LOREAL_Registration_Document_2017

3 L'Oréal’s corporate social, environmental and societal responsibility* L’ORÉAL’S CORPORATE SOCIAL, ENVIRONMENTAL AND SOCIETAL POLICIES

Adaptation to the consequences of climate change Conscious of the consequences of climate change, L’Oréal has initiated its transition towards an increasingly responsible business development model in which the extra-financial issues are placed at the same level as the financial objectives with a vision of global performance. The ambition is to design an innovative low-carbon business model and to make a contribution to the major collective challenge represented by limiting global warming. For this purpose, the Group has, for example, pledged to slash the absolute quantities of greenhouse gas emissions in its plants and its distribution centres by 60% ( versus a 2005 baseline) via targets provided for in the Sharing Beauty With All programme; with the Carbon Balanced programme, between now and 2020, the L’Oréal Group is going to balance its greenhouse gas emissions (Scope 1, Scope 2 and emissions related to downstream transportation) by generating carbon savings in the sustainable sourcing channels for its raw materials, in partnership with the Group’s suppliers (see paragraph 3.2.2. Producing sustainably ). Furthermore, the L’Oréal Group evaluates and integrates the risks related to climate change in its overall risk management process in order adopt the most suitable solutions. The main risks identified are as follows: an increase in the frequency and intensity of rainfall, in s particular in river areas, may momentarily interrupt or slow production and distribution processes; episodes of extreme drought may affect the availability of s resources; cyclones, hurricanes and typhoons may damage facilities, s hamper the supply chain and potentially threaten employee safety. These risks and their consequences may also represent a financial risk for the Group, in particular with regard to the security and safety of employees (see the paragraphs on Safety and Environment and safety of the Risk factors chapter, section 2.8.5.3.1.), production and the supply chain (see the paragraph on Production and supply chain of the Risk factors chapter, section 2.8.5.3.3.), an increase in charges, etc. In order to manage these risks, to lessen their impact and to guarantee business continuity, L’Oréal has implemented a certain number of measures including: a business continuity plan and a crisis management plan; s a security policy making it possible to manage the s consequences of extreme climate events, in particular on the Group’s information systems, and its data centres ; programmes to assist in preserving natural resources in s areas affected by drought.

an initial commitment made by the Group concerning the s reduction of the impact of downstream transportation, with a target of a reduction in greenhouse gas emissions resulting from the transportation of its finished products, from the production sites up to the first customer delivery point, by -20% per sales unit per kilometre, by 2020 from a 2011 baseline (see Sharing Beauty With All programme below); the Carbon Balanced commitment, providing that the s residual emissions for Scopes 1 and 2, and the downstream transportation category of Scope 3, will be compensated for in 2020 thanks to an ambitious insetting programme: the remainder of these emissions must be balanced via the reduction of the carbon emissions in the sustainable sourcing channels for certain raw materials, in partnership with the suppliers; finally, in 2015, L’Oréal undertook to define Science Based s Targets (SBT) in order to reduce its greenhouse gas emissions over the long term, in accordance with the Paris climate agreements. In December 2017, the SBT initiative endorsed the Group's proposals covering its entire value chain and its impacts. L’Oréal is committed to reducing greenhouse gas emissions in absolute terms for its scopes 1, 2 and 3 by 25% by 2030 against a 2016 baseline year. In particular, L’Oréal Group is committed to reducing greenhouse gases from all of the sites that it operates by 100%. Margin of uncertainty related to the Scope 3 estimates In general, greenhouse gas assessments are, by definition, subject to a margin of error or “uncertainty”. The highest level of uncertainty concerns the Scope 3 estimate, in light of the number and nature of the data necessary for its calculation (emission factors of the energy used to heat the water necessary for the phase of use of our rinse-off products all over the world, the quantity of water necessary for rinsing off, CO 2 emissions of our raw materials and packaging suppliers, impact of the Group’s activities is essential information in light of the commitments made to fight against climate change, efforts are made year after year to increase the reliability of these data. The level of uncertainty of the Group’s Scope 3 emissions is between 20 and 30%. This means that, unlike for Scopes 1 and 2, the changes in Scope 3 emissions from one year to the next may be related more to the quality of the data collected and the calculation methods used than real measurement of a change in performance. This margin of uncertainty with regard to Scope 3 is a reality for all companies, and does not make it possible to consider this data as an adequate benchmark or method of performance assessment. distances travelled for transportation, etc.). Because measurement of the global CO 2

REGISTRATION DOCUMENT / L'ORÉAL 2017

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