between 2005 and 2020, our factories and distribution centres reduced their CO2 emissions by -81% (in absolute value), their water withdrawal by -49%Per unit of finished product., and their waste generation by - 37%Per unit of finished product..

The commitments made by the Group for 2030 as part of its L’Oréal for the Future programme are aimed at ensuring compatibility of the Group’s activities with a planet that has limited resourcesSee chapter 4 and the summary table in 1.4.2.. The main environmental objectives of the programme concerning Subsidiaries are as follows:

  • Climate: by 2025, reach 100% renewable energy at all operated sitesOn the Group’s operated sites, excluding safety and security installations as defined in paragraph 4.5.1.3. “Environmental data”.. L’Oréal is also committed to halving the transport footprint of its products by 2030;
  • Water: in 2030, 100% of the water used in our industrial processes will be recycled and reused;
  • Biodiversity: by 2030, all of our operated buildings and all industrial sites will have a positive impact on biodiversity compared to 2019. A methodology for monitoring the Biodiversity commitment was developed in 2021 and rolled out to all of the Group’s sites in 2022. Becoming “biodiversity net positive” is achieved by meeting two conditions: the first is improving the potential for hosting biodiversity on the Group’s sites, the second concerns developing the biodiversity culture of employees; and
  • Natural resources: by 2030, 100% of the waste generated in our operated sites will be recycled or reused. L’Oréal is also committed to no longer send waste to landfills.

These objectives are accompanied by monthly reporting of detailed indicators used to monitor variations in results in each of these areas and to identify potential anomalies and incidents. This reporting is also accompanied by an annual programme to coordinate environmental projects, running until 2030, which allows objectives to be set at site level. These projects are evaluated and prioritised in order to ensure that the L’Oréal for the Future objectives are reached. The objectives, which are defined annually and linked to the monthly reporting, make it possible to assess the performance of each site, country and zone. A summary of the results obtained is provided in subsection 3.4.7.

The Group is engaged in a process of continuous improvement of its EHS performance through a programme to achieve ISO certification for its operated sites, in order to anchor the EHS policy in the long term: ISO 45001 for the management of employee health and safety and improvement in their working conditions; ISO 14001 for the management of environmental impacts and improvement in environmental performance; and ISO 50001 for energy management and energy performance improvement.

Culture” audits are conducted by internal EHS specialists to assess the degree to which EHS culture has been rolled out to all Subsidiary employees. The results of these audits provide information on the level of knowledge of EHS management tools and the maturity of audited sites with regard to the safety and environment culture at all levels of the hierarchy.

Regular checks are carried out at sites operated by the Group to ensure that cooling gas, which is used for the production of cold (e.g. refrigeration units) and heat (e.g. heat pumps), have not leaked. A risk reduction strategy has been implemented following a comprehensive inventory of facilities that use cooling gas at sites. It is based on two pillars: detecting and managing leaks and replacing traditional cooling gases with alternative cooling gases with low global warming potential (or GWP).

Detailed information on these additional actions is available in chapter 4.

(ii) Additional actions intended for Suppliers

The Purchasing teams select the most competitive suppliers and in accordance with the responsible purchasing policy. Suppliers’ EHS assessment is managed by monitoring indicators included in the corporate social responsibility criterion, which is one of the five criteria for monitoring supplier performance.

As part of the L’Oréal for the Future programme, launched in 2020 with targets for 2030, the Group has broadened its environmental commitments to its suppliers. The main environmental objectives of the programme concerning suppliers or those that may be related to their business activity are therefore as follows:

  • Climate: by 2030, strategic suppliers will reduce their direct greenhouse gas emissions (scopes 1 and 2) by 50% in absolute terms compared to 2016.

The Group has defined a methodology to engage suppliers based on their emissions contributions and to manage their emissions performance with them.

This methodology, which is being gradually implemented, is based on:

  • their commitment to CDP Supply Chain;
  • their emissions contributions;
  • the reliability of their reported data, which is checked by monitoring the verification conducted by a third party;
  • the adoption of ambitious targets and the launch of associated action plans; and
  • the alignment of their trajectory with the Science Based Targets initiative.
  • Water: by 2030, all strategic suppliers will use water responsibly in the areas where they operate.
  • Biodiversity:
    • by 2030, 100% of the biobased ingredients for the Group’s formulas and packaging materials will be traceable and will come from sustainable sources, with none linked to deforestation; and
    • by 2030, the footprint on the ecosystems vital to the sourcing of its ingredients will be maintained at 2019 levels.
  • Sustainable sourcing of raw materials: