LOREAL_Registration_Document_2017

3 L'Oréal’s corporate social, environmental and societal responsibility* THE SHARING BEAUTY WITH ALL PROGRAMME

Fighting against deforestation Within the scope of its “Zero deforestation” commitment, L’Oréal deploys an innovative strategy for the traceability of its palm oil derivatives, in partnership with all the stakeholders (small-scale growers, NGOs and suppliers): 100% of purchases of palm oil and palm oil and palm kernel s derivatives have been certified as sustainable according to the RSPO criteria (www.rspo.org) since 2012; 74% of the main derivatives come from sources that are s identified (as far as the mills). L’Oréal, a responsible, innovative company L’Oréal consumes less than 400 tonnes of palm oil every year, but nevertheless consumes 74,000 tonnes of derivatives of palm oil (which come from the palm fruit pulp) and palm kernel oil (extracted from the palm fruit kernel). These two oils are used to produce glycerine, fatty acids and fatty alcohols which form part of the composition of the Group's products. Continuing the efforts made at certification 100% of the volumes of palm oil used by L’Oréal meet the standards and procedures of the Roundtable on Sustainable Palm Oil (RSPO), via one of its most demanding traceability models, the SG (Segregated) model. Concerning the derivatives, which are also 100% certified, L’Oréal has increased the proportion of its physically certified purchases to reach a “Mass Balance” of 51% at the end of 2017, as against 34% in 2016 (the remainder continues to be covered by the RSPO “Book & Claim ” model) in addition to the purchase of RSPO Next certificates. Ensuring the traceability of derivatives as far as the mills Within the framework of its “Zero deforestation” commitment made in 2014, the Group had pledged to trace the main palm and palm kernel derivatives that it uses as far as the mills by the end of 2015. This is a difficult task as the process for transformation of the derivatives involves a large number of players and many branches of the supply chains. An initial phase involving a survey was conducted in 2014, with the support of a firm of independent experts, of L’Oréal’s strategic suppliers, who supply more than half its palm and palm kernel derivatives. Since 2015, L’Oréal has therefore continued to enhance its data collection by extending the scope to cover all its suppliers in order to be able to trace and identify the origin of 100% of its main palm and palm kernel derivatives. The results of this work show that Malaysia and Indonesia are the main countries from which supplies are obtained and that, for 2016, 91% of these volumes of palm and palm kernel derivatives can be traced to the refineries, 74% up to the mills and 15% as far as the plantations. Since 2016 the Group has also begun verifications with regard to the products traced up to identified mills to ensure that they are not linked to deforestation. L’Oréal relies on the Global Forest Watch risk assessment tool in order to this. L’Oréal has also developed a specific tool the Sustainable Palm Index to assess the level of commitment, progress and achievements of its direct suppliers in moving towards sustainable palm oil.

L’Oréal finalised the traceability campaigns launched with all its suppliers, thus making it possible for 100% of plant-based ingredients to now be traced to their country of production, or even as far as the biomass production site.

CERTAIN PRODUCTS SOLD IN 2017 HAVE A PERCENTAGE OF RENEWABLE RAW MATERIALS ABOVE 98% Powermix Shot Color Omega Color Radiance

L’Oréal Professionnel

Crème de Corps Nourishing Dry Body Oil Sanoflore Sublime Red Berries Moisturising complexion enhancer Sanoflore Sublime Pink Peppercorns Moisturising complexion enhancer Garnier SkinActive soothing botanical rose water toner

Kiehl’s

Sanoflore

Sanoflore

Garnier

Currently, more than 25% of the raw materials used by L’Oréal (in terms of volume) are based on green chemistry principles ( i.e. , they come from renewable resources, are transformed using an environmentally respectful process and have a favourable environmental profile). This represents more than 750 raw materials. In 2017, 35 new raw materials based on green chemistry principles have been registered. ASSOCIATING THE GROUP’S SUPPLIERS WITH ITS QUEST FOR PROGRESS L’Oréal has defined a progress-focused approach which will make it possible to attain the Sharing Beauty With All programme targets. The global scale of the programme has encouraged the Group to share its initiative with its renewable raw material suppliers. L’Oréal is attentive to four criteria: traceability, conformity, consideration of critical issues and acceptability. An in-depth investigation into the supply chains is initiated with certain suppliers for the most sensitive raw materials. It starts with a document analysis and goes as far as an on-site investigation conducted by an independent third party. The investigation varies according to the nature and level of the environmental and social risk. In 2016, this method was subject to several critical reviews by external stakeholders. These made it possible to recognise the relevance of this management system for the sustainable sourcing of renewable raw materials. In the event of a variance compared to the Group’s sustainable sourcing targets, corrective action plans are undertaken in cooperation with suppliers and with the systematic support of independent external third parties. The Group also integrates environmental and social issues relating to the industrial operations of its suppliers in other initiatives (the “ Buy & Care ” responsible purchasing programme).

REGISTRATION DOCUMENT / L'ORÉAL 2017

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