The Purchasing teams select the most competitive suppliers in accordance with the responsible purchasing policy. The EHS performance of Suppliers is managed by monitoring indicators included in the corporate social responsibility criterion, which is one of the five criteria for monitoring supplier performance.
As part of the L’Oréal for the Future programme, launched in 2020 with targets for 2030, the Group has broadened its environmental commitments to its supply chain. The main environmental objectives of the programme concerning suppliers or those that may be related to their business activity are therefore as follows:
For the palm oil and its by-products segment, which are the subject of a specific “Zero deforestation” approach at year-end 2020, 100% of the supplies were covered by action plans with the suppliers concerned. L’Oréal developed the Sustainable Palm Index (SPI), a tool to evaluate and select suppliers of palm oil and palm kernel derivatives to assess the level of commitment, progress and achievements of its direct suppliers in favour of sustainable palm oil. This tool is used annually to evaluate suppliers’ progress to wards the Zero Deforestation objective and their level of compliance with the Group’s requirements.
The specific feature of the SPI lies in its integration in the purchasing decision process. A supplier in compliance with the SPI will benefit from an allocation of volumes, long-term contracts, and will be favoured in the context of partnerships in land projects.
In 2019, L’Oréal co-founded the collective Action for Sustainable Derivatives initiative in order to share knowledge and methods with other operators to encourage the production and responsible supply of palm oil derivatives.
For other streams of renewable raw materials, which represent 17% of the portfolio of renewable raw materials in volumes and 74% in number, L’Oréal, on the basis of environmental, social and economic indicators from external databases (IHDI of the UNDP, EPI from Yale University, Verisk Maplecroft Country Index), has defined indicators of “sustainable sourcing challenges” to assess renewable raw material streams with regard to their sustainability.
These indicators are consolidated within the SCAN (Sustainable Characterisation) index, allowing the Group to prioritise the implementation of its sustainable sourcing action plans. The Group updates the information collected regularly. 79% of the volume of raw materials that the SCAN index has identified as representing sustainable sourcing challenges (i.e. 36% of the number of raw materials) are already the subject of plans or improvement initiatives with the relevant suppliers to ensure sustainable supply. The goal is for 100% of the Group’s renewable raw materials to come from sustainable sources.
To achieve this, L’Oréal launched a support and training programme for more than 200 suppliers on the issues of sustainable sourcing of raw materials in order to guarantee the traceability of the raw materials delivered to L’Oréal and ensure the associated streams are secure. Depending on the level of environmental and/or social risk identified on these streams, suppliers are notably asked to deploy the field audit procedure for producers (88 indicators), developed by L’Oréal with the support of the Rain forest Alliance NGO and reviewed in 2019 by EcoCert, The Biodiversity Consultancy and The Danish Institute for Human Rights. They are also invited to rely on sustainable sourcing certifications adapted to the challenges of their streams (Fair Trade, Sustainable Agricultural Network, Organic, etc.).
L’Oréal actively works with its suppliers to help them improve their performance in terms of sustainable development.
In 2007, L’Oréal joined the CDP Supply Chain programme for greater transparency in the actions of its suppliers and to monitor the progress made in relation to L’Oréal’s objectives. In 2014, participation in the CDP was made compulsory by L’Oréal for all strategic suppliers, in order to measure and report their emissions, set targets for reducing these emissions and communicate their action plans to achieve this objective successfully. In 2021, 77% of these strategic suppliers completed the CDP questionnaires on climate, water and/or forest, there by providing valuable information and data on the actions of these suppliers and their impacts.
By participating in the EcoVadis assessment, L’Oréal compares its environmental and social policy with the expertise and the recommendations of external auditors qualified in the analysis of multi-sector risks. This is a useful rating for the continuous improvement of suppliers and it also contributes to the transparency of industry practices. This assessment is used to select suppliers by taking their environmental and social performance into consideration.
