As there were no eligible sales, there were no investments or operating expenses corresponding to activities related to sales that could be qualified as eligible. As a result, the various measures implemented to reduce the carbon footprint of the Group’s products have not been taken into account in the performance indicators relating to investments and operating expenses. The eligibility analysis for investments and operating expenses was therefore focused on “individual measures” to reduce the Group’s emissions, which explains why the eligible amounts are low, given the size of the Group.
The eligible investments identified mainly correspond to long‑term leases on buildings (activity 7.7 of the Delegated Act) as defined by IFRS 16 but without analysis of the technical criteria (in line with the position of the French National Institute of Statutory Auditors) as well as to the costs of constructing and renovating buildings to improve their energy efficiency and reduce greenhouse gas emissions. Eligible investments amounted to €404.8 million (including €374.8 million related to long-term leases on buildings without analysis of the technical criteria), compared to total investments of €1,971.1 million as defined by the Taxonomy Regulation.
These investments do not include the amount of €100 million allocated to Impact Investing funds intended to finance the regeneration of damaged natural ecosystems and the fight against climate change, in so far as investments in funds are not considered eligible expenditure under the Taxonomy Regulation.
Similarly, individual measures that incur operating expenses are limited in number and the amounts in question are not significant for the Group. Furthermore, L’Oréal concluded that its research and innovation programmes are not eligible because they do not fall within the scope of the activities currently covered by the Taxonomy (heavy chemicals). It should be noted that the Group’s annual budget for this category is significant: 1,029 million in 2021. L’Oréal’s research and innovation is focused on Green Sciences (as described in section 4.3.1.3.1. “Eco-designed products” of this document).
The financial information used to conduct this initial analysis was subject to additional reporting as part of the closing of the annual financial statements. It was reviewed and analysed jointly by the local and corporate teams, in order to ensure that it was consistent with consolidated sales, operating expenses, and investments for the financial year 2021. In particular, reporting of the investment data was subject to self‑assessment by the financial departments of the zones, with the consistency of the decisions regarding eligibility checked at corporate level.
The Group will adapt its methodology and eligibility analysis as the Taxonomy is implemented and in light of changes to the regulations, listed activities and technical review criteria.
Notwithstanding the data published by the Group in application of the Taxonomy Regulation, it should be noted that L’Oréal has, for many years, demonstrated a strong commitment to combating climate change. In 2009 L’Oréal committed to reducing the environmental footprint of its plants and distribution centres by 50% compared to 2005. Furthermore, L’Oréal placed sustainability at the heart of its strategy, with the launch of the Sharing Beauty With All programme in 2013, with 2020 targets focused on sustainable production, sustainable innovation, sustainable consumption and shared growth. This meant that, by 2020, CO2 emissions by factories and distribution centres had fallen by 81% in absolute terms compared to 2005, while production had increased by 29% over the same period.
The L’Oréal for the Future programme sets a new range of particularly ambitious targets for 2030, covering all the impacts associated with the Group’s value chain, including:
These long-standing commitments set L’Oréal apart in terms of the action it takes. For example, L’Oréal is the only company in the world, of nearly 6,000, to have received three “A” ratings, from the Carbon Disclosure Project for the sixth consecutive year, which is the highest score in three areas: efforts to combat climate change, forest preservation and sustainable water management.
The goals of the L’Oréal for the Future programme and the 2021 results are described in greater detail in this section (see also section 4.4. “L’Oréal for the Future: 2021 results” of this document, which reports on the progress made on the objectives, which is reported every year in this document).
In addition to transforming its economic model, the Group’s ambition is to help to solve some of the most pressing social and environmental challenges.
Conscious of the growing pressure on natural resources, the global waste crisis and the role of the circular economy could play in mitigating climate change, L’Oréal has decided to set up a global investment fund dedicated exclusively to the circular economy, called the Circular Innovation Fund (CIF).
This fund, which is jointly managed by two management companies from different countries (Cycle Capital Management and Demeter) to firmly embed its international approach, will bring together several co-investors and will have an estimated total value of between €150 million and €200 million over time. It aims to finance companies that are innovating in the areas of recycling, plastic waste management and materials from the bioeconomy.
Launched at the end of 2021, the fund will construct and deploy its investment portfolio from 2022. As the primary sponsor of the Circular Innovation Fund, L’Oréal will invest €50 million.
