2021 UNIVERSAL REGISTRATION DOCUMENT

1.3.1.5. L’Oréal’s investment policy responds to long-term objectives

L’Oréal is a growing manufacturing company thanks largely to two types of investments:

1.  scientific and manufacturing investments, which are described in several sections of this document (see sections 1.2.6. “The bet on research, safety and innovation” and 1.27. “Operations, expertise and services closer to consumers for lasting performance” of this document); and
2.  marketing investments, which are made on an ongoing basis and are inherent to the Group’s activities in the cosmetics industry. Indeed, winning new market share requires in-depth and situation-specific studies, as well as advertising and promotional expenses attuned not only to the familiarity of brands and their competitive position, but also to constant changes in consumers’ aspirations – something that the subsidiaries’ sales and marketing teams monitor constantly. Lastly, investments in point-of sale (POS) advertising materials ensure optimal presence for our brands in points of sale.

For reasons relating to strategy and competition, L’Oréal cannot therefore provide any systematic information on future investments.

In 2021, the Group’s investments totaled €1,075.20 million, or 3.3% of its sales. This level reflects the Group’s constant efforts to improve manufacturing efficiency, research and digital development performance and enhance brand value. Investment commitments in 2021 can be broken down as follows:

• production and the physical supply chain represented approximately 25% of total investments;
• marketing investments, including moulds, POS advertising materials and stores accounted for 31%;
• IT investments spread over all these categories represented 29% of total investments; and
• research and the head offices in the different countries accounted for the remainder.

See notes 3.2.2., 7.2. and 14.2. to the “Consolidated Financial Statements” for more details on these investments.

Despite their strategic nature, none of these investments taken individually is material enough at Group level to warrant more detailed disclosure.

1.3.2. Corporate Social Responsibility (CSR): shared and lasting growth

Priority to Human Capital

As our founder Eugène Schueller declared with conviction: “a company is not walls and machines but people, people and more people.”

The Group’s employees, who are strategic intangible assets, are one of the Group’s main competitive advantages in the long term, alongside its portfolio of brands, its governance, Research and Innovation, data and technology with its transformation to Beauty Tech.

The Group’s human and social project is based around two priorities: developing the individual performance of all its employees on the one hand, and social performance on the other, which is illustrated by the global Share & Care programme.

L’Oréal has always targeted constant, sustainable growth. Since its very beginnings, the Group has been committed to developing its presence in all regions of the world by applying the fundamental rules of a good corporate citizen. The products offered to consumers meet the highest quality standards; the Group’s social commitments are the same in all its subsidiaries; all production centres comply with the same rules aimed at reducing their environmental footprint. Social audits are conducted on the suppliers of the plants and distribution centres.

As far as its resources allow, each subsidiary takes part in the financing of sponsorship initiatives in keeping with the key pillars of the Group’s commitment to philanthropy: Research, women and the environment. Above and beyond its solid long-term economic performances, L’Oréal seeks to be exemplary and sets itself demanding standards in order to limit its environmental footprint.

More consumers and more growth, for L’Oréal, necessarily imply more responsibilities. The Group intends to develop its activity with the utmost respect for the planet, and to improve its social and economic impact on the life of the people and communities that surround it. It is for this reason that, in 2013, in the context of its Sharing Beauty with All programme, and in 2020 with the L’Oréal for the Future programme, L’Oréal set itself ambitious Sustainable Development Goals that were formalised and structured at a strategic level.