2021 UNIVERSAL REGISTRATION DOCUMENT

3. Risk factors and control environment

Business risks/Product quality and safety
Risk identification Risk management
Placing a product on the market that does not meet the safety requirements, or consumer or stakeholder questions about the quality and safety of L’Oréal products, whether based on proven facts or not, whether or not they are related to the use or misuse of a product, could affect consumer confidence, the Group’s sales and, more generally, its financial position, particularly if claims are made or products recalled.

Consumer safety is an absolute priority for L’Oréal: assessing safety is central to any new product development process and a prerequisite before any new product can be brought to the market. The principles governing the Group’s quality and safety policy are:

  • satisfaction of customer needs;
  • compliance with safety requirements and laws;
  • the maintenance of standards and regular updates of safety assessment approaches; and
  • product quality and conformity across the supply chain.

The Worldwide Safety Evaluation Department specifically evaluates the safety of raw materials and finished products. It establishes the toxicological profile of the ingredients used and the tolerance of the formulas before they are launched on the market. The same safety standards are applied worldwide to ensure identical quality across the globe.

L’Oréal goes one step further in safety assessments by monitoring the potential adverse effects that may arise once the product is on the market through its international cosmeto-vigilance network in order to take the appropriate corrective measures if necessary (see “Product quality and safety: a priority” in section 4.3.1.3.2.).

In terms of questions that civil society may ask regarding certain substances and their effects on health and the environment, L’Oréal’s position can be summarised in three points:

  • vigilance with regard to any relevant new scientific data;
  • cooperation with the relevant authorities; and
  • precaution leading to the substitution of ingredients in the event of a proven or strongly suspected risk.

L’Oréal relies on its scientific teams to answer consumers’ questions about the safety of its products, primarily through its Inside our Products platform that has been online since 2019.

Finally, production quality standards define rules governing the quality of products, for all stages from creation to production and distribution. Almost all factories are ISO 9001 certified for their production and follow the Best Manufacturing Practices in accordance with the ISO 22716 standard. In the case of production subcontracting, the rules governing the choice of the subcontractor and its production follow the same principles. The subcontracting quality charter picks up these requirements, compliance with which is assessed during audits and the plan regularly strengthened to ensure appropriate control of our partners.
Business risks/Safety of people and property
Risk identification Risk management

As a global group operating in 80 countries and across more than 400 sites (excluding stores and point-of-sales outlets of distributor customers), the Group is exposed to a variety of risks inherent to the environment in which it performs its activities (war, geopolitical, climate, health/pandemic, economic and social risks, malicious acts, climate and natural disasters). The direct and indirect consequences of these risks may adversely affect people and the assets of the Group (tangible and intangible).

 In order to permanently protect these resources (or Group assets) against malicious acts, the Security Department helps in the preventive implementation of technical, HR and operational procedures to limit the residual risk of malicious damage and support the Group’s international development in all countries concerned. For this purpose, the Security Department:
  • has implemented a watch and evaluation of the state of security in the countries in which the Group is active;
  • conducts evaluation updates in the countries in which it is present;
  • creates country security sheets for international travellers;
  • defines the security standards and minimum protection to be implemented to protect the Group’s activities; and
  • coordinates, with related key players, the security crisis management procedure which is tasked with preventing, managing and limiting the consequences of undesirable events on the Group.
The security measures are regularly adjusted and reassessed based on the local situation and the level of exposure of employees and sites.