2024 universal registration document

Monitoring and control system

The Applicable Rules are controlled through external audits. These audits cover questions on Human Rights as well as Environment, Health and Safety and cover all activities of the audited site without being limited to the parts of the site that operate for L’Oréal.

L'Oréal's social audit is mainly based on the SA 8000 standard. In 2024, the standard used by L'Oréal was updated to make the requirements even more stringent.

The Group puts in place initial audits which are followed up by further audits three years later. During these follow-up audits, the auditors verify the effectiveness of any remedial measures required as a result of the initial audit. A tool for social audits is used to plan the audits with the external service provider's system and to manage the results and action plans for all Suppliers concerned.

A total of 1,147 on-site audits were carried out in 2024 (bringing the total to 4,470 since 2021), some of which corresponded to regular audits and some to specific audits following a risk analysis. Follow-up audits represent 33% of the total number of audits conducted in 2024 and allowed 69% of the Suppliers audited to improve their results.

In 2024, 1,059 Suppliers conducted an EcoVadis assessment of their social, environmental and ethical policies, as well as the implementation of those policies by their own Suppliers.

Social audits⁽¹⁾

Cases of non-compliance identified during social audits of suppliers by topic

Topic	Needs Continuous Improvement	Needs Immediate	Zero Tolerance	Total number of non-compliance cases	Relative weighting by topic
Health, safety and the environment	Health, safety and the environment Needs Continuous Improvement 349	Health, safety and the environment Needs Immediate 500	Health, safety and the environment Zero Tolerance 20	Health, safety and the environment Total number of non-compliance cases 869	Health, safety and the environment Relative weighting by topic 40.80%
Working hours	Working hours Needs Continuous Improvement 294	Working hours Needs Immediate 212	Working hours Zero Tolerance 0	Working hours Total number of non-compliance cases 506	Working hours Relative weighting by topic 23.76%
Wages and charges	Wages and charges Needs Continuous Improvement 148	Wages and charges Needs Immediate 229	Wages and charges Zero Tolerance 0	Wages and charges Total number of non-compliance cases 377	Wages and charges Relative weighting by topic 17.70%
Forced labour	Forced labour Needs Continuous Improvement 113	Forced labour Needs Immediate 14	Forced labour Zero Tolerance 0	Forced labour Total number of non-compliance cases 127	Forced labour Relative weighting by topic 5.96%
Sexual harassment and bullying	Sexual harassment and bullying Needs Continuous Improvement 62	Sexual harassment and bullying Needs Immediate 0	Sexual harassment and bullying Zero Tolerance 0	Sexual harassment and bullying Total number of non-compliance cases 62	Sexual harassment and bullying Relative weighting by topic 2.91%
Freedom of association⁽²⁾	Freedom of association ⁽²⁾Needs Continuous Improvement 33	Freedom of association ⁽²⁾ Needs Immediate 24	Freedom of association ⁽²⁾ Zero Tolerance 0	Freedom of association ⁽²⁾ Total number of non-compliance cases 57	Freedom of association ⁽²⁾ Relative weighting by topic 2.68%
Disciplinary practices	Disciplinary practices Needs Continuous Improvement 50	Disciplinary practices Needs Immediate 0	Disciplinary practices Zero Tolerance 0	Disciplinary practices Total number of non-compliance cases 50	Disciplinary practices Relative weighting by topic 2.35%
Subcontracting	Subcontracting Needs Continuous Improvement 19	Subcontracting Needs Immediate 13	Subcontracting Zero Tolerance 0	Subcontracting Total number of non-compliance cases 32	Subcontracting Relative weighting by topic 1.50%
Child labour and young workers	Child labour and young workersNeeds Continuous Improvement 18	Child labour and young workers Needs Immediate 8	Child labour and young workers Zero Tolerance 1	Child labour and young workers Total number of non-compliance cases 27	Child labour and young workers Relative weighting by topic 1.27%
Non-discrimination	Non-discriminationNeeds Continuous Improvement 19	Non-discrimination Needs Immediate 4	Non-discrimination Zero Tolerance 0	Non-discrimination Total number of non-compliance cases 23	Non-discrimination Relative weighting by topic 1.08%
TOTAL	TOTAL Needs Continuous Improvement 1,105	TOTAL Needs Immediate 1,004	TOTAL Zero Tolerance 21	TOTAL Total number of non-compliance cases 2,130	TOTAL Relative weighting by topic 100%

Health, safety and the environment: 40.80% of the non-compliance cases concerned the Applicable Rules on Health, Safety and the Environment. Most of these cases involved the absence of fire safety certificates, a lack of training about emergency evacuations, handling of fire extinguishers or the use of protective equipment, the absence of an evacuation plan in the local language, breaches with regard to emergency routes or exits or a lack of eye rinsing stations. Corrective measures have been requested and will be checked in future audits.
Working hours: 23.76% of the non-compliance cases. Failures to comply concerned the Applicable Rules regarding working hours and mandatory rest periods, but also the lack of documents to ensure appropriate monitoring of these Rules. Corrective measures have been requested and will be checked in future audits.
Wages and charges: 17.70% of the non-compliance cases. Most of the non-compliance cases related to this topic concerned insurance and social security contributions, as well as non-payment of the minimum wage, overtime and paid leave. Corrective measures have been requested and will be checked in future audits.
Forced labour: The non-compliance cases identified for this topic account for 5.96% of all of the cases of non-compliance identified during the social audits performed in 2024. The majority concerned the non-existence or inadequacy of employment contracts (for example, no clauses on personal data protection). The main remedial measure requested was setting up and amending employment contracts.

Some of the non-compliance cases concerned the payment of recruitment fees by workers, mainly migrants. In the majority of cases, these workers paid the fees to cover the cost of medical tests. In some cases, amounts were paid in advance by the workers. L'Oréal has held discussions with the Suppliers concerned and has asked them to put in place an action plan to remedy the situation. This plan includes reimbursing the workers concerned and introducing preventive procedures in order to reduce the likelihood of such cases arising again in the future.

Follow-up audits have been scheduled to verify that the remedial measures have been carried out. The audits revealed that identity documents have been withheld by employers when they are not legally obliged to do so. In these cases, the immediate return of the identity documents was requested. When the workers concerned pointed out that they feared losing their documents, lockers with padlocks were made available to them.

Certain non-compliance cases related to forced labour concerned the failure to respect workers' freedom to terminate their contract without penalty (financial or other) and a lack of, or inadequate, work permits for foreign workers. Follow-up audits will check that these corrective measures are implemented effectively.
Sexual harassment and bullying: 2.91% of the non-compliance cases. A potential case of psychological harassment was identified during the social audits. The supplier was contacted to find out the root causes of the situation and draw up a remedial action plan. Most of these failures to comply concerned the absence of a written policy prohibiting sexual harassment and bullying or the absence of an internal system allowing the situation to be reported without negative consequences for the worker in question. Corrective measures have been requested and will be checked in future audits.
Freedom of association and right to collective bargaining: 2.68% of the non-compliance cases. Most of the non-compliance cases related to this topic corresponded to a lack of free elections for workers' representatives, or management presence or interference in these elections. Elections must be carried out or, in countries where such elections are not legal, worker meetings must be organised or alternative arrangements made for workers to raise any concerns or complaints they may have. Corrective measures have been requested and will be checked in future audits.
Disciplinary practices: 2.35% of the non-compliance cases. Most of the non-compliance cases related to this topic concerned the absence of clear written rules, or illegal rules, disciplinary practices, and/or a lack of communication about the rules to workers. Corrective measures have been requested and will be checked in future audits.
Subcontracting: 1.50% of the non-compliance cases. Most failures to comply related to Suppliers failing to ensure that L’Oréal’s standards of ethics are upheld in their own supply chain. Corrective measures have been requested and will be checked in future audits.
Child labour and young workers: The non-compliance cases identified for this topic account for 1.27% of all of the cases of non-compliance identified during the social audits performed in 2024. One audit revealed the employment of a child under the age of 16. The case concerned a 15-and-a-half-year-old who was not performing any tasks prejudicial to their health and safety. L'Oréal made sure that the young worker was registered with a school and returned to school. The company in question subsequently reviewed its recruitment procedures and processes for ensuring that its employees are of minimum working age, and this was verified during a follow-up audit. L'Oréal has maintained its business relationship with this company on a probationary basis. The

other identified cases of non-compliance related in particular to a lack of age-check procedures during the Supplier’s hiring processes, as well as failure to respect the applicable legal requirements for employing young workers (such as not organising a pre-employment medical check-up) and apprentices (e.g., failure to respect quotas). The Suppliers concerned were asked to remedy these situations, and follow-up audits were planned.
Non-discrimination: 1.08% of the non-compliance cases. These compliance failures mainly concern the absence of a clear policy to prevent discrimination in recruitment or discrimination in the payment of wages and other costs. It was also noted that some Suppliers required pregnancy tests as part of the recruitment process. The Suppliers concerned were contacted to ensure that they amend their policies and processes so that these practices will not occur again in the future. Corrective measures have been requested and will be checked in future audits.

2024 universal registration document

3. Risk factors and management