2021 UNIVERSAL REGISTRATION DOCUMENT

C/ Reducing emissions from product transport (Scope 3 as per the GHG Protocol)

L’Oréal has a long-standing commitment to reducing the greenhouse gas emissions generated by the transportation of its products. The Sharing Beauty With All programme initiated the reduction of greenhouse gas (GHG) emissions by 24% per unit sold per kilometre between 2011 and 2020.

As part of its new commitments, L’Oréal is going further and has set itself a target to reduce greenhouse gas emissions by 50% per finished product by 2030. The scope of consolidation covers the transportation flows of finished products from the production sites up to the first customer delivery point.

The commitments have been shared with the entire internal and external transport ecosystem: sustainable transportation was ranked as a priority and one of the major strategic components of the Group’s sustainability transformation. L’Oréal’s sustainable transport strategy is based on five pillars with particular emphasis on the heaviest contributors to the greenhouse gas emissions related to product transport-the use of air and road transport.

The sustainable transport strategy was built on five pillars:

1. The sustained and ongoing reduction in the use of air transport and the specific monitoring measures put in place

The reduction of air transport is a pillar of the distribution strategy. It is included in the budget targets of each Division and is integrated into our sourcing strategies; for example, by favouring local production.

In 2021, the Group transported 0.4% of its products by weight by air, representing 44.5% of its transportation-related carbon footprint. As a result, the total carbon footprint of air transport in 2021 was reduced by 7% compared to 2020.

The Group continues to capitalise on its earlier results, and continues to reduce the carbon footprint of air transport with a 7% reduction in 2021 compared to 2020 (-43% in 2020 compared to 2019).

For example:

• the commitment and collaboration of its supply chain, operations and sales teams made it possible for the L’Oréal Luxe Division to reduce its CO₂ emissions by 25% from 2020; and
• the programme deployed in China reduced the tonnage of the CO₂ emissions tied to the importation of finished products into the country by 10% compared to 2020.

The implementation and use of the online platform Global Freight Cockpit also provided precise monthly oversight of air transport activity, with visibility by site, by brand, and by goods flow line, leading to more informed and proactive decision‑making. Related information is shared with all of the Group’s Management Committees and stakeholders at performance review meetings or specific meetings focused on this subject.

2. The Greener Lanes programme dedicated to long-distance road transport

This programme implements solutions that will reduce CO₂ emissions on long-distance road flows with the highest emissions. In 2021, transportation of finished products by road represented 46.6% of the Group’s greenhouse gas emissions.

To cut these emissions, new solutions are being rolled out gradually for all flows between the Group’s factories, distribution centres and customers:

• the use of multimodal transport with, for example, the use of river or rail freight as an alternative to roads; and
• using energy with a lower environmental impact, such as biogas or biofuel vehicles, as an alternative to diesel.

Thus, the Group has identified priority transport lines, which requires a change to an alternative method of transport, one of the main ways to reduce greenhouse gas emissions.

These priority lines have been identified according to several factors, including: the distance traveled, the weight of the finished products transported, and their contribution to the CO₂ emissions related to road transport.

As a result, new solutions were deployed in 2021. For example:

• 29 multimodal, rail or maritime, transport lines or transport using alternative energy such as HVO (Hydrotreated Vegetable Oil) or LNG (Liquefied Natural Gas) have been put in place in Europe;
• in Brazil, a biomethane solution has been implemented between the Sao Paulo factory and the Rio De Janeiro distribution centre; and
• in Mexico, a rail flow has been set up between the subsidiary’s distribution centre and customers located in the North-West of the country.

3. The GLAM (Green Last Mile) programme targets the implementation of solutions that will reduce CO₂ emissions from urban transport.

The Group is also specifically addressing the environmental impact of urban transport with the goal of deploying lower‑impact solutions such as electric vehicles, cargo-bikes or vehicles running on natural gas.