2025 Universal Registration Document

The Group's activities are exposed to the physical and transition risks related to climate change.

The increase in natural risks, both extreme and chronic, the loss of biodiversity, and the growing pressure on water resources could impact the availability of finished products by disrupting the Group's operations and supply chain. The scarcity of resources and the implementation of the transition towards a low-carbon economy could also increase costs through, for example, higher plastic packaging recycling costs or carbon taxes.

Insufficient consideration during product design related to the impact of their usage by consumers could represent a risk for sales in certain areas of the world affected by water stress or the lack of adapted infrastructure to collect and treat waste and wastewater.

Consumer choices could be increasingly influenced by the impact associated with the use of a product (its carbon footprint, water footprint or impact on biodiversity) and by the Group's overall environmental performance, particularly in terms of reducing its CO₂ emissions across all Scopes.

If the Group did not sufficiently anticipate all these impacts and did not initiate a voluntary process to reduce and adapt to climate change, its financial and non-financial performance as well as its reputation could be impacted.

Taking into account environmental challenges, and in particular efforts to combat climate change, is an integral part of L'Oréal's business model.

The Group has set itself decarbonisation targets for 2030 and 2050, covering Scopes 1, 2 & 3 greenhouse gas emissions. These targets, validated by the Science Based Targets initiative (SBTi) in April 2024, build on the achievements of the L'Oréal for the Future programme and affirm the Group's ambition to achieve Net Zero by 2050.

The targets are as follows:

• in the short term, i.e., by 2030, reduce Scopes 1 & 2 emissions by 57% and Scope 3 emissions from purchased goods and services, upstream transportation and distribution and business travel by 28% compared to 2019; and
• in the long term, i.e., by 2050, reduce Scopes 1, 2 & 3 emissions by 90% compared to 2019, offsetting any residual emissions to achieve net zero.

L'Oréal is aiming to use 100% recycled or reused water by 2030, prioritising the roll-out of the required equipment, subject to the water situation of the watersheds in the areas it operates. To address the aforementioned risk associated with product usage and sales, L’Oréal looks to develop water-saving products or technologies to enable consumers – particularly in water-stressed markets – to meet their hygiene and beauty needs. Management of potential consequences of extreme events is described in the section on "Product availability" risk.

The Group also launched a programme called Green Sciences to shift its raw material portfolio through the development of ingredients with a favourable environmental profile, in minimising the environmental impacts associated with growing plant sources of these ingredients (deforestation, soil depletion, consequences on biodiversity, for example), and by leveraging eco-friendly processes that prevent upstream pollution. This approach also includes managing the risks associated with shortages or price volatility of biobased raw materials amid the increasing scarcity of resources. To address these risks, L’Oréal is rolling out a Sustainable Land Use Policy, strengthening sustainable sourcing, and implementing interventions aimed at increasing the resilience of its priority ecosystems.

L'Oréal's ecodesign objectives are also central to its approach, particularly in terms of packaging, where the increase in costs linked to recycled materials is an identified risk. The Group embeds the principles of ecodesign into every stage of its products’ life cycle in order to minimise its environmental footprint and take into account the challenges associated with waste and effluent collection and treatment infrastructure. At the same time, L'Oréal actively contributes to Extended Producer Responsibility (EPR) schemes for packaging, with the aim of optimising end-of-life management and adopting a circular approach.

L'Oréal has specific training programmes in order to raise employees' awareness about issues related to the climate, water, biodiversity and resources. These programmes have recently been rounded out by Going Sustainable Together – a priority training course for all employees, which teaches practical ways of incorporating sustainable practices into their respective businesses, and forms part of the L'Oréal for the Future programme.

To keep its consumers informed and enable them to make more sustainable choices, L'Oréal has joined forces with key players in the cosmetics industry to co-found the EcoBeautyScore Consortium. The consortium aims to provide a clear and transparent assessment of cosmetic products’ environmental impact using a scientific impact assessment method, a shared database of ingredients, a common rating tool and a standardised rating system.

L'Oréal also implements action plans on specific issues, as described in chapter 4 (Sustainability Report) and section 1.4.2.