2023 universal registration document

3. Risk factors and risk management

  • Plastics and advertising displays:
    • by 2030, 100% of the Group’s plastic packaging will be recycled or bio-sourced (target of 50% by 2025);
    • by 2025, 100% of the Group’s plastic packaging will be refillable, reusable, recyclable or compostable; and
    • by 2025, 100% of the Group’s advertising displays at points of sale will be eco-designed, taking into account the principles of the circular economy for managing their end of life.

L’Oréal has taken strong action in the following areas to reduce its overall plastic footprint: (1) packaging, (2)  microplastics in the formulas of its products, (3) POS furniture, (4) transport and (5) plastic waste generated by its factories and warehouses.

In addition to ecodesign measures carried out by research laboratories, Operations teams and brands, this commitment requires the involvement of a range of stakeholders (companies located at different levels of the value chain, research institutions and public authorities).

In order to reduce its plastic footprint, L’Oréal has adopted a strategy known as the “3Rs”:

  • reduce the quantity of plastic;
  • replace fossil-based plastics with other materials that have less of an impact on the environment; and
  • recycle by developing recyclable packaging and increasing the use of recycled plastic.

To do this, L’Oréal takes action at the design level of its products and develops circular economy measures that respect the environment and social rights. Its approach to reducing the plastic content in packaging is based on the following pillars:

  1. reducing the intensity of packaging used by the Group, particularly plastic packaging;
  2. replacing fossil-based plastics with other materials that have less of an impact on the environment, such as shampoo bars and composite packaging; and
  3. promoting reuse (solutions must be analysed with regard to their overall environmental impact and the packaging life cycle as a whole and must be compatible with health protection and the proper conservation of products).

In addition to reducing its use of plastics, L’Oréal wants to reduce the environmental impact of the remaining plastics it uses by means of recycling. Recycling helps to reduce CO2 emissions associated with the production of virgin plastic and to improve waste management by preventing litter, as plastics are collected and sorted for recycling. To this end, L’Oréal promotes the implementation of Extended Producer Responsibility (EPR) initiatives in countries in which this sector is underdeveloped.

L’Oréal has had a health and safety policy for the materials used in its packaging for 20 years. It specifies the conditions for acceptance or rejection of substances that may be present in our packaging, regardless of the material. This policy is updated annually in line with regulatory developments and scientific progress, and each supplier agrees to fully comply with regard to the packaging used in the Group’s products. Quality auditing is carried out to ensure compliance.

The Group has begun working on this value chain, particularly with suppliers of plastic packaging and recycled plastics, by involving them in analysing and mitigating upstream social risks. All recycled plastic producers used by the Group’s packaging suppliers undertake to comply with the Group’s standards and commit to this by signing the Letter of Mutual Ethical Commitment. A social audit is carried out at each recycled plastic supplier factory located in a high-risk country. A conforming social audit is a prerequisite for any commercial relationship between recycled plastic suppliers and the Group’s plastic packaging suppliers. Conscious of the fact that transforming the sector requires the cooperation of all of its stakeholders, including suppliers of plastic packaging, recycled plastics and other end products, the Group maintains an active dialogue with numerous stakeholders in order to shift the industry towards responsible sourcing.

Once sources have been analysed, social audits are conducted at recycling sites based in high-risk countries in accordance with the Group’s social audit procedure.

A €50 million impact fund (the Circular Innovation Fund) is dedicated to waste management and the circular economy as part of the L’Oréal for the Future commitments.

  • Commitment of suppliers to self-assess and move forward with action plans through CDP.

L’Oréal actively works with its suppliers to help them improve their performance in terms of sustainability.

In 2007, L’Oréal joined CDP supply chain programme for greater transparency in the actions of its suppliers and to monitor the progress made in relation to L’Oréal’s objectives. In 2014, participation in CDP Climate programme was made compulsory by L’Oréal for all strategic suppliers. The aim is to measure and report their emissions, set targets for reducing these emissions and communicate their action plans to achieve this objective successfully. In 2023, 95% of strategic suppliers completed the climate questionnaire. 76% of selected suppliers completed the water questionnaire and 73% of those selected for the sustainable management of forestry questionnaire responded.

  • Supplier commitment to self-assess and improve with corrective actions recommended by EcoVadis: By participating in the EcoVadis assessment, L’Oréal compares its environmental and social policy with the expertise and the recommendations of external auditors qualified in the analysis of multi-sector risks. This is a useful rating for the continuous improvement of suppliers and it also contributes to the transparency of industry practices. This assessment is used to select suppliers by taking their environmental and social performance into consideration. 95% of strategic suppliers were evaluated by EcoVadis.