2024 universal registration document

Industrial and environmental risks/Climate change
The Group’s activities are exposed to the physical and transition risks related to climate change. The increase in risks of natural origin, both extreme and chronic, the loss of biodiversity, and the increased 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 reputation could be impacted. 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 In December 2023, in its Climate Transition Plan, the Group announced a new series of decarbonisation objectives for 2030 and 2050, covering Scopes 1, 2 & 3 greenhouse gas emissions. These objectives, were validated by the Science Based Targets initiative (SBTi) in April 2024, building on the achievements of the L'Oréal for the Future programme and reaffirming 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 by 28%; in the long term, i.e., by 2050, reduce Scope 1, 2 and 3 emissions by 90%, offsetting residual emissions to achieve net zero. L’Oréal has undertaken to ensure that, by 2030, all water used in the Group’s industrial processes will be recycled and reused on its sites, prioritising the rollout of the required equipment according to the water situation of the watersheds in which L’Oréal operates. 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 plants sources of these ingredients (deforestation, soil depletion, consequences on biodiversity, for example), and by leveraging eco-friendly processes that prevent upstream pollution. L’Oréal has specific training programmes for raising 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 professional lives, and forms part of the L'Oréal for the Future programme. To inform its consumers and help them make more sustainable consumer choices, the Group has developed an environmental display system for its products, with a rating ranging from A to E, which takes into account 14 factors of impact for the planet, including greenhouse gas emissions. This system has been rolled out across 12 of the Group’s brands in 32 countries in Europe, North America and China. At the same time, L’Oréal actively contributes to the collaborative work of the EcoBeautyScore Association, which aims to develop a standardised scoring system across the entire industry. L'Oréal also implements action plans on specific issues as described in chapter 4, which constitutes the Group's Sustainability Report and includes the recommendations of the TCFD.

Industrial and environmental risks/Climate change

Risk identification

Risk management

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

The increase in risks of natural origin, both extreme and chronic, the loss of biodiversity, and the increased 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 reputation could be impacted. 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

In December 2023, in its Climate Transition Plan, the Group announced a new series of decarbonisation objectives for 2030 and 2050, covering Scopes 1, 2 & 3 greenhouse gas emissions. These objectives, were validated by the Science Based Targets initiative (SBTi) in April 2024, building on the achievements of the L'Oréal for the Future programme and reaffirming 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 by 28%*;
in the long term, i.e., by 2050, reduce Scope 1, 2 and 3 emissions by 90%*, offsetting residual emissions to achieve net zero.

L’Oréal has undertaken to ensure that, by 2030, all water used in the Group’s industrial processes will be recycled and reused on its sites, prioritising the rollout of the required equipment according to the water situation of the watersheds in which L’Oréal operates. 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 plants sources of these ingredients (deforestation, soil depletion, consequences on biodiversity, for example), and by leveraging eco-friendly processes that prevent upstream pollution.

L’Oréal has specific training programmes for raising 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 professional lives, and forms part of the L'Oréal for the Future programme.

To inform its consumers and help them make more sustainable consumer choices, the Group has developed an environmental display system for its products, with a rating ranging from A to E, which takes into account 14 factors of impact for the planet, including greenhouse gas emissions. This system has been rolled out across 12 of the Group’s brands in 32 countries in Europe, North America and China.

At the same time, L’Oréal actively contributes to the collaborative work of the EcoBeautyScore Association, which aims to develop a standardised scoring system across the entire industry.

L'Oréal also implements action plans on specific issues as described in chapter 4, which constitutes the Group's Sustainability Report and includes the recommendations of the TCFD.

* These targets correspond to absolute value reductions compared with the base year of 2019.

2024 universal registration document

3. Risk factors and management