2024 universal registration document

4. Sustainability Report

4.3 Pollution: operations and value chain (E2)

4.3.1 Background

L'Oréal aims to offer beauty that combines quality, effectiveness, safety and responsibility. The Group continuously invests in solutions that minimise or eliminate any adverse effects of its products and ingredients, in accordance with applicable regulations. Its research and innovation policy aims to improve the environmental footprint of its products over their entire life cycle, while ensuring the personal safety of consumers.

In view of the challenges posed by the pollution of water and air, the Group conducts assessments on an ongoing basis to minimise its impacts in the value chain and strives to make reducing environmental consequences a priority. The Group introduces concrete actions at production sites and across the supplier network to promote more sustainable practices. This section presents the measures taken and the outcomes achieved through this approach.

4.3.1.1 Material pollution-related impacts, risks and opportunities

In accordance with the CSRD, the double materiality assessment concerning ESRS E2 on pollution has a more targeted approach than other standards owing to the list of pollutants in the European Pollutant Release and Transfer Register (E-PRTR). Instead of a broad initial assessment of impacts as is the case with the other ESRS, E2 focuses directly on regulated pollutants, offering a more precise and relevant analysis for this specific topic. Pollutants that are prohibited for use in cosmetics, absent from raw materials or present in quantities well below the classification thresholds have been excluded from the analysis. L'Oréal used its internal tool, data from independent non-profit Citepa⁽¹⁾ and conservative assumptions to quantify the remaining pollutants. Only pollutants exceeding the regulatory materiality thresholds are classified as material and included in the table below.

Description	Subtopics	Policy	Action plans
Description The potential direct or indirect negative impact includes pollution⁽¹⁾ of water and air from L'Oréal's own industrial activities. Specifically, the materiality assessment of pollutants based on the CSRD's ESRS framework highlights the chemical oxygen demand (COD) for water and non-methane volatile organic compounds (NMVOCs) for air as material pollutants. Suppliers' upstream industrial and agricultural activities can also generate air and water pollution. Downstream, the use of rinse-off products by consumers could contribute to the discharge of pollutants into water and impact the quality of the water discharged into wastewater systems.	Subtopics Pollution of air Pollution of water	Policy EHS policy Sustainable purchasing policy Research & Innovation policy	Action plans Prevent pollution risks at operated sites Encourage suppliers to take steps to avoid pollution Reduce the environmental footprint of products
Description L'Oréal strives to minimise the environmental footprint of its products by developing more environmentally friendly formulas and minimising the use of substances of very high concern and microplastics. This approach could influence production practices on a wider scale across the industry, encouraging stakeholders to adopt more sustainable processes and invest in research and innovation.	Subtopics Microplastics Substances of concern (SOCs) Substances of very high concern (SVHCs)	Policy Research & Innovation policy	Action plans Remove microplastics Remove substances of very high concern
Description Another challenge that L'Oréal faces is adapting to constantly changing regulations and shifting consumer expectations in relation to the environment. New regulations, particularly regarding ingredients and packaging, require L'Oréal to reformulate products and conduct additional tests, which generates significant costs. The diversity and constant reinforcement of the regulatory environment expose the Group to a risk of failure to comply or increased compliance costs. In addition, growing consumer awareness of environmental issues requires L'Oréal to constantly adapt. Failure to meet new consumer expectations regarding sustainable products and ensure that its practices comply with ethical and environmental standards, could harm its image and negatively impact sales.

Description

Subtopics

Policy

Action plans

IRO : Negative impact

Time horizon :short term

The potential direct or indirect negative impact includes pollution⁽¹⁾ of water and air from L'Oréal's own industrial activities. Specifically, the materiality assessment of pollutants based on the CSRD's ESRS framework highlights the chemical oxygen demand (COD) for water and non-methane volatile organic compounds (NMVOCs) for air as material pollutants.

Suppliers' upstream industrial and agricultural activities can also generate air and water pollution.

Downstream, the use of rinse-off products by consumers could contribute to the discharge of pollutants into water and impact the quality of the water discharged into wastewater systems.

Pollution of air

Pollution of water

EHS policy

Sustainable purchasing policy

Research & Innovation policy

Prevent pollution risks at operated sites

Encourage suppliers to take steps to avoid pollution

Reduce the environmental footprint of products

IRO : positive impact

Time horizon :medium term / long term

L'Oréal strives to minimise the environmental footprint of its products by developing more environmentally friendly formulas and minimising the use of substances of very high concern and microplastics. This approach could influence production practices on a wider scale across the industry, encouraging stakeholders to adopt more sustainable processes and invest in research and innovation.

Microplastics

Substances of concern (SOCs)

Substances of very high concern (SVHCs)

Research & Innovation policy

Remove microplastics

Remove substances of very high concern

IRO : Risk

Time horizon :short term / medium term

Another challenge that L'Oréal faces is adapting to constantly changing regulations and shifting consumer expectations in relation to the environment. New regulations, particularly regarding ingredients and packaging, require L'Oréal to reformulate products and conduct additional tests, which generates significant costs. The diversity and constant reinforcement of the regulatory environment expose the Group to a risk of failure to comply or increased compliance costs. In addition, growing consumer awareness of environmental issues requires L'Oréal to constantly adapt. Failure to meet new consumer expectations regarding sustainable products and ensure that its practices comply with ethical and environmental standards, could harm its image and negatively impact sales.

(1) To determine the materiality of the pollution, the Group analysed each pollutant emitted and listed in Annex II of Regulation (EC) No. 166/2006 of the European Parliament and of the Council (European Pollutant Release and Transfer Register – E-PRTR Regulation). If the quantity of pollutants observed exceeds the materiality threshold set by the regulation, it is included in the Sustainability Report.