LOREAL_Registration_Document_2017

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

… with our suppliers 3.2.4.2. “By 2020, 100% of the Group’s strategic suppliers will be participating in our supplier sustainability programme.”

2020 TARGETS

2017 RESULTS

82% of the Group’s strategic suppliers (1) have been evaluated and selected on the basis of their environmental and social performance. They represent more than 74% of total direct purchases (raw materials, packing items and subcontracting) Furthermore, in 2017, 1,231 social audits ‚; were carried out, making a total of over 9,400 since 2006. 87% of strategic suppliers (1) have completed a self-assessment of their sustainability policy with the Group’s Sustainable Development. This percentage is based on the calculation of the number of suppliers who, in 2017, had been assessed on their social, environmental and ethical policies, as well as the application of such policies at their own suppliers, by Ecovadis. An online site dedicated to suppliers has been launched. It proposes e-learning modules, videos presentations on ethics, climate change, social audits, etc. Initially available to strategic suppliers (1) , it is in the process of being rolled out. 9% of strategic suppliers (1) are associated with the Group’s Solidarity Sourcing programme.

All strategic suppliers (1) will be evaluated and selected based on social and environmental performance.

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All strategic suppliers (1) will have completed a self-assessment of their sustainability policy with the Group’s support.

All suppliers will have access to L’Oréal training tools to improve their sustainability policies.

20% of strategic suppliers (1) will be associated with our Solidarity Sourcing programme.

Strategic suppliers are suppliers whose added value is significant for the Group by contributing to the L’Oréal sustainable strategy by their weight, their innovations, their (1) strategic alignment and their geographical deployment. Eventually, 80% of the amount of direct purchases will ultimately be covered by this approach. The portfolio of suppliers will therefore solely consist, in 2020, of suppliers with the best CSR results: new suppliers selected on their performances and longstanding suppliers whom the Group continues to use as they are some of the best.

As a socially responsible company L’Oréal includes its entire value chain, including the work carried out by its suppliers, in its Sustainable Development policy. There are thousands of suppliers throughout the world who cover the Group’s needs in terms of packaging, raw materials, subcontracting, production equipment, promotional and advertising items, etc. The global volume of purchases directly related to production represented €4.4 billion in 2017. The Group has decided to use its partners’ environmental and social performances as a selection criterion. On this basis, the commitments under the Sharing Beauty With All programme fit in with, and follow on from, those in the Group’s responsible purchasing policy initiated in 2002 with the L’Oréal Buy & Care programme. This contributes to sharing good practices and the Company’s values and standards with its suppliers. Assessing and selecting the Group’s strategic suppliers on the basis of their social and environmental performance The Corporate Social and Environmental Responsibility (CSR) commitments of suppliers play a significant role in the choice of the Group’s business partners. In this respect, L’Oréal’s purchasing teams have defined 5 pillars of performance that make it possible to assess and choose suppliers: Quality; s Corporate Social and Environmental Responsibility; s

Innovation; s Supply chain & Service; s Competitiveness. s

These pillars form the basis both for daily performance and for long-term strategies. A global scorecard has been deployed for all purchasing fields and makes it possible to precisely measure suppliers’ results, in particular their compliance with their environmental, social and societal commitments which represent 20% of the final assessment. The CSR strategy and action plans of suppliers are fully integrated into their relationship with L’Oréal and are therefore discussed at strategic meetings (Business Reviews). In this way, in 2017, 293 business reviews were carried out. The evaluation of suppliers on the CSR pillar is based, in particular, on their compliance with their social audits, the implementation of Solidarity Sourcing projects and their results in the “CDP Supply Chain” programme for the reduction of CO 2 emissions. Suppliers and subcontractors are also asked to comply with the standards set out in the ethical commitment letter that relate to the Fundamental Conventions of the International Labour Organization as well as local laws, in particular with regard to minimum wages, working time and health and safety (see section 3.1.4.4 Respect for the ILO Conventions ).

; The Statutory Auditors have expressed a reasonable assurance with regard to this indicator.

REGISTRATION DOCUMENT / L'ORÉAL 2017

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