In addition to transforming its economic model, the Group’s ambition is to help to solve some of the most pressing social and environmental challenges.
Conscious of the growing pressure on natural resources and the global waste crisis, at the end of 2020 L’Oréal set up a global investment fund dedicated exclusively to the circular economy, called the Circular Innovation Fund (CIF). It aims to finance companies that are innovating in the areas of recycling, plastic waste management and materials from the bioeconomy(1)(European Commission, 2012) “A bioeconomy can be defined as the production of renewable biological resources and the conversion of these resources and waste streams into value added products, such as food, feed, biobased products and bioenergy.”.
This international fund is co-managed by Cycle Capital Management and Demeter. The fundraising was completed at the end of 2023, with €111 million raised and 12 co-investors gathered. As the primary sponsor of the CIF, L’Oréal is committed to investing a total budget of €50 million in this Fund. At the end of 2023, the amount committed by L’Oréal is €12.6 million. More than 425 investment projects were analysed during 2023, with 5 additional investments being made, bringing the total number of investments since the Fund was created to 8. In 2023, the CIF has committed and invested a total amount of €12.33 million, bringing the total amount invested since the Fund was created to €20.81 million. In July 2023, the CIF launched its first edition of the accelerator, a tailor-made six-month programme to support the development of the business and the impact of four circular start-ups. The start-up Sparxell, selling pigments made from biobased materials(2)(ISO 16128 standard) a raw material is considered biobased when more than 50% of the carbons it contains are of natural origin., benefited from the accelerator in 2023. The call for applications for the 2024 edition is planned for March.
As part of its commitment to preserving biodiversity, L’Oréal launched the L’Oréal Fund for Nature Regeneration (3)Regeneration measures are applied to farmland and aim to increase ecological productivity in terms of contributions from nature. Source: OP2B Restoration Framework/Science Based Targets Network (2020). Science‑Based Targets for Nature: Initial Guidance for Business. in 2020. This €50 million impact investment fund, managed by Mirova, is intended to combine financial performance with the creation of environmental and social value. By supporting projects to rehabilitate(4)The focus of rehabilitation is on halting and reversing deterioration in ecosystems and restoring biodiversity. Source: OP2B Restoration Framework/Science Based Targets Network (2020). Science‑Based Targets for Nature: Initial Guidance for Business. degraded soils, regenerate mangroves, and restore marine areas and forests, the L’Oréal Fund for Nature Regeneration aims to help preserve or restore one million hectares of ecosystem, to capture 15 to 20 million tonnes of CO2 and create hundreds of jobs by 2030. Since the fund was launched, more than one hundred projects have been considered for the purposes of building the investment portfolio. At the end of 2023, 24 projects were selected for further study, and 16 investment projects totalling more than €27 million were validated. As an example, in April 2023, the L’Oréal Fund for Nature Regeneration invested in the ReforesTerra project, which aims to restore 2,000 hectares of land degraded by pastures(5)Degraded land is deforested land alongside watercourses which suffers from overgrazing. – one of the greatest challenges facing the Amazon. The project will engage with smallholder farmers(6)These are landowners with fewer than four fiscal modules – one fiscal module in the project area is equivalent to 60 hectares, therefore fewer than 240 hectares under Brazilian legislation. Targeting them allows the socio-economic advantages of the project to be channelled towards the most vulnerable groups. to directly plant new trees and create a favourable environment for natural regeneration of the forests in the lower Rio Jamari basin in Rondônia, covering 75% of the project area. The remaining 25% will benefit from planting in small clusters(7)This “Applied nucleation” method imitates the natural regeneration process to facilitate the recolonisation of woody plants. It consists of distributing small plots of trees around the target area. These plots, or nuclei, encourage new natural tree shoots to become established, thus expanding the forest area over time. that attracts wildlife to naturally propagate new forests. This project is one of the largest Afforestation, Reforestation and Revegetation (ARR) projects in Brazil.
In 2023, L’Oréal created a new endowment fund: the L’Oréal Climate Emergency Fund. With a budget of €15 million, it is intended to increase the resilience of vulnerable communities in the face of climate disasters. It supports communities in the most exposed areas by enabling expert partner organisations to help them prepare for and recover from such events.
The funds will be directed towards two types of actions: “prepare”, to help minimise the impact of climate disasters before they occur, through disaster planning and early warning systems; and “repair”, to restore essential infrastructures and vital services such as healthcare, housing and access to food and water when disaster strikes. The first two L’Oréal Climate Emergency Fund recipients are The Solutions Project, a US-based non-profit organisation and Start Network, a global alliance of more than 80 local, national and international NGOs, that both work on the frontline to provide early and effective responses when and before humanitarian crises strike.
On 22 March 2022, the Group issued its first sustainability- linked bond. This fixed-rate issue, which has a maturity of four years and three months and amounts to €1,250 million, is accompanied by a coupon of 0.875% per year. It is aligned with the Group’s Sustainability-Linked Financing Framework, which covers all financial instruments with characteristics that are linked to the sustainability objectives.
The bond was established with reference to the 2020 Sustainability-Linked Bond Principles (“SLBP 2020”) as defined by the International Capital Market Association.
