2025 Universal Registration Document

4.3.3.2 Sustainable purchasing action plan relating to upstream pollution

In signing L'Oréal's Mutual Ethical Commitment Letter (MECL) (see section 4.4.2.2), suppliers⁽¹⁾ undertake to put in place systems to prevent accidental pollution of the air, soil, surface and ground water during production and storage processes, including wastewater, as well as pollution during transportation. They also commit to raising employees'awareness of what they should do in the event of an environmental incident.

The Group's suppliers can thereby assess their environmental footprint and implement appropriate prevention measures at each site concerned. Supplier risk analysis covers at least those areas identified in the audit grid provided by L’Oréal, drawn from the list of major risks described below, and is applied during initial referencing and follow-up audits (see section 3.6.4.2):

• the nature of the suppliers' activity requires identification of specific risks: the suppliers are required to roll out additional prevention measures in accordance with best practices in their industry; and
• the nature of the raw materials used by the suppliers: in the case of subcontracting to suppliers involved in aerosol production or storage, bleaching powders or flammable products, the local sites are subject to specific risk analyses on process safety. Additional specific EHS audits are performed by independent third parties at these subcontractors' sites. These audits are launched at the time of referencing, as part of a follow-up conducted within three years of a “Needs Immediate Action” request, depending on the severity of the breach in compliance identified, and at the time of confirmation, five years after the initial audit.

Suppliers that present the most significant risks because of their activity or geographic location may be audited on these issues, as provided for in the risk map.

Serious cases of non-compliance (Needs Immediate Action, Zero Tolerance and Access Denied) or the failure to implement corrective actions can result in the refusal to list a new Supplier or the suspension or termination of business relationships with a listed Supplier. All the main cases of non-compliance found are monitored and consolidated annually by risk type.

4.3.3.3 Research & Innovation action plan for downstream pollution

L'Oréal has been taking concrete action for many years to identify, assess and limit the environmental footprint of products made available to consumers. This approach is based on several pillars:

• improving the environmental profile of its products throughout their life cycle;
• improving the biodegradable properties of its formulas;
• removing microplastics; and
• reducing the use of substances of (very high) concern.

L'Oréal is improving the environmental profile of its products, including formulas, packaging and raw materials, in particular through the SPOT environmental design tool, which assesses 14 environmental impact factors, including water quality (see section 4.4.3.3).

L'Oréal is also working on improving the biodegradable properties of its formulas, not only for new products but also for existing ones. Formulas are considered to be biodegradable when the raw materials in those formulas decompose quickly and completely in nature thanks to the action of micro-organisms (OECD 301 or equivalent ISO).

L'Oréal has taken the lead in eliminating microplastics, anticipating regulations and acting proactively to reduce the impact of its products on the environment. As early as 2014, L'Oréal began reformulating its rinse-off products such as shower gels and shampoos, succeeding in completely eliminating plastic microbeads from its exfoliating products as of 2017 (six years before the regulatory ban in Europe) and microplastics from all its rinse-off formulas as of 2020 (seven years before the regulatory ban in Europe). The Group continues to work on substitutions that do not compromise the effectiveness or performance of other product categories.

L'Oréal prohibits the introduction of new ingredients classified as SVHC⁽²⁾ in its product portfolio. Aware of constantly evolving scientific knowledge, L'Oréal strives to remove from its products any substance which, although not classified as SVHC when the formula was first marketed, has subsequently been identified as such.

Thanks to the SPOT environmental design tool, L'Oréal automatically takes into account the potential environmental impact of substances of concern and, with the aim of improving the environmental footprint of its products, will consequently minimise the use and potential concentrations of this type of ingredient.

L'Oréal also rigorously assesses the toxicological and environmental profile of the ingredients used in its products, in accordance with the REACH and CLP (Classification, Labelling, Packaging) Regulations on chemical substances.