2023 universal registration document

4. Corporate Social Responsibility

DOUBLE MATERIALITY ANALYSIS

In 2022, L’Oréal conducted a double materiality analysis in order to anticipate the next European regulatory requirements and to continue its dialogue with stakeholders. This analysis is based on the double materiality principle that is fully enshrined in the Corporate Sustainability Reporting Directive (CSRD), which defines materiality in two different dimensions:

  • financial materiality (the risks and opportunities sustainability issues pose for the development, position or financial performance of a company); and
  • impact materiality (the potential impact a company has on people or the environment).

In 2023, L’Oréal launched an update to this double materiality analysis to align it line with the final version of the European Sustainability Reporting Standards (ESRS) adopted on 31 July 2023. This process has helped to determine the data points to be published in 2025 under the CSRD.

Identification, evaluation and ranking of issues: first, an analysis of the key environmental, social and governance (ESG) topics was conducted, regardless of whether these topics are covered by the ESRS or are specific to L’Oréal or the beauty sector. These were then subjected to a double financial materiality and impact materiality analysis through:

  • a documentary review to incorporate materiality and financial impact data as well as the perspectives of numerous L’Oréal’s stakeholders, in particular by considering the opinions of: employees, via the annual Pulse survey on L’Oréal employee engagement; consumers, through consumer surveys conducted by L’Oréal and the external third party; investors, via the review of international standards (SASB in particular) and non-financial rating agencies, including MSCI, S&P Global, Moody’s ESG Solutions, Sustainalytics;
  • workshops with in-house ESG experts to incorporate the Group’s operational and strategic perspectives; and
  • interviews with external ESG experts (clients, investors, representatives of civil society, NGOs, professional associations).

Following this analysis, the issues were classified according to their financial and impact materiality.

Results and action plans: all the issues identified in the matrix have, for the most part, already been identified within the framework of programmes such as L’Oréal for the Future or L’Oréal Share & Care. This analysis was shared with the Audit Committee and the Executive Committee in 2022.

Main ESG issues Examples of policies and action plans Document section
Environmental issues: circular economy, preservation of natural resources (packaging, formulas), climate, water and biodiversity Environmental issues: circular economy, preservation of natural resources (packaging, formulas), climate, water and biodiversityExamples of policies and action plans“Transforming our business” pillar of the L’Oréal for the Future programme:
  • Climate: reducing greenhouse gas emissions from sites, strategic suppliers, product transportation and consumers;
  • Water: ensuring that formulas are respectful of all aquatic ecosystems and that water in factories is recycled or reused;
  • Biodiversity: ensuring that 100% of the biobased ingredients for formulas and packaging materials are traceable and come from sustainable sources
  • Resource management: using biobased formulas, recycled or biobased plastic in our packaging, refillable, reusable, recyclable or compostable plastic packaging, recovered waste etc. 
 Environmental issues: circular economy, preservation of natural resources (packaging, formulas), climate, water and biodiversityDocument section

1.4.2 Corporate Social Responsibility (CSR): shared and lasting growth; L’Oréal for the Future: 2023 Results.
Safety of ingredients and product compliance, including transparency and action on the safety of new ingredients Safety of ingredients and product compliance, including transparency and action on the safety of new ingredientsExamples of policies and action plans
  • Safety assessment process: standards that govern product quality from design and production to distribution (100% of products subject to rigorous assessment, the Environmental Safety department, safety testing)
  • “Inside our Products” website
 Safety of ingredients and product compliance, including transparency and action on the safety of new ingredientsDocument section

4.3.1.3.2. Involving consumers in the Group’s transformation 4.3.1.3.2. A/ Product quality and safety: a priority

Responsible beauty marketing and advertising

Responsible consumption and adopting sustainable lifestyles

Responsible beauty marketing and advertising

Responsible consumption and adopting sustainable lifestyles

Examples of policies and action plans
  • Displaying the environmental impact of products.
  • Environmental and societal commitments of L’Oréal brands
  • Responsible communication commitment: member of the Unstereotype Alliance.
  • L’Oréal’s Influencer Value Charter

Responsible beauty marketing and advertising

Responsible consumption and adopting sustainable lifestyles

Document section

4.3.1.3.2. B/ Raising consumer awareness about sustainable lifestyle choices

4.3.2.6. Promoting Diversity, Equity and Inclusion

4.1.5 Ongoing stakeholder dialogue

4.3.3.1. A commitment of the entire organisation
Fair transition, including living wages in the supply chain Fair transition, including living wages in the supply chainExamples of policies and action plans
  • Code of Ethics & Mutual Ethical Commitment Letter
  • Commitment to the living wageSee the definition of the living wage in paragraph 4.3.2.5.for employees and strategic suppliers
  • 12 years of the Inclusive Sourcing programme.
  • Signature of IDH’s call to action Better Business Through Better Wages.
  • L’Oréal Foundation: Beauty for a Better Life
 Fair transition, including living wages in the supply chainDocument section

4.3.1.2. Involving suppliers in the Group’s transformation.

4.3.1.2.1. Due diligence: selecting and assessing strategic suppliers.

4.3.3. Human rights policy

4.3.3.6. Community measures