2024 universal registration document

4.2.2 Governance engaged at every level of the organisation

L'Oréal has set up a robust governance structure involving the Group's most senior management levels in overseeing material climate-related matters. In particular, the climate transition plan is prepared according to several key stages:

1. collaborative drafting and validation: the plan is drawn up together with the functions and business lines to ensure feasibility and alignment with operational reality;
2. validation by the Executive Committee, which reviews the plan to ensure that it is consistent with the Group's overall strategy;
3. presentation to the Board of Directors: the Board of Directors monitors the risks and opportunities, as well as the impact on society and the environment, notably through the Audit Committee and the Strategy and Sustainability Committee; and
4. implementation: the functions and business lines apply the plan with the support of the Sustainability Leaders Network, which ensures that sustainability is integrated into all Group functions.

Climate transition plan implementation process

Once the climate transition plan has been validated by L'Oréal's top management bodies, it is implemented at all levels of the organisation:

Operational deployment: each business line, Division and Zone receives a tailored roadmap, transposing the global net zero strategy to local scale:

• The Divisions, which are more involved in the upstream value chain and product design, focus on emissions reduction targets linked to eco-design, the choice of ingredients and packaging.
• The Zones and Countries, which are more involved downstream, focus on reducing emissions linked to marketing and distribution, such as transportation and marketing products (e.g., refills).
• The various functions and business lines, including Research & Innovation, Operations and digital and physical promotion, actively contribute to decarbonisation by identifying and reviewing innovation opportunities and defining a specific transition plan for each Division and Zone. For example, Purchasing is incorporating responsible supply into its processes, and Operations is optimising energy performance at production sites.

Prioritisation: the roadmaps set out the priority actions, with quantitative targets and deadlines, so as to ensure that the plan is implemented in a concrete and measurable way.

Mobilising the Sustainability Leaders Network: this internal network made up of employees trained in sustainability provides the operational teams with expertise and support, and acts as a point of reference as they implement the plan.

Outcome monitoring process

The Board of Directors annually reviews the outcomes of the climate strategy against the initial objectives. The outcomes are also reviewed by the Strategy and Sustainability Committee. The Chief Executive Officer also presented the Group's climate change strategy to the 2024 Annual General Meeting. Shareholders can engage in discussion with L'Oréal on a regular basis as part of the Group's shareholder consultation process. The Board of Directors receives an account of these discussions.

The level of remuneration of the Chief Executive Officer and the Group's top management is subject to the achievement of climate objectives (see sections 2.4.1.2.1. and 7.4.3.6). Each year, the Human Resources and Remuneration Committee reviews both the upcoming remuneration policy objectives and the performance achieved during the year in question. The Committee makes recommendations in this regard to the Board of Directors.