2024 universal registration document

Renewable energy purchases and contractual instruments (E1-6 AR 45)

4.2.5.4 GHG removals and GHG mitigation projects financed through carbon credits (E1-7)

Although the cosmetics industry has a low carbon footprint compared to other industries, L'Oréal is focusing its efforts on decarbonising the value chain. The Group does not currently use carbon offsetting mechanisms and relies on biodiversity to capture carbon. In 2020, the Group launched the L'Oréal Fund for Nature Regeneration. Endowed with €50 million, its mission is to restore one million hectares of ecosystems by 2030, with the overall goal of capturing 15 to 20 million tonnes of carbon and creating jobs in the process.

4.2.5.5 Alignment with the EU Taxonomy

4.2.5.5.1 Reminder of the regulatory environment and L'Oréal’s sustainability strategy

The Green Taxonomy Regulation is a cornerstone of the European Action Plan for Sustainable Finance and aims to redirect capital towards a more sustainable environment by drawing up a list of economic activities considered sustainable by the European Commission. The Taxonomy focuses on activities it has identified as having a high potential for contributing to environmental objectives:

• climate change mitigation;
• climate change adaptation;
• sustainable use and protection of water and marine resources;
• transition to a circular economy;
• pollution prevention and control;
• protection and restoration of biodiversity and ecosystems.

L'Oréal publishes its taxonomy report in accordance with Taxonomy Regulation (EU) 2020/852 and its associated delegated acts (Climate: 2021/2139 and 2023/2485; Environmental: 2023/2486), applying the doctrine of the European Commission and the Platform on Sustainable Finance (SFP).

This report identifies L'Oréal's activities that are eligible for the European Taxonomy, i.e., those that meet the technical screening criteria set out in the regulation. Of these eligible activities, the report identifies those that are also “Taxonomyaligned”. Alignment requires that the activity is eligible, i.e., that it makes a substantial contribution to an environmental objective while also doing no significant harm (DNSH) to the remaining five objectives, and that it meet minimum standards, in accordance with the technical screening criteria of the delegated acts.

Pursuant to the Taxonomy Regulation, L'Oréal has presented the proportion of eligible (since 2021) and aligned (since 2022) turnover (net sales), capital expenditure (CapEx) and operating expenditure (OpEx) associated with economic activities classified as sustainable. Until 2022, alignment data were provided only on the climate change mitigation and adaptation objectives. Starting in 2023, L’Oréal now also reports the Taxonomy-eligible portion for the other four environmental objectives.

As L'Oréal's beauty business activities have not yet been included in the EU Taxonomy list, they are considered ineligible within the meaning of these regulations. Accordingly, L'Oréal only reports on its secondary activities, mainly related to real estate.

The low rate of eligibility and alignment of the Group's Taxonomy indicators only very partially reflects L'Oréal's sustainability strategy and its strong commitment to combating climate change, preserving water resources, implementing the principles of the circular economy, preventing pollution or preserving biodiversity throughout its value chain.