LOREAL_Registration_Document_2017

2 Corporate governance *

RISK FACTORS AND CONTROL ENVIRONMENT

Implementation of L’Oréal's ethics programme The role of the 74 Ethics Correspondents all over the world is to assist the Country Managers/Entity Managers in implementing the ethics programme and enable all the employees to have a local point of contact whilst favouring the normal routes for handling concerns by management. The Ethics Correspondents benefit every year from a specific coordination and training programme. The ethics training campaign is on-going. A specific and compulsory e - learning course on ethics is available in all countries. As of 31 December 2017, 74% of the employees with access to the online module had completed this course. The Ethics Department also provides in-room training sessions. In 2017, 29 training courses were delivered to 436 employees, representing 866 hours of training (Country Managers, Buyers and Human Resources). L’Oréal’s “Open Talk” policy enables employees to raise any concerns they may have directly with the Group’ s Senior Vice-President and Chief Ethics Officer including via a secure website. All allegations are examined and appropriate measures are taken, where applicable. A practical tool enables Country Managers to evaluate and analyse any local ethical risks and to take the necessary measures to prevent them. An annual reporting system allows to monitor the implementation of the ethics programme. The Senior Vice-President and Chief Ethics Officer regularly visits the Group’s entities all over the world (head offices, plants, distribution centres and research centres) to meet employees at all levels of the Company and visit the various sites. In 2017, within this framework, he visited 18 countries, making a total of 81 countries visited since the end of 2013. Ethics risks are systematically reviewed during audit assignments, through individual interviews. These interviews are conducted separately with the Country Manager and the Administrative and Financial Director. Convinced that Sustainable Development is an essential factor for success and durability, L’Oréal has adopted an ambitious corporate social, societal and environmental policy, which is shared by its management and its teams and is based on a core set of strong ethical principles defined by the Group: Integrity, Respect, Courage and Transparency (see paragraph 3.1. The L’Oréal Group’s corporate social, environmental and societal policies) In 2013, a new level was reached with the implementation of the Sharing Beauty With All programme. Clear targets have been set for 2020 in terms of innovation, production, meeting the challenges of sustainable consumption, and sharing the Group’s growth (see paragraph 3.2 The Sharing Beauty With All programme ). It should be noted that the financial risks related to the effects of climate change and the measures taken by the Group to reduce them through the Sharing Beauty With All programme are set out in chapter 3. L’Oréal corporate social, societal and environmental responsibility

L’Oréal's Code of Ethics is available in 45 languages and in Braille in English and French. It is distributed to all employees around the world. It enables employees to understand how these Ethical Principles need to be reflected in their behaviour and actions by providing simple rules and a description of concrete situations they may encounter. The Code of Ethics applies to all employees, corporate officers and members of the Executive and Management Committees of the Group and its subsidiaries worldwide. Since 2010, eleven supplements to the Code of Ethics have covered certain aspects of the Code in more details. Country Managers (or for Corporate or Zone staff, the members of the Group’s Executive Committee to whom they report) are responsible for ensuring the respect of the Code of Ethics in their Country. Respect of these Ethical Principles is integrated in the annual appraisal system for all employees through three ethical competencies : “Take accountability with courage and transparency”, “Delivers both sustainable and short-term results with integrity” and “Treats all individuals in a respectful and consistent manner”. L’Oréal published its Human Rights Policy in 2017 to share its commitment to its stakeholders, namely its consumers and civil society, and to describe how this commitment is respected in practice. ensure the promotion and integration of best practices s within the Group, providing guidance in ethical decision-making; ensure employees are trained; s oversee the handling of concerns, if any, and directly s manage those related to senior management positions; measure and assess the Company’s ethical performance; s and oversee respect for Human Rights in the Group. s He reports in this regard to the Board of Directors and the Audit Committee on a regular basis. He has a dedicated budget and team, access to all information and documents concerning the Group’s activities and can call upon all the Group’s teams and resources to carry out his work. Ethics Day: an annual day on ethics Ethics Day has been held since 2009: a live webchat with L’Oréal’s Chairman and Chief Executive Officer enables all of the Group’s employees to ask questions and exchange on the day-to-day application of L’Oréal’s Ethical Principles. Ethics discussions are also organised locally with each Country Manager. In 2017, over 60% of employees took part in this dialogue and over 5,700 questions were asked worldwide. The employees have a dedicated intranet site which provides additional information on ethics. The Senior Vice-President and Chief Ethics Officer Reports directly to the Chairman and Chief Executive Officeron a regular basis. His mission is to:

REGISTRATION DOCUMENT / L'ORÉAL 2017

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