In 2021, as in 2020, despite the context that prevented the organisation of in-person events, L’Oréal maintained its leadership through a number of Webinars (entitled “Spread the green vibes”) around the world in order to share its commitment to decarbonisation (Science-Based Targets), to introduce its L’Oréal for the Future programme more widely and with different objectives, but also to launch new actions and initiatives. More than 900 suppliers participated in these interactive exchanges in 2021.
4.3.1.2.1. Due diligence: selection and assessment of strategic suppliers
A/ Incorporating suppliers’ environmental and social performance into their selection and assessment
The Group has decided to use the environmental and social performance of its partners and suppliers as a key selection criterion. On this basis, the commitments under the Sharing Beauty With All programme, and now the L’Oréal for the Future programme, fit in with and follow on from those in the Group’s responsible purchasing policy initiated in 2002 with the L’Oréal Buy & Care programme.
L’Oréal has published a new sustainable Sourcing strategy, which builds on the previous strategy and focuses on four pillars: protection of Human Rights, preservation of the environment and resources, the integrity of business relationships and diversity and inclusion.
For each pillar, the commitments, targets, values and standards that L’Oréal shares with its suppliers are set out. These targets have been designed with external experts on the basis of recognised benchmarks. The tools for monitoring progress are also specified. This strategy provides a common framework for integrating these issues into the heart of the business model and taking action to achieve sustainable performance.
This diagram shows the four pillars of the group’s sustainable sourcing strategy
- PROTECTION OF HUMAN RIGHTS
- PRESERVATION OF THE ENVIRONMENT AND RESOURCES
- DIVERSITY AND INCLUSION
- INTEGRITY OF BUSINESS RELATIONSHIPS
The CSR commitments and performance of suppliers play a significant role in the choice of the Group’s business partners. In this respect, L’Oréal’s purchasing teams have defined five performance pillars that make it possible to assess and choose suppliers:
- quality;
- corporate social responsibility;
- innovation;
- the Supply Chain & Service; and
- competitiveness.
These pillars form the basis for daily performance and long-term strategies. A global scorecard has been deployed for all purchasing fields and makes it possible to accurately measure supplier results, in particular their compliance with their corporate social responsibility commitments which represent 20% of the final assessment.
The CSR strategy and action plans of the suppliers are fully integrated into their relationship with L’Oréal and are therefore discussed at strategic meetings (Business Reviews). As such, 627 business reviews were conducted in 2021. The evaluation of suppliers on the CSR pillar is based, in particular, on their compliance with their social audits, the implementation of Solidarity Sourcing projects and their results in the “CDP Supply Chain” programme for the reduction of CO2 emissions.
All the suppliers evaluated represent more than 85% of total direct purchases (raw materials, filling and packing components, subcontracting and electronic devices) and 10% of indirect purchases.
To give suppliers access to Group training tools designed to optimise their sustainable development policies, an online site dedicated to suppliers has been operational since 2016. It offers e-learning modules, videos, presentations on various topics such as, ethics, climate change, social audits, etc. Today, it is open to all the Group’s strategic suppliers and is being progressively expanded to all suppliers.
B/ Social audits: a rigorous and continuous improvement process
Since 2002, all of the Group’s suppliers have had to sign the Letter of Ethical Commitment. This letter sets out the suppliers’ requirements and commitments in accordance with the Group’s programmes and policies concerning ethics, corporate responsibility, Human Rights, and compliance.
In 2021, the Group released an updated version of this document, now entitled the “Mutual Ethical Commitment Letter”, which highlights the mutual commitment between L’Oréal and its suppliers. This document covers, in particular, the issues of Human Rights and working conditions. The letter is being rolled out gradually to all suppliers worldwide (see section 3.4. “Vigilance Plan” of this document).
The Group’s subcontractors and its suppliers of raw materials, packaging, production equipment and POS/promotional advertising items located in countries identified as being at risk according to Verisk Maplecroft are subject to a mandatory social audit (and prior to any inclusion on the supplier panel) aimed notably at ensuring compliance with applicable laws, Human Rights and labour law. This audit also covers employee safety and working conditions, and the way in which the impact of activities on the environment is taken into account.
The social audits are carried out on behalf of L’Oréal by independent external service providers.
The initial audits and re-audits three years later are financed by the Group. Follow-up audits that make it possible to verify the effectiveness of the action plans are paid for by the suppliers.