2021 UNIVERSAL REGISTRATION DOCUMENT

3. Risk factors and control environment

B/ Product distribution

Products are distributed by the Subsidiaries and independent third-party distributors in the countries or regions where the Subsidiaries are not present.

In order to ensure this distribution, warehouses are operated by the Subsidiaries directly, or these services are entrusted to third-party logistics service providers that render services on the same type of activity: storage and preparation of orders in warehouses that they lease or own.

3.4.4. Applicable rules resulting from the risk analysis

The Subsidiaries and Suppliers must comply with the applicable local legislation and the minimum common core of the rules listed below (the “Applicable Rules”) in order to prevent the risk of serious adverse impacts on Human Rights and fundamental freedoms, health and safety of people and the environment. When local laws and/or the internal rules of Subsidiaries and Suppliers provide more stringent standards than the Applicable Rules, such standards must take precedence. If, however, the Applicable Rules provide for stricter standards, the Applicable Rules take precedence unless they result in an unlawful activity. In the event of contradictions between local laws and internationally recognised Human Rights, L’Oréal works to comply with these international standards.

3.4.4.1. Risks and Applicable Rules for the prevention of serious violations of Human Rights and Fundamental Freedoms
Risk Analysis and risks identified relating to Human Rights and fundamental freedoms

Following an initial analysis conducted in 2017, the Group wanted to expand its mapping in 2020 by identifying the salient Human Rights risks. To do so, L’Oréal relied on the reporting framework of the Guiding Principles on Business and Human Rights (UNGP Reporting Framework). This identification process takes into consideration the severity, scale, remediability and likelihood of its impact on people. The identification process at global level and in 27 markets was finalised in 2021. This study was conducted with an NGO specialising in the area, providing independent analysis.

As a result of this analysis, the following salient risks were identified in the context of the application of the French Law on Duty of Vigilance:

  • the risk of child labour among the employees of the Group’s Suppliers;
  • the risk of forced labour among the employees of the Group’s Suppliers;
  • the risk of job discrimination because of gender, age, disability, gender identity and sexual orientation of the employees of L’Oréal and the employees of the Group’s Suppliers; and
  • the risk of a lack of decent living wage for the employees of the Group’s Suppliers.

Another risk identified concerns the Human Rights of communities potentially impacted by the Group’s activities (respect for the environment, right of access to water, consideration of Human Rights in the choice of raw materials and, in particular, the right of access of local populations to their land and respect for their traditional knowledge under the Nagoya Protocol).

Applicable rules on Human Rights

Subsidiaries and Suppliers must comply with the minimum core rules, which consist of the following rules that result from an analysis of the risks related to the activities of the Group and its Suppliers.

Non-discrimination

Acts of discrimination are serious violations of Human Rights that remain anchored in all regions of the world in which L’Oréal is present. Discrimination related to gender, sexual orientation and gender identity, disabilities, family situation, age, political and philosophical opinions, religious beliefs, union activities, or related to ethnic, social, cultural or national origins are prohibited. Discrimination related to pregnancy is also prohibited. In this respect, L’Oréal bans pregnancy testing when employees are hired within the Group, and requires its Suppliers to comply with this standard.

Bullying and sexual harassment

Bullying and sexual harassment are also prohibited in the Group. L’Oréal requires that its Suppliers comply with this standard.

Child labour

L’Oréal’s presence in certain regions of the world that are particularly at risk for child labour, including Asia and Latin America, has led the Group to identify this issue as a priority.

To take into consideration the vulnerability of young workers, L’Oréal has set the minimum hiring age at 16 years old.

The Subsidiaries and Suppliers are required to check the age of all new employees upon hire.

L’Oréal prohibits night work and work hazardous to health and safety for employees younger than 18 in its Subsidiaries. L’Oréal requires that its Suppliers comply with this standard.

(1) With the exception of one production unit in the Turkey factory