Organizational Strategy - Sustainable Development - L'Oréal

1 L’oréaL - GrI DaTa SHEETS 2011 

I. CONTENTS 

1.1. 

Statement from the most senior decision-maker of the 

organization (e.g., CEo, chair, or equivalent senior 

position) about the relevance of sustainability to the 

organization and its strategy. 

II. STATE OF THE L’ORéAL’S POLICY IN 2011 

1.1 

Organizational Strategy 

FOR SUSTAINABLE, RESPONSIBLE AND INCLUSIVE GROWTH 

In a world facing an increasing number of challenges—climatic, environmental and societal—expectations with regard to companies are 

extremely high. But what could be seen as a constraint is in fact a remarkable source of inspiration, creativity and competitiveness. our 

approach to sustainable growth is deliberate and carefully considered. our ethical values are the basis of coherent policies in terms of 

responsible innovation, the environment, social and societal responsibility and philanthropy. We are particularly proud to have supported the 

principles of the United Nations Global Compact since 2003, and to be renewing our commitment again this year through concrete projects 

that are constantly progressing. In this way, we shall have solid foundations on which to build sustainable, responsible and inclusive growth. 

First of all, sustainable growth, because hundreds of thousands of people all over the world are directly or indirectly dependent on the prosperity 

of our group. Here the key is our ambition to win over a billion new consumers. It is based on our strategy for universalising beauty that respects the 

diversity of the world. It is expressed in the form of products that are tailored to different needs, cultures and beauty traditions, and it also reflects 

the cultural richness of our teams. With this strategy, we are targeting solid, sustainable growth. 

Secondly, responsible growth. We are all convinced that a company’s behaviour is just as important as its performance, and L’oréal’s ambition 

is thus to be one of the most exemplary companies in terms of ethics. 

More than any other, the world leader in beauty has a duty to help preserve the beauty of the planet. We long ago began reducing the 

environmental impact of all stages in the life cycle of our products, with truly sustainable consumption as the goal. We are already well on the 

way to achieving the highly ambitious objectives we have set ourselves in terms of reducing our environmental footprint, while our business 

continues to grow. 

and lastly inclusive growth, because experience has shown that the healthy state of our ecosystem and the company’s performance 

are inseparably linked. For many years now, L’oréal has been considerably boosting its societal commitments. Through the initiatives of 

its Foundation, its brands, “Solidarity Sourcing” and its subsidiaries, the group seeks to share its success and thus contribute to the greater 

well-being of the surrounding populations. 

If we are to get through another century successfully, we need to continue taking action on three fronts. Firstly, being useful through our 

business, which over a hundred years has given meaning to our action because cosmetics are linked to the identity of all individuals, 

enabling them to fully express their personality, develop self-confidence, connect with others and find fulfilment. Secondly, aiming for 

the long-term, because we want all our actions to be lasting, so that we never sacrifice the future for the present; and lastly, committing 

ourselves, through our innovative force, to an ongoing effort of anticipation and progress that are both concrete and measurable. 

The world’s great challenges are collective issues in which each one of us has a role to play. our global presence gives us an amazing 

capability for action and mobilisation. By facilitating access to products that contribute to the quality of life, protecting the natural capital 

of our planet and helping the communities around us, we create value that benefits everyone. 

> For further details, see page 2 of the Sustainable Development report 2011. 

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1.2 

Description of key impacts, risks, and opportunities. 

Jean-Paul Agon, Chairman and Chief Executive Officer


1.2 

The group can embrace the future with confidence, shored up by a particularly healthy balance sheet and solid financial position. With 

its faithful shareholders, vigilant governance and stable board of directors, L’oréal has always aimed for sustainable, dynamic growth. 

Built on a strong economic model, L’oréal strives to be exemplary, reaching for the very highest standards in order to limit its ecological 

footprint. Moreover, to invent new sustainable consumption models, the group relentlessly seeks to boost its creativity. 

at L’oréal, corporate responsibility is an approach embedded in the history of the group. once again, 2011 was a year of commitment and 

progress as regards sustainable development. Sara ravella, Executive Vice-President, Communication, Sustainability and Public affairs, 

looks back over the progress and achievements of the past year. 

AN APPROACH INVOLVING PROGRESS AT EVERY STAGE 

If 2011 had to be summarised in two words, it would be the year of “sustainable innovation”. We innovated in every field, setting ourselves 

ambitious goals in terms of respect for the environment and for all stakeholders, and economic support for the communities around us. This 

notion shows our commitment to innovating right through the entire life cycle of products, in order to offer cosmetics tailored to a diversity 

of aspirations and purchasing powers while respecting the environment. In other words, sustainable innovation has to be applied from the 

choice of ingredients used in formulations to the elimination of packaging, including their industrial production, their marketing promotion 

and their distribution to consumers. as you will see in this new report, all our divisions and teams have worked to that end. among many 

examples, you will learn about the paper and cardboard industry’s ambitious forest certification policy pursued by the Packaging teams; 

awareness-raising in Marketing staff of the principles of environmentally friendly design; the reformulation of the Ultra Doux shampoo 

range and the partnership between L’oréal and Carrefour aimed at educating consumers about responsible consumption issues, and 

the publication of a set of international ethics guidelines designed for all staff dealing with suppliers. 

also in our relations with suppliers, we have taken another step forward by initiating the “Solidarity Sourcing” programme aimed at 

including small, economically vulnerable suppliers in the socio-economic circuit. and these are just some of a whole range of examples 

to be discovered in the report. 

SUBSTANTIAL ADVANCES IN PURSUING THE GOALS SET FOR 2015 

In 2005, L’oréal committed to a 50% reduction in Co 2 , water consumption and waste production by 2015. Thanks to the operations teams 

we have already reduced our Co 2 emissions by 29.8%, water consumption by 22.6% and waste production by 24.2% per finished product. 

These results are also due to sustainable innovation: from plants to distribution centres, all our sites have rallied around to find creative, 

effective solutions. L’oréal Mexico for example has reduced its Co 2 emissions by 60% by using wind turbines, while in France, after six years’ 

research and development, the Chimex plant has set up phytoremediation gardens unique in their kind to treat wastewater effectively. 

A LONG-TERM AMBITION 

our main goal for 2012 and the years to come is to maintain and extend our field of action. In every area, we must continue to transform 

environmental and societal constraints into opportunities to stand out: not only in research and Production of course, but also in Marketing, 

Human resources and Communication. 

Far from being just a trend, sustainable development encourages us to integrate new ways of working into all our businesses. For L’oréal, 

it is thus an amazing lever in terms of innovation and progress, and represents a vast field of action so that the group can prove its ability 

to be a constant pioneer. 

Sara Ravella, Executive Vice-President, Communication, Sustainability and Public Affairs. 

> For further details, go to 

• Page 3 of the Sustainable Development report 2011. 

• research issues on page 11 of the Sustainable Development report 2011. 

• Environment issues on page 19 of the Sustainable Development report 2011. 

• Social and Societal responsibility issues on page 29 of the Sustainable Development report 2011. 

• Solidarity issues on page 39 of the Sustainable Development report 2011. 

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2 L’OréaL - GrI DaTa SHEETS 2011 

I. CONTENTS 

2.1 

Name of the organization. 

2.2 

Primary brands, products, and/or services. 

The reporting organization should indicate the nature 

of its role in providing these products and services, 

and the degree to which it utilizes outsourcing. 

2.3 

Operational structure of the organization, including 

main divisions, operating companies, subsidiaries, 

and joint ventures. 

2.4 

Location of organization’s headquarters. 

2.5 

Number of countries where the organization operates, 

and names of countries with either major operations 

or that are specifically relevant to the sustainability 

issues covered in the report. 

2.6 

Nature of ownership and legal form. 

2.7 

Markets served (including geographic breakdown, 

sectors served, and types of customers/beneficiaries). 

II. STATE OF THE L’ORÉAL’S POLICY IN 2011 

2.1 

L’Oréal. 

2.2 

Profile of the organization 

L’Oréal has a portfolio of 27 international brands, each of which has a turnover in excess of fifty million euros. The group also owns 50% of 

Galderma, one of the largest dermatological laboratories in the world. 

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2.8 

Scale of the reporting organization, including: 

• Number of employees; 

• Net sales (for private sector organizations) or net 

revenues (for public sector organizations); 

• Total capitalization broken down in terms of debt 

and equity (for private sector organizations); 

• and quantity of products or services provided. 

2.9 

Significant changes during the reporting period 

regarding size, structure, or ownership including: 

• The location of, or changes in operations, including 

facility openings, closings, and expansions; 

• Changes in the share capital structure and other 

capital formation, maintenance, and alteration 

operations (for private sector organizations). 

2.10 

awards received in the reporting period.


List of group brands: 

L’OréaL PrOfessiOnneL 

Kerastase 

redKen 

Matrix 

L’OréaL Paris 

Garnier 

MaybeLLine new yOrK 

sOftsheen.CarsOn 

essie 

2.3 

LanCôMe 

GiOrGiO arMani 

yves saint Laurent 

biOtherM 

KiehL’s 

raLPh Lauren 

shu ueMura 

dieseL 

CaChareL 

2/7 

heLena rubinstein 

CLarisOniC 

viKtOr & rOLf 

viChy 

La rOChe-POsay 

sKinCeutiCaLs 

rOGer&GaLLet 

innéOv 

the bOdy shOP 

With a presence in 130 countries, over the 100 years that it has been in existence, the group has managed to attract close to one billion 

consumers, or approximately 15% of the population of the planet. With the acceleration of globalisation, L’Oréal’s task has grown: using 

the strength of its international positions and its power to innovate, the group’s ambition is to win one billion new consumers over the next 

10 to 15 years. 

L’Oréal has its registered office in France and operates a commercial business specific to France. at the same time, it operates as a holding 

company and a strategic, scientific and industrial coordination company for the group on a global basis. Most of the subsidiaries have 

a development and marketing role for products manufactured by group factories. L’Oréal holds all the capital in the great majority of its 

subsidiaries. 

L’Oréal’s registered office is in France. It operates a commercial business specific to France. at the same time, L’Oréal operates as a holding 

company and a strategic, scientific and industrial coordination company for the group on a global basis. Most of the subsidiaries have 

a development and marketing role for products manufactured by group factories. L’Oréal holds all the capital in the great majority of its 

subsidiaries. 

The cosmetics branch which makes up the major part of group activity (93% of turnover in 2010) has four operating divisions, each with 

its own distribution network: 

• L’Oréal Luxe brings together a unique group of prestige brands. The distribution of these brands is selective and shared between 

department stores, perfumeries, travel outlets and also owned boutiques and electronic commerce sites. Brands in the De Luxe Products 

Division: LanCôMe, GiOrGiO arMani, yves saint Laurent, biOtherM, KiehL’s, raLPh Lauren, shu ueMura, CaChareL, heLena rubinstein, dieseL et yue sai. 

• The Consumer Products Division offers the best in cosmetic innovation at affordable prices in all major distribution channels (hypermarkets, 

supermarkets, drugstores and traditional shops) on all continents. Consumer Products Division brands: L’OréaL Paris, Garnier, MaybeLLine, 

sOftsheen.CarsOn. 

• The Professional Products Division which markets products used, but also sold, in hairdressing salons. a favoured partner of hairdressers 

the world over, it supports them in all facets of their development and offers them high-level training. Its portfolio of differentiated brands 

allows it to meet requirements from all types of salon. Professional Product Division brands: L’OréaL PrOfessiOnneL, Kérastase, redKen, Matrix. 

• The active Cosmetics Division distributes its products in all health networks throughout the world, mainly in pharmacies, drugstores, 

medical spas and, in some countries, via dermatologists. Its unique portfolio of brands, covering all consumer health and beauty needs 

and its privileged partnership with health professionals makes this division the world number one in derma-cosmetics. 

Brands in the active Cosmetics Division: viChy, La rOChe-POsay, sKinCeutiCaLs, innéOv, rOGer & GaLLet. 

The Body Shop branch represented approximately 4% of consolidated turnover in 2010. Created in 1976 in Great Britain by Dame anita 

roddick, the bOdy shOP is famous for its strong ethical commitment and its products based on natural ingredients. More than 65% of its 

products contain ingredients originating from its “Community Fair Trade programme”. The brand is present in upwards of 50 countries and 

distributes its products and expresses its values through a network of exclusive boutiques but also in complementary distribution channels: 

sales via the Internet and in airport boutiques. 

The Dermatology Branch makes up approximately 3% of group turnover (L’Oréal share). Comprising GaLderMa, a joint venture between 

L’Oréal and Nestlé created 30 years ago, this branch is dedicated exclusively to dermatology. Growing steadily over a number of years, 

the Galderma laboratory passed the one billion euro mark in 2010 and has established itself as a leader in dermatology. 

Several specialist departments provide expertise and support to the operating branches and divisions: 

• research and Innovation Department, responsible for basic and applied research. 

• Operations Department, responsible for the coordination of production and the supply chain. 

• Human resources department, responsible for recruitment, training, the motivation of talent and the coordination of social policy. 

• The administration and Finance department, responsible for group financial policy, management and consolidation, information 

systems and legal and fiscal coordination. 

• Communications department, responsible for coordinating corporate communications, coordinating communications from the 

divisions and brands, and sustainable development.


2.4 

L’Oréal would appreciate your opinion on its performance and its reports in the area of sustainable development. Please send your 

comments, questions and suggestions to: 

sustainabledevelopment@loreal.com 

• Head Office: 41, rue Martre 92117 Clichy – France Tel.: +33 1 47 56 70 00 Fax: +33 1 47 56 86 42 

• registered Office: 14, rue royale 75008 Paris – France www.loreal.com 

2.5 

L’Oréal has subsidiaries in 68 countries with 60% of its turnover being achieved outside western Europe. World growth in the cosmetics market 

has led the group to develop its activities in countries in the “New Markets” zone, representing 37% of cosmetics sales. apart from the currency 

risks mentioned in the “Covering the exchange risk” document, pages 132 to 134 of the reference document and paragraph 2.3.7, political or 

economic disturbances in countries where the group achieves a significant part of its turnover, could affect its business. 

However, its highly globalised presence also favours a balance of sales and reward between countries and geographical areas. However, in 

periods of severe economic slowdown, growth in group turnover could be affected. 

> For more details, see the section “Products accessible to the greatest number” on page 8 of the 2011 Sustainable Development report. 

41 PLANTS WORLDWIDE 

2.6 

NORTH 

AMERICA 

9 

LATIN 

AMERICA 

4 

L’Oréal 

Public company (S.a.) with a capital of 120,596,816.40 euros 

registered in Paris under number: 632 012 100 

Head office: 41 rue Martre 92117 Clichy Cedex 

registered office: 14 rue royale 75008 Paris - France 

3/7 

WESTERN 

EUROPE 

18 

AFRICA – 

MIDDLE-EAST 

3 

EASTERN 

EUROPE 

2 

ASIA, 

PACIFIC 

5 

L’Oréal has its registered office in France and operates a commercial business specific to France. at the same time, L’Oréal operates as a 

holding company and a strategic, scientific and industrial coordination company for the group on a global basis. Most of the subsidiaries 

have a development and marketing role for products manufactured by group factories. L’Oréal holds all the capital in the great majority of 

its subsidiaries.


DIVISION OF THE CAPITAL AS AT 31 DECEMBER 2011 

Madame Bettencourt and her family 

Nestlé 

The public 

(1) As required by law, acquired shares have no voting rights. 

2.7 

38.2% 

1.4% 

29.6% 

30.8% 

acquired shares (1) 

For more than a hundred years, L’Oréal has been pushing back the frontiers of science to create beauty and offer men and women throughout the 

world the best in cosmetics in terms of quality, effectiveness and safety. Give everyone access to beauty by offering products responding to needs, 

culture and expectations in their infinite diversity. This is what L’Oréal is really about. 

1/ A HISTORICAL PRESENCE IN DEVELOPED MARKETS 

L’Oréal is present in 130 countries on five continents. Founded in France in 1909, the group developed rapidly in western Europe. In 2010, it achieved 

39.6% of its cosmetic sales in this area, confirming the importance of this zone in overall turnover. 

L’Oréal has had a foothold in North america since the first half of the twentieth century. Initially, the group entrusted the distribution of its products 

to distribution companies, based around an exclusive agent, Cosmair, in 1953. Following the purchase of Cosmair in 1994, it is as a subsidiary that 

the group has developed on the North american continent. The acquisition of brands such as MaybeLLine (1996) and Matrix (2000) has permanently 

anchored the group in North america. In 2010, sales increased by 4.1% to reach 23.6% of global cosmetics sales. 

Present in Japan for more than 30 years, the L’Oréal group has developed its penetration by selecting important brands for this very specific market: 

Kérastase in hairdressing salons, LanCôMe in the luxe products and MaybeLLine in the mass market. 

Despite the importance of the developed markets, their relative share of turnover for the group has fallen year on year in favour of the New Markets. 

2/ RAPID DEVELOPMENT IN THE NEW MARKETS 

In the 1970s, the Latin american zone was developed with a multi-divisional organization that the group would reproduce in the major regions of 

the world. 

The 1990s saw the opening of New Markets with the fall of the Berlin Wall, allowing its brands access to east European markets. 

L’Oréal was the first foreign group to obtain authorisation from the Indian government in 1994 for the creation of a 100% owned subsidiary. 

In 1997, the group created a large multi-divisional zone in asia under Jean-Paul agon, which opened new subsidiaries, in particular in China, where 

L’Oréal holds 100% of the capital in its business. 

africa and the Middle East where the group had a small presence is the new frontier for development in the New Markets: the number of subsidiaries 

has grown from 5 to 9 over the last three years. 

The middle of the last decade marked a turning point: strong acceleration in the development of the New Markets has resulted in the shifting of 

the centre of gravity of the economic world. 

In total, the proportion of turnover achieved by the group in the New Markets was 15.5% in 1995, 21.7% in 2006 and 36.8% in 2010. This growth is set 

to continue. 

3/ A DESIRE FOR SUSTAINABLE AND SHARED GROWTH 

Careful to look after its future and put in place bases for continuing growth, L’Oréal is seeking to develop its presence in the New Markets by 

applying the fundamental rules of good corporate citizenship: 

• The products offered to consumers must meet the highest quality standards. 

• The social policy followed by subsidiaries in the New Markets is the same as for all group entities. 

• all its production sites follow the same rules for reducing discharges and its environmental footprint. Social audits are carried out at all suppliers 

to its factories. 

• Every subsidiary participates, so far as it is able, in the main sponsorship programmes of the L’Oréal Foundation, such as “For Women in Science”, 

“Hairdressers against aIDS”. This overall approach is consistent with its ambition to be world leader in cosmetics products: making the world more 

beautiful. 

4/ VAST POTENTIAL FOR DEVELOPMENT 

apart from the major so-called BrIMC countries (Brazil, russia, India, Mexico and China), L’Oréal has also identified “growth markets”: Poland, 

Ukraine, argentina, Colombia, Indonesia, Thailand, Vietnam, the Philippines, Turkey, Egypt, Saudi arabia, Pakistan, Kazakhstan, South africa, Nigeria. 

In each of these countries, the consumption of cosmetic products per inhabitant is 10 to 20 times less than in mature markets. Every year, several 

million inhabitants access levels of income that allow them to become part of the “middle classes” and enable them to become consumers of 

modern cosmetic products. 

It marketing teams listen to these new consumers and it laboratories on every continent study their specific features. The group’s innovation policy 

is based on accessibility and the adaptation of products to the beauty practices and rituals of all men and women in their infinite diversity. These 

are the bases of the universalisation of beauty which is it strategy for succeeding in these New Markets. 

4/7


5 / L’ORÉAL IS PRESENT IN 130 THE COUNTRIES THAT MAKE UP SEVEN MAJOR BUSINESS ZONES 

• North america 

5.5% growth in 2011 (1) 

• Western Europe 

0.6% growth in 2011 (1) 

• asia Pacific 

13.0% growth in 2011 (1) 

• Eastern Europe 

2.8% decline in 2011 (1) 

• Latin america 

13.2% growth in 2011 (1) 

• africa, Middle East 

10.5% growth in 2011 (1) 

• New Markets 

- L’Oréal in africa 

In December 2011, L’Oréal opened its new subsidiary in Kenya. Situated in Nairobi, this new location will be the base for developing group business 

in East africa in Uganda, Tanzania, rwanda, Burundi and Ethiopia. With the opening of subsidiaries in Kenya and Nigeria, the group confirms its 

belief in the potential for growth in africa. 

(1) Turnover evolution on a comparable base 

6/ THE FIVE BEST-PERFORMING COUNTRIES 

China 

The market is very dynamic and the penetration of its brands is increasing, both in mainstream distribution with MaybeLLine new yOrK and Garnier and 

also LanCôMe in selective distribution which has a presence in a growing number of cities. 

Mexico 

With growth of 11.6% (1) , L’Oréal Mexico had a very good year in 2011, marked by the breakthrough of MaybeLLine new yOrK, alongside the mainstays of 

L’OréaL Paris and Garnier. activity is very strong in the active Cosmetics Division, in particular with viChy in facial care and La rOChe-POsay in sun care. 

United States 

L’Oréal grew more quickly than the market with an increase of 5.6% (1) . L’Oréal Luxe, Consumer Products and active Cosmetics Divisions showed 

strong growth. It was a very good year for MaybeLLine new yOrK, gains in market share for Garnier and the successful launch of essie in the mass market. 

France 

With 2.6% growth (1) , L’Oréal improved its market shares in all divisions. This year, the honour goes to Kérastase, L’OréaL Paris, KiehL’s, and dieseL which had 

great success with its new perfume, Loverdose. sKinCeutiCaLs and rOGer&GaLLet confirmed their role as growth-driving brands. 

Turkey 

L’Oréal Turkey saw strong growth of 27.8% (1) , from the Consumer Products Division and in particular remarkable penetration by MaybeLLine new yOrK. 

2011 was also a good year for perfumes with three major launches: armani Code Sport, Loverdose and Fuel For Life Denim. 

(1) Turnover evolution on a comparable base 

2.8 

• Number of employees: 68,886. 

• Consolidated turnover: 20.343 billion euros. 

• Net profit (other than non-recurring items, excluding minority interests): 2.583 billion euros. 

• Consolidated profit and loss account: from operating profit to net profit excluding non-recurring items. 

5/7


In €M 2010 2011 

Operating profit 3,056.9 3,292.6 

Products and financial charges excluding dividends received -35.6 -25.2 

Sanofi dividends 283.8 295.6 

Profit before tax, excluding non-recurring items 3,305.2 3,563.1 

Tax on profits, excluding non-recurring items -931.9 -977.6 

Minority interests -2.3 -2.5 

Group net profit (excluding non-recurring items)* 2,370.9 2,582.9 

Net profit per share** (e) 4.01 4.32 

Group share of net profit 2,239.7 2,438.4 

Diluted earnings per share after minority interests (e) 3.79 4.08 

Diluted average number of shares 591,392,449 597,633,103 

* Net profit, excluding non-recurring items, also excludes asset depreciation, restructuring costs, the effects of taxes and minority interests. 

** group share per diluted share, excluding non-recurring items. 

• The total cost of net financial indebtedness fell strongly again this year and stands at 25.2 million euros. This new reduction results in a considerable 

lessening of its average debt. 

• Dividends from Sanofi rose to 295.6 million euros, up by 4.2%. 

• Tax on profits, excluding non-recurring items rose to 977.6 million euros, i.e. 27.4%, slightly down on 2010. 

• The group share of net profit excluding non-recurrent items amounted to 2.5829 billion euros, up by 8.9%. 

• The net profit per share, at €4.32, was up by 7.8%. 

For 2011, after taking non-recurring items into account, i.e. a charge, net of taxes amounting to 144 million euros, the net profit is 2.4384 billion euros, 

up by 8.9%. 

CASH FLOW FROM OPERATIONS, BALANCE SHEET AND DEBT 

The cash flow from operations was 3.2262 billion euros. 

The need for working capital increased to 322 million, following two years when it had reduced in absolute terms. It is a return to a situation more in 

line with changes to group business. 

Investments, at 865.7 million euros, amounted to 4.3% of turnover. 

after paying a dividend and acquisitions (Q-MED and Clarisonic), the group posted a net cash surplus of 504 million euros. 

The balance sheet structure is very solid since, at the end of 2011, own capital made up 65.7% of the assets. The strengthening of own capital over 

2010 results mainly from the profit allocated to reserves and the net re-valuation of Sanofi securities, valued at market price. 

6/7


2.9 

SHARE CAPITAL 

The Board of Directors recorded that the amount of the share capital as at 31 December 2011 was 602,984,082 shares with a nominal value of €0.20, 

i.e. a total of 120,596,816.40 euros. 

NOTABLE EVENTS IN THE PERIOD 1/10/11 TO 31/12/11 

On 10 November, L’Oréal USa and Pacific Bioscience Laboratories Inc. (PBL) signed a merger agreement. Started in 2001, this company has 

developed a patented technology giving rise to a range of products marketed under the Clarisonic brand and which has seen great success. The 

Clarisonic brand is the dynamic market leader in skin care appliances and technology. This acquisition was finalised on 15 December 2011. In 2010, 

PBL’s (Pacific Bioscience Laboratories Inc.) turnover was 105 million dollars. 

On December 6, L’Oréal opened its new subsidiary in Kenya. Based in Nairobi, this new location will be the base for developing group business in 

East africa in Uganda, Tanzania, rwanda, Burundi and Ethiopia. With the opening of subsidiaries in Kenya and Nigeria, the L’Oréal group confirms 

its belief in the potential for growth in africa. 

On 19 December, L’Oréal, the State of rio and the municipality of rio de Janeiro signed a protocol of intent for the construction of a research and 

Innovation Centre close to the rio de Janeiro University Technology Park. This investment, of the order of 30 million euros, will allow the intensification 

of the development of innovative products adapted for the Brazilian and Latin-american markets but also suitable for marketing elsewhere in the 

world. 

2.10 

AWARDS AND RECOGNITIONS OBTAINED DURING THE REPORTING PERIOD 

> In 2011, for the 5 th consecutive year, L’Oréal has been ranked among the top 100 global firms committed to sustainable development by Corporate 

Knights, a Global responsible investment network. 

> In 2011, L’Oréal was listed in the major sustainable development indices, namely the Dow Jones Sustainability Index (for Europe), FTSE4Good, aSPI 

Eurozone and Ethibel (label “Pioneer and Excellence”). 

> In 2011, L’Oréal stood as number one in its sector in the annual Climate Counts survey that evaluates companies managing their climate impacts. 

> L’Oréal was among the world’s top 100 companies with regard to sustainable development in the 2011 “Newsweek Green ranking”. 

> For the third time, L’Oréal is acclaimed by Ethisphère Institute as one of the “world’s most ethical companies” in 2012. 

> In 2011, L’Oréal received special recognition from Ethical Corporation for ethical excellence and transparency in its corporate social responsibility 

and sustainable development communication. 

> In the 2011 ranking of the Chinese academy of Social Sciences (CaSS), L’Oréal was rated as one of the 100 most sustainable foreign companies 

operating in China. 

> In 2011, L’Oréal was ranked “Leader in the Personal and Household Goods Sector” by the Forest Footprint Disclosure. The latter measures the 

impact of companies’ business activities on deforestation. 

> WWF Palm Oil Buyers’ Scorecard ranked L’Oréal as best in class for its use of sustainably sourced palm oil in 2011. 

7/7


I. CONTENTS 

3.1 

reporting period (e.g., fiscal/calendar year) 

for information provided. 

3.2 

Date of the most recent report (if any). 

3.3 

reporting cycle (annual, biennial, etc.). 

3.4 

Contact point for questions regarding the report 

or its contents. 

3.5 

Process for defining report content, including: 

• determining materiality; 

• prioritising topics within the report; 

• and identifying stakeholders the organization expects 

to use in the report. 

3.6 

Boundary of the report (e.g., countries, divisions, 

subsidiaries, leased facilities, joint ventures, suppliers). 

3.7 

State any specific limitations on the scope or boundary 

of the report. 

I 

3.8 

Basis for reporting on joint ventures, subsidiaries, leased 

facilities, outsourced operations, and other entities 

that can significantly affect comparability from period 

to period and/or between organizations. 


3.1 

Report Parameters 

Each year, L’oréal publishes a Sustainable Development report. The examination of current practices and the study of the 

recommendations emanating from international institutions and specialised organizations such as the United Nations, the oECD, the 

European Commission and the WBCSD helped prepare this report. For its expert report (Expert data sheets can be downloaded from 

the www.sustainabledevelopment.loreal.com site), the group followed the Global reporting Initiative guidelines (GrI 3) to analyse its 

sustainable development performance. 

1/18 

3.9 

Data measurement techniques and the bases of 

calculations, including assumptions and techniques 

underlying estimations applied to the compilation 

of the Indicators and other information in the report. 

3.10 

Explanation of the effect of any re-statements of 

information provided in earlier reports, and the reasons 

for such re-statement (e.g., mergers/ acquisitions, 

change of base years/periods, nature of business, 

measurement methods). 

3.11 

Significant changes from previous reporting periods 

in the scope, boundary, or measurement methods 

applied in the report. 

3.12 

Table identifying the location of the Standard 

Disclosures in the report. 

3.13 

Policy and current practice with regard to seeking 

external assurance for the report. If not included in 

the assurance report accompanying the sustainability 

report, explain the scope and basis of any external 

assurance provided. also explain the relationship 

between the reporting organization and the assurance 

provider(s).


SCOPE OF APPLICATION, BOUNDARIES AND BASES OF THE REPORT 

This report covers all of the L’oréal group’s activity from January to December 2011. 

SCOPE OF APPLICATION OF THE DATA PERTAINING TO: 

• the environment, health and safety; 

• employment affairs. 

There were no major activity changes that significantly affected the comparison of data in this report with those of the preceding report 

or between organizations. 

> For more information, refer to the GrI index sheet – assurance reports. 

3.2 

The preceding L’oréal report on sustainable development was published in June 2011. 

3.3 

This report covers the L’oréal group activity in its entirety from January to December 2011. 

3.4 

L’oréal appreciates your opinion on its sustainable development performance and reports. Please send your comments, questions or 

suggestions to: sustainabledevelopment@loreal.com. 

3.5 3.6 3.7 3.8 3.9 3.10 3.11 

Global response: 

THE STRATEGY AND SUSTAINABLE DEVELOPMENT COMMITTEE 

This Committee clarifies, through its analyses, the strategic orientations submitted to the Board, and monitors the implementation and 

advancement of significant operations in progress. It ensures that there is overall financial balance. It reviews the main lines of development, 

options and strategic projects presented by the General Management, together with their economic and financial consequences, 

acquisition opportunities, and financial transactions that may significantly change the balance sheet structure. along with the constant 

and close review of the group’s business activity and the analysis of markets and competitors, the Committee monitored the economic 

conditions during emergence from the crisis, after having noted the strategic decisions made by the general management at a very early 

stage to tackle the difficult economic environment. Furthermore, the Committee was called on to study projected acquisitions. 

REPORTING METHODOLOGY 

Each year, L’oréal publishes a report on sustainable development. 

To prepare this report, L’oréal examines current practices and studies the recommendations emanating from international institutions and 

specialised organizations such as the United Nations, the oECD, the European Commission and the WBCSD. The sustainable development 

report writing guidelines, which are published by the Global reporting Initiative (GrI), also helped the group analyse its sustainable 

development performance. 

To make all annual publications as complementary as possible, the Sustainable Development report is now issued at the same time as 

annual report and the reference Document, i.e., each year in april. all three of these publications are presented as a trilogy with common 

graphics. They are printed on FSC-certified 100% recycled paper, which helps L’oréal convey a consistent and integrated responsible 

image. 

The Sustainable Development report: 

• is a synthetic, editorial, printed document that systematically refers to an interactive website that is rich in content and regularly updated. 

• is designed within a complete ecosystem, an online “corporate conversation”. 

• emphasises photo testimony/reports to accentuate the human aspects of undertaken actions. 

2/18


In addition to this document, L’oréal has chosen to provide information according to the GrI guidelines within “data” sheets intended 

for a more specialised audience. These data sheets will be presented as downloadable PDF files. The following departments are involved 

in writing these data sheets: Ethics, Human resources, Labour relations, research, Environment, Finance, operations and Social affairs. 

In July of each year, L’oréal asks all contributors (divisions, subsidiaries, brands) to communicate about key sustainable development 

subjects, programmes, initiatives and progress for the year in their areas Then, the people responsible for the Sustainable Development 

report meet with each individual contributor to jointly select the subjects to be highlighted and to begin the interviews and article-writing. 

SELECTION OF INDICATORS 

The L’oréal values and issues (see Strategy Sheet 1.1 on page 1) that are integral to its business guide us in selecting the sustainable 

development indicators used in this report. The environmental, employment and societal criteria selected by the group are consistent 

with the group’s strategies: they correspond to group policies and help monitor the group’s performance in areas deemed crucial and 

strategic for the years to come. This is why, since 2006, the group launched a process to verify its environmental and employment data to 

ensure the relevance of the accepted criteria. 

Every year since 2006, its environmental and employment data have undergone an audit by its Chartered accountants. In 2010, the data 

on the environment, health and safety were verified by Environmental resources Management (ErM) and the employment affairs data 

by PricewaterhouseCoopers audit. 

In 2011, the employment affairs, environment, health and safety data were verified by Deloitte & associés and PricewaterhouseCoopers 

audit. 

To prepare its Sustainable Development report 2011, L’oréal examined current practices and studied the recommendations emanating 

from international institutions and specialised organisations such as the United Nations, the oECD, the European Commission and the 

WBCSD. Now more than ever, the group considered the Global reporting Initiative (GrI) G3 principles of sustainable development 

communication in analysing and reporting its performance. 

The relevance of monitoring indicators will be reviewed and honed in relation to the work planned by L’oréal with its stakeholders (see 4.16 

approaches to stakeholder engagement, Governance Sheet p. 24). 

SCOPE OF CONSOLIDATION FOR EMPLOYMENT, HYGIENE AND SAFETY DATA, REPORTING INDICATORS, METHOD AND SYSTEMS 

EMPLOYMENT DATA 

Scope of consolidation 

The employee numbers indicated in the “Head count” and “Geographic distribution of employees” tables correspond to the total head 

count on 31 December of the year in question. 

For companies that are consolidated through proportional integration, employee numbers on 31 December are recorded in proportion 

to L’oréal’s interest. 

other employment indicators are presented in the Employee Information section of the “Cosmetics” and “The Body Shop” branches (2) . 

If a given indicator pertains to a scope other than that of the “Cosmetics” and “The Body Shop” branches, the scope of consolidation is 

indicated in a note. 

Indicators 

The accepted indicators are those used in managing personnel and in group employment issues. They reflect the results of the Human 

resources policy. 

Data 

Collecting data for the defined scope requires four methods: 

• The bulk of the data is gathered using the “reporting by country” intranet system available in each country where L’oréal has a 

subsidiary. The system covers several areas: head count, ethics, global employee participation, labour relations, remuneration, Human 

resources expenses, recruitment and training, absenteeism. 

at the beginning of each year, local Human resources Directors send the required data on the preceding year. 

When the data are being compiled, each country must validate a charter of engagement on the accuracy of the submitted data. 

• The other data are collected by the divisions in question (namely Training, recruitment), using targeted systems that implement the same 

operational and communication approach. It should be noted that the Unity tool, used for the monitoring of training at Group level, 

does not include all the hours of training for the reporting year when the non-financial data collection ceases. The number of hours of 

training and the number of staff members trained are higher than the figures published in this report. an action plan will be conducted 

in 2012 to make these data more accurate. 

• If the data are not consolidated for the entire scope of the Cosmetics branch, they can be extrapolated using the available results for 

the scope of the entities connected to the local Information Systems (IS), provided that this scope is representative (3) . 

• Finally, the specific data pertaining to “executives” are collected using the “CaroL” online career monitoring system used for all 

“Cosmetics group” subsidiaries. 

a process for continuously improving these systems has been implemented. The systems are reviewed each year with consideration for 

the recommendations of the Chartered accountants and the monitoring objectives for the following years: update the indicators to be 

monitored, improve their definition and improve the process for communication, monitoring and control. 

3/18

3 EXPErT L’oréaL - GrI DaTa SHEETS 2011 

(1) Including employees with a permanent or fixed-term contract of employment. 

(2) Innéov is included, Galderma (dermatology) is excluded. 

(3) In France, the gender distribution of the Cosmetics workforce was extrapolated from the gender breakdown of the entities connected 

to the France HrIS. The extrapolation method concerns 5% of the French workforce, which is not yet connected to the local HrIS. 

> For more information, see the “Methodological note” on 193 of the 2011 reference Document. 

HYGIENE AND SAFETY DATA 


The safety indicators pertain to the manufacturing entities, distribution centres, administrative sites and research centres of the “Cosmetics”, 

“Dermatology” and “The Body Shop” branches. Safety reporting covers all industrial or manufacturing sites and distribution centres. In 

2011, it covered 70% of the staff of the administrative sites and research centres. 

The safety indicators for manufacturing sites and distribution centres that have been transferred or closed down during the year are 

integrally reported until the date when they leave the scope. The manufacturing sites or distribution centres that join the group have at most 

two years to integrate their environmental and safety reporting: however, for 2011, the majority of the recently acquired manufacturing 

sites and distribution centres had participated in reporting. 

Indicators 

The accepted indicators are those used in the management of the Company’s sites. They reflect the group’s Environmental, Health and 

Safety (EHS) policy. 

Data 

Collecting data for the defined scope uses the following method: 

The health and safety data are collected using the intranet system of information on quality dedicated to site reporting, which is available 

in each country where L’oréal has a subsidiary. The local managers submit the required data every month. 

When the data are being compiled, each site must validate the submitted data. 





DATA ENVIRONNEMENT 


The environmental indicators pertain to the manufacturing sites and distribution centres of the “Cosmetics”, “Dermatology” and “The Body 

Shop” branches. 

If a given indicator pertains to a scope other than that of the “Cosmetics”, “Dermatology” and “The Body Shop” branches, the consolidation 

scope is indicated in a note. 

The environmental indicators for manufacturing sites and distribution centres that have been transferred or closed down during the year 

are integrally reported until the date when they leave the scope. The manufacturing sites or distribution centres that join the group have 

at most two years to integrate their environmental reporting: However, for 2011, the majority of the recently acquired manufacturing sites 

and distribution centres participated in reporting. 

Indicators 

The accepted indicators are those used in the management of the Company’s sites. They reflect the group’s Environmental, Health and 

Safety (EHS) policy. 

Data 

Collecting data for the defined scope uses the following method: 

The data are collected using the intranet system of information on quality dedicated to site reporting, which is available in each country 

where L’oréal has a subsidiary. This system covers several areas: quality, process performance and EHS data. 

The local managers submit the required data every month. 

When the data are being compiled, each site must validate the submitted data. 





SOCIETAL DATA 

The information pertaining to societal commitments, which constitutes a new section in addition to the employment and environmental 

items, is part of the requirements emanating from the French Grenelle II environmental regulations. 


Depending on the indicator, the scope covers the data of L’oréal S.a. on either a French or a group level. The scope is specified for each indicator. 

4/18


Indicators 

The accepted indicators are those anticipated within the scope of the Grenelle II regulations with close attention paid to data 

comparability. 

Data 

Collecting data for the defined scope uses the following methods: 

Some of the data, especially those pertaining to Ethics, are collected by the Ethics Department using the “Country reporting” intranet 

system, which is also used to collect Human resources data (see the Hr data reporting methodology described on page 193 of the 2011 

reference Document). 

The other data are collected by the Departments in question (Communication, Sustainable Development and Public affairs, Human 

resources, Purchasing and International Product Safety assessment). 


3.12 

PROFILE DESCRIPTION EVALUATION REFERENCE 

Organizational Strategy 

1.1 

1.2 

Profile of the 

organization 

Statement from the most senior 

decisionmaker of the organization 

(e.g., CEo, chair, or equivalent senior 

position) about the relevance of 

sustainability to the organization 

and its strategy. 

Description of key impacts, risks, 

and opportunities. 

2.1 Name of the organization. 

2.2 

2.3 

2.4 

Primary brands, products, and/or 

services. 

The reporting organization should 

indicate the nature of its role in 

providing these products and services, 

and the degree to which it utilizes 

outsourcing. 

operational structure of the 

organization, including main divisions, 

operating companies, subsidiaries, 

and joint ventures. 

Location of organization’s 

headquarters. 

5/18 

Strategy Data sheet p. 1 

page 2 of the 2011 Sustainable 

Development report 

Strategy Data sheet -p. 1 

- Page 3 of the Sustainable 

Development report 2011. 

- research issues on page 11 

of the Sustainable Development 

report 2011. 

- Environment issues on page 19 

of the Sustainable Development 

report 2011. 

- Social and Societal responsibility 

issues on page 29 of the Sustainable 


- Solidarity issues on page 39 of 

the Sustainable Development 

report 2011. 

Profile of the organisation data sheet 

p. 1 


p. 1 


p. 1 


p. 1



2.5 

Number of countries where the 

organization operates, and names of 

countries with either major operations 

or that are specifically relevant to the 

sustainability issues covered in the 

report. 

2.6 Nature of ownership and legal form. 

2.7 

2.8 

2.9 

2.10 

Report Parameters 

3.1 

Markets served (including geographic 

breakdown, sectors served, and types 

of customers/beneficiaries). 

Scale of the reporting organization, 

including: 

• Number of employees; 

• Net sales (for private sector 

organizations) or net revenues 

(for public sector organizations); 

• Total capitalization broken down in 

terms of debt and equity (for private 

sector organizations); 

• And quantity of products or services 

provided. 

Significant changes during the reporting 

period regarding size, structure, 

or ownership including: 

• The location of, or changes in 

operations, including facility openings, 

closings, and expansions; 

• Changes in the share capital 

structure and other capital formation, 

maintenance, and alteration operations 

(for private sector organizations). 

awards received in the reporting 

period. 

reporting period (e.g., fiscal/calendar 

year) for information provided. 

6/18 


p. 3 

“Products accessible to the greatest 

number” on page 8 of the 2011 

Sustainable Development report. 


p. 4 


p. 5 


p. 8 


p. 10 


p. 11 

report Parameters data sheet p. 1 

GrI index sheet – assurance reports. 

3.2 Date of the most recent report (if any). report Parameters data sheet p. 1 

3.3 reporting cycle (annual, biennial, etc.). report Parameters data sheet p. 1 

3.4 

3.5 

3.6 

3.7 

3.8 

Contact point for questions regarding 

the report or its contents. 

Process for defining report content, 

including: 

• determining materiality; 

• prioritising topics within the report; 

• and identifying stakeholders the 

organisation expects to use in the 

report. 

Boundary of the report (e.g., countries, 

divisions, subsidiaries, leased facilities, 

joint ventures, suppliers). 

State any specific limitations on the 

scope or boundary of the report. 

Basis for reporting on joint ventures, 

subsidiaries, leased facilities, 

outsourced operations, and other 

entities that can significantly affect 

comparability from period to period 

and/or between organizations. 



report Parameters data sheet p. 2 - 6 

“Methodological note” on 193 of the 2011 

reference Document. 




“Methodological note” on 193 of the 

2011 reference Document. 

“Methodological note” on 203 of the 






reference Document.


PROFIL DESCRIPTION EVALUATION REFERENCE 

3.9 

3.10 

3.11 

3.12 

3.13 

Governance, 

Commitments 

and Engagement 

4.1 

4.2 

4.3 

4.4 

4.5 

Data measurement techniques and 

the bases of calculations, including 

assumptions and techniques underlying 

estimations applied to the compilation 

of the Indicators and other information 

in the report. 

Explanation of the effect of any 

re-statements of information provided 

in earlier reports, and the reasons 

for such re-statement (e.g., mergers/ 

acquisitions, change of base 

years/periods, nature of business, 

measurement methods). 

Significant changes from previous 

reporting periods in the scope, 

boundary, or measurement methods 

applied in the report. 

Table identifying the location of the 

Standard Disclosures in the report. 

Policy and current practice with regard 

to seeking external assurance for the 

report. If not included in the assurance 

report accompanying the sustainability 

report, explain the scope and basis 

of any external assurance provided. 

also explain the relationship between 

the reporting organization and the 

assurance provider(s). 

Governance structure of the 

organization, including committees 

under the highest governance body 

responsible for specific tasks, such 

as setting strategy or organizational 

oversight. 

Indicate whether the Chair of the 

highest governance body is also 

an executive officer (and, if so, their 

function within the organization’s 

management and the reasons for t 

his arrangement). 

For organizations that have a unitary 

board structure, state the number 

and gender of members of the 

highest governance body that are 

independent and/or nonexecutive 

members. 

Mechanisms for shareholders 

and employees to provide 

recommendations or direction to the 

highest governance body. 

Linkage between compensation for 

members of the highest governance 

body, senior managers, and executives 

(including departure arrangements), 

and the organization’s performance 

(including social and environmental 

performance). 

7/18 
















report Parameters data sheet - the GrI 

index sheet 

report Parameters data sheet - the GrI 

index sheet 

Governance, Commitments and 

Engagement data sheet p. 1 

Corporate Governance chapter on 

pages 27 to 68 of the 2011 reference 

Document. 





“2.2.1.2. officers of the Company” 

section on page 30 of the 2011 



Engagement data sheet P. 6 



“5. Directors’ remuneration” section 

on pages 52 and 53 of the 2011 

reference Document.



4.6 

4.7 

4.8 

4.9 

4.10 

4.11 

4.12 

Processes in place for the highest 

governance body to ensure conflicts 

of interest are avoided. 

Process for determining the 

composition, qualifications, and 

expertise of the members of the highest 

governance body and its committees, 

including any consideration of gender 

and other indicators of diversity. 

Internally developed statements of 

mission or values, codes of conduct, 

and principles relevant to economic, 

environmental, and social performance 

and the status of their implementation. 

Procedures of the highest governance 

body for overseeing the organization’s 

identification and management of 

economic, environmental, and social 

performance, including relevant risks 

and opportunities, and adherence 

or compliance with internationally 

agreed standards, codes of conduct, 

and principles. 

Processes for evaluating the highest 

governance body’s own performance, 

particularly with respect to 

economic, environmental, and social 

performance. 

Explanation of whether and how the 

precautionary approach or principle 

is addressed by the organization. 

Externally developed economic, 

environmental, and social charters, 

principles, or other initiatives to which 

the organization subscribes or endorses. 

Include date of adoption, countries/ 

operations where applied, and the 

range of stakehoklders involved in 

the development and governance of 

these initiatives (e.g., multi-stakeholder, 

etc). Differentiate between nonbinding, 

voluntary initiatives and those 

with which the organization has an 

obligation to comply. 

8/18 



“2.2.2.1.2. The work of Board of 

Directors’ Committees” section on 

pages 43 and 44 of the 2011 reference 

Document. 





- The Global Compact 

www.loreal.fr/_fr/_fr/html/groupe/loreal-soutient-le-pacte-mondial-de-lonu.aspx 

- The Code of Business Ethics at 

www.loreal.fr/_fr/_fr/html/groupe/lacharte-ethique.aspx 



“2.2.2.1.2. The work of Board of 

Directors’ Committees” section on 

pages 43 and 44 of the 2011 reference 

Document. 



“2.2.2.2. Self-assessment by the Board 

of Directors” section on page 46 of the 




• the “6.3.4. Fair practices” section 

“Measures taken to protect consumers’ 

health and safety” paragraph on page 

202 of the 2011 


• the “1.8.1.2. Product quality and 

safety” section on page 18 of the 2011 



Engagement data sheet p; 15 

“United Nations Global Compact” 

section: 

www.developpementdurable.loreal. 

com/business/un-global-compact.asp 

www.developpementdurable.loreal. 

com/business/un-global-compact.asp 

on the loreal.com site



4.13 

4.14 

4.15 

4.16 

4.17 

Managerial Approach 

Memberships in associations (such as 

industry associations) and/or national/ 

international advocacy organizations in 

which the organization: 

• has positions in governance bodies; 

• participates in projects or committees; 

• provides substantive funding beyond 

routine membership dues; 

• views membership as strategic. 

List of stakeholder groups engaged 

by the organization. 

Examples of stakeholder groups are: 

• Civil society; 

• Customers; 

• Employees, other works, and their 

trade unions; 

• Local communities; 

• Shareholders and providers of 

capital; and 

• Supplier. 

Basis for identification and selection 

of stakeholders with whom to engage. 

This includes the organization’s process 

for defining its stakeholder groups, and 

for determining the groups with which 

to engage and not to engage. 

approaches to stakeholder 

engagement, including frequency 

of engagement by type and by 

stakeholder group. 

Key topics and concerns that have 

been raised through stakeholder 

engagement, and how the organization 

has responded to those key topics 

and concerns, including through its 

reporting. 

EC Economic Performance 

Market Presence 

Indirect Economic Impacts 

9/18 









“6.3.2. relations with interested parties” 

section on page 199 of the 2011 




Economy data sheet p. 1 

http://www.loreal-finance.com/eng/ 





EN Materials Environment data sheet p. 1 

Energy Environment data sheet p. 1 

Water Environment data sheet p. 1 

Biodiversity Environment data sheet p. 1 

Emissions, Effluents, and Waste Environment data sheet p. 1 

Products and Services Environment data sheet p. 1 

Compliance Environment data sheet p. 1 

Transport Environment data sheet p. 1 

overall Environment data sheet p. 1



LA Employment Employment data sheet p. 1 

Labor/Management relations Employment data sheet p. 1 

occupational Health and Safety Employment data sheet p. 1 

Training and Education Employment data sheet p. 1 

Diversity and Equal opportunity Employment data sheet p. 1 

HR Investment and Procurement Practices Human rights data sheet p. 1 

Non-discrimination Human rights data sheet p. 1 

Freedom of association and Collective 

Bargaining 

10/18 

Human rights data sheet p. 1 

Child Labor Human rights data sheet p. 1 

Prevention of Forced and Compulsory 

Labor 


Security Practices Human rights data sheet p. 1 

Indigenous rights Human rights data sheet p. 1 

SO Local Communities Society data sheet p. 1 

Corruption Society data sheet p. 1 

Public Policy Society data sheet p. 1 

anti-Competitive Behavior Society data sheet p. 1 

Compliance Society data sheet p. 1 

PR Customer Health and Safety Product responsibility data sheet p.1 

Performance indicator 

Economy 

Economic performance 

EC1 

EC2 

EC3 

EC4 

Product and Service Labeling Product responsibility data sheet p.1 

Marketing Communications Product responsibility data sheet p.1 

Customer Privacy Product responsibility data sheet p.1 

Compliance Product responsibility data sheet p.1 

Direct economic value generated 

and distributed, including revenues, 

operating costs, employee 

compensation, donations and other 

community investments, retained 

earnings, and payments to capital 

providers and governments. 

Financial implications and other risks 

and opportunities for the organization’s 

activities due to climate change. 

Coverage of the organization’s defined 

benefit plan obligations. 

Significant financial assistance received 

from government. 

Economy data sheet p.2 

2011 reference Document: 

Consolidated accounts p.87. 


- the messages from Jean-Paul agon, 

Chairman and Chief Executive, and 

Sara ravella, Executive Vice-President 

Communication, 

Sustainability and Public affairs, 

respectively, on pages 2 and 3 of the 


- the Environment part of the report 

(pages 18 to 27). 

- the Strategy sheet. 


- 2011 reference Document, p.183: 

Provident and retirement plans and 

other benefits.



Market presence 

EC5 

EC6 

EC7 

Indirect economic 

impact 

EC8 

EC9 

Environnement 

Materials 

range of ratios of standard entry level 

wage by gender compared to local 

minimum wage at significant locations 

of operation. 

Policy, practices, and proportion of 

spending on locally-based suppliers 

at significant locations of operation. 

Procedures for local hiring and 

proportion of senior management hired 

from the local community at locations 

of significant operation. 

Development and impact of 

infrastructure investments and services 

provided primarily for public benefit 

through commercial, inkind, or pro 

bono engagement. 

Understanding and describing 

significant indirect economic impacts, 

including the extent of impacts. 

EN1 Materials used by weight or volume. 

EN2 

Energy 

EN3 

EN4 

EN5 

EN6 

EN7 

Percentage of materials used that are 

recycled input materials. 

Direct energy consumption by primary 

energy source. 

Indirect energy consumption by primary 

source. 

Energy saved due to conservation 

and efficiency improvements. 

Initiatives to provide energy-efficient 

or renewable energy based products 

and services, and reductions in energy 

requirements as a result of these 

initiatives. 

Initiatives to reduce indirect energy 

consumption and reductions achieved. 

11/18 



Solidarity Sourcing programme on: 

- the Company file (indicator So1). 

- “Solidarity Sourcing” pages 40 and 41 

of the 2011 Sustainable Development 

report. 

-Economy data sheet p.17 

- Talents section on pages 30 and 31 

of the 2011 Sustainable Development 

report. 



“Products accessible to the greatest 

number” on pages 8 and 9 of the 2011 


- “Solidarity Sourcing” on pages 

40 and 41 of the 2011 Sustainable 

Development report. 

- “Solidarity Sourcing” and “Community 

Fair Trade” programmes on the 

company sheet (indicator So1). 

Environment data sheet 




Environment/Energy on pages 22 and 

23 of the Sustainable Development 

report 2011.


PROFIL DESCRIPTION EVALUATION REFERENCE 

Water 

EN8 Total water withdrawal by source. 

EN9 

EN10 

Biodiversity 

EN11 

EN12 

Water sources significantly affected 

by withdrawal of water. 

Percentage and total volume of water 

recycled and reused. 

Location and size of land owned, 

leased, managed in, or adjacent to, 

protected areas and areas of high 

biodiversity value outside protected 

areas. 

Description of significant impacts of 

activities, products, and services on 

biodiversity in protected areas and 

areas of high biodiversity value outside 

protected areas. 

EN13 Habitats protected or restored. 

EN14 

EN15 

Emissions, effluents, 

and waste 

EN16 

EN17 

EN18 

EN19 

EN20 

EN21 

EN22 

EN23 

EN24 

EN25 

Strategies, current actions, and future 

plans for managing impacts on biodiversity. 

Number of IUCN red List species and 

national conservation list species with 

habitats in areas affected by operations, 

by level of extinction risk. 

Total direct and indirect greenhouse 

gas emissions by weight. 

other relevant indirect greenhouse 

gas emissions by weight. 

Initiatives to reduce greenhouse gas 

emissions and reductions achieved. 

Emissions of ozone-depleting 

substances by weight. 

No, So, and other significant air 

emissions by type and weight. 

Total water discharge by quality 

and destination. 

Total weight of waste by type 

and disposal method. 

Total number and volume of significant 

spills. 

Weight of transported, imported, 

exported, or treated waste deemed 

hazardous under the terms of the Basel 

Convention annex I, II, III, and VIII, 

and percentage of transported waste 

shipped internationally. 

Identity, size, protected status, and 

biodiversity value of water bodies 

and related habitats significantly 

affected by the reporting organization’s 

discharges of water and runoff. 

12/18 


“6.2.3. Sustainable use of resources” 

on page 196 of the reference 

Document 2011. 




reference Document 2011 p. 197 6.2.5. 

Biodiversity protection. 







reference Document 2011 p.196 6.2.3. 

Sustainable use of resources. 


reference Document 2011 p.195 6.2.2. 

Pollution and waste management.



Products and services 

EN26 

EN27 

Compliance 

EN28 

Transport 

EN29 

Overall 

EN30 

Employment, 

Social Relations 

and Decent Work 

Initiatives to mitigate environmental 

impacts of products and services, 

and extent of impact mitigation. 

Percentage of products sold and their 

packaging materials that are reclaimed 

by category. 

Monetary value of significant fines and 

total number of non-monetary sanctions 

for noncompliance with environmental 

laws and regulations. 

Significant environmental impacts 

of transporting products and other 

goods and materials used for the 

organization’s operations, and 

transporting members of the workforce. 

Total environmental protection 

expenditures and investments by type. 

Employment - 

LA1 

LA2 

LA3 

Labor/management 

relations 

LA4 

LA5 

Total workforce by employment type, 

employment contract, and region, 

broken down by gender. 

Total number and rate of new employee 

hires and employee turnover by age 

group, gender, and region. 

Benefits provided to full-time employees 

that are not provided to temporary 

or parttime employees, by significant 

locations of operation. 

Percentage of employees covered 

by collective bargaining agreements. 

Minimum notice period(s) regarding 

operational changes, including whether 

it is specified in collective agreements. 

13/18 



Employment data sheet p. 2 

- “section 6.1.2.1. Employment” 

on page 181 of the 2011 reference 

Document. 


- “Profit Sharing and Incentive Plans 


Document. 


- “Profit Sharing and Incentive Plans 


Document. 

- “Profit-sharing at L’oréal S.a.” 


Document. 

- “The Company Savings Plan and 

L’oréal S.a. Share Fund” on page 184 

of the 2011 reference Document. 

- “Company Savings Plan and Blocked 

Current account” on page 184 of the 



“review of collective agreements” 


Document.



Occupational health 

and safety 

LA6 

LA7 

LA8 

LA9 

Training and education 

LA10 

LA11 

LA12 

Diversity and equal 

opportunity 

LA13 

LA14 

Human Rights 

Investment and 

procurement practices 

HR1 

HR2 

HR3 

Percentage of total workforce 

represented in formal joint 

management–worker health and safety 

committees that help monitor and 

advise on occupational health and 

safety programmes. 

rates of injury, occupational diseases, 

lost days, and absenteeism, and total 

number of work-related fatalities, by 

region and by gender. 

Education, training, counseling, 

prevention, and risk-control 

programmes in place to assist workforce 

members, their families, or community 

members regarding serious diseases. 

Health and safety topics covered 

in formal agreements with trade unions. 

average hours of training per year 

per employee by gender, and by 

employee category. 

Programmes for skills management 

and lifelong learning that support the 

continued employability of employees 

and assist them in managing career 

endings. 

Percentage of employees receiving 

regular performance and career 

development reviews, by gender. 

Composition of governance bodies and 

breakdown of employees per employee 

category according to gender, age 

group, minority group membership, 

and other indicators of diversity. 

ratio of basic salary and remuneration 

of women to men by employee 

category, by significant locations of 

operation. 

Percentage and total number of 

significant investment agreements 

and contracts that include clauses 

incorporating human rights concerns, 

or that have undergone human rights 

screening. 

Percentage of significant suppliers, 

contractors, and other business partners 

that have undergone human rights 

screening, and actions taken. 

Total hours of employee training on 

policies and procedures concerning 

aspects of human rights that are 

relevant to operations, including the 

percentage of employees trained. 

14/18 


“Health and safety conditions 

at L’oréal S.a.” on page 191 of 

the 2011 reference Document. 


“1.8.3.3. Environment and safety (HSE)” 

on page 20 and section “6.1.2.4. 

Health and Safety” on page 190 of 









Human rights data sheet p. 4



Non discrimination 

HR4 

Freedom of association 

and collective 

bargaining 

HR5 

Child labor 

HR6 

Forced and compulsory 

labor 

HR7 

Security practices 

HR8 

Indigenous rights 

HR9 

Society 

Local communities 

SO1 

Corruption 

SO2 

SO3 

SO4 

Total number of incidents of 

discrimination and corrective actions 

taken. 

operations and significant suppliers 

identified in which the right to exercise 

freedom of association and collective 

bargaining may be violated or at 

significant risk, and actions taken to 

support these rights. 


identified as having significant risk for 

incidents of child labor, and measures 

taken to contribute to the effective 

abolition of child labor. 


identified as having significant risk 

for incidents of forced or compulsory 

labor, and measures to contribute to 

the elimination of all forms of forced or 

compulsory labor. 

Percentage of security personnel 

trained in the organization’s policies 

or procedures concerning aspects 

of human rights that are relevant to 

operations. 

Total number of incidents of violations 

involving rights of indigenous people 

and actions taken. 

Percentage of operations with 

implemented local community 

engagement, impact assessments, 

and development programmes. 

Percentage and total number 

of business units analyzed for risks 

related to corruption. 

Percentage of employees trained in 

organization’s anti-corruption policies 

and procedures. 

actions taken in response to incidents 

of corruption. 

15/18 




- p. 193, 6.1.2.7. of the reference 

document “Promotion and respect 

of the stipulations of the fundamental 

conventions of the International Labour 

organization. 

Society data sheet 

- the article on the L’oréal site 

http://www.loreal.fr/_fr/_fr/html/ 

suppliers/responsible-sourcing/ 

responsible-sourcing-fair-trade.aspx 

- the article “ever more responsible 

sourcing” in the Sustainable 


Society data sheet p. 1 


Society data sheet p. 9



Public Policy 

SO5 

SO6 

Anti-competitive 

behavior 

SO7 

Compliance 

SO8 

Product Responsibility 

Customer health and 

safety 

PR1 

PR2 

Product and service 

labeling 

PR3 

PR4 

PR5 

Marketing 

communications 

PR6 

PR7 

Public policy positions and participation 

in public policy development and 

lobbying. 

Total value of financial and in-kind 

contributions to political parties, 

politicians, and related institutions 

by country. 

Total number of legal actions for 

anticompetitive behavior, anti-trust, 

and monopoly practices and their 

outcomes. 

Monetary value of significant fines 

and total number of non-monetary 

sanctions for noncompliance with laws 

and regulations. 

Life cycle stages in which health and 

safety impacts of products and services 

are assessed for improvement, and 

percentage of significant products 

and services categories subject to such 

procedures. 

Total number of incidents of noncompliance 

with regulations and 

voluntary codes concerning health 

and safety impacts of products and 

services during their life cycle, by type 

of outcomes. 

Type of product and service information 

required by procedures, and 

percentage of significant products 

and services subject to such information 

requirements. 



voluntary codes concerning product 

and service information and labeling, 

by type of outcomes. 

Practices related to customer 

satisfaction, including results of surveys 

measuring customer satisfaction. 

Programmes for adherence to laws, 

standards, and voluntary codes 

related to marketing communications, 

including advertising, promotion, 

and sponsorship. 



voluntary codes concerning marketing 

communications, including advertising, 

promotion, and sponsorship by type 

of outcomes. 

16/18 



note 22 of the chapter 4 of the 

reference Document 2011 


note 22 of chapter 4 of the 2011 


Product responsibility data sheet p. 1 

2011 Sustainable Development report, 

p. 12: article on predictive evaluation. 







Product responsibility data sheet p. 9



Customer privacy 

PR8 

Compliance 

PR9 

Total number of substantiated 

complaints regarding breaches 

of customer privacy and losses of 

customer data. 

Monetary value of significant fines 

for noncompliance with laws and 

regulations concerning the provision 

and use of products and services. 

17/18


3.13 

L’oréaL 

a French “Société anonyme” 

14, rue royale 

75008 Paris 

Chartered accountant’s report on a selection of environmental, employment and safety indicators published in the group’s sustainable 

development report. 

Financial year ending 31 December 2011 

In our capacity as Chartered accountants, and subsequent to your request, we performed an audit to enable us express moderate 

assurance regarding certain environmental, employment and safety indicators - identified with the “4” symbol in pages 46 and 47 of the 

L’oréal group’s sustainable development report - for the financial year ending 31 December 2011 (hereinafter the “Data”). 

These Data were established under the responsibility of the Environment Department and Human resources Department in compliance 

with the internal assessment and reporting protocol available within these departments (hereinafter the “Frameworks”). 

The methodology note, which can be consulted in the experts section of the web version of the group’s sustainable development report, 

outlines the methodologies for collecting and calculating the presented indicators. The note also specifies the limits inherent to measuring 

some of these indicators. 

It is up to us, based on our audit, to issue an opinion on these Data (1) , given that the conclusions presented hereinafter pertain to these Data 

only and not to the sum total of the environmental, employment and safety information presented in the group’s sustainable development 

report. 

Nature and scope of the audit 

We conducted the audit according to ISaE 3000 standards in compliance with professional principles that apply in France. 

We conducted a limited review in order to provide moderate assurance that the selected Data, identified by the “4” symbol, did not have 

any significant errors. a higher level of assurance would have required a more extensive audit. 

For the selected Data: 

• We assessed the Frameworks with respect to their relevance, reliability, objectivity, comprehensibility and exhaustiveness; 

• We conducted interviews with employees affected by the Frameworks and working in the Environment Department, the Environment, 

Health and Safety Department or the Human resources Department; 

• We performed detailed tests on the application of the Frameworks in a selected group of entities and countries; 

• We performed consistency tests on the consolidation of these Data on a Group level. 

To help us perform this audit, we enlisted the help of the Environmental and Sustainable Development experts from our firms. These experts 

were under the responsibility of Mr Eric Dugelay for Deloitte & associés and Mr Sylvain Lambert for PricewaterhouseCoopers audit. 

Conclusion 

Based on our audit, we did not detect any major abnormalities indicating that the Data identified by the “4” sign and published in the 

group’s sustainable development report for the financial year closing on 31 December 2011 were not established in general compliance 

with the aforementioned framework. 

Without calling into question the above audit conclusions, we draw your attention to the methodology note in the experts section of the 

web version of the sustainable development report. This note lists the reasons for which the data pertaining to training time published in 

this report were underestimated. 

Prepared in Neuilly-sur-Seine on 10 april 2012 

Chartered accountants 

Deloitte & associés PricewaterhouseCoopers audit 

David Dupont Noel Eric Dugelay Etienne Boris Sylvain Lambert 

[1] The Data are as follows [Contribution to Group data for entities selected for our work is mentioned in brackets.]: Units of produced finished products (37%), Quantity of 

bulk produced (30%), Volume of total CO2 emissions (19%), Total energy consumption (25%), Emissions of Volatile Organic Compounds (21%), Emissions of sulphur dioxide 

(18%), Total water consumption (28%), Chemical Oxygen Demand (26%), Transportable Waste (20%), Waste treatment (24%), Tonnes transported per kilometre, Number of 

hours worked (18%), Number of accidents with time off work per 1 million hours worked, Number of occupational accidents with time off work for L’Oréal staff and temporary 

employees and occupational accidents with post adjustments for L’Oréal staff per 1 million hours worked, Severity Rate, MESUR (Managing Effective Safety Using Recognition 

& Realignment), Safety Improvement Opportunities Index (SIO), Total workforce (25%), Average age per geographic zone (25%), Number of bodies in France, Number of 

staff representatives in France, Number of representation mandates in France, Total number of collective agreements signed and in force as at 31/12/2011, Number of hours 

of training (28%), Number of staff members trained (28%). 

18/18


I. CONTENTS 

4.1 

Governance structure of the organization, including 

committees under the highest governance body 

responsible for specific tasks, such as setting strategy or 

organizational oversight. 

4.2 

Indicate whether the Chair of the highest governance 

body is also an executive officer (and, if so, their function 

within the organization’s management and the reasons 

for this arrangement). 

4.3 

For organizations that have a unitary board structure, 

state the number of members of the highest governance 

body that are independent and/or non-executive members. 

4.4 

Mechanisms for shareholders and employees to provide 

recommendations or direction to the highest governance 

body. 

4.5 

Linkage between compensation for members 

of the highest governance body, senior managers, 

and executives (including departure arrangements), 

and the organization’s performance (including social 

and environmental performance). 

4.6 

Processes in place for the highest governance 

body to ensure conflicts of interest are avoided 

4.7 

Process for determining the qualifications, and 

expertise of the members of the highest governance 

body for guiding the organization’s strategy on 

economic, environmental, and social topics. 

4.8 

Internally developed statements of mission or 

values, codes of conduct, and principles relevant 

to economic, environmental, and social performance 

and the status of their implementation. 

4.9 

Procedures of the highest governance body for 

overseeing the organization’s identification and 

management of economic, environmental, and social 

performance, including relevant risks and opportunities, 

and adherence or compliance with internationally 

agreed standards, codes of conduct, and principles. 

Governance, 

Commitments and Engagement 

1/13 

4.10 

Processes for evaluating the highest governance 

body’s own performance, particularly with respect 

to economic, environmental, and social performance. 

4.11 

Explanation of whether and how the 

precautionary approach or principle is addressed 


4.12 

Externally developed economic, environmental, 

and social charters, principles, or other 

initiatives to which the organization subscribes 

or endorses. 

4.13 

Memberships in associations (such as industry 

associations) and/or national/international 

advocacy organizations in which the organization: 

• has positions in governance bodies; 

• participates in projects or committees; 

• provides substantive funding beyond routine 

membership dues; 

• views membership as strategic. 

4.14 

List of stakeholder groups engaged 


Examples of stakeholder groups are: 

• Civil society; 

• Customers; 

• Employees, other works, and their trade unions; 

• Local communities; 

• Shareholders and providers of capital; and 

• Supplier. 

4.15 

Basis for identification and selection of 

stakeholders with whom to engage. 

4.16 

approaches to stakeholder engagement, 

including frequency of engagement 

by type and by stakeholder group. 

4.17 

Key topics and concerns that have been 

raised through stakeholder engagement, 

and how the organization has responded 

to those key topics and concerns, including 

through its reporting.



4.1 

STRATEGY AT THE HEART OF DISCUSSION 

The Board of Directors is responsible in particular for ensuring that all measures have actually been taken to enable the harmonious 

deployment, on a sound, solid basis, of the strategy conceived and implemented by the Executive Committee after it has been 

approved. 

Board Meetings are prepared by four very active committees: the Strategy and Sustainable Development Committee, the audit 

Committee, the Human resources and remuneration Committee and the appointments and Governance Committee. 

This year, the strategic approach has been scrutinised even more closely in the Board’s work, as regards developing brands, countries 

and markets where the group operates. The Board is also very concerned by major developments in research & Innovation which is 

at the heart of the group’s strategy. In 2011, the Board devoted an entire day to visiting one of its laboratories. research & Innovation 

and creativity are absolutely fundamental in its business, in accordance with the standards of quality, safety and efficacy and seeking 

performance for consumers, wherever they are in the world. 

A REMIT IN PHASE WITH TOMORROW’S ISSUES 

The Strategy and Sustainable Development Committee has extended its remit to scrutinising commitments made as regards sustainable 

development. This year the Committee had a very precise statement of those commitments: to ensure sustainable economic growth by 

making beauty universal, building a human model valuing the diversity of staff, always behaving ethically and responsibly, developing 

new routes as regards sustainable consumption and lastly sharing the benefits of the Company’s development through public spirited 

actions. 

COMPOSITION OF THE BOARD OF DIRECTORS AT 31 DECEMBER 2011 

The Board of Directors consists of 14 members. United and well balanced, notably with three directors who are members of the Bettencourt 

family, successors of the founder Eugène Schueller, three directors from Nestlé, also a major shareholder, and six independent directors. It 

is totally committed to working for L’Oréal’s development. 

Every director offers an original view and unique expertise, acquired over the course of an eminent career, most often international. 

This summary of talent and experience favours the dynamic, constructive discussion on which Senior Management and the Executive 

Committee can count to support the implementation of group strategy. 

Jean-Paul Agon (1) 

aged 55. Chairman and Chief Executive Officer of L’Oréal, director since 2006, his term of office was renewed in 2010. Director of air 

Liquide. 

Sir Lindsay Owen-Jones 

aged 66. British national. Honorary Chairman of L’Oréal, director since 1984, his term of office was renewed in 2010. Director of Sanofiaventis 

and Ferrari (Italy). 

(2) (5) (6) (8) 

Jean-Pierre Meyers 

aged 63. Director of L’Oréal since 1987, his term of office was renewed in 2009 (9) , Vice-Chairman of the Board of Directors. Director of Nestlé 

ITS (Switzerland). 

(2) (5) (6) 

Peter Brabeck-Letmathe 

aged 67. austrian national. Chairman of the Board of Directors of Nestlé. Director of L’Oréal since 1997, his term of office was renewed in 

2009, Vice-Chairman of the Board of Directors. Vice-Chairman of the Board of Directors of Crédit Suisse group (Switzerland), Director of 

Delta Topco Limited (Jersey) and Exxon Mobil (United States). 

Liliane Bettencourt (2) 

aged 89. Daughter of Eugène Schueller, founder of L’Oréal. Director since 1995, her term of office was renewed in 2011. 

Françoise Bettencourt Meyers 

aged 58. Daughter of Mrs. Bettencourt. Director since 1997, her term of office was renewed in 2009. 

Werner Bauer 

aged 61. German national. Chief Executive of Nestlé. Director of L’Oréal since 2005, his term of office was renewed in 2009 (9) . 

(2) (8) 

Francisco Castañer Basco 

aged 67. Spanish national. Former Chief Executive of Nestlé. Director of L’Oréal since 1998, his term of office was renewed in 2010 (9) . 

(6) (7) 

Charles-Henri Filippi 

aged 59. Former Chairman and Chief Executive of HSBC France. Director of L’Oréal since 2007, his term of office was renewed in 2011 (9) . 

Director of France Telecom, member of the Supervisory Board of Euris and Non-Voting Board Member of Nexity. 

2/13


Xavier Fontanet (3) 

aged 63. Former Chairman and Chief Executive of Essilor. Director of L’Oréal since 2002, his term of office was renewed in 2010. Director of 

Crédit agricole ITS. 

(2) (4) 

Bernard Kasriel 

aged 65. Former Chief Executive of Lafarge. Director of L’Oréal since 2004, his term of office was renewed in 2008. Director of arkema and 

Nucor (United States). 

Marc Ladreit de Lacharrière 

aged 71. Member of the Institute. With L’Oréal from 1976 to 1991. Chairman and Chief Executive of Fimalac. Chairman of Fitch (United 

States). Director of L’Oréal since 1984, his term of office was renewed in 2010. Director of Casino, the Lucien Barrière group and renault. 

Annette Roux 

aged 69. Chairman and Chief Executive of Bénéteau from 1976 to 2005, and then Vice-Chairman of the Supervisory Board. Director of 

L’Oréal since 2007, her term of office was renewed in 2011. 

(2) (8) 

Louis Schweitzer 

aged 69. Chairman and Chief Executive of renault from 1992 to 2005, Chairman of the Board of Directors until 2009. Director of L’Oréal 

since 2005, his term of office was renewed in 2009. Chairman of the Board of Directors of aB Volvo (Sweden) and astra Zeneca (United 

Kingdom). Director of BNP Paribas and Veolia Environment. Member of the Consultative Board of allianz aG and Bosch (Germany). 

The term of office of Directors of L’Oréal is renewable and runs for a statutory four years or for a shorter term to enable the renewal of 

directors’ terms of office to be spread. Directors each hold at least 1,000 L’Oréal shares. 

(1) Chairman of the Strategy and Sustainable Development Committee. 

(2) Member of the Strategy and Sustainable Development Committee. 

(3) Chairman of the Appointments and Governance Committee. 

(4) Chairman of the Human Resources and Remuneration Committee. 

(5) Member of the Appointments and Governance Committee. 

(6) Member of the Human Resources and Remuneration Committee. 

(7) Chairman of the Audit Committee. 

(8) Member of the Audit Committee. 

(9) In 2009 the terms of office of Mr. Bauer and Mr. Meyers were renewed for a three year period, in 2010 Mr. Castañer Basco for a two year period 

and Mr. Filippi for a one year period, to enable the smooth renewal of directors’ terms of office. 

COMPOSITION OF THE EXECUTIVE COMMITTEE AT 31 DECEMBER 2011 

Jean-Paul AGON 

Chairman and Chief Executive Officer 

Laurent Attal 

Vice-Chairman, Chief Executive, research and Innovation 

Jean-Philippe Blanpain 

Chief Executive, Operations 

Nicolas Hieronimus 

Chief Executive, L’Oréal Luxury 

Jean-Jacques Lebel 

Vice-Chairman, Chief Executive, Consumer Products 

Brigitte Liberman 

Chief Executive, active Cosmetics 

Marc Menesguen 

Chief Executive, Strategic Marketing 

Christian Mulliez 

Vice-Chairman, Chief Executive, administration and Finance 

Alexandre Popoff 

Chief Executive, Latin america Zone 

Sara Ravella 

Executive Vice-President, Communication, Sustainability and Public affairs 

3/13


Frédéric Rozé 

Chief Executive, North america Zone 

Geoff Skingsley 

Chief Executive, africa, Middle East Zone 

Jérôme Tixier 

Chief Executive, Human resources 

An Verhulst-Santos 

Chief Executive, Professional Products 

Jochen Zaumseil 

Chief Executive asia, Pacific Zone 

after seven years spent in the Human relations Division, Geoff Skingsley is taking charge of the africa – Middle East zone Division. This region 

of the world is the last great frontier for L’Oréal, an area of high demographic growth and significant long term economic potential. Jérôme 

Tixier, advisor to the Chairman, succeeds Geoff Skingsley and is joining the Executive Committee as Chief Executive, Human relations. 

Created at the end of 2010 at Executive Committee level, the job of the Strategic Marketing Department, run by Marc Menesguen, is to help oversee 

group transformations as regards strategic monitoring, consumer understanding, marketing creativity, advertising creation, digital communication 

and distribution methods, in order to transform all changes in the world into opportunities. 

> For further details, see the Corporate Governance chapter on pages 27 to 68 of the 2011 reference Document. 

4.2 

On 17 March 2011, the duties of Chairman and Chief Executive were combined in the person of Mr. Jean-Paul agon. For the Board, this more 

robust method of governance simplifies decision-making and responsibility and enables greater responsiveness in running and managing 

the group. Sir Lindsay Owen-Jones was appointed Honorary Chairman of L’Oréal and remains a member of the Board of Directors. 

4.3 

The directors of L’Oréal are highly committed and exercise complete freedom of judgement. Both in terms of independence and male/female parity, the 

composition of the Board of Directors complies with the recommendations in the aFEP-MEDEF Code of Corporate Governance. 

INDEPENDENT DIRECTORS 

The directors are independent in mind, they have a duty of vigilance and exercise complete freedom of judgement. Their freedom of 

judgement enables them in particular to participate, entirely independently, in the Board’s decisions and work and Specialist Committees. 

at end 2011, the Board of Directors examined on a case by case basis the situation of each of its members, in particular as regards the 

independence criteria given in the aFEP-MEDEF Code. 

a Board member is independent when he or she has no relationship of any kind with either the Company, its group or its Management 

that might compromise the exercise of his or her freedom of judgement. With this in mind, the criteria that guide the Board in classifying a 

member as independent are the following criteria specified in the aFEP-MEDEF Code: 

t not being an employee or officer of the Company, an employee or Director of its parent company or a consolidated company and 

not having been so in the previous five years; 

t not being an officer of a company in which the Company directly or indirectly holds a post of director or in which an appointed employee 

does so or an officer of the Company (current or having been one in the last five years) holds a post of director; 

t not being a significant customer, supplier, business banker or merchant banker: 

• of the Company or its group, or 

• for which the Company or its group accounts for a significant part of the business; 

t not having a close family link with an officer of the Company; 

t not having been an auditor of the business in the previous five years. 

The Board has not applied one particular criterion specified in the aFEP-MEDEF Code, taking the view that holding an office for more than 12 

years does not lose the member concerned his or her status as independent. This is because the status of director is also measured by his or her 

experience, abilities, authority and thorough understanding of the Company, all assets that allow the strategy to be pursued over the long term. 

OF THE 14 MEMBERS OF THE BOARD OF DIRECTORS, SIX DIRECTORS ARE CLASSIFIED AS INDEPENDENT: 

annette roux, Charles-Henri Filippi, Xavier Fontanet, Bernard Kasriel, Marc Ladreit de Lacharrière and Louis Schweitzer. 

Mr. Ladreit de Lacharrière has been a Director of L’Oréal for more than 12 years but his business experience and freedom of judgement, 

combined with a thorough understanding of the Company, make a substantial contribution to the Board’s discussions and decisions. 

It is moreover stated that scrutiny was conducted of financial flows occurring in 2011 between L’Oréal and companies in which the six 

independent directors also hold offices. It appears that the character of these business relations is not significant. 

The proportion of independent directors is thus at least one third and complies with the recommendations in the aFEP-MEDEF Code. 

Under these circumstances, the Board performs its duties with the independence and objectivity necessary and all directors take the 

interests of all shareholders into account. 

4/13


> For further details, see the “2.2.1.2. Officers of the Company” section on page 30 of the 2011 reference Document. 

4.4 

RELATIONS WITH SHAREHOLDERS 

The loyalty of its shareholders is one of the group’s greatest strengths, an essential component for implementing a long term strategy. 

ACTIVE FINANCIAL INFORMATION 

L’Oréal organises numerous events for shareholders which are all occasions to strengthen links with them. The group has increased the 

number of meetings with individual shareholders: a dozen meetings with shareholders were organised in France and Belgium, as well as 

visits to plants and laboratories, and the group participated at the actionaria exhibition. 

In total, the financial information team succeeded in meeting 7,000 individual shareholders and about a thousand institutional investors in 2010. 

For the second consecutive year, L’Oréal’s responsibility to its shareholders and staff was acknowledged at the second edition of “Grand 

Prix des Actions” organised by Mieux Vivre Votre Argent magazine in partnership with Vigeo, an independent agency specialising in 

corporate responsibility. L’Oréal also received the General assembly of CaC 40 groups Prize awarded by Capitalcom. 

THE CONSULTATIVE COMMITTEE OF INDIVIDUAL SHAREHOLDERS IS CELEBRATING ITS FIRST ANNIVERSARY 

Created in 2010, the Consultative Committee of individual shareholders met four times in the year to discuss themes as varied as preparing 

for the annual General Meeting and digital communication. a key body in the dialogue with the group’s individual shareholders, the 

committee enables their expectations to be better understood and the quality of interaction to be constantly improved. 

REWARDING THE LOYALTY OF L’ORÉAL’S SHAREHOLDERS 

Since the 27 april 2010 annual General Meeting, L’Oréal has been one of the few CaC 40 companies to offer a loyalty bonus. a dividend 

increased by 10% is thus offered to all shareholders listed by name or registered for at least two years*, to acknowledge those who support 

the company over the long term. Naming gives a better understanding of L’Oréal’s shareholders and means they can be offered benefits. 

Shareholders listed by name have greatly increased in the last two years. 

4.5 

Directors receive fees the amount of which is approved by the Ordinary General Meeting and the allocation decided by the Board. 

The amount of fees is allocated between the directors as follows: 

t an equal share allocated to each of them, including a fixed part and a variable part according to attendance at meetings; 

t an additional share for members of Specialist Committees, this share being doubled for their Chairman. 

Exceptional remuneration may be allocated by the Board of Directors for special duties or remits assigned to directors. 

For 2011, for a full year, the Board allocated a set annual sum of €30,000; a sum of €5,000 per Board meeting attended by the director; a 

sum of €15,000 for each director member of the Strategy and Sustainable Development Committee and an additional sum of €15,000 for 

the Chairman of that Committee; a sum of €10,000 for each director member of the Human resources and remuneration Committee and 

appointments and Governance Committee and an additional sum of €10,000 for the Chairman of each of those Committees; a sum of 

€25,000 for each director member of the audit Committee and an additional sum of €25,000 for its Chairman. 

> For further details, see the “5. Directors’ remuneration” section on pages 52 and 53 of the 2011 reference Document. 

4.6 

as part of directors’ rights and obligations detailed in the L’Oréal Board of Directors’ rules of Procedure and in accordance with the 

aFEP-MEDEF Code, “every director must inform the Board of any conflict of interest situation, even potential, and must not vote on the 

corresponding decision”. In this respect, on the basis of statements made by each director, the Board has not identified any conflicts of 

interests. The information specified in appendix 1 to European regulation number 809/2004 below contains additional details. 

> For further details, see the “2.2.2.1.2. The work of Board of Directors’ Committees” section on pages 43 and 44 of the 2011 reference Document. 

4.7 

EXPERIENCED DIRECTORS WITH COMPLIMENTARY ABILITIES 

L’Oréal’s directors are of various origins, their abilities are complimentary because of their varied business experience and expertise, 

they have a thorough understanding of the business. The directors are present, active and involved. This all benefits the quality of the 

Board’s discussions and the preparation of its decisions of a strategic nature. The directors are independently minded, they have a duty 

of vigilance and exercise total freedom of judgement. Their freedom of judgement enables them in particular to participate, entirely 

independently, in the work of the Board and its Committees. 

4.8 

ETHICS 

L’Oréal bases itself on the fundamental values of respect, integrity and the pursuit of excellence, supported by courage and transparency. 

5/13


L’Oréal’s commitment to act ethically and responsibly is summarised in a document entitled “L’Esprit L’Oréal” (The L’Oréal Spirit) available 

to all at www.loreal.com. 

ETHICS AND SUSTAINABLE DEVELOPMENT 

Ethics is at the heart of L’Oréal’s commitments to enable sustainable growth and consumption. “L’Esprit L’Oréal” provides a general 

framework for the group’s policies on Corporate Governance, environmental, health and safety strategy, social responsibility and diversity, 

relations with suppliers, sustainable innovation, responsibility to consumers and philanthropy. 

THE L’ORÉAL CODE OF BUSINESS ETHICS 

available in 43 languages, the Code of Business Ethics is the L’Oréal reference Document for everything related to Ethics. 

It applies to all staff, officers of the Company, members of the group’s Executive and Management Committees and subsidiaries worldwide. 

Every member of staff receives a copy. The Code of Business Ethics was published for the first time in 2000. It was updated in 2007 

with the help of staff from 22 countries who came together in international workgroups in asia, Europe, North america and Latin america. It 

was then confirmed by the Head of each country, the Head of Human resources and local Legal advisor to ensure that it can be applied 

in every country. To emphasise its importance, the Chairman and the Chief Executive Officer of L’Oréal both signed the foreword and the 

entire Executive Committee signed the introduction. 

The Code of Business Ethics is regularly revised in order to make any improvements. Staff are also encouraged to make their opinions 

known on the Charter. 

Country Heads guarantee compliance with the Code of Business Ethics in their individual country. 

THE GROUP HEAD OF ETHICS 

The group’s Head of Ethics reports directly to the Chairman and CEO. (For further information, refer to the interview with Emmanuel Lulin, 

group Head of Ethics). 

He is tasked with promoting and embedding best practices in the group, and giving help when decisions are made related to ethics. He 

trains staff and manages any complaints. 

He regularly assesses results and provides periodic reports to the Chairman and CEO and to the Executive Committee. 

He has access to all documents and information concerning L’Oréal’s activities and may use any of the group’s resources to properly fulfil 

his remit. The group’s Ethics Department is ISO 9001 certified. 

ETHICS OFFICERS 

The Ethics Officers’ remit is to assist Country Heads in implementing the Ethics approach and they are also a local resource for personnel. 

With 17 new appointments in 2010 the world-wide network of Ethics Officers gives 93% of staff the benefit of a local contact. 

ETHICS AND RESTRUCTURING 

L’Oréal’s sustainable growth is the best guarantee of job security for its staff. In order to attain this goal, L’Oréal has to continually adapt to its 

environment. This may result in restructuring, especially because of the current difficult economic situation. any decision that might affect the 

employment experience or jobs of staff is taken after careful consideration. In such situations, L’Oréal is guided by its values of respect and integrity. 

L’Oréal informs clearly and regularly so the group is certain that staff are informed and maintain ongoing contact with staff and their representative 

bodies. When job cuts are found to be unavoidable, L’Oréal endeavour to maintain employment, supporting staff by repositioning their jobs, in 

particular by retraining and moving them within the company or solutions tailored to each personal situation. 

ETHICS TRAINING 

Training on Ethics is part of the induction process for new staff. In addition, there are six other special modules designed in particular for 

Country Heads, Buyers and recruiters. 

EXTERNAL INITIATIVES 

L’Oréal signed the United Nations Global Compact in June 2003 and is a member of the Friends of the Global Compact in France Forum. 

The group also works in close cooperation with the following major associations and institutes: 

• International Chamber of Trade anti-Corruption Commission 

• Global Council on Business Conduct, The Conference Board 

• Ethics and Compliance Officers association 

• The Ethics resource Center 

• International Business Ethics Institute 

• Institute of Business Ethics 

• Circle of Business Ethics 

> For further details, see 

The Global Compact 

www.loreal.fr/_fr/_fr/html/groupe/l-oreal-soutient-le-pacte-mondial-de-l-onu.aspx 

The Code of Business Ethics at 

www.loreal.fr/_fr/_fr/html/groupe/la-charte-ethique.aspx 

6/13


4.9 

The Strategy and Sustainable Development Committee demonstrates the Board’s determination to ensure that L’Oréal has all of the 

means and resources to meet all of the challenges of sustainable growth. 

Through its analyses, the Committee clarifies the strategic lines put before the Board and monitors the achievement and development 

of significant operations in hand. It monitors the maintenance of major financial balances. In that respect, the Committee examines 

outlines, options and strategic projects presented by the Senior Management with their economic and financial consequences, acquisition 

opportunities, financial transactions liable to significantly affect the structure of the balance sheet. The Committee also ensures that the 

group’s commitments as regards Sustainable Development, issues specific to the group’s business and aims are fully taken into account. In 

that respect, the Committee examines the means and resources employed and reports to the Board. 

In 2011, the Committee welcomed a new independent director, Louis Schweitzer, which brought the number of its members to seven. The 

Committee is chaired by the Chairman and CEO (Jean-Paul agon), there are two members of the Bettencourt family (Liliane Bettencourt 

and Jean-Pierre Meyers), two members are from Nestlé (Peter Brabeck Letmathe and Francisco Castañer Basco) and two independent 

directors are also on the Committee (Bernard Kasriel and Louis Schweitzer). all these directors take part in Committee meetings with complete 

freedom of judgement and in the interests of all shareholders. 

The Committee met five times 2011, with an attendance rate of 92%. 

The Committee periodically analysed business in terms of sales and results, and the outlook and development opportunities for the group 

and its Divisions as markets and the competition evolve. 

Throughout the year, acquisition plans were examined by the Committee before being presented to the Board for a decision. In addition, 

the Committee appraised itself of the industrial strategy, especially in New Markets, as part of a process of localising, seeking flexibility 

and adapting to local constraints. additionally, at each of its meetings, the Committee examined the latest high added value product 

launches in terms of innovation. Lastly, in 2011, the Committee took advantage of the opportunity to have the Company’s Sustainable 

Development policy presented and noted that the policy aims to: 

• ensure ongoing economic growth, built on a model valuing staff diversity; 

• favour ethical, responsible behaviour on a daily basis, and develop new ways as regards sustainable consumption; 

• share the group’s development through public spirited actions. 

On all its work, the Committee reported to the Board. 

> For additional information, see the “2.2.2.1.2. The work of Board of Directors’ Committees” section on pages 43 and 44 of the 2011 


4.10 

Chairman Jean-Paul aGON (March 2011) 

Members Liliane BETTENCOUrT (2004) 

Jean-Pierre MEYErS (2004) 

Peter BraBECK-LETMaTHE (2005) 

Francisco CaSTaNEr-BaSCO (2004) 

Bernard KaSrIEL (2004) 

Louis SCHWEITZEr (april 2011) 

Every year, the Board assesses its composition, organization and the way in which it works. From a summary of prior individual interviews 

between the director and the Secretary to the Board, the Board considers routes for progress still possible and, after discussion, took the 

improvement measures that it deemed relevant. The assessment is made in accordance with the aFEP-MEDEF Code, to which the Board 

refers. 

again in 2011, the directors exercised complete freedom of judgement. Their freedom of judgement enables them to play their part, 

entirely independently, in the Board’s work and joint decisions and, when applicable, in preparatory work then in proposals by the Board’s 

Committees. 

The Board was of the opinion that the quality of its meetings, as regards what had been anticipated as routes for progress on completion 

of the self-assessment at end of 2010, continues to improve, in particular on the group’s strategic issues which are regularly discussed and 

debated, in the presence of management members of the Executive Committee. This year again, the strategic approach was scrutinised 

in depth as part of the Board’s work, as regards the development of brands, countries and markets in which the group operates and, in 

that respect, the Board’s attention is particularly focused on the major developments in research and Innovation that are at the heart 

of the group’s strategy. In 2011, the Board spent an entire day on research at one of its laboratories. L’Oréal’s research is essential to the 

group’s growth, through its discoveries, in compliance with quality, safety and efficacy standards and to aid performance for consumers, 

wherever they may be in the world. L’Oréal has established an international presence in its research and Innovation activity with five 

regional centres: in France, the USa, Japan, China and Brazil. 

In 2011, the Board assessed the quantity, frequency and format of information that it is sent as regards the general business and main events 

in the life of the group. The provision of documents prior to meetings of the Board or Committees, in accordance with the requirements for 

confidentiality and time constraints that the Company is subject to, favours the quality of discussion. 

7/13


The directors made new proposals for themes to be added to the agenda of meetings in 2012, mainly relating to the group’s lines for 

development, in strong growth areas and New Markets. 

> For further details, see the “2.2.2.2. Self-assessment by the Board of Directors” section on page 46 of the 2011 reference Document. 

4.11 

Protecting the safety of consumers is an absolute priority for L’Oréal. The very strict safety tests to which products are submitted before they 

are marketed enable L’Oréal to satisfy current safety rules in national regulations in all countries where the group’s products are sold. To 

that end, and well before the introduction of legal requirements, the group had already formed a team to assess product safety so as to 

guarantee that they are innocuous both for professionals and consumers. 

The assessments made by the L’Oréal’s International Safety assessment Department, based on a multidisciplinary scientific approach, 

mark every stage in the life cycle of products. 

assessing product safety is based on a complex process: assessing the safety of every ingredient and of all finished products on the 

basis of existing safety data and the latest medical and scientific knowledge. It thus establishes the toxicological profile of ingredients 

used and the tolerance of formulas before they are put on the market. If necessary, L’Oréal conducts additional safety tests at qualified 

subcontracting laboratories located throughout the world. Their results are interpreted by experienced scientists specially trained on 

safety assessments. 

To conclude, a special safety certificate, signed by an expert safety assessor, is issued for every product that L’Oréal puts on the market. 

additionally, L’Oréal’s ethical values, rooted in both scientific thoroughness and taking societal issues into account, lead to a logic of 

anticipation that makes formulations evolve by removing and/or substituting the substances in question. 

The added value for L’Oréal as regards assessing the safety of ingredients and finished products is based on the investment made over 

more than 20 years in developing forecasting methods and in tissue engineering. Thus, L’Oréal has been investing, for many years, in 

science and technology to create new assessment systems that are used daily by safety assessors. 

L’Oréal extends the safety assessment by monitoring potential undesirable effects that may occur when the product is on the market. This 

enables appropriate corrective measures to be taken if necessary. 

To address issues that the public may have on the subject of particular substances and their effects on health and the environment, 

L’Oréal’s position can be summarised in three points: 

• vigilance as regards any new scientific data; 

• working with the competent authorities; 

• precaution leading to the substitution of ingredients in the case of ascertained or strongly suspected risk. 

> For further details, see: 

• the “6.3.4. Fair practices” section “Measures taken to protect consumers’ health and safety” paragraph on page 202 of the 2011 


• the “1.8.1.2. Product quality and safety” section on page 18 of the 2011 reference Document. 

A PERMANENT COMMITMENT TO PREDICT PRODUCT EFFICACY AND SAFETY 

L’Oréal’s technological innovations would be worth nothing without the guarantee that they are safe and efficacious. To meet these 

requirements, reasearch began in the eighties to develop alternative methods to animal testing to assess the safety of its products. 

Great progress has been made thanks to tissue engineering, which in 1983 enabled the reconstruction of the first human epidermis, then, 

in 1996, of the first complete skin (epidermis and dermis). Because of these models, L’Oréal was able to end tests on animals for finished 

products in 1989, which is 14 years before required by European law. In three decades, the group has built real expertise in reconstructed 

tissues. Today, nine models of reconstructed skin and cornea have been developed. 

These models are fabulous tools for predicting the safety and efficacy of its products and allow the pre-marketing interval to be reduced. 

> For further details, see the “Products available to the greatest numbers” section on pages 12 and 13 of the 2011 Sustainable Development 

report. 

8/13


A STRONG COMMITMENT TO SOCIAL RESPONSIBILITY AND SAFETY 

Like the rest of group, the Operations Division plays a major part as regards social responsibility and safety. Through its “Buy & Care” 

programme, L’Oréal encourages its suppliers to take greater responsibility and checks their commitment rigorously through numerous 

social audits at suppliers around the world. The aim is not to penalise suppliers but to help them to improve their safety standards and 

environmental and social performance. 

By creating the “Solidarity Sourcing” programme, the group has forged the initiative to take on local suppliers that are committed to 

favouring minorities: disabled workers or ones from disadvantaged environments. It can also involve very small suppliers or ones in fair 

trade which L’Oréal is developing through its suppliers. 

as regards safety, the Operations Division is especially attentive to staff who work at production sites. They are trained to comply with 

safety rules and every day observe “a safety minute” in order to prevent and avoid accidents. 

> For further details, see the “‘Solidarity Sourcing’, a supportive world sourcing programme” section on page 40 of the 2011 Sustainable 

Development report. 

4.12 

L’Oréal supports and implements in its sphere of influence, the ten fundamental principles relating to Human rights, labour law, 

environmental standards and combating corruption. 

UNITED NATIONS GLOBAL COMPACT 

Its commitments 

L’Oréal has been a signatory of the United Nations Global Compact since 2003 and a member of the French Global Compact Forum 

(Forum des Amis du Pacte Mondial). 

Progress report 

L’Oréal supports and implements in its sphere of influence, the ten fundamental principles relating to Human rights, labour law, 

environmental standards and combating corruption. 

L’Oréal works closely with the following major associations and institutes to advance practices and share its experience: 

• The International Chamber of Commerce’s anti-Corruption Commission 

• Global Council on Business Conduct, The Conference Board 

• Ethics and Compliance Officers association 

• International Business Ethics Institute 

• Institute of Business Ethics 

• Circle of Business Ethics 

Human rights 

Principle 1: Businesses are asked to promote and respect the protection of international law on human rights in their sphere of influence; 

and, 

Principle 2: To ensure that their own companies are not complicit in breaching human rights. 

• Its commitment: L’Oréal supports the United Nations Universal Declaration of Human rights. L’Oréal wants, in particular, to contribute to 

eliminating the exploitation of children in the workplace and forced work, to ensure that workers’ rights are respected and to promote 

diversity. 

• System: L’Oréal’s policy on Human rights (corriger partout) is detailed in the Code of Business Ethics (pdf). Staff can report their concerns 

in this sphere to the group Head of Ethics through a dedicated, secure web site. a strict policy prohibits any reprisals against staff who 

have reported their concerns in good faith. 

• The group’s training on Ethics makes staff aware of questions related to Human rights. 

• L’Oréal’s monitoring system provides that independent auditors regularly conduct audits of all group plants and distribution facilities, as 

well as of suppliers and subcontractors. 

• The annual reporting system on Ethics allows L’Oréal to assess the group’s performance as regards Human rights. 

• 2010 actions: L’Oréal’s world-wide subsidiaries have been asked to inform and train their personnel more on ethical questions, including 

questions related to Human rights. 

• 2010 results: 6% of countries informed staff on the Ethics theme at least in 2010 (+ 1% compared to 2009). 

60% of countries informed staff on five or more themes related to Ethics (+ 7% compared to 2009) / 90% of countries set up local training 

on at least one theme related to Ethics (+ 2% compared to 2009) / 55% of countries set up local training on 5 or more themes related to 

Ethics (stable since 2009). 

Labour standards 

Principle 3: Businesses are asked to respect freedom of association and to acknowledge the right of collective negotiation. 

• Its commitment: L’Oréal supports the fundamental principles of the United Nations Universal Declaration of Human rights and the 

International Labour Organization’s fundamental agreements. L’Oréal wants, in particular, to contribute to ending the exploitation of 

children in the workplace and forced work, to ensure that workers’ rights are respected and promote diversity. 

• Systems: all L’Oréal’s suppliers and subcontractors are required to comply with the group’s General Terms of Procurement, that clearly state the obligation 

to comply with International Labour Organization conventions C87 and C98 on freedom of association. 

• Systems: all L’Oréal’s suppliers and subcontractors are required to comply with the group’s General Terms of Procurement, that clearly 

state the obligation to comply with International Labour Organization conventions C87 and C98 on freedom of association. 

2010 actions: an agreement signed in 1996 between L’Oréal and the French and European trades union organizations (FECCIa and 

EMCEF) lead to the creation of the Instance européenne de dialogue social (IEDS/EWC – European Works Council). The IEDS consists 

of 30 members. Data from various European countries which regularly benefit from training courses on economic and social questions, is 

reviewed by PricewaterhouseCoopers. a new consultation process has been introduced concerning cross-border projects involving 

9/13


local consultation procedures in at least two countries. 

• 2010 results: In France, 90 bodies bring together more than 500 personnel representatives. Data reviewed by PricewaterhouseCoopers. 

The European Works Council (IEDS/EWC) was created in 1996, subsequent to agreements made with French and European trades unions 

FECCIa and EMCEF. It covers 26 countries and more than 30,600 employees. 

In most countries, L’Oréal pays minimum wages appreciably higher than the legal minimum wage (both nationally and regionally, or as determined 

by joint agreements). For example, in argentina, wages are 96% higher and in China, they are 82% higher. 

Principle 4: Eliminating all forms of forced or coerced labour. 

• Its commitment: the same as Principle 3 

• Systems: all L’Oréal suppliers and subcontractors are required to comply with the group’s General Terms of Procurement, that clearly 

state the obligation to comply with the International Labour Organization conventions C29 and C105 on the abolition of forced labour. 

• 2010 actions: In 2009, L’Oréal extended its programme of social audits to suppliers. The group conducted 567 audits at suppliers’ sites 

around the world in 2010, or more than 2,148 to date. 

• 2010 results: 28% breaches found at suppliers’ sites by audits conducted by L’Oréal concerned working hours and 26% concerned wages 

and benefits. 

Principle 5: The effective abolition of child labour. 

• Its commitment: the same as Principle 3 


state the obligation to comply with the International Labour Organization conventions C138 and C182 on the prohibition of child labour. 

• L’Oréal has set the minimum age for all its staff at 16. Staff aged between 16 and 18 also receive special attention. all L’Oréal entities must 

confirm the age of staff before they are employed. 

• 2010 actions: In 2009, L’Oréal extended its programme of social audits to suppliers. The group conducted 567 audits at suppliers’ sites 

around the world in 2010, or more than 2,148 to date. 

• L’Oréal has created a policy entitled “Suppliers/Subcontractors and child labour” (pdf). 

• 2010 results: 9% of breaches found at suppliers’ sites by audits conducted by L’Oréal concern child labour. 

Principle 6: The elimination of discrimination in employment and at work. 

• Its commitment: the same as Principle 3. 


state the obligation to comply with the International Labour Organization conventions C100 and C111 on equality. 

Environment 

Principle 7: Businesses are asked to apply the precaution approach to address problems affecting the environment. 

Principle 8: Undertake initiatives to promote heightened environmental responsibility. 

Principle 9: Promote the development and application of technologies kind to the environment. 

• Its commitment: L’Oréal has long been committed to favouring the protection of the environment and reducing climate change, as 

stated in the group’s Environment, health and safety (EHS) policy. 

• To protect and promote biodiversity, since 2005, L’Oréal has adopted an approach meeting the goals of the Convention on biological 

diversity and the recommendations in the Convention on International Trade in Endangered Species (CITES). 

• L’Oréal undertakes to promote efficient operation and quality manufacturing. The Company has thus invested substantial sums in hightech 

facilities, which greatly contribute to reducing its footprint, whenever possible, in accordance with the aims of its environment 

protection programme. 

• Where research and Innovation are concerned, its constant commitment to sustainable development means environmentally friendly 

procedure design, application of the “green chemistry” principles in the formulation process and growing expertise in sourcing organic 

and natural products that respect the environment. 

• Systems: L’Oréal uses internationally renowned systems, including the ISO 14001 standard, for environmental management. 

• L’Oréal’s world ESS auditing programme assesses progress and the compliance of its practices with its policies and ESS standards. The 

group also conducts audits at suppliers’ sites. 

• 2010 actions: L’Oréal has set a target of halving its CO 2 emissions, water consumption and waste production by 2015 (reductions will be 

calculated using comparable data for the 2005-2015 period). 

• 2010 results: apart from in the energy sector, the group has achieved spectacular results by radically reducing its water consumption, 

transportable waste production, greenhouse gas, sulphur dioxide, volatile organic component emissions and wastewater quality index. 

L’Oréal is also pleased to have met its safety target. 

Combating corruption 

Principle 10: Businesses are asked to act against corruption in all its forms, including extortion and bribery. 

Commitment and policy: 

• Components from the basic report: B1/B2 L’Oréal supports the war against corruption, complies with the United Nations Convention 

against corruption and is committed to applying current legislation, in particular laws against Corruption. This commitment is stated in 

the L’Oréal Code of Business Ethics on the corporate web site. 

• Components of the report wanted: D1 The L’Oréal Code of Business Ethics publicly states a policy of zero tolerance as regards corruption, except in 

rare cases where the safety of an employee is at stake. The anti-corruption policy detailed in the Code of Business Ethics applies to all staff, Officers 

of the Company and members of the group’s Executive and Management Committees and to its world-wide subsidiaries. 

• D2 L’Oréal complies with the United Nations Convention against Corruption and is part of the International Chamber of Commerce’s 

anti-Corruption Commission. 

• D3 Country Heads have a practical means enabling them to appraise and analyse any ethical risks, specifically, ones relating to 

corruption, in order to take the measures necessary to remedy them. They are asked to make this appraisal every year and to check 

progress resulting from measures taken, where applicable. 

10/13


• D4 The L’Oréal Code of Business Ethics covers themes such as corruption and “facilitation payments”, conflicts of interest, and gifts and 

hospitality. The Code of Business Ethics is given to all new staff and is available in 43 languages on the L’Oréal web site. Other policies such as 

the Code of best sourcing practices and Guide to the fundamentals of internal control also cover these questions. 

• D5 Being compiled. 

Application: 

• B3 Country Heads must apply the L’Oréal policy on combating corruption. They may ask for help from the group’s Ethics Department 

and its in-house and external legal resources. The components of the L’Oréal anti-corruption programme are detailed below and cover 

information, training and monitoring. 

• B4 The anti-corruption policy is backed by the very highest level of management, in particular by the Chief Executive of L’Oréal. Staff 

were thus able to question the Chief Executive of L’Oréal on these questions during the on-line discussion on the Code of Business Ethics 

organised for the Ethics Day. 

• B5 L’Oréal regularly informs about Ethics and its commitment to combating corruption. In particular, a day is set aside for ongoing staff 

awareness of Ethics questions: the Ethics Day. On-line discussion with the Chief Executive of L’Oréal is the day’s key event. all staff worldwide 

are thus invited to take part. 

• In addition, its training courses on Ethics also deal with corruption and “facilitation payments” as well as gifts and hospitality, and 

conflicts of interest. 

• B6 The Company’s internal audit teams are especially watchful on this issue. Corruption risks are always investigated during internal 

audits. 

• D6 Being compiled 

• D7 D8 Human resources procedures impart L’Oréal’s commitment to combating corruption by incorporating the “Get results with 

integrity” ethics criterion into the annual assessment system. 

• D9 Staff can make their concerns known and put their questions on-line without worrying about reprisals thanks to the “L’Oréal Ethics 

Open Talk” policy. More precisely, L’Oréal’s “Let’s talk about it” web site provides a secure mechanism for sending feedback directly to 

the group Head of Ethics. 

• D10 The Company’s internal audit teams are especially watchful on this issue. Corruption risks are always investigated during internal 

audits. 

Monitoring: B7 L’Oréal’s annual reporting system on Ethics, Country reporting Ethics, contributes to monitoring the performance of the 

group’s Ethics in this respect. Every country receives a report comparing its situation with that in other entities in terms of application and 

monitoring of ethical questions, including combating corruption. 

• D11 L’Oréal is a member of the International Chamber of Commerce’s anti-Corruption Commission. 

• D12 Being compiled. 

• D13 all incidents are investigated in detail and result in any corrective measures necessary in accordance with L’Oréal’s “Let’s talk about 

it” policy. 

• D14 Not applicable. 

• D15 Not applicable. 

> For further details, see the “United Nations Global Compact” section: 

www.developpementdurable.loreal.com/business/un-global-compact.asp 

on the loreal.com site 

4.13 

L’Oréal, as leader in the cosmetics industry, considers it a duty to be proactive and take part in compiling local regulations in countries 

where the group operates. Which is why it is involved in Cosmetics Europe (formerly Colipa), its industry association - that is almost always 

the body quoted, referred to or its spokesman, as regards stakeholders - as well as in the various European industry associations: Medef, 

aFEP and aIM. IE South america, CaSIC and CONarS (on self-regulation and responsible advertising aspects). 

LEADERSHIP, COOPERATION AND ASSISTANCE 

L’Oréal retains its role as leader and share its progress in the sustainable development field in particular by participating in and cooperating 

with: 

• the Observatoire sur la Responsabilité Sociétale des Entreprises (OrSE – Social responsibility in business monitor), a network of European 

businesses for developing and discussing systems and knowledge related to social responsibility in business; 

• CSr Europe, network of European businesses to promote social responsibility in business, with nearly 75 multinational groups; 

• Carbon Disclosure Project, a world-wide network of organizations committed to fighting climate change; 

• The Conference Board, american organization that gathers and publishes knowledge in order to help business to behave as responsible 

corporate businesses; 

• World Business Council for Sustainable Development, international association of chairmen and CEOs from several companies, dealing 

exclusively with questions of sustainable development in business; 

• UN Global Compact – L’Oréal has been a signatory to the 10 principles of the Global Compact since 2003; 

• Forest Footprint Disclosure Project (FFDP), which supports businesses in order to determine together their “forest footprint”. The 2010 FFDP 

index puts L’Oréal in the top rank in its sector for its responsible sourcing of cardboard and palm oil. 

In addition: 

• L’Oréal supports university research, in particular by sponsoring the chair of bioplastics at the Paris école des Mines which investigates 

alternative packaging materials; 

• It participates in the main industry forums and networks; 

• It maintains active, open discussions on sustainable development-related themes with interested parties, in particular environment 

defence groups, its charitable partners and suppliers. 

11/13


Diversity 

2011: In cooperation with the rMC-BFM association, L’Oréal is launching the Charte du Cœur (Charter for hearts) and mobilising 83 

companies around the need to install defibrillators in public places and train their staff and suppliers/customers on how to save lives. 

• In 2011, L’Oréal was awarded the 1 st European label for equality in business, the Gender Equality-European Standard (GE-ES), for seven 

European countries: France, Italy, Spain, Belgium, Germany, the UK and Ireland. 

• Since 2010, L’Oréal has been a partner in the EVE programme, the top women’s inter-business leadership seminar, dedicated to women 

and open to men. In December 2010, the 1 st edition initiated by Danone, brought together nearly 250 participants including 16 staff from 

L’Oréal. In 2011, 30 staff from L’Oréal took part. 

• In 2012, L’Oréal, in cooperation with the aFMD (Association française des managers de la diversité – French association of diversity 

managers), launched the 1 st Diversity Encyclopaedia in France. 

4.14 

To identify and answer questions on sustainable development that are of interest to the parties concerned and relevant for L’Oréal, the 

group seeks the opinion of numerous sources and engage proactively in its organization and externally. 

UNDERSTANDING CONSUMERS, MARKETS AND COMPANIES 

L’Oréal has assessment centres dedicated to understanding consumers’ requirements and expectations in the beauty field in various 

socio-economic and cultural contexts around the world. In the 54 countries where L’Oréal has a subsidiary, more than 1.5 million contacts 

have been made with consumers. 

THE STAFF: SHAPING L’ORÉAL’S FUTURE 

L’Oréal is convinced that furthering the development of its staff is a fundamental engine of economic performance and the group 

regularly questions its staff by means of the PULSE opinion poll. It is also essential for L’Oréal to share the group’s view of sustainable 

development with its staff, and to involve them in its corporate view. 

> For further details, see the reply to indicator 4.13. affiliation with associations (business associations) or membership of national or 

international organizations for the defence of interests in which the organization: 

• holds positions on governing bodies; 

• takes part in projects or on committees; 

• provides funding in addition to simple membership fees; 

• or considers its participation to be strategic. 

This mainly applies to memberships maintained at organization level. 

4.15 

> For further details, see the reply to indicator 4.14 . 

4.16 

Through its Sustainable Development Department, L’Oréal has regular discussions with all organizations and associations concerned by 

its development and activities. 

In 2011, L’Oréal developed “Stakeholder Forums” in order to discuss with representatives from the general public and inform them about 

the group’s progress in the sustainable development field. Thus L’Oréal directly met nearly 300 associations and NGO opinion formers 

at information and discussion meetings in London, Hong Kong, Peking, Sao Paolo and New York. additionally, individual meetings with 

interested parties took place in France to talk about the main issues relative firstly to the Grenelle II (France’s environment think-tank) 

agenda, and secondly to innovation and sustainable consumption. 

This approach, which is part of L’Oréal’s commitments under the Global Compact, was recognised by the various interested parties as an 

approach for progress that is both credible and sincere. 

More specifically, L’Oréal maintains relations with educational bodies and associations. 

DISCUSSIONS WITH INTERESTED PARTIES ARE CURRENTLY BEING RESTRUCTURED. THESE ARE THE MAIN GOALS FOR 2012: 

AS PART OF ITS RELATIONS WITH EXTERNAL INTERESTED PARTIES: 

• Continue to develop ‘Stakeholder Forums’ in order to talk with representatives from the general public and inform them about its 

progress in the SD field. 

• Create and run a ‘Panel of Critical Friends’ consisting of 4 or 5 independent, unpaid experts, meeting once a year to work with members 

of the SD Strategic Committee on a limited number of themes proposed by the SD Department. 

• Consolidate its relations with the most influential rating agencies and acquire their complete reports (Vigeo, SAM-Dow Jones and 

Ethibel-FTSE4Good). Establish a summary score card on L’Oréal’s assessment by rating agencies which would be a real set of key indicators 

for its observance of the GrI. 

AS PART OF THE SD DEPARTMENT’S SUPPORT FOR OTHER OF THE GROUP’S MAIN FUNCTIONS: 

• Strategic contribution to sustainable innovation issues developed by Research and Innovation, in particular on priority projects: 

Nanotechnology and Endocrine Disruptors. 

12/13


• Strategic contribution on regulatory and “Public Affairs” questions in the context of development of the Global Compact agenda 

and political and media discussion of biodiversity in emerging countries. Establishment of a Task Force with r&I on this essential issue 

which ultimately will have an impact on its access to raw materials. This is because biodiversity is increasingly employed as a means for 

protectionism. 

AS PART OF THE SUSTAINABLE DEVELOPMENT DEPARTMENT’S SUPPORT FOR BRANDS: 

Support for brands on Sustainable Development & rSE and sustainable consumption information questions in cooperation with the 

International Strategic Marketing teams. a Sustainable Development Map/Identity card should be formalised for each brand. 

> For further details, see the “6.3.2. relations with interested parties” section on page 199 of the 2011 reference Document. 

4.17 

SUSTAINABLE DEVELOPMENT IS SYNONYMOUS WITH RESPONSIBLE GROWTH 

adopting a responsible approach is necessary for us to achieve its goal of winning the confidence of a billion new consumers over the 

next 10 years. L’Oréal is seeing an increasing interest from emerging markets in Western lifestyle and the related benefits to the economy 

and society. 

SOME INTERESTED PARTIES ARE CONCERNED ABOUT THIS TREND 

The first question is: “how is L’Oréal going to meet the necessary targets as regards the environmental footprint and at the same time 

substantially increase the total volume of consumption?”. 

To meet this major challenge, L’Oréal includes sustainable consumption at every stage in the life cycle of its products, together: 

• sustainable innovation that incorporates ethical policies and cutting edge research to choose new ingredients and develop green 

design and green chemistry; 

• responsible management of production, packaging and the logistics chain in order to significantly reduce its impact on the environment 

and society, wherever the group is. Its goals for 2015 are ambitious: 50% reduction in greenhouse gas emissions, water consumption 

and the volume of waste per finished product. Its fair trade policy and commitment to local communities are fully incorporated into its 

decision-making process. Some interested parties also ask another question: “is L’Oréal destroying local culture in emerging countries 

by transferring or imposing its western way of life?”. 

L’Oréal firmly believes that innovation must be designed close to the places where consumers live and meet their needs and perceived 

aspirations. The best way of achieving this is to: 

• ensure performance and quality by applying best practices; 

• take account of local practices and customs. In India, for example, kajal, used in traditional makeup, is a great source of inspiration for 

developing new products. The group pays particular attention to taking into consideration the natural environment and local society, 

which guide consumers in the choice of their cosmetics. 

CORPORATE RESPONSIBILITY TO CONSUMERS 

In L’Oréal, Corporate responsibility is applied to consumers to each of its activities, from research and innovation to sourcing, without 

forgetting production, and from marketing to relations with consumers. 

at world scale, businesses alone cannot meet the challenge of sustainable consumption. 

Consumers have an important part to play with the rest of society to guarantee that today’s consumption does not, in the future, exceed 

the planet’s production capacity. 

13/13


MANAGERIAL APPROACH 

Economy 

Following the meeting of the L’oréal board on 13 February 2012, the consolidated accounts and the corporate financial statement for 2011 

were approved. 2011 was a year of solid development and the group continued to gain in strength. In a globally well oriented cosmetics 

market, L’oréal achieved strong turnover growth and confirmed its position as the world leader in beauty. 

all divisions saw growth. L’oréal Luxe, in particular, had a very good year, thanks in particular to Lancôme, GiorGio armani and KiehL’s. 

Internationalisation continued in all divisions. The group continues to make gains in the New Markets, asia and Latin america, first 

and foremost, and clear progress in North america. 2012 will be a symbolic year, since the New Markets will become the group’s top 

geographical zone. 

These performances confirm the relevance of its strategic orientation and again confirm the key role of research, innovation and creativity 

in the group’s business. 

2011 was also another year of solid construction in operations. With strong growth, results demonstrated a virtuous dynamic: operating 

efficiency increased in all fields, thus enabling us to prepare well for the future, and profitability grew strongly in the New Markets. 

These quality results make us ever more confident in the group’s ability to achieve continuing, profitable growth. L’oréal is well equipped 

to succeed with its strategy of universalising beauty and making 2012 another year of turnover and profit growth. 

The Board of Directors decided to propose to the 17 april General Meeting the payment of a dividend of 2 euros per share, up by 11% over 

2010. 

L’oréal’s economic performance and also its presence in the market are consolidated in its activity report for 2011 and its 2011 reference 

Document, both if which may be consulted on line at www.loreal-finance.com. 

ECONOMIC PERFORMANCE 

I. CONTENTS 

base 

EC1 

Direct economic value generated and distributed, including revenues, operating 

costs, employee compensation, donations and other community investments, retained 

earnings, and payments to capital providers and governments. 

EC2 

Financial implications and other risks and opportunities for the organization’s activities 

due to climate change. 

EC3 

Coverage of the organization’s defined benefit plan obligations. 

1/14



EC1 

2011 GROWTH IN TURNOVeR 

on comparable data, i.e. on an identical structure and exchange rates, the growth in the L’oréal group’s turnover was 5.1%. 

The net effect of the change in structure was +0.6%. 

Monetary effects had a negative impact of 1.4%. 

Growth at a constant rate of exchange was 5.7%. 

on published data, group turnover, as at 31 December 2011, reached 20.343 billion euros, up by 4.3%. 

TURNOVeR bY DIVIsION aND OPeRaTING ZONe: 

Per operating division 

(1) Group share, i.e. 50%. 

OPeRaTING PROFITabILITY, 16.2% OF TURNOVeR 

Consolidated profit and loss account: from turnover to operating profit. 

Turnover 

2010: €19.4958 billion; 100.0% of turnover 


Cost of sales 

2010: €–5.6965 billion; 29.2% of turnover 


4 th quarter 2011 At 31 December 2011 

eM 

Growth per data 

Growth per data 

eM 

Comparable Published Comparable Published 

Professional products 704.6 3.20% 5.10% 2,813.8 2.50% 3.60% 

Consumer products 2,405.2 4.10% 3.90% 9,835.2 4.50% 3.20% 

L'Oréal Luxe 1,350.4 6.90% 7.30% 4,800.1 8.20% 6.50% 

Active Cosmetics 305.5 1.10% 0.30% 1421.7 3.20% 2.60% 

Total for cosmetics 4,765.7 4.50% 4.80% 1,870.8 5.00% 4.00% 

Per geographical zone 

Western Europe 1,748.3 -0.6% -0.3% 7,246.6 0.60% 0.90% 

North America 1,122.6 5.60% 7.60% 4,406.2 5.50% 2.70% 

New Markets, incl. 1,894.8 9.10% 8.20% 7218 9.50% 8.30% 

Asia Pacific 975.3 12.70% 15.60% 3,619.5 13.00% 13.40% 

Eastern Europe 355 -3.0% -5.2% 1,336.9 -2.8% -4.4% 

Latin America 423.7 10.90% 5.20% 1,680.9 13.20% 10.80% 

Africa/Middle East 140.9 15.70% 7.20% 580.7 10.50% 4.10% 

Total for cosmetics 4,765.7 4.50% 4.80% 18,870.8 5.00% 4.00% 

The Body Shop 264.4 7.60% 6.40% 767.6 4.20% 1.70% 

Dermatology 225.6 13.40% 25.10% 704.7 8.40% 17.10% 

Group total 5,255.7 5.10% 5.60% 20,343.1 5.10% 4.30% 

2/14


Gross margin 

2010: €13.7993 billion; 70.8 % of turnover 

2011: €14.4916 billion; 71.2 % of turnover 

R&D costs 

2010: €–664.7 million; 3.4 % of turnover 

2011: €–720.5 million; 3.5 % of turnover 

advertising and promotional costs 



sales and administrative costs 



Operating profit 



The gross margin was 71.2% of turnover, an improvement of 40 basis points over 2010. 

research costs increased by 8.4%, representing 3.5% of turnover. This new growth reflects the strategic decision to make significant 

investments in research. 

advertising and promotional expenditure was 30.9% of turnover, i.e. at an identical level to 2010. 

Sales and administration costs grew more quickly than turnover. at 20.6%, they show an improvement of 20 basis points over 2010. 

In total, the operating profit was 3.2926 billion euros, up by 7.7%. Profitability was appreciably up over 2010, by 50 basis points. 

OPeRaTING PROFIT bY bRaNCH aND bY DIVIsION 

- By operating division 

Professional Products 

2010: €551.9 million; 20.3% of turnover 


Consumer Products 



L’Oréal Luxe 



active Cosmetics 



Total of cosmetic divisions 



Not allocated* 

2010: €–512.9 million; 2.8% of turnover 

2011: €–546.2 million; 2.9% of turnover 

Total for cosmetics branches 



The body shop 



Dermatology branch** 



3/14


- Group 



* Not allocated = group central expenses, basic research, stock options, free shares and miscellaneous. In % of cosmetics turnover. 

** group share, i.e. 50%. 

as in 2010, this year all divisions again showed an increase in operating profitability, in particular L’oréal Luxe, up by 180 basis points. 

The Body Shop improved its profitability in 2011. 

Finally, Galderma experienced competition in generic products for two important medicaments, Differin 0.1% and Loceryl. 

PROFITabILITY PeR GeOGRaPHICaL ZONe 

Operating profit: 

Western europe 



North america 



New Markets 



Total for cosmetics zones* 



* Before non-allocated. 

The profitability of western Europe has declined slightly to 20.9%, going back to its 2009 level. 

The profitability of the North america and New Markets zones has again grown strongly, to reach 18.4% of turnover. 

NeT eaRNINGs PeR sHaRe**: €4.32 

Consolidated profit and loss account: from operating profit to net profit excluding non-recurring items. 

Operating profit 

2010: €3.0569 billion 

2011: €3.2926 billion 

Products and financial charges excluding dividends received 

2010: €–35.6 million 

2011: €–25.2 million 

sanofi dividends 

2010: €283.8 million 

2011: €295.8 million 

Profit before tax, excluding non-recurring items 

2010: €3.3052 billion 

2011: €3.5631 billion 

Tax on profits, excluding non-recurring items 

2010: €–931.9 million 

2011: €–977.6 million 

Minority interests 

2010: €–2.3 million 

2011: €–2.5 million 

Group share of net profit excluding non-recurring items* 

2010: €2.3709 billion 

2011: €2.5829 billion 

4/14


Net profit per share**(e) 

2010: €4.01 billion 

2011: €4.32 billion 

Group share of net profit 

2010: €2.2397 billion 

2011: €2.4384 billion 

Group share of net diluted earnings per share (e) 

2010: €3.79 billion 

2011: €4.08 billion 

Diluted average number of shares 

2010: 591,392,449 

2011: 597,633,103 

* Net profit, excluding non-recurring items, also excludes asset depreciation, restructuring costs, the effects of taxes and minority interests. 

** Group share per diluted share, excluding non-recurring items. 

The total cost of net financial indebtedness fell strongly again this year and stands at 25.2 million euros. This new reduction results in a 

considerable lessening of our average debt. 

Dividends from Sanofi rose to 295.6 million euros, up by 4.2%. 

Tax on profits, excluding non-recurring items rose to 977.6 million euros, i.e. 27.4%, slightly down on 2010. 

The group share of net profit excluding non-recurring items amounted to 2.5829 billion euros, up by 8.9%. 

The net profit per share, at €4.32, was up by 7.8%. 

For 2011, after taking non-recurring items into account, i.e. a charge, net of taxes amounting to 144 million euros, the net profit is 

2.4384 billion euros, up by 8.9%. 

CasH FLOW FROM OPeRaTIONs, baLaNCe sHeeT aND DebT 

The cash flow from operations was 3.2262 billion euros. 

The need for working capital increased by 322 million, following two years when it had reduced in absolute terms. This is a return to a 

situation more in line with the changes to group business. 

Investments, at 865.7 million euros, amounted to 4.3% of turnover. 

after paying a dividend and paying for acquisitions (Q-MED and Clarisonic), the group posted a net cash surplus of 504 million euros. 

The balance sheet structure is very solid since, at the end of 2011, own capital made up 65.7% of the assets. The strengthening of own 

capital over the 2010 results mainly from the profit allocated to reserves and the net re-valuation of Sanofi securities, valued at market 

price. 

DIVIDeND PROPOseD TO THe 17 aPRIL 2012 GeNeRaL MeeTING 

The Board of Directors has decided to propose to the General Meeting of shareholders on 17 april 2012, approving a dividend of 2 euros 

per share, up by 11% compared to the dividend paid in 2011. It will be paid on 3 May 2012 (ex-dividend date 27 april at midnight, Paris time). 

2012 is the first year when shareholders who have been continuously registered for more than two years will receive a dividend greater 

than 10%. 

sHaRe CaPITaL 

The Board of Directors recorded that the amount of the share capital as at 31 December 2011 was 602,984,082 shares with a nominal value 

of €0.20, i.e. a total of 120,596,816.40 euros. 

> For more details, see the 2011 reference Document: Consolidated accounts p.87. 

5/14


EC2 

L’ORÉaL’s eNVIRONMeNTaL ObJeCTIVes 

L’oréal is committed to reducing its industrial waste by 50% between 2005 and 2015, also its Co 2 emissions and water consumption. Thanks 

to the operations teams, the group has already reduced its Co 2 emissions by 29% in absolute value, its water consumption by 23% and its 

production of waste per finished product by 26%. 

> For more information, see: 

- the messages from Jean-Paul agon, Chairman and Chief Executive officer, and Sara ravella, Executive Vice-President Communication, 

Sustainability and Public affairs, respectively, on pages 2 and 3 of the Sustainable Development report. 

- the Environment part of the report (pages 18 to 27). 

- the Strategy sheet. 

UNITeD NaTIONs GLObaL COMPaCT 

Our commitments 

L’oréal has been a signatory to the United Nations Global Compact since 2003 and a member of the French network under the Global 

Compact (Forum des amis du Pacte Mondial) [Forum of Friends of the Global Compact]. 

Progress report 

Within its sphere of influence, L’oréal supports and implements the ten basic Human rights principles, the right to work, environmental 

standards and the fight against corruption. 

We collaborate closely with the following associations and major institutions to advance their practice and exchange experience. 

n International Chamber of Commerce anti-corruption commission 

n Global Council on Business Conduct, The Conference Board 

n Ethics and Compliance officers association 

n International Business Ethics Institute 

n Institute of Business Ethics 

n Cercle d’éthique des affaires 

environment, health and safety 

L’oréal has long been committed to environmental protection and mitigating climate change, as stipulated in its Environment, Health and 

Safety Policy (EHS). 

L’oréal uses internationally recognised systems, including ISo 14001, for environmental management. 

our global ESS audit programme evaluates our progress and the conformity of our practices to ESS policies and standards. We also 

conduct audits on our suppliers’ sites. 

Production 

Since 2005, to protect and promote biodiversity, L’oréal has adopted an approach consistent with the Convention on Biodiversity and the 

recommendations of the International Chamber of Commerce on wild flora and fauna threatened with extinction (CITES). 

biodiversity 

L’oréal undertakes to promote efficient operation and quality manufacturing. The company has therefore invested significant sums in its 

installations and cutting-edge technologies, that contribute greatly to reducing its footprint, wherever possible, in accordance with the 

aims of its environmental protection programme. 

So far as research and innovation are concerned, our constant commitment to sustainable development goes from the eco-design of 

products, the application of “green chemistry” products in formulation processes and a growing expertise in the sourcing of natural and 

organic products and respect for the environment. 

COLLabORaTION WITH GROUP sUPPLIeRs ON eNVIRONMeNTaL IssUes 

L’oréal considers that its suppliers’ Co 2 emissions form part of its extended environmental footprint and that they must work together, to 

succeed in reducing them. 

a member of the Carbon Disclosure Project (CDP) since 2003 and of the CDP logistics chain leadership collaboration project since 

2007, L’oréal continues to encourage its suppliers to measure and manage their Co 2 emissions. 

In 2011, 48 suppliers responded positively to an invitation from L’oréal to also join the CDP. This number is above the average for members 

of the CDP, both in number and in rate of participation. The group maintains an on-going dialogue with its suppliers to understand their 

approach for the resolution of questions relating to sustainable development. 

6/14


Below you will find below the elements of the CDP Supply Chain Public report and Custom report for 2011: 

PROVIDeNT, ReTIReMeNT aND OTHeR beNeFIT PLaNs 

L’oréal participates, according to the laws and customs of each country, in retirement and career-end management plans, and also in 

provident plans, offering various additional guarantees to its employees. 

In 2002, L’oréal set up a Monitoring Committee for the retirement and provident plans offered by its subsidiaries. This committee 

oversees the implementation and monitoring of the L’oréal policy for retirement and providence, as defined by the group’s Executive 

Committee. 

This policy expresses general principles in the following areas: the design and setting up of plans, relations with employees, financing and 

the cost of plans, management of the plans. any setting up of a new system, or modification of an existing one, must obtain prior approval 

from the oversight Committee. The oversight Committee works in collaboration with the operations Managements in the Divisions and 

the Zones. The characteristics of the retirement plans and other career end benefits offered by the subsidiaries outside France vary 

according to the applicable laws and regulations and also company practice in each country. 

In many countries, L’oréal participates in setting up supplementary pensions for its employees through a set of plans with defined benefits 

and/or defined contributions (examples: United States, Netherlands, Belgium, Canada, South american countries). In some cases, plans 

with defined benefits have been closed to new employees who are now offered plans with defined contributions (Germany, Belgium, 

United Kingdom). This group of plans with defined benefits and defined contributions allows the risks to be shared and provides better cost 

stability. In defined contribution plans, the company’s commitment consists essentially of paying a percentage of the employee’s annual 

salary into the pension plan each year. Defined benefit plans are financed by payments into special funds or by setting up provisions in 

agreement with the accounting standards adopted by L’oréal. The performance of the administrators of the main funds set up, likewise 

the scoring of the financial stability of the trustees, is regularly monitored by the oversight Committee. 

ReTIReMeNT PLaNs IN FRaNCe 

In France, L’oréal extended its pension system by creating, on 1 January 2001, a system of defined benefits with non-fixed entitlements, 

dependent on completing one’s career in the company, then on 1 September 2003, a system with defined contributions and acquired 

rights. 

DeFINeD beNeFITs PLaN 

In order to possibly add to the compulsory retirement plans under retirement Insurance within Social Security, operated by arrCo 

or aGIrC, on 1 January 2001, L’oréal set up a retirement plan with defined benefits with non-fixed entitlements, the “Guarantee of 

resources for retired Former Senior Managers”. on 31 December 2000, L’oréal had closed another pension plan with defined benefits, 

also with non-fixed entitlements, the “Pension Guarantee for Members of the Management Committee”. access to the “Guarantee 

of resources for retired Former Senior Managers” created on 1 January 2001, is open to former L’oréal senior managers who, apart 

from the condition of having finished their career within the company, in particular, meet the condition of having held the position 

of Manager, as defined in article L. 3111-2 of the Labour Code for at least ten years at the end of their career. This plan opens the 

right to the payment to the beneficiary pensioner of an annuity and, after his/her death, to the spouse and/or former spouse(s) 

of a reversionary annuity and to the children of an orphan’s annuity, subject to certain conditions. The basis for calculation of the 

Guarantee of resources is the average of the salaries of the three best years from the seven calendar years prior to the end of a career 

within L’oréal. The Guarantee of resources is calculated according to the beneficiary’s number of years of service in the company, uprated 

on the date the career in L’oréal ends, up to a limit of 25 years, every year giving a progressive and regular increase of 1.8% of the 

level of the Guarantee. at that point, the gross Guarantee of resources may not exceed 50% of the calculation basis of the Guarantee 

of resources, nor exceed the average of the fixed part of the salaries of the three years taken into consideration in this base. a gross 

annuity and a gross constituent capital are then calculated, taking into account the sum of the annual pensions acquired on the date 

of their liquidation by the person retiring, by virtue of his/her professional activity and taking 65 as the beneficiary’s age. The annuity 

is the result of the conversion into a pension at the beneficiary’s age on the date of the liquidation of the gross constituent capital, 

reduced by the amount of all compensation due by reason of the termination of the contract of employment, other than notice 

and paid holiday, and all salary paid on the occasion of a career end holiday, if such a capital sum results from these operations. 

7/14 

L’Oréal CDP members 

Number of participants 48 1,864 

Number of invited participants 55 4,234 

Rate of participation 87% 44% 

Strategic awareness 83% 59% 

Ambitions in terms of reduction (Suppliers with a reduction aim) 57% 41% 

Capacities in terms of publication (Transparency and relevance of responses) 54% 47% 

Practices implemented (Practical actions and initiatives in respect of climate 

change) 

EC3 

36 29


approximately 450 senior managers are eligible for this plan, subject to them meeting the conditions on completion of their career in 

the company. 

access to the “Pension Guarantee for Members of the Management Committee” has been closed since 31 December 2000. This old 

system opened the right to payment to the retired beneficiary, upon completion of his/her career in the company, of an annuity and, 

after his/her death, of payment to the spouse and/or former spouse(s) of a reversionary annuity and of an orphan’s annuity, subject to 

certain conditions being met. The basis for calculating the retirement Guarantee is the average of the salaries of the three best years 

from the seven calendar years prior to the end of the career with L’oréal. The retirement Guarantee is calculated according to the 

beneficiary’s seniority up to a limit of 40 years, knowing that on the date the plan closed, 31 December 2000, the required minimum 

seniority was 10 years. The retirement Guarantee may not exceed 40% of the calculation basis of the retirement Guarantee, up-rated 

by ½% per year during the first 20 years then 1% per year during the following 20 years, nor exceed the average of the fixed part of the 

salary during the three years taken into consideration in this base. approximately 120 active or retired managers are affected by this 

plan, subject to, for those still working, that they meet the conditions upon completing their career in the company. 

DeFINeD CONTRIbUTIONs PLaN 

In September 2003, L’oréal introduced a “Defined Contributions retirement Plan”. a new agreement was signed in December 2007 to 

come into force on 1 January 2008, and also an amendment on 1 January 2009. all executives and salesmen affiliated to the CIPC-r 

are beneficiaries under the plan. The contributions basis, which is unchanged, is between 1 and 6 times the Social Security ceiling, with 

a contribution, from 1 January 2008, of 4% shared between the company and the employee. This plan opens the right to the payment to 

the retired beneficiary, after liquidating his/her pension rights with the Social Security retirement Plan, to an annuity and also, after his/her 

death to a reversionary annuity to the spouse and/or former spouse(s). The annuity is calculated according to the capital constituted 

by the contributions paid in and the accumulated financial product at the end of the employee’s career. The employer’s commitment is 

limited to the payment of the planned contributions. 

In euros 

31.12.2009 31.12.2010 31.12.2011 

Number of members 11,806 11,967 12,594 

Total net contributions 7,497,479 8,027,527 8,742,485 

CaReeR eND aRRaNGeMeNTs 

L’oréal has paid great attention to its employees’ retirement conditions and the career end arrangements in force for many years have 

been confirmed and improved as part of the agreement of the Employment of Seniors, signed on 3 December 2009, which provides, in 

particular, for the introduction of a Senior Time Savings account. 

CaReeR eND HOLIDaY (CFC) 

This career end arrangement consists of allowing employees to stop work but during this period, they remain L’oréal employees and 

benefit from holding on to their salary (up to a limit of €9,280 a month) along with dividends, profit sharing and paid holidays. 

THe “TaLON” 

This device, linked to the 35-hour agreement and the Time Saving account (CET), allows an employee who has saved three days holiday 

in the CET per year every year since 2001, to benefit from an early end to work of a minimum of 3 months (6 months for sales staff) which 

may be added to the CFC. 

seVeRaNCe PaY UPON ReTIReMeNT (IDR) 

a new L’oréal scale was introduced by collective agreement as from 2011, more favourable than the Chemical Industries National 

Collective agreement. Thus, an employee may benefit, at the point where he/she retires, from an IDr going from 2 months salary for 

5 years service to 8 months salary for 40 years service. To bring forward his/her early end to work, he/she may opt to convert the IDr into 

time or choose to have it paid, which occurs at the moment of leaving. 

31.12.2009 31.12.2010 31.12.2011 

M F Total M F Total M F Total 

Career end leave 77 109 186 49 102 151 51 127 178 

Involuntary retirees 37 25 5 

Voluntary retirees 187 234 162 

(Source: Hr Statistics France 2009, 2010 and 2011). 

8/14


These commitments are subject to partial external financial cover, the objective of which is to progressively assemble funds supplied 

by the premiums paid to external organizations. The net commitments to funds invested in and the actuarial shortfalls are covered by 

a provision in the liabilities on the consolidated balance sheet. The valuation method used for calculating pension commitments and 

career end arrangements is the retrospective method with projection of the career end salary. These commitments take into account the 

employer’s contribution to the health expenses plan for pensioners. 

In millions of euros 31.12.2009 31.12.2010 31.12.2011 

Provision in consolidated balance sheet liabilities for pension 

commitments 

585.9 687.8 662.6 

(Source: Hr Statistics France 2009, 2010 and 2011). 

PROVIDeNT PLaNs IN FRaNCe 

Besides the obligatory Capital on Death for Executives under articles 4 and 4bis of the 1947 National Collective agreement (1.5% in 

tranche a) and the guarantees provided by the Chemical Industries National Collective agreement, L’oréal has put in place in France, 

through an agreement, a Provident Plan, providing additional collective cover to its employees. all of these guarantees are based on 

gross remuneration up to eight times the Social Security ceiling, except for the Education annuity, which is up to four times. They are 

generally financed on tranches a, B and C, except for the Education annuity which is financed on a and B and the Spouse’s annuity 

on levels B and C. 

The Provident Plan guarantees: 

• For all employees, in the event of incapacity, 90% of their gross salary, limited to eight times the Social Security ceiling, up to this net level 

of charges, after the first 90 days of stoppage; 

• For all employees, in the event of invalidity, a fraction, according to the level of invalidity, of up to 90% of the gross remuneration limited 

to eight times the Social Security ceiling, up to that net level of charges; 

• In the event of death: 

• For all employees, the payment of a Capital Sum on Death, up-rated according to the family situation. Its amount is doubled in the event 

of accidental death. 

• For Executives and Executive Level Employees, the payment of a Spouse’s annuity to the surviving spouse. It provides resources 

approaching those for a reversionary pension which aGIrC would have paid if death had occurred at 65. 

• For Executives, Executive Level Employees and sales people, the payment of an Education annuity to each dependent child, according 

to an age-related scale. For other employees, this guarantee is optional, substituting for a part of the Capital Sum on Death. 

The total amount of the capital making up these guarantees may not exceed €2.3 million per event. 

The capital making up the Spouse’s annuity is put together as a priority; the Education annuity is calculated afterwards; finally, the 

remainder of the basic plan is used to make up the Capital Sum on Death, possibly supplemented by the Guaranteed Minimum Death 

Capital Sum. 

In thousands of euros 31.12.2009 31.12.2010 31.12.2011 

Net provident contributions for the financial year 9,340.5 9,877.1 10,170.0 (1) 

(1) Estimated. 

GUaRaNTeeD MINIMUM CaPITaL sUM ON DeaTH 

on 1 December 2004, then 1 January 2005 for sales people, L’oréal put in place an additional death benefit which, where applicable, 

and for all employees, extends the death benefit up to three years of average earnings. This benefit is capped. The total amount of the 

capital at risk, making up the Spouse and Education annuities, the Capital Sum on Death and the Guaranteed Minimum Capital Sum on 

Death, is also capped. 

HeaLTHCaRe COsTs 

Employees of L’oréal S.a. and its French subsidiaries benefit from top-up cover plans for healthcare costs. The healthcare costs plan 

is compulsory for all employees of L’oréal and its subsidiaries. Their family members may also to be covered. Contributions are usually 

individual. The employee’s contribution is partly financed by the Company. Pensioners may continue to benefit from the healthcare costs 

plan with contributions from L’oréal, conditional on the duration of membership. The L’oréal pensioners plan was detailed in a retirement 

regulation on additional defined benefits applicable from 1 January 2008. The financial management of this plan was outsourced to 

insurance companies in July 2011. 

> For more information, see the 2011 reference Document, p.183: Provident and retirement plans and other benefits. 

9/14


MARKET PRESENCE 

I. CONTENTS 

aDD 

EC5 

range of ratios of standard entry level wage 

by gender compared to local minimum wage 

at significant locations of operation. 


EC5 

ReMUNeRaTION aND ITs GROWTH 

Personnel costs (including social charges) relates to the Cosmetics and TBS perimeter. 

In each country, the remuneration policy is based on a performance evaluation system applied throughout the world. Career development 

is managed on an individual basis and according to country, salaries and their growth are made up of an individual component and 

a collective component. L’oréal wishes to offer an attractive remuneration package, in order to attract and win the loyalty of the best 

talent. Consequently, almost all subsidiaries participate every year in a remuneration survey. remuneration varies according to each 

person’s position, skills, performance and potential. L’oréal meets its legal and contractual obligations in respect of remuneration in all its 

subsidiaries. 

ReMUNeRaTION IN L’ORÉaL sa 

average gross monthly remuneration of full-time men and women. 

This relates to employees (other than senior managers) on a permanent contract, employed for two consecutive years. Employees who 

have changed category are compared in the category to which they belong in the second year. 

CORe 

Millions of euros 2010 2011 

TOTAL 3,624 3,833 

10/14 

EC6 

Policy, practices, and proportion of spending 

on locally-based suppliers at significant locations 

of operation. 

EC7 

Procedures for local hiring and proportion 

of senior management hired from the local 

community at locations of significant operation. 

In euros 2010 2011 Change 

Men Women All Men Women All 

Executives 6,110 5,091 5,540 6,495 5,424 5,895 +6.4% 

Supervisors 

and technicians 

3,016 2,995 2,969 3,188 3,127 3,141 +5.8% 

Employees 2,242 2,124 2,169 2,379 2,259 2,305 +6.3% 

Labourers 2,543 2,440 2,506 2,676 2,585 2,643 +5.5% 

Sales staff 4,150 3,676 3,958 4,357 3,902 4,173 +5.4%


COMPaNY CONTRIbUTIONs 

In L’oréal Sa, the annual amount of company contributions in 2011 was €175,775,565. 

EC6 

one of the components in L’oréal’s sourcing policy is to ensure the development of suppliers in locations where the group is increasing 

its production and sales. The localisation of its purchasing in production zones is therefore a monitored indicator. In 2011, an average 

of 80% of purchases linked to production (packaging, raw materials, sub-contracting) were made with suppliers situated within the 

geographical production zone (Europe, USa, asia, Latin america, africa/Middle East). For example, american factories purchase 69% of 

their requirements in North america and European factories do 84% of their procurement in Europe. 

L’oréal’s objective is to increase the localisation of its purchases, mainly in the emerging zones, so as to meet local needs. To do this, 

Purchasing works with research and Innovation to reference local suppliers of raw materials (diversification programme or dual sourcing 

of raw materials) and with Packaging approval to reference local suppliers of packaging items and sub-contracting. 

For packaging items, a large “In-house production programme” is being run, for example, in several factories. It consists of installing a 

supplier’s machines and personnel in a L’oréal facility, even a production factory. This concept, which requires achieving a significant 

manufacturing volume to make the investment worthwhile, is perfectly suited to mass distribution cosmetics and to the technological 

specialisation in L’oréal factories. The approach is restricted to simple packages with a short production line, easy to set up on an existing 

site. In L’oréal, the “In-house” version was introduced for the first time in 2010 for the production of plastic bottles for Elsève and Fructis hair 

care products for the European market, at rambouillet and Settimo respectively. Today, there are five production sites involved: in France 

at rambouillet, in Belgium at Libramont, in Italy at Settimo, in the USa at Florence and in Brazil at São Paulo. In 2012, more than one billion 

finished products will be manufactured using this principle. L’oréal plans to introduce new installations between now and the end of 2012 

in Poland and Mexico and to conduct studies on other sites, everywhere where the model could be applied. The benefits of this “ultra” 

localisation are many: flexibility, environment, savings. 

Local suppliers are assessed on the same bases as other suppliers, i.e. on 5 KPI: quality, logistics, competitiveness, innovation, sustainable 

development. 

THe GLObaL “sOLIDaRITY sOURCING” PROGRaMMe 

Because the first economic and social contribution of a group is its purchasing power, L’oréal has also decided to make its sourcing an 

original way of fighting exclusion. So, in mid-2010 the group created a global solidarity purchasing programme: “Solidarity Sourcing”. Its 

purpose is to assist people from economically vulnerable communities to find long-term access to work and income. This initiative gives 

them the opportunity to re-integrate socially. 

Several initiatives had already been developed by the group, in particular the Body Shop’s “Community Fair Trade” programmes. With 

“Solidarity Sourcing”, L’oréal fundamentally transforms its purchasing process by opening it up to new categories of supplier to build 

sustainable, fair-trade commercial partnerships with them, creating economic and societal value. Involved in this programme are: 

companies working for the inclusion of disabled people, social insertion enterprises, micro-companies which find it difficult to access to 

large-scale specifiers, companies owned by minorities and producers operating a fair trade policy. 

It is intended to develop the programme in all countries where the group has locations. Collaborative tools have been put in place, so 

that projects which give birth to local initiatives (South africa, Brazil, China, France, Morocco, etc.) then influence all group employees that 

have the ability to make solidarity purchases. 

a year after starting “Solidarity Sourcing”, purchasing teams have launched 120 initiatives in 47 countries. Solidarity purchases by group 

brands, including The Body Shop, today have a global value of fifty million euros. Thanks to such projects, 29,000 people now have access 

to paid employment. 

> For more details, see the “Solidarity Sourcing” programme on: 

- the Company file (indicator So1). 

- “Solidarity Sourcing” pages 40 and 41 of the 2011 Sustainable Development report. 

EC7 

The group plans to grow very strongly in countries where it is already located. To achieve this objective and recruit real talent, the group 

selects candidates who demonstrate the potential to rise to different levels over a two to five year time span. It is also L’oréal’s aim to ensure 

the recruitment and internal mobility of senior managers, trustees of L’oréal culture. This strategic task falls to the Talent Management 

Directors who work closely with local Hr departments. Based within the countries, they have a close understanding of local needs, carry 

out recruiting and meet candidates, in order to select the most suitable profiles. There are currently five Talent Management Directors 

in the group: one for the USa, one for the Latin american Zone, one for the africa/Middle East Zone, one for the aSEaN (association of 

Southeast asian Nations) zone and one for China. The appointment of the first Talent Management Director dates from 2010. 

> For more details, see the Talents section on pages 30 and 31 of the 2011 Sustainable Development report. 

11/14


Growth of published group staff numbers (companies taken proportional to their rate of consolidation) 

Distribution by gender and average age of staff (Scope: Cosmetics and TBS) 

INDIRECT ECONOMIC IMPACTS 

Cosmetics The Body Shop Dermatology Group 

2010 2011 2010 2011 2010 2011 2010 2011 

Western Europe 23,996 24,254 4,803 4,891 743 1,011 29,542 30,155 4 

North America 11,110 11,762 3,231 2,948 470 485 14,811 15,195 4 

Asia Pacific 11,449 12,531 772 688 223 286 12,444 13,505 4 

Latin America 4,674 4,760 , , 205 233 4,879 4,993 4 

Eastern Europe 3,127 3,186 ,, , 20 22 3,146 3,207 4 

Africa/Middle East 1,783 1,817 , , 15 15 1,798 1,832 4 

New markets 21,033 22,293 772 688 462 555 22,266 23,536 4 

Total 56,139 58,309 8,806 8,527 1,674 2,050 66,619 68,886 4 

TOTAL MEN WOMEN AGE 

Western Europe 29,145 9,686 19,459 38 

North America 14,710 4,223 10,487 38 

Asia Pacific 13,219 4,103 9,116 33 

Latin America 4,760 2,314 2,446 36 

Eastern Europe 3,186 1,102 2,084 33 

Africa/Middle East 1,817 836 981 37 

New markets 22,981 8,355 14,626 34 

Total 66,836 22,264 4 44,572 4 37 4 

I. CONTENTS 

CORe 

EC8 

Development and impact of 

infrastructure investments and services 

provided primarily for public benefit 

through commercial, in kind, or pro 

bono engagement. 


aDD 

12/14 

EC9 

Understanding and describing 

significant indirect economic 

impacts, including the extent 

of impacts. 

% women 

67% 

71% 

69% 

51% 

65% 

54% 

64% 

67%


EC8 

sPONsORsHIP: GROUP sUbsIDIaRIes MaKe COMMITMeNTs TO THeIR COMMUNITY aND FIGHT aGaINsT INseCURITY bY PROVIDING 

WORK TO THe MOsT DIsaDVaNTaGeD. 

L’oréal has always fought against exclusion and insecurity, especially by training less favoured groups in the beauty industry. a strong 

group commitment to give back material independence and a future to the most vulnerable. Group subsidiaries have therefore launched 

example initiatives, like in Vietnam, where the “beauty for a Living” programme has already allowed 120 less favoured women, victims 

of violence or insecurity, to be offered training as hairdressers. a joint initiative with the Polytechnic University of Ho Chi Minh City, the 

Women’s association, conducted with technical support from L’oréal Professional teams, which has enabled 12 graduates to open their 

own salons and others to find work, increasing their income by a factor of two or even four times. The programme was welcomed by the 

government. In Brazil, L’oréal concentrates its work on the young in the less favoured communities of Sao Paulo and rio de Janeiro, fighting 

against the shortcomings in the education system. Its “oficina de Beleza” programme offers professional training as make-up artists and 

hair stylists. apart from training, students benefit from networking opportunities and work with L’oréal partners in “Fashion and Beauty” 

weeks or on television. 66% of the 130 young people trained have joined the job market. The subsidiaries also adapt to new needs in their 

community. L’oréal Thailand thus extended its “Beautiful Tomorrows” programme, intended for women who are victims of violence to 

those who have lost their jobs following the closure of factories caused by the floods in November 2011. This programme awards bursaries 

for eight months of intensive training in beauty trades at Ketvadi-Gandini International Hair Dressing academy, in order to give them back 

the stable resources which they need. 

L’oréal Singapore is engaged with the National association for the Visually Impaired by offering make-up and care and “appearance 

management workshops to these disabled people. In Japan, “100 Love Hands” gives hand massages to improve the well-being of women 

suffering from cancer and to mothers of children with rare diseases. Insertion through the beauty trades is another strong commitment: 

Through its “Beauty for a Living” programme, L’oréal Vietnam has helped 120 young women, since 2009, to escape from distress by training 

them as hairdressers, allowing them to open their own salons or to find employment. 

other countries undertake education for little girls, like, for the last three years, L’oréal Morocco, which has developed the “School for all” 

programme with the INSaF association (National Institute for solidarity with Women in Distress), to promote the education of little girls and 

fight against them being condemned to do domestic work. In 2011, workers also re-developed the premises of the Hsaine school in the 

Chichaoua region, that teaches 270 pupils. 

L’oréal entities also make commitments to emergency programmes. In Thailand, during the recent floods that struck the country, L’oréal’s 

local teams assisted 10,000 victims in emergency centres in the capital, by distributing emergency hygiene products and offering haircuts. 

In the longer term, the subsidiary is committed to extending its training programme in the beauty trades, initially intended for women who 

are victims of violence, to those who lost their jobs due to the factory closures resulting from the floods. 

Key figures: In 2011, L’oréal invested €33,208,098 around the world (other than sponsoring), allocated as follows: 

• Foundation: €8,140,848 

• Corporate: €11,221,376 

• Brands: €13,845,874 

Three main areas of action: 

• Science: promoting careers for women in science 

• Solidarity: assisting the most vulnerable to rediscover dignity and self-confidence 

• Education: making education more accessible 

EC9 

TOWaRDs beTTeR aCCess TO THe PRODUCTs 

Today, the western world is no longer the most dominant market for the cosmetics industry. To attract new consumers, while ensuring 

that products are accessible to them, requires constantly working on the economic suitability of the offering to the diversity of local 

populations. Taking the local specifics of different markets into account has a change effect on the design work done by teams. To best 

adapt the product offering to consumers’ requirements, the directors of subsidiaries and the local marketing departments now work 

closely with Product Development and Packaging teams. actually, accelerating innovation for new markets such as India, the Philippines 

and other aSEaN countries, requires knowledge of specific market requirements: for example, the right format for the product, the right 

process and ad hoc distribution. 

To adapt to south asian markets like Thailand, for example, L’oréal had opted initially for essentially urban distribution in hypermarkets. The 

launch of 10 g sachets, distributed in a large number of rural superettes enabled a strong acceleration of growth and, today, the group 

is the leader in skin care. This small-size packaging fits with consumers’ purchasing power, some paid by the week, as in the Philippines, 

where everything is in sachets, from facial care to cigarettes. In India and in Indonesia, shampoo in 80 ml bottles is the most popular. 

In parallel with these low-paid populations, a huge explosion of the middle classes in the big cities means that consumers are aspiring to 

beauty practices of a higher quality or with a greater frequency. To meet these needs, the ranges grow in parallel, both in bottle size but 

also in brand sophistication. In the New Markets, only China started with a less strong demand for sachets and with distribution provided by 

a more developed infrastructure. But the growth dynamic there is the same as in other countries. It results in greater consumption, greater 

appetite and more interest in the appearance of products. Close cooperation between the local marketing department and the Product 

Development and Packaging teams allows the offering to be better adapted. 

13/14


In pursuit of the same accessibility objective, L’oréal promotes ever more local production which provides consumers with access to a 

product at the best possible price. Today, the group has 41 factories, 35 of which are certified - ISo 9001 (version 2000) or FDa (quality 

certification), oHSaS 18000 or VPP (safety), or even ISo 14000 (environment) - producing 86% of units sold. With this industrial policy, L’oréal 

products meet the same quality standards throughout the logistics chain, wherever they are produced in the world. 

> For more details, see the file “Products accessible to the vast majority of people” on pages 8 and 9 of the 2011 Sustainable Development 

report. 

THe GLObaL “sOLIDaRITY sOURCING” PROGRaMMe 

In mid-2010 the group created a global solidarity purchasing programme: “Solidarity Sourcing”. Its purpose is to assist people from 

economically vulnerable communities to find long-term access to work and income. This initiative gives them the opportunity to reintegrate 

socially. With “Solidarity Sourcing”, L’oréal fundamentally transforms its purchasing process by opening it up to new categories 

of supplier to build sustainable, fair-trade commercial partnerships with them, creating economic and societal value. It is intended to 

develop the programme in all countries where the group has locations. 

> For more details, see the article “Solidarity Sourcing” on pages 40 and 41 of the 2011 Sustainable Development report. 

THe bODY sHOP “COMMUNITY FaIR TRaDe” PROGRaMMe 

Several initiatives had already been developed by the group, in particular the Body Shop’s “Community Fair Trade” programme. With its 

fair trade programme, The Body Shop purchases from 25 suppliers spread across 21 countries to obtain quality ingredients with proven 

traceability. This programme directly benefits more than 300,000 people in marginalised communities throughout the world. Since its 

acquisition by the L’oréal group in 2006, it has introduced L’oréal buyers to “Community Fair Trade” suppliers. Today, the group uses four 

ingredients belonging to the Body Shop range of products: aloe, olive, sesame and sugar. 

> For more details, see the “Solidarity Sourcing” and “Community Fair Trade” programmes on the company sheet (indicator So1). 

14/14


MANAGEMENT APPROACH 

Environment 

To manufacture and distribute products while respecting the environment and people is an essential element of the vision of L’oréal’s 

sustainable development. 

The teams are committed daily to the reduction of L’oréal’s environmental footprint. The group’s environmental policy relies on strict 

compliance with regulations, internal standards applicable to all its sites, business processes based on prevention, reduction and reuse. 

Their policy is accompanied by a detailed monthly report of indicators which monitor the development of the results. In addition, the 

L’oréal managers are responsible for implementing environmental policy, practical activity and the achievement of objectives. 

L’oréal has 41 factories and 74 distribution centres across the world. In 2011, the group manufactured and distributed more than 5.78 billion 

products. 

The factories and distribution centres are committed to highly ambitious environmental targets: 

• 50% absolute reduction in greenhouse gas emissions (scope 1 and 2). 

• 50% reduction in waste generated per finished product. 

• 50% reduction in water consumption per finished product. 

reductions are calculated on a like-for-like basis for the 2005-2015 period. 

ENERGY AND GREENHOUSE GAS IN MANUFACTURING 

The cosmetics industry has a relatively low energy demand in comparison with other sectors. Thereby, L’oréal is exempt from the European 

regulations on carbon emission quotas. 

However, the group is committed to using energy efficiently and reducing dependency on fossil fuels. as far as possible, L’oréal purchases 

natural gas rather than fuel oil (which has a higher carbon content) and continues to develop their renewable energy strategy. 

The group values each initiative taken by its sites across the world. Each saving is important in reducing the global carbon footprint. 

• absolute reduction in greenhouse gas emissions of 29.8% between 2005 and 2011. 

WATER USE 

Most of the water used in L’oréal factories is for cleaning production equipment and packaging lines aimed at maintaining our strict 

hygiene standards. This represents approximately 40% of all water consumption in the group’s industrial sites. 

To meet its targets, L’oréal strives to reduce the amount of water used in all areas (cleaning, sanitary, cooling…). a new method called 

optiCIP has been developed. It enables us to take into account site specifics such as equipment and type of product, and then apply the 

most efficient cleaning processes in the factories. 

In 2010 and 2011, several factories launched pilot projects, with initial findings showing significant reductions of 50% and more on certain 

types of equipment. Implementation programmes are now in place, with the aim of applying the optiCIP method in all manufacturing 

equipment. 

• Water consumption per finished product decreased by 22.6% between 2005 and 2011. 

WASTE 

L’oréal has followed a robust policy of waste management for many years. This goes beyond regulatory compliance, and consists of 

waste prevention, recycling and reuse as well as energy recovery in order to avoid sending waste to landfill. 

In 2011, in line with the goals set of reducing waste per finished product by 50% (2005-15), the group launched new initiatives that go further 

in reducing waste at source while reducing the overall environmental footprint. 

• 95.7% of the waste is reused, recycled or recovered for the production of energy. 

• More than 50% of the sites send no waste to the landfill. 

• Transportable waste generated per finished product decreased by 24.2% between 2005 and 2011 (excluding returnable packaging). 

TYPES OF WASTE 

Waste is defined as any materials, other than products, leaving the L’oréal sites, and the group distinguishes different types of waste in 

accordance with European regulations. 

These include transportable wastes (including cardboard, paper, plastic, dirty packaging, pallets, and manufacturing residues), returnable 

packaging for transport that circulates between the suppliers and the sites, and exceptional waste such as construction debris. 

CERTIFICATION 

88% of the L’oréal’s plants have the ISo 9001 (2000 version) or FDa quality certification, 85% have the oHSaS 18000 or VPP safety certification 

and 90% have the ISo 14000 environment certification. 

1/12


TRANSPORT 

L’oréal optimises its global production on a regional basis, placing operations teams as close as possible to the markets they serve. This 

allows each production site to be more responsive and more efficient in terms of logistics and transport. 

While, relatively speaking, greenhouse gas emissions in the cosmetics industry is limited, transport still contributes to L’oréal’s overall 

carbon footprint. 

L’oréal’s logistics network moves over 5.78 billion products a year from factories to distribution centres to the customers all over the world. 

NEW CARBON REDUCTION INITIATIVES 

road transport represents 58% of the means of transport used by L’oréal. as far as possible, the logistics teams use greener forms of 

transport that enable the group to meet required costs and deadlines. In 2011, L’oréal has placed priority on other methods and different 

modes of transport with lower greenhouse gas emissions. 

> For more details, see page 24 of the Sustainable Development report 2011. 

BIODIVERSITY 

In 2010, the signatory countries to the Convention on Biological Diversity approved the Nagoya Protocol, aimed at regulating access to 

resources in a given territory and the fair sharing of benefits resulting from those resources. L’oréal research was aware of these issues well 

before the protocol came into effect, and since 2005 has continuously striven to secure its supply chains so that they meet the issues of 


This awareness goes hand in hand with the increasing use of renewable plant-based ingredients in their products, as with Biotherm which 

launched a men’s deodorant with 100% natural ingredients this year. Palm oil supply is a significant example: in 2011, L’oréal’s was again 

recognised as sustainable by the WWF with a score of 9/9 on their rating scale. Similarly, the group’s argan sourcing was the subject of 

a presentation by an external expert, Daniel robinson (New South Wales University, australia), during the “Union for Ethical BioTrade” 

conference, where it was hailed as a proactive initiative for “accessing and sharing benefits”. 

SUMMARY OF THE ENVIRONMENTAL PERFORMANCE OF FACTORIES AND DISTRIBUTION CENTRES OF THE L’ORÉAL GROUP 

• Increase of 15.8% in manufacturing capacity (2005-2011) 4. 

• Emissions of greenhouse gases: absolute reduction of 29.8% (tonnes of Co 2 , direct and indirect 2005-11) 4. 

• reduction in water consumption of 22.6% (litres per finished product, 2005-11) 4. 

• reduction of 24.2% in production of transportable waste (grams per finished product, excluding returnable packaging, in the factories 

and distribution centres, 2005-11) 4. 

ENERGY 

I. CONTENTS 

CORE 

ADD 

EN3 

Direct energy consumption by primary 

energy source. 

EN4 

Indirect energy consumption by primary 

source. 

EN5 

Energy saved due to conservation 

and efficiency improvements. 

2/12 

ADD 

EN6 

Initiatives to provide energy-efficient 

or renewable energy based products 

and services, and reductions in energy 

requirements as a result of these initiatives.



EN3 

The direct energy consumption of all the factories and distribution centres of the group, measured in gigajoules (GJ), is detailed below: 

: 

2010 2011 

Coal 0 GJ 4 

Natural Gas 1,344,932 GJ 1,184,257 GJ 4 

Fuel 64,394 GJ 69,511 GJ 4 

Biofuel 0 GJ 4 

Ethanol 0 GJ 4 

Hydrogen 0 GJ 4 

Total 1,409,326 GJ 1,253,768 GJ 4 

Biomass 16,586 GJ 

Direct energy consumption divided by source of primary renewable energy 24,069 GJ 

TOTAL ENERGY CONSUMPTION 

DISTRIBUTION BY ENERGY SOURCE (1 000 x MWh) 

3/12 

2006 2007 2008 2009 2010 2011 

1,000 x MWh 808 815 786 791 799 746 4 

Consumption for 1,000 finished products (kWh/1 000 PF) 177 169 169 174 158 145 4 

2006 2007 2008 2009 2010 2011 

Total 808 815 786 791 799 746 4 

Electricity 374 378 362 371 374 374 4 

Gas 380 401 393 376 374 329 4 

Fuel 54 36 30 27 18 19 4 

Steam - - - 16 23 19 4 

Geothermal - - - 0 1 0 4 

Solar Thermal - - - 0 1 1 4 

Other non-fossil energy - - - 1 9 5 4


EN4 

The indirect energy consumption of the L’oréal factories and distribution centres, measured in gigajoules, is indicated as follows: 

2011 

Electricity 1,064,738 GJ 4 

Heating and air conditioning 0 GJ 4 

Steam 68,985 GJ 4 

Nuclear Energy 0 GJ 4 

Other forms of imported energy 0 GJ 4 

Total 1,133,723 GJ 4 

Intermediate energy bought and consumed, stemming from renewable energy sources: 1,324,552 GJ. 

L’oréal does not possess information about primary fuels used in the production of electricity that the factories and distribution centres 

purchase, nor on their origin. 

EN5 

During the year 2011, L’oréal has put in place new projects to optimise its activity: redefinition of the processes (e.g.: new DC in roye, 

energy saving, heat recovery, improvement of manufacturing in terms of overall efficiency), conversion and adjustment of equipment and 

changes in staff behaviour. To estimate the overall improvement, while the activity of the group remains unchanged (manufacturing of 

cosmetics), the Environment team has calculated the GJ/million of units produced. It was found that overall efficiency has increased by 

8.1%. To find the amount of energy saved, this progression was applied to the overall energy consumption. 

SOLAR ENERGY 

The initiatives abound in the L’oréal factories around the world. at each, the project is adapted to its location and configuration. The 

Yichang factory in China, has installed 2,000 solar tubes for preheating water, allowing for a 6% reduction in its fuel consumption. The 

Burgos factory in Spain will reach a neutral carbon balance thanks to a large biomass project and already uses green technologies such 

as solar panels and biomass for heating a building. In Pune, India, the factory uses solar energy to preheat the washing water, which allows 

for a 7% reduction of its total energy consumption. It already has 320 solar panels distributed over 970 m 2 . another emblematic example 

of the group’s willingness for specific environment results is Piscataway in the United States, which will soon have reduced its Co 2 emissions 

by 60%: due to the installation of LED lighting and solar panels on the site’s roofs, a reduction equal to 1,000 tonnes of Co 2 has been 

reached. on the Franklin site in New Jersey, where power consumption is lower than the Piscataway factory, the solar panels should allow 

for a reduction of 25% in Co 2 emissions, which is a decrease of 1,700 tonnes of Co 2 in 2012. In Montreal, solar walls are used not to produce 

electricity but to preheat the cold air outside before being distributed inside the buildings, during the cold season. one hundred tonnes 

of carbon for heating are thus saved, which previously derived from the use of natural gas. 

WIND TURBINES 

Since 1 st December 2011, L’oréal Mexico has access to wind power through its participation in the company Eurus, a company producing 

this renewable energy. Henceforth, 84% of the electrical energy consumed by the Mexico factory and the Centrex site comes from the 

wind, which will allow, from 2012, a reduction of 60% in the emissions of Co 2 compared with 2005. In 2012, L’oréal will also open its largest 

hair dye plant in the world at Villa de reyes, in the State of San Luis Potosí. This new production site, the group’s second in Mexico and the 

fourth in Latin america, will also call on wind power. 

4/12 

2010 2011 

Finished products in millions 5,062.8 5,154.9 4 

Total energy consumption 2,871,700 GJ 2,687,960 GJ 4 

GJ per million finished products 567.2 521.4 4 

Overall efficiency 8.1% 

Energy saved through conservation and improvements 235,998 GJ 

EN6


BIOGAS 

In 2009, a unique system of biomethanisation was implemented in Libramont, Belgium. In this factory, the electricity and hot water are 

produced from the combustion of methane gas generated from agribusiness waste. This production covers more than 100% of the electrical 

energy requirements essential to the operation of the factory and 80% of the plant’s heating needs to produce steam in the production 

processes. This installation has reduced the use of fossil fuels, and the surplus electricity transferred to the network was equivalent, in 2010, 

to the consumption of 4,000 homes. a successful experience that will inspire other projects in the group in the years to come. 

> For more details, see the heading Environment/Energy on pages 22 and 23 of the Sustainable Development report 2011. 

ELECTRICITY 

The Vichy plant benefits from an ambitious partnership between L’oréal and EDF. Goal: 50% reduction in the site’s Co 2 emissions. To 

achieve this, EDF optimal Solutions (a subsidiary specialising in eco-efficient energy use) has designed a global custom-made energy 

solution, taking into account the specificities of the industrial processes at Vichy. The new facilities, inaugurated in June 2011, allow for 

triple energy recovery (capable of annually heating the equivalent of 12 olympic pools, or 88,000 m 3 of water for washing), an efficient 

geothermal energy which heats all 50,000 m 2 of the premises. It also includes a “free cooling” system, a technique that replaces standard 

renovation with the use of fresh outdoor air. a speed controller on one of the air compressors would adapt its operation to the needs of 

the site; remote management tools have been planned to monitor energy consumption in real time and Co 2 savings to the pace of the 

production. 

> For more details, see the heading Environment/Energy on pages 22 and 23 of the Sustainable Development report 2011. 

BUS PROJECT (BETTER UTILITIES FOR SUSTAINABILITY) 

The BUS project, a group-wide pilot project run by operations managers, is drawing on expertise from across L’oréal to identify methods, 

technical solutions and good practices in cleansing, cooling, air compression and other factory processes. 

To date, we have identified 11 good practices in water conservation and energy efficiency; these are accompanied by technical 

recommendations which are implemented throughout the group. 

> For more details, see page 197 of the reference Document 2011. 

WATER 

2011 Total 

Direct CO 2 (t) 71,012 4 

Indirect CO 2 (scope 2) (t) 91,558 4 

SO 2 (t) 6,5 4 

Electricity (MW) 373,756 4 

Gas (MW) 328,960 4 

Fuel (MW) 19,309 4 

Others (MW) 24,587 4 

Energy Consumption (MW) 746,612 4 

I. CONTENTS 

CORE 

EN8 

Total water withdrawal by source. 

5/12 

ADD 

EN9 

Water sources significantly affected 

by withdrawal of water.



EN8 

L’oréal carries out pre-treatment adapted to the various types of effluents before discharging into the municipal wastewater treatment 

plants. L’oréal has on-site wastewater treatment in nearly 60% of its sites, using state of the art facilities with physical, chemical and 

biological processes. In some sites, pre-treatment is not required. However, all the wastewater is tested before being sent to municipal 

treatment plants or discharged. The group’s warehouses and offices do not generate significant amounts of wastewater, other than the 

normal wastes. 

Chemical oxygen demand (CoD) is the most common indicator used for wastewater treatment needs. our overall CoD generation (in 

kilotonnes) increased by 8.9% in 2011. 

• reduction of 7% in wastewater quality after on-site treatment, to 1.2 g chemical oxygen demand (CoD) per finished product 4; 

• reduction of 5.9% in CoD of wastewater before treatment (corresponding to 18.5 kg CoD per tonne of bulk product) 4. 

The total volume of water withdrawn by all the Group’s factories and centres, in annual cubic meters (m 3 /year), derive from the following 

sources. 

Ground water 331,677 m3 4 

Rainwater collected directly and stored by the reporting organization negligible volumee 

Wastewater from another organization 0 m3 Water from the municipal network or other water suppliers 2,552,121 m3 4 

TOTAL 2 883 798 m3 4 

> For more details, see section “6.2.3. Sustainable use of resources” on page 196 of the reference Document 2011. 

EN9 

No water supply source is significantly affected by the withdrawals. Most of the industrial sites are located in urban areas. Mean withdrawal 

volume of a site corresponding to the volume withdrawn by 1,000 - 1,500 inhabitants (130 l/capita/day): these figures do not significantly 

affect the water supply sources. 

BIOdIvERSITY 

I. CONTENTS 

CORE 

ADD 

EN12 

Description of significant impacts of activities, 

products, and services on biodiversity in 

protected areas and areas of high biodiversity 

value outside protected areas. 

EN14 

Strategies, current actions, and future plans 

for managing impacts on biodiversity. 

6/12 

ADD 

EN15 

Number of IUCN red List species and national 

conservation list species with habitats in areas 

affected by operations, by level of extinction risk.



EN12 

Concerning Biodiversity and sourcing of renewable raw materials, L’oréal applies the same approach whether or not they are from 

rich and/or sensitive Biodiversity areas. So since 2006, all the group’s raw materials of the group are strictly examined on the criteria of 

respecting Biodiversity (ecological status of the resource and/or of its ecosystem, potential protective measures of the resources, impact 

of production on the natural environments, etc.). These data are controlled through “Plant Data Sheets” (for the 300 plant species origin 

of the renewable raw materials) and the raw Material Sustainability assessment (implemented for raw materials considered sensitive). 

The latter establishes a specific ecological profile of the species assessed in our raw materials and the ecosystems from which they are 

derived to ensure sustainable sourcing. 

The programme “Sustainable sourcing of argan” is also a good example of specific action since the argan forest has been declared a 

Biosphere reserve by UNESCo. 

In the framework of this approach, in 2011, L’oréal applied the Business and Biodiversity Interdependence Indicator, developed by the 

orée association of which the group is a member (BBII, http://www.oree.org/en/bbii-indicator.html), to the sourcing its raw Materials. 

EN14 

Since 2006, all the group’s raw materials of the group are strictly examined on the criteria of respecting Biodiversity (ecological status of 

the resource and/or of its ecosystem, potential protective measures of the resources, impact of production on the natural environments, 

etc.). These data are controlled through “Plant Data Sheets” (for the 300 plant species origin of the renewable raw materials) and the raw 

Material Sustainability assessment (implemented for raw materials considered sensitive). The latter establishes a specific ecological profile 

of the species assessed in our raw materials and the ecosystems from which they are derived to ensure sustainable sourcing. 

In the framework of this approach, in 2011, L’oréal applied the Business and Biodiversity Interdependence Indicator, developed by the orée 

association of which the group is a member (BBII, http://www.oree.org/en/bbii-indicator.html), in the case of sourcing its raw Materials. 

ANTICIPATE THE DEVELOPMENT OF INTERNATIONAL REGULATION ON ACCESS TO NATURAL RESOURCES (CONVENTION ON BIOLOGICAL 

DIVERSITY, SEE NAGOYA PROTOCOL) 

In 2010, the signatory countries to the Convention on Biological Diversity approved the Nagoya Protocol, aimed at regulating access to 

resources in a given territory and the fair sharing of benefits resulting from those resources. L’oréal research was aware of these issues well 

before the protocol came into effect, and since 2005 has continuously striven to secure its supply chains so that they meet the issues of 


In the context of the issue of responsible Biodiversity use, in particular since the adoption of this Protocol, the establishment of an 

international regime on access and benefit-sharing (aBS) supporting a shared goal of innovation and conservation of biodiversity is 

crucial. aim at strengthening predictability and legal safety of research activities and to promote the establishment of trust relationships 

with research and/or supply partners, in compliance with the conservation objectives expressed by the Convention on Biological Diversity. 

> For more details, see reference Document 2011 p. 197 6.2.5. Biodiversity protection. 

EN15 

The group has nothing to report on the possible species present in areas directly affected by our activities. 

Concerning renewable raw Materials, the research strictly follows their ecological status and their potential inclusion in one of these lists. 

Where appropriate, all the responsible sourcing safeguards are obtained from suppliers (regulatory compliance, voluntary sustainable 

resource management plan, audits and certifications, substitution, etc.). 

7/12


EMISSIONS, EFFLUENTS ANd WASTE 

I. CONTENTS 

CORE 

ADD 


EN16 

EN16 

Total direct and indirect greenhouse gas 

emissions by weight. 

EN17 

other relevant indirect greenhouse gas 

emissions by weight. 

EN18 

Initiatives to reduce greenhouse gas emissions 

and reductions achieved. 

L’oréal’s GHG emissions come from its energy consumption for all the group’s production and distribution sites. 

L’oréal uses the GHG protocol (Greenhouse Gas Protocol). Calculations are based on specific data: for each source of energy (natural 

gas, fuel, steam, electricity), L’oréal multiplies the energy consumption by the relevant emission factor: 

• For gas and fuel, L’oréal applies the emission factors recommended by the GHG protocol. 

• For electricity, the group uses the emission factor of the local supplier, if the latter is available. otherwise, it applies the last factor 

provided by the International Energy. 

Direct Emissions 

Indirect Emissions 

71,012 tonnes of CO 4 2 

95,238 tonnes of CO 4 2 

TOTAL 166,250 tonnes of CO 4 2 

EN17 

The GHG emissions are of Co 2 . The group’s indirect GHG emissions (besides electricity, heat and steam) are mainly froms: 

• Use of products by customers (hot water): estimated at 3,500,000 tonnes of Co 2 4. 

• Components of the finished products: estimated at 790,000 tonnes of Co 2 4. 

• raw materials for the finished products: estimated at 660,000 tonnes of Co 2 4. 

• Transportation of finished products, raw materials and components: estimated at 380,000 tonnes of Co 2 4. 

The total indirect GHG emissions (except electricity) are estimated at 5,900,000 tonnes of Co 2 4. 

8/12 

CORE 

ADD 

EN19 

Emissions of ozone-depleting substances 

by weight. 

EN20 

No, So, and other significant air emissions 

by type and weight. 

EN21 

Total water discharge by quality and destination. 

EN22 

Total weight of waste by type and disposal 

method. 

EN24 

Weight of transported, imported, exported, or treated 

waste deemed hazardous under the terms of the Basel 

Convention annex I, II, III, and VIII, and percentage of 

transported waste shipped internationally.


EN18 

Each factory and distribution centre strives, on a voluntary basis, to reduce their greenhouse gas emissions, through a variety of actions: 

• optimisation of steam networks in factories, less consumption of fossil fuels, 

• optimisation of heat in the factories and DC, less consumption of fossil fuels, 

• Use of heat pumps, 

• recovery of energy generated by wastewater, 

• recovery of energy from compressors, 

• optimising the electricity consumed, as in the generation of compressed air, use of LEDS in some sites, variable frequency motors to 

adapt the speed to the needss, 

• Changes in staff behaviour, 

• on-site production of renewable electricity (solar), 

• Use of geothermal energye, 

• Purchase of green power… 

Scope 1 

Factories Scope 2 

Total 

Scope 1 

Centres Scope 2 

Total 

Scope 1 

F + DC Scope 2 

Total 

EN19 

• Tonnes of substances (estimate): 0.184 t. 

• Tonnes of equivalent CFC-11 (estimate): 0.178 t. 

These estimates come from a survey performed on the 2009 values. This study shows that the equivalent Co 2 emitted by the oDS* represents 

less than one per cent of direct Co 2 emissions. Using the total direct emissions, we have estimated the oDS* to the group’s scale (tonnes 

of Co 2 ); this quantity was then translated into equivalent tonnes of CFC-11. Concerning substance quantity, we based the calculation on 

the amount emitted by the study sample concerning the equivalent amount of Co 2 . 

* ozone-depleting substances 

EN20 

TCO 2 2010 2011 Development 

The calculation below is established according to the data recorded by the various sites: 

NO negligible 

SO 6,532 kg 4 

POP 0 

VOC 121.8 t 4 

PAHs 0 

Smoke emissions and fugitive emissions 0 

Particulate matter, cosmetic powder negligible 

EN21 

Before being discharged, wastewater quality is tested in compliance with legal and contractual requirements. approximately 60% of 

the L’oréal sites include on-site treatment with state of the art facilities using physical, chemical and biological processes. In 2011, the 

group increased its CoD (chemical oxygen demand, the most common indicator used for wastewater treatment) by 7%, or 1.2 g per 

finished product, following on-site treatment. Most of the time, L’oréal’s wastewater discharge is relatively low compared to the volume 

of municipal wastewater. 

• Installation of collective treatment: 1,711,266 m 3 . 

• Watercourse: 111,788 111 788 m 3 . 

Treatment method: 

• Physical-chemical treatment: 257,324 m 3 . 

• Biological treatment: 364,022 m 3 . 

• Physical-chemical and biological treatment: 384,140 m 3 . 

• others (decantation, filtration): 817,568 m 3 . 

64,747.6 

73,362.1 

138,109.1 

15,203.2 

22,213.6 

37,416.7 

79,950.8 

95,575.7 

175,526.4 

9/12 

59,460.9 

76,795.7 

136,256.6 4 

11,550.9 

18,442.3 

29,993.3 4 

71,011.8 

95,238.1 

166,249.9 4 

-8.2% 

4.7% 

-1.3% 

-24.0% 

-17.0% 

-19.8% 

-11.2% 

-0.4% 

-5.3%


Waters reused by other organizations: None. 

Total volume: 1,823,054 m 3 . 

• BoD: 2,195 t. 

• CoD: 6,356 t 4. 

> For more details, see reference Document 2011 page 196 6.2.3. Sustainable use of resources. 

EN22 

This deals with Hazardous Waste (according to the national law definition at the generation site) and Non-hazardous Waste (all other types 

of solid or liquid waste, other than wastewater). 

Reuse (1) 50,320 4 

Recycling (1) 41,783 4 

Composting (1) 5,038 4 

Recovery, including the energy recovery (1) 34,672 4 

Incineration (burning in bulk) (1) 2,240 4 

Injection into deep wells (1) 0 

Landfill (1) 3,736 4 

On-site storage (1) 0 

Others (1) (1) In tonnes 

0 

The disposal method is determined on the basis of information provided by the scrapping company. 

> For more details, see reference Document 2011 page 195 6.2.2. Pollution and waste management. 

EN24 

• Total mass of hazardous wastes transported, by destination: 11,977.0 t. 

• Mass of hazardous wastes transported to the reporting organization, from external sources/suppliers not belonging to the reporting 

organization, by destination: 0 t. 

• Mass of hazardous wastes transported from the reporting organization, to external sources/suppliers not belonging to the reporting 

organization, by destination: 11,977.0 t. 

• Mass of hazardous wastes shipped to the interior of the country and/or internationally between sites owned, leased or managed by the 

reporting organization, by destination: 0 t. 

• Total mass of hazardous wastes transported: 11,977.0 t. 

• Total mass of hazardous wastes imported: 0. 

• Total mass of hazardous waste exported: unknowne. 

• Total mass of hazardous wastes treated: 11,977.0 t. 

PROdUCTS ANd SERvICES 

I. CONTENTS 

CORE 

EN26 

Initiatives to mitigate environmental impacts 

of products and services, and extent of impact 

mitigation. 

CORE 

10/12 

EN27 

Percentage of products sold and their 

packaging materials that are reclaimed 

by category.



EN26 

GREEN CHEMISTRY 

Since 1999, the research teams have placed the principles of green chemistry at the core of their eco-design approach. Their methods 

are being refined year after year. In 2011, the processes used to obtain Pro-Xylane (a natural sugar derivative extracted from beech 

wood) were further improved. By reducing the quantity of solvents used, its “E-factor” (the quantity of waste generated by each product 

quantity) was reduced still further to 4.9 (compared to the initial 13 and 6.6 in 2009). 

over the years, L’oréal has been improving the proportion of plant-based raw materials in its portfolio. In 2011, 55% of new raw materials 

registered were of plant origin, compared with 40% in 2010. The same year, the teams increased the amount of incorporated raw 

materials respecting green chemistry principles to 45% (compared with 26% in 2010). and in scientific circles like the annual Green 

Chemistry Conference held in Washington in June 2011, L’oréal was acclaimed and cited in this field as the main industrial player in 

cosmetics. 

TEST MINIATURES TO REDUCE WASTE 

The concept is simple: to generally reduce as much as possible the quantity of substances used during tests, as well as the quantity of 

substrate required to conduct them. For example, when testing a hair colour product, the evaluation teams had, for decades, worked on 

either wigs of several hundred grams of hair, or locks of a few grams. To reduce the consumption of both hair and chemical products, it 

was necessary to gradually decrease the quantities of hair used down to mini-locks, then to samples in small test tubes, and then finally to 

the stage of hair powder. Nowadays, only 10 milligrams of hair and just a few milligrams of chemical products are used for our hair colour, 

hair care and make-up tests (mascaras, for example). Historically, this systematic miniaturisation was initiated by biology, which can go 

as far as conducting tests on a single molecule. L’oréal’s approach has therefore consisted of extrapolating these concepts to far more 

physical tests that are closer to the actual usage properties of cosmetics products. 

TOWARDS BIODEGRADABILITY OF FORMULAS 

To constantly minimise the environmental impact of ingredients, research teams work on improving the biodegradability of formulas. This 

property is gauged by working out the total percentages of biodegradable ingredients. once the calculations are made, strict internal 

criteria are applied to award “biodegradable” status to the formula. So 2011 saw the launch of the 97% biodegradable Ultra Doux almond 

and Lotus Flower shampoo and conditioner, and the 94% biodegradable Fructis Pure Brilliance shampoo and conditioner. 

RESPONSIBLE SOURCING 

L’oréal research has adopted an approach of supporting its supply chains since 2005. This awareness goes hand in hand with the 

increasing use of renewable plant-based ingredients in their products, as with Biotherm which launched a men’s deodorant with 100% 

natural ingredients this year. The supply of palm oil is also a significant example: in 2011, L’oréal’s sourcing received new sustainable 

recognition by the WWF with a score of 9/9 on their rating scale. 

> For more details, see: 

- The website 

http://wwf.panda.org/what_we_do/footprint/agriculture/palm_oil/solutions/responsible_purchasing/scorecard2011/scores/volume/ 

manufacturers/ 

- The heading research/Eco-design on pages 14-17 of the Sustainable Development report 2011. 

TOWARDS AN ECO-DESIGN OF PACKAGING 

Since 2007, L’oréal has been committed to a strict policy of forestry certification for its paper and cardboard packaging through the active 

promotion of FSC (Forest Stewardship Council) certification. FSC-certified materials are produced via responsible forestry operations that 

guarantee the forest’s sustainable management, committed to the employment of local and regional workforces and the enforcement 

of stringent safety standards. 

In parallel, L’oréal undertakes to carry out the actions aimed at reducing the weight and volume of its packaging and lessen its impact 

on the environment. So every time a packaging is renewed, a simplified comparative life cycle analysis is conducted to select a design 

that will help reduce these effects. This study takes into account all the stages of the packaging’s life cycle and is based on eight impact 

indicators (including Co 2 , water, eutrophication, waste...). 

For several years, Garnier has been embarked on an eco-design initiative consisting of successive stages in line with the existing design of 

its products and packaging. The iconic 50 ml skin care jar initially used 40% recycled glass, enabling a reduction in the energy consumed 

in producing the jars. Then, for its latest renewal in 2011, Garnier opted for a lighter plastic design which both more attractive and reduces 

the packaging’s impact on the environment by 30% (according to the life cycle analysis carried out by an independent market research 

firm and confirmed by a jury of experts, in accordance with the ISo 14040 and 14044 standards). 

The Biotherm brand, with regards to this, saves several tonnes of packaging. In 2011, 80% of the 50 ml glass jars used for skin care cream 

contained recycled glass (up to 40%). 100% of the cardboard packaging was certified (70% FSC and 30% PEFC, with a target of 100% 

FSC). The elimination of instruction leaflets, now printed on the inside of the box, saved 24 tonnes of paper in 2011 (compared with 30 

tonnes expected in 2012). The plastic PE bottles have also been revamped: a 6 g reduction in the 400 ml bottle, from 40 to 34 g, and a 

2.5 g reduction for the 200 ml, from 25 to 22.5 g. That is 10 tonnes of plastic saved in 2011, with a saving of 26 tonnes planned for 2012. a 

11/12


community spirit brand, Biotherm encourages consumers to recycle by using twist-off pumps and providing helpful information on the 

packaging. 

> For more details, see the heading Environment/Packaging on pages 20-21 of the Sustainable Development report 2011. 

EN27 

This indicator is not followed at the group level, in a consolidated manner. on the other hand, a number of the group’s brands have 

programmes in this direction: 

• http://www.kiehls.fr/services/service.aspx?topcode=aboutKiehls. 

• http://www.garnier.com.au/_en/_au/garnier/green_tips.aspx. 

• http://www.thebodyshop.com/_en/_ww/values-campaigns/protect-planet.aspx. 

12/12


Employment, Social Relations 


and Decent Work 

THE L’ORÉAL HUMAN RESOURCES POLICY 

L’Oréal has always placed the human dimension at the heart of the company and done so with a long-term vision. after all, the development 

of men and women is one of the key elements in the group’s economic and social performance. 

The desire for an active diversity policy as a driving force for progress, innovation and the creation of social cohesion has been expressed for 

many years and is gradually being enriched with the group’s global expansion. 

renowned as one of the most attractive companies on the planet for young graduates and one of the most formative in terms of the 

development of leadership among its directors, L’Oréal permanently seeks a balance between the constant improvement of its organizational 

efficiency and the enrichment of its talent pool, at all levels and in all countries. 

L’ORÉAL’S HUMAN RESOURCES POLICY IS BASED ON: 

• an active recruitment policy supported by partnerships with the world’s leading educational institutions, the use of innovative business 

games and methods permitting the identification and attraction of the best talent and its efficient selection among the one million unsolicited 

applications received each year. 

• The aim of allowing every employee to evolve courtesy of individual performance monitoring and numerous opportunities for progression, 

supported by comprehensive training programmes that are accessible to all. Internationally based training structures allow these programmes 

to be delivered throughout the world. The significant level of mobility between posts and countries and the numerous individual promotions 

that take place each year testify to the vitality of career management within L’Oréal. This dynamic is ensured by an Hr network that is both 

closely attuned to employees’ expectations and aware of the business requirements. 

• a desire to recognize the actual contribution of each individual via a dynamic remuneration policy and global long-term incentive schemes. 

• regular evaluation of the expectations of staff from all over the world via opinion polls that generate action plans. 

• Seeking a work environment and conditions conducive to the personal blossoming of each individual. 

• an active social dialogue with staff and their representatives both in Europe and the rest of the world. 

EMPLOYMENT 

I. CONTENTS 

CORE 

LA1 

Total workforce by employment type, employment 

contract, and region. 

LA2 

Total number and rate of employee turnover 

by age group, gender, and region. 

1/16 

ADD 

LA3 

Benefits provided to full-time employees that 

are not provided to temporary or part-time 

employees, by major operation.



LA1 

Development of group’s reported workforce (proportional companies taken at their rate of consolidation) 

Cosmetics The Body Shop Dermatology Group total 

(*) Israel and Turkey included 

The workforces indicated in the total workforce and breakdown of workforces per geographical zone pertain to the total group workforces 

present as at 31 December 2011 (1). 

For the companies Galderma and INNEOV consolidated in proportional integration, the workforces as at 31 December have been 

counted pro rata according to the percentage of L’Oréal’s stake. 

Cosmetics and The Body Shop included (Dermatology excluded) 

WORKFORCES: 


2010 2011 2010 2011 2010 2011 2010 2011 

Western Europe 23,996 24,254 4,803 4,891 743 1,011 29,542 30,155 4 

North America 11,110 11,762 3,231 2,948 470 485 14,811 15,195 4 

Asia Pacific 11,449 12,531 772 688 223 286 12,444 13,505 4 

Latin America 4,674 4,760 205 233 4,879 4,993 4 

Eastern Europe 3,127 3,186 20 22 3,146 3,207 4 

Africa/Middle East (*) 1,783 1,817 15 15 1,798 1,832 4 

Of which New markets 21,033 22,293 772 688 462 555 22,266 23,536 4 

Total 56,139 58,309 8 806 8,527 1,674 2,050 66,619 68,886 4 

Cosmetics The Body Shop Group total 

2010 2011 2010 2011 2010 2011 

Western Europe 23,996 24,254 4,803 4,891 28,799 29,145 

North America 11,110 11,762 3,231 948 14,341 14,710 

Asia Pacific 11,449 12,531 772 688 12,221 13,219 

Latin America 4,674 4,760 4,674 4,760 

Eastern Europe 3,127 3,186 3,127 3,186 

Africa/Middle East (*) 1,783 1,817 1,783 1,817 

Of which New markets 21,033 22,293 772 688 21,805 22,981 

Total 56,139 58,309 8,806 8,527 64,945 66,836 

2/16


PART TIME / FULL TIME: 


PERMANENT CONTRACTS/ FIXED-TERMS CONTRACTS: 


% OF MANAGER: 


% managers 

2010 2011 

Western Europe 32% 33% 

North America 26% 26% 

Asia Pacific 32% 33% 

Latin America 33% 36% 

Eastern Europe 51% 52% 

Africa/Middle East (*) 42% 45% 

Of which New markets 36% 37% 

Total 32% 33% 

> For more details, see “section 6.1.2.1. Employment” on page 181 of the 2011 reference Document. 

Cosmetics The Body Shop Total 

2010 2011 2010 2011 2010 2011 


North America 2,951 2,938 11,390 11,772 14,341 14,710 

Asia Pacific 88 61 12,133 13,158 12,221 13,219 

Latin America 0 2 4,674 4 758 4,674 4,760 

Eastern Europe 12 13 3,115 3,173 3,127 3,186 

Africa/Middle East (*) 1 1 1,782 1,816 1,783 1,817 

Of which New markets 101 77 21,704 22,904 21,805 22,981 

Total 8,426 8,995 56,519 57,841 64,945 66,836 

Permanent Contracts Full time Total 

2010 2011 2010 2011 2010 2011 


North America 13,935 14,571 406 139 14 341 14,710 

Asia Pacific 9,085 9,572 3,136 3 647 12,221 13,219 

Latin America 4,652 4,754 22 6 4 674 4,760 

Eastern Europe 2,873 2,991 254 195 3,127 3,186 

Africa/Middle East (*) 1,737 1,791 46 26 1,783 1,817 

Of which New markets 18,347 19,108 3,458 3,873 21,805 22,981 

Total 56,460 61,254 5,485 5,582 64,945 66,836 

3/16


LA2 

RECRUITMENT 

The number of new recruits in 2011(*) was 6,746, breaking down as: 

• 4,967 recruited on permanent contracts, 

• 1,779 recruited on temporary contracts. 

(*) This indicator pertains to roughly 60% of the global area. 

NUMBER OF NEW RECRUITS AT L’ORÉAL SA: 

L’Oréal recruited 301 persons on permanent contracts, 346 on fixed-term contracts and 284 on work-study programmes (170 apprenticeship 

contracts and 114 vocational training contracts). To this are added 300 persons taken on occasionally during holiday periods or for a season. 

L’Oréal does not experience any difficulties with recruitment, either at executive level or for other staff categories. 

NUMBER OF DISMISSALS AT L’ORÉAL SA: 

In 2011, there were no economic redundancies. Out of a total workforce of 6,015, there were 47 dismissals for inherently personal reasons, 

including 2 for physical inaptitude. 

INFORMATION RELATING TO WORKFORCE REDUCTION AND JOB PROTECTION PLANS, REDEPLOYMENT AND REHIRING EFFORTS AND 

SUPPORTING MEASURES: 

at L’Oréal Sa, there were no workforce reduction plans in place during 2011. 

> For more details, see “recruitment” on page 182 of the 2011 reference Document. 

LA3 

PROFIT SHARING AND INCENTIVE SCHEMES 

For many years now, it has been L’Oréal’s policy to allow staff to share in the company’s results, which in 2011, resulted in 204.3 million euros 

being redistributed. 

L’Oréal has set up a global incentive scheme linked to the economic results of the subsidiaries (WPS – Worldwide Profit Sharing Program), the 

aim of which is to increase staff’s sense of belonging and motivation. 

at corporate level, adherence to the scheme’s principles and rules is coordinated by the Social relations Department, with the involvement 

of the General Management and Human resources departments from the zones, together with the General Management of the group. The 

scheme’s implementation and management are carried out locally by the General Management of each subsidiary. 

In addition to profit-sharing and incentive schemes for staff, the group has for some years been issuing stock option plans within an international 

framework, in order to offer the chief contributors a stake in the future development of the group’s results and to enhance their sense of belonging. 

In 2009, L’Oréal expanded its policy by introducing a mechanism for the Conditional Grant of Shares to Employees (CGSE), in order to reach 

a wider group of potential beneficiaries by means of a long-term coordination tool with a greater motivating effect than stock options. 

In 2011, the group decided to further widen the scope of the CGSE. 

In total, nearly 3000 staff, in this case nearly 14% of managerial staff worldwide, benefit from at least one stock option or CGSE, in accordance 

with the terms explained on the corresponding pages of section 7 – Stock market / Social capital information. 

> For more details, see “Profit Sharing and Incentive Plans on page 183 of the 2011 reference Document. 

INCENTIVE SCHEMES 

The incentive scheme is a system for which provision is made in law but which remains optional in nature. It was introduced within the 

framework of a group agreement in France from 1988 and renewed in 2009. Its amount is proportional to the current profit before tax adjusted 

by exceptional elements and weighted by the salary/added value ratio. The incentive scheme is available immediately but it may be 

blocked for 5 years in the Company Savings Plan in order to benefit from tax exemption. 

Within the framework of the new regulation on profit-sharing (article 1 of law no. 2011-894 of 28 July 2011), L’Oréal has proposed the payment of 

an additional Incentive payment, in respect of the non-compulsory financial benefits” envisaged by the texts, in connection with the increase 

of the dividend per share paid in 2011 in respect of the 2010 results. L’Oréal chose to offer an additional Incentive because it constitutes the 

system most in line with the concept of “value-sharing”. a company-level agreement was thus concluded with L’Oréal’s Central Works Council 

on 6 October 2011. Coming on top of the incentive amount paid in 2011 of +6.5%, this additional incentive was paid on 31 December 2011. 

DEVELOPMENT OF THE GROSS INCENTIVE SCHEME PAYMENT AT L’ORÉAL SA FOR ALL THE COMPANIES CONCERNED: 

In thousands of euros 2007 (1) 2008 (1) (2) 2009 (1) (2) (1) (2) 2010 

L’Oréal S.A. 51,766 55,236 57,358 58,809 

(1) Paid in next financial year. 

(2) Sums paid after corporate social contribution. 

4/16


For a gross annual salary of: 

> For more details, see “Incentive Scheme at L’Oréal S.a.” on page 183 of the 2011 reference Document. 

PROFIT-SHARING 

Profit-sharing is a system compulsory in France, introduced in 1968 for all companies with over 50 employees and making a profit. The profitsharing 

agreement was renewed in June 2009. 

L’Oréal has made favorable changes to the legal formula: 

It amounts to a group agreement: all employees of the companies which are signatories to this agreement, whatever their activity sector 

and results, receive the same share of the profit, 

It plans to include, in the financial benefit, royalties derived from the concession of patents, inventions and technical processes developed 

in France, thus creating a direct link with the group’s international development, 

It includes measures enabling the limiting of the consequences of exceptional events on the determination of the profit. 

Profit-sharing is available immediately but may be blocked for 5 years in the Company Savings Plan or the Blocked Current account, or 

blocked until retirement in the Collective retirement Savings Plan in order to benefit from tax exemption. 

DEVELOPMENT OF GROSS SHARE OF PROFITS IN FRANCE FOR ALL OF THE COMPANIES CONCERNED: 

(1) Paid in next financial year. 

(2) amounts after corporate social contribution. 

The 2010 share of profits paid in 2011 was the equivalent of 0.7 months’ salary. 

> For more details, see “Profit-sharing at L’Oréal S.a.” on page 184 of the 2011 reference Document. 

THE COMPANY SAVINGS PLAN AND L’ORÉAL EQUITY FUNDS 

L’Oréal offers a diverse range of funds that give staff great freedom of choice, as it is possible: 

to invest the share of profit in a Blocked Current account remunerated by L’Oréal at the average rate of yield of bonds in private companies 

(TMOP) in accordance with article D. 3324-33 of the Labor Code, 

since 2004, to invest the share of profit in a Collective retirement Savings Plan (PErCO) and to benefit from a matching contribution of +50%, 

to invest the profit-share and Incentive plans in a Company Savings Plan (CSP) made up of seven joint investment funds presenting a wide 

range of options (monetary, bonds, French and international stocks and securities, etc.) and great flexibility of use. a fund made up of 

100% L’Oréal shares and two compartments: one can earn interest and is matched at a level of +25%, while the other can receive share 

of profit and voluntary payments and is not matched. 

> For more details, see “The Company Savings Plan and L’Oréal S.a. Share Fund” on page 184 of the 2011 reference Document. 

In 2011, the employees of L’Oréal and its French subsidiaries invested the following net amount of CSG (general social contribution) and 

CrDS (social debt reimbursement contribution)and social security contributions in the “The L’Oréal Incentive Scheme” fund consisting of 

100% L’Oréal shares: €45,412,299, to which was added the net amount of “2011 Profit-sharing” additional Incentive of €2,148,184. These 

payments were then boosted by respective matching contributions of €9,961,285 and €463,525 which, at the opening price of the L’Oréal 

share on the day of each of these contributions, namely €85.15 on 29 april 2011 for the “L’Oréal Incentive” and €80.53 on 30 December 

2011 for the “additional Incentive”, represented the equivalent of 122,741 L’Oréal shares. 

as the total net amount of the Incentive distributed in 2011 was €104,850,644, nearly 285,000 shares were thus offered free of charge by 

L’Oréal to its employees in France during 2011 via this matching contribution method. 

COMPANY SAVINGS PLAN AND BLOCKED CURRENT ACCOUNT 

Liabilities for all of the companies concerned: 

The 2010 gross 

incentive payment 

came to: 

5/16 

Additional “Profit- 

Sharing Incentive 

for 2011” 

e25,000 e6,674 or 3,2 months e474 e7,148 or 3.4 months 


e45,000 e9,032 or 2, months e642 e9,674 or 2.6 months 


In thousands of euros 2007 (1) 2008 (1) (2) 2009 (1) (2) (1) (2) 2010 

L’Oréal S.A. 19,489 21,612 19,802 19,527 

In thousands of euros 2009 2010 2011 

CSP + blocked current account + PERCO 650,968 716,189 720,185 

Total


as at 31 December 2011, 48% of the L’Oréal employee savings plan was invested in L’Oréal shares, and 9,649 of the group’s employees in 

France were shareholders in L’Oréal via their company savings plan. 

> For more details, see “Company Savings Plan and Blocked Current account” on page 184 of the 2011 reference Document. 

LABOR/MANAGEMENT RELATIONS 

I. CONTENTS 

CORE 

LA4 

Percentage of employees covered by collective bargaining agreements. 


LA4 

Worldwide, 79% of its employees work in countries where representative bodies are officially in place, even if not all these employees 

are “officially” covered by a collective agreement (in several countries collective agreements cover only union members, while in other 

countries they cover all the employees – erga omnes -). 

as a result, 43% of its employees are officially covered by a collective agreement (national and/or sector and/or company agreement). 

94% of them are covered by company collective agreements. 

SOCIAL RELATIONS 

The organization of the social dialogue, most notably the procedures for the informing and consultation of personnel and for negotiations 

with them. 

The quality of the social climate within L’Oréal is the fruit of continuous dialogue between the management, the employees and their 

representatives. 

The group pays particular attention to communication with its staff and, since 2003, L’Oréal has carried out an opinion poll among them 

with the assistance of the international firm Towers Watson. This poll took place again in 2011-2012 and the results were shared with the staff 

and their representatives. They are the subject of action plans implemented in a decentralized fashion and which are as closely aligned 

as possible with the expectations expressed. 

an agreement signed in 1996 between L’Oréal and the French and European trade union bodies (FECCIa and EMCEF) led to the creation 

of the European Works Council (EWC). The initial agreement has been regularly updated, most notably in 2009 in order to introduce a new 

information and consultation procedure applicable to transnational projects giving rise to local consultation procedures. This process 

envisages the option of the EWC issuing a recommendation, which is then implemented with the liaison secretariat, widened to include 

the members from the countries concerned or indeed the full EWC, depending on the geographical and strategic scale of the project. 

This revision represented an important step aimed at enhancing the social dialogue at L’Oréal while at the same time anticipating the 

development of the legislation. 

The EWC facilitates discussions and meetings with the EWC members on the group’s current situation and future prospects. It is made up 

of 30 members, who regularly benefit from training in economic and social issues. at the current time, this body covers roughly 30,000 

personnel from 26 countries within the European Economic area, with the 16 of these that have over 145 staff being directly represented. 

In France, the employees are represented by 107 personnel representation bodies and 600 personnel representatives. 

Worldwide, 79% of its employees work in countries where representative bodies are officially in place, even if not all of these employees are 

“officially” covered by a collective agreement (in several countries, the collective agreements only cover members of the union, while in 

other countries, they cover all employees - erga omnes-) 

Consequently, 43% of its employees are officially covered by a collective agreement (national and/or sectoral and/or company 

agreement). 

94% of them are covered by company collective agreements. 

6/16


EMPLOYMENT RELATIONS AND SOCIAL ACTIVITY AT L’ORÉAL SA 

The social dialogue at L’Oréal Sa is structured around a Central Works Council, 3 Establishment Committees, 13 Committees for Health, 

Safety and Working Conditions, 9 Personnel representative bodies and 30 Trade Union representatives 4. 

SOCIAL ACTIVITIES 

BREAKDOWN OF EXPENDITURE AT L’ORÉAL SA (*) 

In thousands of euros 2011 

Accommodation 1,587 

Transport 631 

Catering 5,993 

Divers 2,030 

TOTAL 10,241 

*Excluding share of company restaurant rent. 

Payment to L’Oréal Sa’s 3 Establishment Committees : 1.622 thousands of euros. 

REVIEW OF COLLECTIVE AGREEMENTS 

Within L’Oréal, 226 agreements were in force as at 31 December 2011, 38 agreements were signed in France during 2011 and 69 agreements 

were signed in the rest of the world 4. 

The collective agreements signed at L’Oréal Sa in 2011 are as follows: 

Company agreements: 

- The agreement relating to the L’Oréal research/Evaluation Classifications signed on 30 September 2011. 

- The L’Oréal agreement on the payment of an additional Incentive - Law no. 2011-894 of 28 July 2011. 

- The amendment to the agreement of 24 January 1983 (article 3 of the agreement) concerning length of service of 9 November 2011. 

- amendment no. 2 to the agreement signed on 17 December 2007 and to its amendment no. 1 of the Life Insurance Scheme applicable 

to Blue and White-Collar Workers, Technicians and Supervisors not covered by article 36 of annex I and articles 4 and 4b of the aGIrC 

agreement of 14 March 1947 of 25 November 2011. 

- amendment no. 4 signed on 17 December 2007 concerning the Life assurance Scheme applicable to Managers and Similar covered by 

article 4 and 4b of the aGIrC agreement of 14 March 1947 of 25 November 2011. 

- amendment no. 4 signed on 17 December 2007 concerning the Life assurance Scheme applicable to staff from article 36 of annex I of 

the aGIrC agreement of 14 March 1947 of 25 November 2011. 

Establishment agreements: 

- Weekend work agreement signed on 28 april 2011 –La Barbière production site 

- amendment for the extension of weekend work on 1 June 2011 –La Barbière production site 

> For more details, see “review of collective agreements” on page 189 of the 2011 reference Document. 

OCCUPATIONAL HEALTH AND SAFETY 

I. CONTENTS 

CORE 

LA6 

Percentage of total workforce represented in 

formal joint management–worker health and 

safety committees that help monitor and advise 

on occupational health and safety programmes. 

7/16 

ADD 

LA7 

rates of injury, occupational diseases, lost 

days, and absenteeism, and total number 

of work-related fatalities, by region.



LA6 

HYGIENE AND SAFETY CONDITIONS AT L’ORÉAL SA: 

For many years now, L’Oréal has been committed to a voluntary policy aimed at continually improving the working conditions for its staff and 

thereby contributing to the development of an environment encouraging quality of life at work. Within this context and over and above the 

already existing systems, L‘Oréal was keen to go further by implementing, firstly, an initiative for the prevention and management of stress, and 

secondly, a process of deliberation on how to prevent difficult working conditions in application of the provisions of Law no. 2010-1330 of 9 

November 2010. 

Mindful of the stressful situations which might be experienced by its staff, and regardless of the circumstances, L’Oréal commenced a stress 

prevention and management initiative at the start of 2009, using the network of company doctors (6 within L’Oréal) and a body authorized 

as a Intervenant en Prévention des risques Professionnels (IPrP –occupational risk prevention adviser). 

THIS INITIATIVE WAS BASED ON 3 PLANKS: 

- a prevention plan consisting specifically of two training modules permitting both staff (1 day) and managers (2 days) to improve their 

understanding of the mechanisms of stress and to provide them with operational solutions to regulate the effects. 

- an individual evaluation of the level of stress, anxiety and depression felt by employees via a questionnaire completed during the 

medical visit, based on recognized scientific scales; on completion, the results are shared with the company doctor. 

- an annual analysis of the company’s collective results within the CHSCT (health and safety committee); 

after an initial experimental period at 2 L’Oréal Sa sites in 2009, this action plan was rolled out within all of the group’s entities during 2011. 

Within the framework of the provisions of Law no. 2010-1330 of 9 November 2010, Decree nos. 2011-354 of 30 March 2011 and 2011-824 of 7 

July 2011, L’Oréal has continued its reflections on the improvement of working conditions and the prevention of difficulties with the aim of 

enabling the employee to continue their activity for longer and under better conditions. 

although not classed as an obligation, discussions have been undertaken in certain of L’Oréal’s activity sectors or establishments, in conjunction 

with the health and safety committee and the health & safety teams, in order to develop action plans designed to prevent difficulties arising. 

In application of the Decree of 5 November 2011 on occupational risks, L’Oréal has carried out the updating of the single document for 

the evaluation of risks within the company by including these two points in particular. 

In 2011, L’Oréal’s 13 health and safety committees held 89 HSE meetings. 

There are a total of 6 company doctors present on the company’s different sites and the number of clinical examinations rose to over 6,500 in 2011. 

In 2011, the total number of accidents at work involving a stoppage was 22. 

ACTIONS TAKEN TO AID SAFETY: 

The protection of health and safety of the staff is a fundamental aim that constitutes an integral part of its human and social policy. It is 

based on the prevention of risks both at individual level, via troubleshooting examinations allowing staff to receive individual in-depth 

and tailored medical monitoring, and at collective level, through the evaluation and control of the occupational risks. The health & safety 

initiative is part of an overall initiative conducted in close collaboration with the company doctors, safety managers and the CHSCT 

(health and safety committees). 

Review of the collective agreements on hygiene and safety: 

- Weekend work agreement signed on 28 april 2011 –La Barbière production site 

- amendment for the extension of weekend work on 1 June 2011 –La Barbière production site 

> For more details, see “Health and safety conditions at L’Oréal S.a.” on page 191 of the 2011 reference Document. 

LA7 

L’Oréal has a responsibility towards its staff and its performance in terms of health and safety constitutes a key element in its evaluation. 

ABSENTEEISM (ILLNESS, MATERNITY, ACCIDENTS AT WORK, ETC.) – COSMETICS AND THE BODY SHOP 

Number of working days 

8/16 

Number of days of 

absenteeism 

% of absenteeism 

Western Europe 6,055,864 344,290 5.38% 

North America 2,871,567 118,391 3.96% 

Asia Pacific 3,060,509 111,550 3.52% 

Latin America 1,133,515 38,443 3.28% 

Eastern Europe 695,042 45,710 6.17% 

Africa & Middle East (*) 442,306 21,311 4.60% 

Of which New markets 5,331,372 217,014 3.91% 

Total 14,258,803 679,695 4.55%


The global rate of absenteeism is estimated at 4.6%, 2.5% of which is attributable to illness, in application of the following method: 

Calculation method: 

Overall absenteeism: B/(a+B) 

absenteeism due to illness: C/(a+B) 

(A): Number of days actually worked by entire contractual workforce, training days included 

(B): Number of days’ absence (illness, occupational illness, maternity, accident at work and/or during travel or 

any other absence not contractually envisaged) 

(C): Number of days’ illness (excluding occupational illness, maternity, accident at work or during travel, etc.) 

ABSENTEEISM AT L’ORÉAL SA: 

at L’Oréal Sa, the total rate of absenteeism was 4.29 % in 2011, 2.28% of which was linked to illness. 

ABSENTEEISM PER REASON 

Reason for absenteeism % of absenteeism 

Illness 2.28% 

Accident at work/travel/occupational illness 0.13% 

Maternity – adoption 1.32% 

Family events 0.43% 

Time-off on health grounds 0.14% 

TOTAL 4.29% 

HEALTH AND SAFETY 

For several years now, L’Oréal has applied a well-established Health and Safety (HSE) policy. It defines the commitment of the company 

to developing, producing, distributing and selling innovative products of the highest quality while maintaining ethical behavior and 

guaranteeing the health and safety of staff, customers and the communities where L’Oréal conducts its activities. This initiative fits in with 

a global policy relating to the Environment, Health and Safety (EHS) described in the “Environmental Information” section below. 

L’Oréal is committed to providing its staff with a safe and healthy working environment. Health and safety are of paramount importance, 

L’Oréal’s ultimate aim being to achieve a rate of zero accidents and incidents. Exhaustive measures have been put in place with the 

aim of reducing the risks and ensuring constant improvement. a culture of safety has been inculcated, defining the high standards and 

involves the company’s personnel at all levels. 

Keen to further improve safety in the company’s workplaces, the General Management has set an ambitious target for the improvement 

of the HSE results. 

REMINDER OF PERFORMANCE LEVELS 

Overall, 2011 was a good year in terms of HSE performance, with the operational and administrative sites showing an improvement in 

relation to 2010. However, the deterioration in the performance of reseach and InnovationI and the centers had a significant impact on 

the group’s overall performance. 

Out of the 198 accidents leading to a stoppage recorded within the group during 2011, 80% took place at administrative sites, including 

10% within research & Innovation and 20% in Operations. 

• Operational sites (plants and centers) 

TFC = 1.36 v 1.58 in 2010 (- 13.9%) 4 

• administrative sites (with r&I) 

TFC = 2.29 v 2.39 in 2010 (- 4%) 4 

• Group: operational and administrative sites 

TFC = 2.01 v 2.10 in 2010 (-4%) 4 

TFC (taux de fréquence conventionnel – conventional frequency rate) = number of accidents with stoppage per million hours worked by 

L’Oréal staff. 

9/16


The management is the guiding thread in this change in safety culture, supported and aided by the L’Oréal HSE network, which is equipped 

with the tools and programmes required to achieve excellence in this area. 

The basis of the safety enhancement programmes will continue to be: 

- HSE steering committees 

- SHaP 2010: prevention programme (Safety Hazard assessment Procedure) 

- Measurement 

- SIO (Opportunités d’Amélioration Sécurité –safety improvement opportunities) 

- Safety Training for management 

- Ergonomic attitude 

- HSE Culture audits 

> For more details, see section “1.8.3.3. Environment and safety (HSE)” on page 20 and section “6.1.2.4. Health and Safety” on page 190 of 


TARGET FOR THE SAFETY OF OPERATIONS 

The initial aim is to improve the safety score by 81% between now and 2015 (reference year 2005: TFC = 3.09), which represents a TFC < 0.60. 

REMINDER OF OPERATIONS PERFORMANCE LEVELS 

In line with the positive trend recorded in recent years, the performance levels remained very good in 2011. The accident rate fell by 14% 

on the previous year. 

TFC (conventional frequency rate) – Plants and distribution centers 

2010 

2009 

2008 

2007 

2006 

2011 : 1.36 

0,0 

ZERO ACCIDENT IN 2011 

• Out of 100 plants and distribution centers, 72 displayed a rate of zero accident with stoppage 4. 

• apart from the reduction in the number of accidents, it is also important to note that the accident gravity rate has fallen by 50% since 2005. 

- Millions of hours without accident causing work stoppage since 2005 – Operational and administrative sites 4. 

• 13 plants, 4 distribution centers and 16 administrative sites reached or exceeded the threshold of one million hours worked without 

accident causing work stoppage 4; 

• 2 plants are at 3 million hours 4. 

TRAINING AND EDUCATION 

I. CONTENTS 

CORE 

4 

LA10 

average hours of training per year 

per employee, by employee category. 

ADD 

10/16 

LA11 

Programmes for skills management and 

lifelong learning that support the continued 

employability of employees and assist 

them in managing career endings. 

LA12 

Percentage of employees receiving regular 

performance and career development reviews.



LA10 

Training forms an integral part of the staff development policy at L’Oréal. as such, it is the subject of an individual interview once a year 

with each employee. 

L’Oréal regularly ensures the personal and professional development of its staff via a training system tailored to their individual needs, 

everywhere and for all positions. The “Learning for development” department is fully integrated with the company, thus enabling full 

advantage to be derived from the best practices worldwide and offering a coherent overview of the training programmes. 

The number of training hours in 2011 was 1,022,772 across the group as a whole. 

In 2011, L’Oréal Sa devoted 15,264 thousand euros to the professional training of its staff, equivalent to 4% of its payroll. 

• Number of persons trained in 2011: 4,705, or 78% of the workforce as at 31 December 2011. 

• Number of training actions in 2011: 13,189, an average of 2 training actions per individual trained. 

• Number of training hours in 2011: 128,312 hours. 

• Number of staff that benefited from a Droit Individuel à la Formation (D.I.F –individual training entitlement): 264. 

The L’Oréal Human resources intranet site (Profile & My training) provides staff with comprehensive information on their options with regard 

to professional training and their entitlement in terms of D.I.F. 

Training hours (Cosmetics and The Body Shop) 

Recommended 

number of 

training hours 

Training forms an integral part of the staff development policy at L’Oréal. as such, it is the subject of an individual meeting once a year 

with each employee. L’Oréal regularly ensures the personal and professional development of its staff via a training system tailored to their 

individual needs, everywhere and for all positions. The “Learning for development” department is fully integrated with the company, thus 

enabling full advantage to be derived from the best practices worldwide and offering a coherent overview of the training programmes. 

TRAINING AND DEVELOPMENT 

Learning is part of the group’s everyday life. In order to ensure L’Oréal’s competitiveness, the group offers its staff training options right 

throughout their working lives. 

AN INDIVIDUAL APPROACH 

“L’Oréal and me” offers a new international framework for professional reviews, consisting of two meetings each year at which it is possible 

to identify and discuss career paths, personal development and salary. 

From this perspective, the group regularly ensures the personal and professional development of its staff via a training system tailored 

to their individual needs, everywhere and for all positions. The “Learning for development” department is fully integrated with the 

company, thus enabling full advantage to be derived from the best practices worldwide and offering a coherent overview of the training 

programmes. The optimized realization of each individual’s potential is crucial if a sustainable competitive edge is to be maintained. Since 

the group benefits from dynamic and centralized career management, the “Learning for development” department has developed tools 

to aid transition, aimed at managers taking on new responsibilities. 

11/16 

Number of 

open access 

training hours 

Total number 

of training 

hours 

Number of 

employees 

trained 

Western Europe 471,657 12,214 483,871 19,223 

North America 130,024 5,912 135,936 9,789 

Asia Pacific 260,641 941 261,582 9,737 

Latin America 48,679 3,532 52,211 2,057 

Eastern Europe 54,055 1,542 55,597 1,992 

Africa & Middle East 33,512 64 33,576 1,262 

Of which New Markets 396,887 6,079 402,966 15,048 

Total 998,567 24,205 1,022,772 4 44,060 4 

LA11


INTERNATIONAL MOBILITY 

Geographical mobility and career flexibility benefit staff in terms of development and experience, but also the group at the level of 

growth and innovation. International mobility also strengthens its diversity policy, as its brands are adapted to suit local demand by 

multicultural teams. 

at the end of 2010, 883 employees from 59 countries were on long-term international assignments in 57 different countries, a rise of +17% 

on 2009. 37% of these employees were women and 15% were aged under 30. also at the end of 2010, nearly 40 L’Oréal employees were 

on foreign transfers aimed at increasing their experience, primarily in manufacturing projects, for a short period (assignments of 12 months 

maximum). 

L’Oréal has revised its international mobility policy to ensure that it meets the requirements of its staff and of the company. Specific 

packages have also been developed for young employees, as well as for inter-regional transfers. 

In order to encourage this ambitious acceleration of globalization, the group is seconding its best talents on international programmes, 

developed in partnership with renowned institutions. There, they have access to the best training resources available worldwide and can 

share the expertise and experience of L’Oréal’s directors. These programmes are aimed at transmitting the culture and values specific 

to L’Oréal, as well as contributing to the strategic coherence of the group. In 2010, a symbolic training course, “L’Oréal Insight”, brought 

together 195 young managers from 37 different countries. This figure shows to what extent the local Hr directors are committed to the 

development of their best assets. In total, just short of 400 strategic staff, from all countries where the group is present, attended at least 

one of the company’s key international seminars during 2010. 

“MY LEARNING” 

In 2010, with the aim of “bringing learning to all”, L’Oréal “Learning for development” teams launched the “My Learning” platform at 

international level, namely in 18 languages, making it accessible to 20,000 staff in 32 countries. This project will be extended to 45,000 staff 

in 56 countries in 2011. 

The use of a single platform for the L’Oréal group as a whole guarantees the sharing of the group’s culture and expertise on a global scale. 

“My Learning” also encourages the transfer of knowledge within the group and aids the orientation of employees and company initiatives 

concerning diversity and ethics in particular, as well as allowing information to be distributed immediately to staff. 

The employees access the training and resources coming under fields such as management, professional expertise, language and IT. Its 

creation is based on a combination of innovative learning methods and tools ranging from remote training to video demonstrations. This 

enables the long-term training needs of all L’Oréal staff to be met. 

“My Learning” offers employees a personalized training path consisting specifically of a training offer and free access to the online 

modules linked to their duties. 400 personalized paths have been developed, targeting the particular skills to be improved on the basis 

of the main responsibilities of their post. 

SHARING OF KNOWLEDGE, CULTURE AND VALUES ACROSS THE WORLD 

Its training and development strategy takes into account the various ways of learning, by means of a combination of formal and informal 

methods. Convinced of the importance of sharing knowledge and learning through practice, L’Oréal has identified certain of it internal 

capabilities or “know-how” and created practical learning guides for use on the ground. These tools help it staff to enhance their skills on 

a daily basis. 

In 2010, the group also created two online training modules in order to share its culture with all staff, wherever they might be located. 

n “I-Discovery” is the name of an interactive module aimed at new recruits and introduces them to its brands, it strategy and it organization, 

right from the 1st day, everywhere in the world. 

n “Keys to L’Oréal” is a module available in 9 languages that explains and shares the group’s specific values on subjects such as decisionmaking 

and innovation. 

Its “Learning for development” teams have also developed new interactive online training resources that identify and pool the specific 

expertise of different departments. For the research & Innovation department, for instance, one such resource allows staff to identify the 

color, shape and chemical components of a hair, while another enables researchers to improve their understanding of all the stages of a 

product’s design, as well as the role of the teams at each of these stages. 

By way of an example, in 2010, the Consumer Products division launched a virtual certification programme centered on the management of 

categories that allow new category managers to enhance their theoretical and practical skills. This programme includes case studies and 

webinars during which category management specialists share their experience. This training is delivered by the Category Management 

Knowledge group, a global leader in category management training. at the end of this programme, the participants receive a category 

management certificate. 

> For more details, see section “6.1.2.5. Training” on page 191 of the 2011 reference Document. 

END-OF-SERVICE PACKAGES 

In accordance with the law and customs of each country, the group participates in retirement plans, end-of-service packages and other 

schemes granting various benefits to employees. 

For the basic schemes and other defined contribution plans, the group counts the contributions to be paid when due as expenses and no 

provision is recorded in the accounts, with the group not being committed beyond the contributions paid. 

For defined benefit plans, the characteristics of the schemes in force within the group are as follows: 

12/16


n In France, the obligations arising from the agreements envisage specific end-of-service compensation payments. Furthermore, an early 

retirement scheme is in place, along with a defined benefit retirement plan. Moreover, within certain group companies, medical cover 

for retirees is partially paid by the group. 

With the exception of the medical cover for retirees, these commitments are the subject of partial external financial cover; 

n abroad, when retirement plans or other specific defined benefit commitments exist, the corresponding actuarial liabilities, net of the 

capitalized funds allocated to their cover, are also taken charge of on the basis of the entitlement acquired by employees. 

From 1 January 2009, the group has chosen to adopt the IaS 19 option that permits immediate recognition in shareholders’ equity of 

actuarial losses and gains for defined benefit schemes subsequent to employment, in place of the corridor method. 

The charge recognized in the income statement for the financial year includes: 

n the additional entitlements acquired by the employees during this financial year; 

n the variation from the updating of the entitlements existing at the start of the financial year, as a result of the passage of time; 

n the product of the external funds calculated on the basis of the normalized yield from the long-term investments; 

n the effect of any modifications to the plans in relation to previous years or of any new plans. 

In order to determine the updated value of the obligation in respect of each plan, the group uses the retrospective method with end-ofservice 

salary projection based on the so-called projected unit credit method. The valuation of the commitments and the plan assets takes 

place each year and, for the valuation of the commitments in particular, takes into account length of service, life expectancy, rate of staff 

rotation per category and also economic hypotheses such as inflation rates and discount rates. actuarial shortfalls recorded on the other 

benefits such as long service awards, etc. are immediately recorded in the profit and loss accounts. 

The debt relating to the company’s net commitment concerning staff is recorded on the liability side of the balance sheet, in the section 

Provisions for pensions and other post-retirement benefits 

> For more details, see section “1.23. Provisions for retirement, end-of-service packages and other benefits granted to employees” on page 

99 of the 2011 reference Document. 

LA12 

MaP (Managing and appraising Performance) is an evaluation system that permits the evaluation and development of the skills and 

performance of all L’Oréal staff. 

MaP deals with the following points: 

• Integration of roles, key responsibilities, targets and skills of the employees 

• Career management: taking into account of the wishes of an employee, along with their evaluation, experience and resilience 

• Training decisions based on the development plan 

• remuneration decisions (taking into account their command of the key responsibilities and achievement of targets) 

The MaP On Line system, which is currently being deployed, has been used by 25,731 people in 62 countries this year. The plan is to 

extend it to the population as a whole while gradually replacing the paper format. 

MaP consists of an end-of-year interview and, for most staff, a mid-year interview. 

• The mid-year interview 

The mid-year interview (EMa) takes place at the year’s midpoint, thus permitting the employee to gain a detached view of their 

everyday activities, to measure the progress made with their manager and to examine with them any supporting measures that might 

be necessary. 

• aims: 

- To conduct a review of the progress made in terms of the employee’s targets and skills 

- To develop a personalized development plan for the next twelve months 

- To give the employee and manager a shared view of the best way of working together 

• The end-of-year interview 

The EFa is centered on: 

- the evaluation of their performance during the year elapsed 

- the prospects for the year ahead 

• The end-of-year interview (EFa) offers an opportunity for the employee to speak with their manager and their n+2 about: 

- their performance 

- their targets for the coming year 

- their aspirations 

- their developing needs. 

It should take place within a spirit of open dialogue and objectivity. 

24,353 employees used MaP On Line to publish their EFa report after the 2011 end-of-year interviews, which is 25% more than last year. 

13/16


DIVERSITY AND EQUAL OPPORTUNITIES 

I. CONTENTS 

CORE 

LA13 

Composition of governance bodies and breakdown of employees per category 

according to gender, age group, minority group membership, and other 

indicators of diversity. 

LA14 

ratio of basic salary of men to women by employee category. 


LA13 

at L’Oréal, diversity plays a predominant role in the business culture. The level of diversity within the group provides a snapshot of its human 

capital. 

DIVERSITY AND EQUAL OPPORTUNITIES 

For over 15 years, L’Oréal has been implementing a global and proactive policy in favor of diversity. Structured around 6 priority criteria 

(nationality, socio-cultural and ethnic origin, genre, disability and age), the diversity policy has resulted in numerous achievements that 

have helped establish L’Oréal as one of the leading players on the subject. 

a signatory to the 2004 Diversity Charter in France, L’Oréal is also now committed to seven charters that exist around Europe and has 

contributed to the creation of two charters, in Italy and Sweden. 

after having obtained French diversity labeling in 2009, L’Oréal was in 2011 awarded the 1 st European label for equal opportunities, the 

Gender Equality European Standard, for seven European countries. 

L’Oréal has also developed a Diversity review in France, with a hundred indicators covering all of the 6 dimensions of Diversity policy. 

Where Disability is concerned, L’Oréal is committed to developing a comprehensive and global disability policy structured around five 

complementary themes: access to and continuation in employment, awareness-raising, accessibility of premises and information and 

partnership with the protected sector. Each subsidiary is encouraged to fit its own initiatives into this approach. 

In order to accelerate the mobilization of the countries, L’Oréal has, from 2008, put in place the “Initiatives for the Disabled” that reward the 

operational entities for their concrete actions in favor of Disability. awarded every two years in the presence of the General Management, 

these trophies help promote and share the actions conducted by the different L’Oréal entities, both in France and in Europe. In 2012, this 

competition will be open to all subsidiaries at global level. 

COMMITMENTS VIS-À-VIS PROFESSIONAL EQUALITY FOR MEN AND WOMEN WITHIN L’ORÉAL SA 

The issue of professional equality for men and women has been at the heart of L’Oréal’s social and human policy for many years and is a 

source of social innovation: examples of this include the “Schueller leave”, extending maternity leave by 4 weeks, introduced in the late 

1960s, the “dad’s/mum’s Wednesday” created in 1976 and the more recent maintaining of salary during paternity leave (2008). 

Three company agreements have been signed unanimously by the trade union bodies, on the remuneration of female staff on maternity 

leave (2007), professional equality for men and women and the reconciliation of home and work life (2008). 

regular discussions are held with the staff representatives on the subject of equal opportunities: 

- during the compulsory annual negotiations, the issues raised include any salary deviations, 

- during the examination of the Corporate Social review, all of the indicators are presented by genre, 

- and lastly, during the annual examination of the Compared Situation report on the general employment and training conditions for men 

and women within the company. 

L’Oréal completes its parent-friendly policy by, wherever possible, setting up nursery systems or inter-company crèches. Nine structures 

(including 5 specifically for L’Oréal Sa) take care of employees’ children, thus bringing to 133 the number of facilities available to L’Oréal 

staff. 

14/16


ACTIONS IN AID OF THE EMPLOYMENT AND INTEGRATION OF DISABLED WORKERS 

as at 31 December 2011, L’Oréal Sa employed 153 disabled staff and regularly uses the services of companies from the protected workers 

sector (adapted Company or Specialized Company and Protected Workshop). 

ACTIONS IN AID OF SENIOR CITIZENS 

Following the collective agreement signed in 2009, numerous systems have been developed at L’Oréal Sa with the aim of improving the 

transmission of knowledge and professional development throughout employees’ careers. 

WORKFORCE AT L’ORÉAL SA: 

The total workforce of L’Oréal Sa was 6,015 persons as at December 2011. 

2011 Men Women Combined 

Managers 1,392 1,753 3,145 

Supervisors and technicians 452 1,576 2,028 

White-collar staff 116 191 307 

Blue-collar staff 155 95 250 

SR 166 119 285 

TOTAL 2,281 3,734 6,015 

To this workforce are added temporary staff, who account for an average of 2.43% of the workforce and an average monthly number of 

166 temporary workers for an average contract duration of 15.15 days. 

DIVERSITY: PARITY 

Moreover, women within the group account for 63% of all staff, 

49% of Operations staff 

58% of managers 

61% of managers recruited 

37% of expatriates 

45% of new expatriates 

41% of the members of the Management Committees 

21.4% of the members of the Executive Committee (3/13) 

43% of the brands are managed by women (15/35 international brand managers) and 15 women were appointed to Division Head posts 

during 2011. 

BREAKDOWN BY GENRE AND AVERAGE COSMETICS WORKFORCE + THE BODY SHOP 

- average age per geographical zone 

TOTAL MEN WOMEN AGE 

Western Europe 29,145 9,686 19,459 38 

North America 14,710 4,223 10,487 38 

Asia Pacific 13,219 4,103 9,116 33 

Latin America 4,760 2,314 2,446 36 

Eastern Europe 3,186 1,102 2,084 33 

Africa & Middle East 1,817 836 981 37 

Of which New Markets 22,981 8,355 14,626 34 

Total 66,836 22,264 44,572 37 

2011 

Western Europe 38 

North America 38 

Of which New Markets 34 

Total 37 

15/16 

% women 

67% 

71% 

69% 

51% 

65% 

54% 

64% 

67%


LA14 

REMUNERATION AT L’ORÉAL SA 

average gross monthly remuneration of Women and Men continually present 

This relates to employees (excluding directors) on permanent employment contracts and present for two consecutive years. 

Employees who changed category are compared in the category to which they belonged in the 2 nd year. 

In euros 2010 2011 Change 

Men Women Combined Men Women Combined 

Managers 6,110 5,091 5,540 6,495 5,424 5,895 +6.4% 

Supervisors 

and technicians 

3,016 2,995 2,969 3,188 3,127 3,141 +5.8% 

White-collar staff 2,224 2,124 2,169 2,379 2,259 2,305 +6.3% 

Blue-collar staff 2,543 2,440 2,506 2,676 2,585 2,643 +5.5% 

SR 4,150 3,676 3,958 4,357 3,902 4,173 +5.4% 

EMPLOYER CONTRIBUTIONS 

at L’Oréal Sa, the annual sum of employer contributions in 2011 came to 175,775,565 euros. 

16/16



Human Rights 

as a signatory to the United Nations Global Compact, L’Oréal has undertaken to respect Human rights. The group’s Ethics Director sets the 

policy and coordinates the actions concerning the respect of Human rights. at local level, it is the Country Head who is responsible for the 

respect of these rights. 

These principles are detailed by L’Oréal in documents such as The L’Oréal Spirit and the Ethical Charter, as well as being complemented by 

internal initiatives such as “Let’s talk about it together” and tools for analysis and reporting. 

In the “as an Employer” section of L’Esprit L’Oréal, the group describes its principal commitments vis-à-vis its staff, most notably in terms of 

diversity. Its commitments on the abolition of child labor and forced labor are set out within the “as a Socially responsible Company” section 

of the same document. 

Furthermore, several chapters of the L’Oréal Ethical Charter are devoted to the practical implementation of human rights: Health, hygiene 

and security, Diversity, Moral and sexual harassment, respect for privacy, Contribution to the community, and Choice and fair treatment of 

suppliers. 

at L’Oréal, staff are encouraged to notify any concerns that they might have to their line manager, their HrD, their Ethics Contact and their 

Country Head within the framework of the “Let’s talk about it together” initiative. a special secure website also allows them to submit their 

concerns directly to the group’s Ethics Director. L’Oréal organizes continuous communication and tailored training for the staff concerned 

on all of these topics. 

Moreover, in order to ensure the continuity of internal communication on this subject, L’Oréal organizes an annual Ethics Day. In 2011, the 

theme of this day was “L’Oréal’s values”. During this internal initiative, the flagship event was a live web chat held in live with L’Oréal’s Chief 

Executive Officer Jean-Paul agon, open to all group staff throughout the world. 

The group has put in place an annual reporting system on ethical issues, Country reporting Ethics, which covers all the topics dealt with in 

the Ethical Charter and provides an analysis of the initiatives deployed within the countries. This information makes it possible to evaluate the 

group’s performance in terms of the application of human rights. 

an ethical risk analysis and evaluation tool also allows the Country Heads to assess possible ethical risks (including in terms of human rights) 

and to take the steps required to resolve them. 

> For more details, see pages 28 to 37 of the 2011 Sustainable Development report. 

HYPErLINK «http://www.loreal.fr/_fr/_fr/html/groupe/l-esprit-l-oreal.aspx» http://www.loreal.fr/_fr/_fr/html/groupe/l-esprit-l-oreal.aspx 

INVESTMENT AND PROCUREMENT PRACTICES 

I. CONTENTS 

CORE 

HR1 

Percentage and total number of significant 

investment agreements that include human 

rights clauses, or that have undergone human 

rights screening. 

HR2 

Percentage of significant suppliers, contractors, 

that have undergone screening on human rights 

and actions taken. 

1/6 

ADD 

HR3 

Total hours of employee training on policies 

and procedures concerning aspects of human 

rights that are relevant to operations, including 

the percentage of employees trained.



HR1 

as L’Oréal is a signatory to the United Nations Global Compact, all of its suppliers and subcontractors are required to comply with the group’s General 

Purchasing Conditions, which include respect for the fundamental Conventions of the International Labour Organization and for local legislation, 

particularly in terms of the minimum wage, working time, health and security. 

Subcontractors, regardless of where in the world they are based, and suppliers of raw materials, packaging or POS/PrOMO materials located in 

countries classed as “at risk” are required to undergo a social audit. 

HR2 

L’Oréal actively seeks to work with suppliers who share its values and its ethical commitments. Subcontractors, regardless of where in the world they 

are based, and suppliers of raw materials, packaging and POS/PrOMO materials located in countries classed as “at risk”, are required to undergo a 

social audit. The initial audits are financed by L’Oréal and conducted independently on its behalf. 

L’Oréal has implemented a social responsibility program among its suppliers in order to ensure the application of fundamental points such as 

compliance with the laws in force, respect for human rights and labor law, the protection of hygiene and the security of staff. 

Social and Security/Health audits are performed frequently worldwide right along the logistics chain in order to validate the selection of new suppliers 

and to contribute to the development of good practices among existing suppliers. 

Since 2002, L’Oréal has implemented a program that allows it to ensure that its suppliers comply with the applicable laws, human rights and labor law, 

as well as ensuring the security of their teams and hygiene in the workplace. 

The audits cover the following 10 aspects: 

• child labor; 

• forced labor; 

• health and security; 

• compliance with laws concerning trade unions; 

• non-discrimination ; 

• disciplinary practices; 

• sexual harassment or hostile working environment; 

• observance of minimum wage/compensation and benefits; 

• working time; 

• relations with subcontractors. 

L’Oréal’s social audit is to a large part based on the globally recognized Sa8000 standard, but includes certain exceptions as regards the issue of the 

minimum age for child labor and the requirements relating to a living wage. 

Thus far, L’Oréal has performed social audits at over 3,000 supplier sites: 567 took place in 2010. In 2011, 793 audits (567 in 2010) were conducted, bringing 

the total to more than 3,300 since 2006. 

GEOGRAPHICAL BREAKDOWN OF L’ORÉAL’S SOCIAL AUDITS 

NAZ: North America zone 

ZAL: Latin America zone 

ZAMO: Africa & Middle East zone 

2006 2007 2008 2009 2010 2011 

Europe 78 221 80 86 119 134 

NAZ 58 21 2 5 2 9 

ZAL 43 106 128 36 84 65 

ZAMO 24 26 24 4 23 76 

Asia 103 211 454 305 339 512 

TOTAL 306 585 688 436 567 793 

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These percentages correspond to all nonconformities connected with the topic concerned, irrespective of their nature or seriousness. 

Nonconformities observed are the subject of corrective actions and, in the most serious cases, may result in commercial relations being 

halted or, where applicable, refusal to list a new supplier. 

L’Oréal does not carry out monitoring in terms of the number of training hours or the number of staff trained, but does monitor the number 

of countries where the training courses cover the human rights topics of: 

• Health, hygiene and security 

• Diversity, 

• Moral and sexual harassment, 

• respect for privacy, 

• Contribution to the community, 

• Choice and fair treatment of suppliers. 

In 2011, 83.1% of countries communicated internally on human rights topics, a figure up in relation to 2009 (65%) and 2010 (74.4 %). 

Where training courses are concerned, the percentage of countries covering human rights topics is also growing, with 75% in 2009, 80.5% 

in 2010 and 77.1% in 2011. 

NON-DISCRIMINATION 

2010 2011 

Access refused 7% 4% 

Zero tolerance 2% 1% 

Satisfactory or ongoing improvement 47% 45% 

Immediate action required 47% 49% 

Main conformity defects 2010 2011 

Child labor 9% 6% 

Pay 26% 23% 

Hours 28% 25% 

Hygiene and security 21% 41% 

Others 16% 5% 

HR3 

I. CONTENTS 

CORE 

HR4 

Total number of incidents of discrimination and corrective actions taken. 


3/6


HR4 

Diversity is one of the key values for L’Oréal. It goes hand in hand with their main aim: respect for the individual, an integral part of the 

Ethical Charter. For L’Oréal, it is not only a matter of recognizing, accepting and valuing difference, but also of capitalizing on it in order to 

improve performance. The number 1 objective is to make L’Oréal the world leader in diversity management. 

a “Pulse France” survey conducted in 2007 showed that 70% of L’Oréal staff consider that the company encourages diversity (24 pts. more 

than the national average). They are due to be surveyed again on this topic for the Pulse 2012 opinion poll. 

Diversity is a core value for L’Oréal and, since 2005, the group has opted to structure its diversity promotion policy around six priority 

aspects: nationality, socio-cultural & ethnic origin, genre, handicap and age. For instance, the role of women is developing year on year, 

to the point that, in 2011, they made up 58% of the managerial workforce, 41% of the Management Committees and 45% of the major 

expatriation assignments. 

SINCE 2004, SEVERAL COMMITMENTS HAVE BEEN MADE BY THE GROUP WITH REGARD TO DISCRIMINATION: 

• In 2004, L’Oréal signed the Charte de la Diversité dans l’Entreprise (Company Diversity Charter) in France and is currently a signatory to seven 

European charters (France, Germany, Spain, Italy, Belgium, Sweden and Poland) and a co-founder of the Italian, Swedish and Polish charters. 

• On 11 april 2008, in conjunction with the association SOS Préma, L’Oréal launched the Charte de la Parentalité en Entreprise (Company 

Parenthood Charter), which has 310 signatory companies and bodies. 

• In 2011, in partnership with the rMC-BFM association, L’Oréal launched the Charte du Cœur (Heart Charter) and got 83 companies 

involved in the vital project to install defibrillators in public places and to train their staff and suppliers/clients in lifesaving actions. 

• Since 2005, a Global Diversity Department has existed within the group while a France Diversity Department was set up in 2009. at 

international level, a network of thirty local coordinators carry out actions on the ground, while an HrD responsible for international 

diversity was appointed in 2011. 

• In 2011, none of the 793 audits performed identified any problems of discrimination. 

L’ORÉAL HAS ALSO BEEN RUNNING TRAINING COURSES FOR SOME CONSIDERABLE TIME: 

• In 2006, the group launched a diversity training course (1.5 days) for 8,000 managers throughout Europe. 

• In 2011, 1,411 staff took part in the Diversity Workshops, a day devoted exclusively to diversity issues within the company and accessible 

to all staff and new entrants. This number was on top of the 4,000 staff already trained in France by the end of 2010. By the end of 2011, 

5,146 employees, mostly managers, had completed this course around Europe (excluding France). 

SEVERAL ACTIONS HAVE ALSO BEEN IMPLEMENTED WITHIN THE GROUP: 

• In 2005 the first managerial recruitment audit took place in collaboration with the l’Observatoire des Discriminations. 

• Since 2008, an audit on Equal Opportunities in the recruitment process has been performed annually in conjunction with the Equality 

office. 

• In 2008 and 2009, L’Oréal signed three agreements with the trade union bodies: 

- on Male/Female Equality at Work 

- on the reconciliation of Private and Work Life 

- on the Employment of Senior Citizens 

- For the evaluation of Managers: “diversity” criteria are included in the Talent Development section 

all L’Oréal suppliers and subcontractors are required to comply with the group’s General Purchasing Conditions, which clearly stipulate 

the obligation to conform to Conventions C100 and C111 of the International Labour Organization concerning equality. 

FREEDOM OF ASSOCIATION AND COLLECTIVE BARGAINING 

I. CONTENTS 

CORE 

HR5 

Operations identified in which the right to exercise freedom of association and collective bargaining may 

be at significant risk, and actions taken to support these rights. 


4/6


HR5 

The quality of the social climate within L’Oréal is the fruit of continuous dialogue between the management, the employees and their 

representatives. 

The group pays particular attention to communication with its staff and, since 2003, L’Oréal has carried out an opinion poll among them 

with the assistance of the international firm Towers Watson. This poll took place again in 2011-2012 and the results were shared with the staff 

and their representatives. They are the subject of action plans implemented in a decentralized fashion and which are as close as possible 

to the expectations expressed. 

an agreement signed in 1996 between L’Oréal and the French and European trade union bodies (FECCIa and EMCEF) led to the creation 

of the European Works Council (EWC). The initial agreement has been regularly updated, most notably in 2009 in order to introduce a 

new information and consultation procedure applicable to transnational projects giving rise to local consultation procedures. This process 

envisages the option of the EWC issuing a recommendation. It is then implemented with the liaison secretariat, widened to include the 

members from the countries concerned or indeed the full EWC, depending on the geographical and strategic scale of the project. This 

revision represented an important step aimed at reinforcing social dialogue at L’Oréal while at the same time anticipating the development 

of the legislation. 

The EWC facilitates discussions and meetings with the EWC members on the group’s current situation and future prospects. 

It is made up of 30 members, who regularly benefit from training in economic and social issues. 

at the current time, this body covers roughly 30,000 personnel from 26 countries within the European Economic area, with the 16 of these 

that have over 145 staff being directly represented. 

In France, the employees are represented by 107 staff representation bodies and 600 staff representatives. 

THE RECORD ON COLLECTIVE AGREEMENTS 

Within L’Oréal, 226 agreements were in force as at 31 December 2012, 38 agreements were signed in France during 2011 and 69 agreements 

were signed in the rest of the world. 

In 2011, 2% of the nonconformities detected related to the freedom of association part. 

This percentage corresponds to all nonconformities connected with the topic concerned, irrespective of their nature or seriousness. 

Nonconformities observed are made the subject of corrective action and, in the most serious cases, may result in commercial relations 

being halted or, where applicable, refusal to list a new supplier. 

CHILD LABOR 

I. CONTENTS 

CORE 

HR6 

Operations identified as having significant risk for incidents of child labor, and measures taken to contribute 

to the elimination of child labor. 


HR6 

By choosing to set the minimum age for its staff at 16, a higher limit than that required by the Fundamental Conventions of the International 

Labour Organization (ILO), L’Oréal is contributing to the abolition of child labor. all of the group’s entities are required to verify the age of 

their new recruits at the time of hiring. In view of their young age, staff aged 16 to 18 are subject to special monitoring to ensure that they 

do not do night work, extra hours, work involving the use of dangerous substances or tools, or carry heavy loads. They are also subject to 

an enhanced training plan, are assigned an internal tutor and entered on a special register. 

all of the group’s entities are subject to monitoring concerning the ban on hiring under 16s and the working conditions of staff aged 16 to 

18. In 2011, 537 employees aged 16 to 18 were employed within the group. 

Furthermore, all of the group’s social audits deal with the issue of child labor. 

5/6


In fact, 6% of the nonconformities detected during the 2011 supplier audits related to the “child labor” part (contracts, employment 

situation of staff aged 16 to 18), medical visits that did not take place, etc.). 

all L’Oréal suppliers and subcontractors are required to comply with the group’s General Purchasing Conditions, which clearly stipulate 

the obligation to conform to Conventions C138 and C182 of the International Labour Organization concerning the ban on child labor. 

L’Oréal is also contributing to the abolition of forced labor. The use of prison labor is possible, directly or via a supplier/subcontractor, only 

when it is voluntary within the context of a rehabilitation program and paid at the market rate. 

Should more information be required, L’Oréal has developed a policy entitled 

“http://developpementdurable.loreal.com/pdf/child-labour-suppliers.pdf” “Fournisseurs/Sous-traitants et travail des enfants” 

“http://developpementdurable.loreal.com/pdf/child-labour-suppliers.pdf” 

“http://developpementdurable.loreal.com/pdf/child-labour-suppliers.pdf” 

> For more details, also see p. 193, 6.1.2.7. of the reference document “Promotion and respect of the stipulations of the fundamental 

conventions of the International Labour Organization. 

FORCED AND COMPULSORY LABOR 

I. CONTENTS 

CORE 

HR7 

Operations identified as having significant risk for incidents of forced or compulsory labor, and measures to 

contribute to the elimination of forced or compulsory labor. 


HR7 

L’Oréal is also contributing to the abolition of forced labor. The use of prison labor is possible, directly or via a supplier/subcontractor, only 

when he is voluntary within the context of a rehabilitation program and paid at the market rate. 

all L’Oréal suppliers and subcontractors are required to comply with the group’s General Purchasing Conditions, which clearly stipulate the 

obligation to conform to Conventions C29 and C105 of the International Labour Organization concerning the abolition of forced labor. 

In 2011, 1% of the 793 audits performed at our Suppliers’ sites identified problems of forced labor. 

This percentage corresponds to all nonconformities connected with the topic concerned, irrespective of their nature or seriousness. 

Nonconformities observed are the subject of corrective actions and, in the most serious cases, may result in commercial relations being 

halted or, where applicable, refusal to list a new supplier. 

6/6



Society 

The Code of Business Ethics is the reference document for ethics within L’Oréal. It helps employees integrate the L’Oréal spirit into their 

daily activity. The Code of Business Ethics applies to all employees of the L’Oréal group and its subsidiaries worldwide. It also pertains to all 

L’Oréal group officers, directors and members of executive committees and boards of the L’Oréal group and its subsidiaries worldwide. Each 

employee receives a personal copy of the Code of Business Ethics. 

The Code of Business Ethics was drafted with the help of employees from 22 countries who took part in international working groups in Latin 

america, North america, asia and Europe. The Code was then validated by 50 internal experts and reviewed by each Country Manager, 

Human resources Manager and local legal advisor. 

> For more information, read the Code, which is available in 43 languages, on the official L’Oréal English-language website: 

http://www.loreal.fr/_fr/_fr/html/groupe/la-charte-ethique.aspx. 

CODE OF ETHICS FOR GROUP EMPLOYEES WORKING WITH SUPPLIERS 

aspects of society, such as communities, corruption, public policy, unfair business practices and regulatory compliance, are all an integral part 

of L’Oréal’s management approach. In observance of the Code of Business Ethics, the Ethics Department and the Purchasing Department 

created and implemented a document for all group employees who deal with suppliers. The purpose of this document is to guide the 600 

professional buyers and 10,000 occasional buyers involved in purchasing decisions in their daily relations with suppliers. 

> For more information, read “a new international ethical guide for purchasing” on page 35 of the Sustainable Development report 2011. 

COMMuNITY 

I. CONTENTS 

CORE 

SO1 

Nature, scope, and effectiveness of any programmes and practices that assess and manage 

the impacts of operations on communities, including entering, operating, and exiting. 


SO1 

L’Oréal has implemented programmes on the conditions for sourcing raw materials and the impact of these materials on communities. For 

example, since 2007, the group established the “Sustainable Sourcing of argan” programme in Morocco. 

> For more information, read: the article on the L’Oréal site 

• http://www.loreal.fr/_fr/_fr/html/suppliers/responsible-sourcing/responsible-sourcing-fair-trade.aspx 

• the article “ever more responsible sourcing” in the Sustainable Development report 2011. 

1/8


With the support of an NGO (for which one of the first missions was to coordinate a committee of local stakeholders to validate action 

plans), the group specifically assessed the economic and social impact on local communities of activities related to producing its raw 

materials (such as the improvement in income levels, the frequency of access to healthcare and the literacy rate). 

In addition to these types of local actions, L’Oréal routinely evaluates the raw materials in its portfolio, which includes examining topics 

related to the impact of sourcing activities on communities (a particularly significant issue for renewable raw materials). In 2011, 80% of the 

raw materials considered potentially sensitive in terms of equitability or access to their natural resources had their traceability and sectors 

closely examined thanks to the group’s impact measuring framework: the “raw Material Sustainability assessment Tool” deployed among 

the group’s suppliers. 

Based on these results, and armed with initial field experience, L’Oréal will continue to set up responsible sourcing programmes, thereby 

optimising the social, economic and environmental impact on communities in the territories where raw materials originate (e.g. the Shea– 

“Solidarity Sourcing” 2012 project, see details below). 

“SOLIDARITY SOURCING” 

Since the primary vehicle for the societal impact and the economic development generated in communities by L’Oréal is its purchasing 

power, L’Oréal has decided to make its sourcing an original way to combat exclusion. Subsequently, in mid 2010, the group created a 

global programme entitled: “Solidarity Sourcing”. Its purpose is to help people from economically vulnerable communities find enduring 

access to work and income. This initiative affords them an opportunity for social integration. 

Several initiatives had already been developed in the group, and in particular, the Body Shop’s “Community Fair Trade” programmes. With 

“Solidarity Sourcing”, L’Oréal profoundly transformed its purchasing process, opening it up to new types of suppliers to build commercially 

fair, sustainable partnerships that create economic and societal value. These partner suppliers include: companies working for the 

inclusion of disabled people, companies promoting social integration, very small, small and mid-sized businesses that have difficulty 

gaining access to major contractors, minority-owned companies and manufacturers employing fair trade practices. 

One year after the launch of “Solidarity Sourcing”, the sourcing teams launched 120 initiatives in 47 countries. Solidarity sourcing for the 

L’Oréal group brands, including The Body Shop, thereby corresponds to a global value of 50 million Euros in solidarity purchases. Thanks 

to these projects, 29,000 have gained access to paid employment. Through this programme of insertion through economic activities, the 

group aims to double the value of solidarity sourcing to a level of 100 million Euros by the end of 2013. 

DETAILS OF THE GLOBAL “SOLIDARITY SOURCING” PROGRAMME 

A vision: Trigger the virtuous circle of integration 

The global “Solidarity Sourcing” programme is based on two firm beliefs: 

• The first is that purchasing power is an effective lever for inclusion and for the creation of sustainable employment for economically 

vulnerable people. 

• The second is that to ensure that this “Solidarity Sourcing” programme endures, it was necessary to incorporate it into the business model 

and fully integrate the sourcing method. Hence, by including solidarity suppliers into its development, L’Oréal’s growth also becomes the 

suppliers’ growth. 

With “Solidarity Sourcing”, L’Oréal helps combat the weakening of social ties and endeavours to maintain access to employment and 

social integration for economically vulnerable people. For L’Oréal, work is a vehicle for identity, socialisation, and the consolidation of selfesteem 

and social ties. It also provides access to economic power, which in turn helps people free themselves from assistance to once 

again find their independence and dignity. The L’Oréal group is thus reinforcing its actions against exclusion, an issue in which the group 

is already active through its Diversity policy and the actions of its Foundation. 

Two basic principles: 

• Use the group’s purchasing power as a lever 

L’Oréal sources goods and services in all areas: raw materials, packaging, promotional material, POS displays, property, travel, IT, and so on. 

For several years now, the group has, through its “L’Oréal Buy & Care” programme, devoted itself to making its sourcing responsible and to 

working with its suppliers to forge sustainable relationships based on environmental respect, social development and economic progress. 

L’Oréal wanted to go further by also making its sourcing one of solidarity. In all areas, the goal of the “Solidarity Sourcing” programme is to 

enable new types of suppliers, who have difficulty accessing tenders, to work with L’Oréal. The group establishes commercial relationships 

with these companies, which then provide L’Oréal with goods and services. L’Oréal supports their development by: 

- entering into contracts that provide fair remuneration and that satisfy all parties involved, 

- providing access to an international network to help them find new clients and to reinforce their strength and economic independence 

vis-à-vis L’Oréal. 

• Make the programme sustainable by integrating it into the business 

“Solidarity Sourcing” is not dependent on a specific budget. It represents a new method of sourcing, and therefore is a strategy that is totally 

integrated into the business and closely tied to the group’s economic growth. The more L’Oréal grows, the higher its purchasing power 

will be and the stronger the “Solidarity Sourcing” programme will be. “Solidarity Sourcing” is an integral part of the Operations Department 

and the group General Purchasing Department – it is not an independent department. It is also not a programme that is peripheral to the 

business. rather, it represents principles and tools for guiding buyers. This is the decentralised mode of operating that involves all L’Oréal 

buyers, who will in turn ensure the success of “Solidarity Sourcing”. 

A simple procedure: be open to new supplier categories 

The mission of all L’Oréal buyers is to identify new “Solidarity Sourcing” suppliers who have certain points in common, such as economic 

vulnerability and difficulty gaining access to large scale contractors. The programme targets five company types: 

2/8


- producers practising fair trade, 

- companies working for the inclusion of disabled people, 

- companies that promote social integration, 

- small companies, 

- minority-held companies. 

Involved governance 

a Strategic Committee, chaired by Jean-Paul agon, meets twice a year to establish objectives and evaluate progress. 

A method of operating based on five essential points: 

1/ A programme integrated into the objectives of buyers 

Fully integrated into the roadmaps for the group’s buyers, this programme is part of their purchasing objectives and their remuneration 

determination, since it constitutes one of the items used to calculate their bonus. International coordinators in the five global regions are 

responsible for increasing buyer awareness, motivating buyers and validating the projects. Each buyer has a toolbox (glossary, process 

book, project book) and an online platform to enable them to successfully integrate the programme and share good practices. 

2/ Strict project selection criteria 

To ensure a significant societal impact and the credibility of these purchases, the “Solidarity Sourcing” programme has implemented a 

strict project selection process. The projects are selected based on a certain number of criteria, including: value of purchase, number of 

jobs created or maintained, positive external effects for the Company (creation or maintenance of infrastructures, such as hospitals and 

schools), ability to replicate project and project sustainability. respecting the group fundamentals (ethics, local regulations, environmental 

impact and the “Buy & Care” charter) is a necessary criterion for project approval. 

The evaluation matrix for “Solidarity Sourcing” projects helps measure the various impacts of a project using key performance indicators. 

Criteria 

3/8


3/ Collaboration with integration associations and bodies 

associations and bodies that provide integration assistance often form strong ties with potential “Solidarity Sourcing” suppliers and with people in 

situations of exclusion (such as arES, an association for disabled people in China, Helvetas, SNV and GTZ). Therefore, for certain projects, L’Oréal works 

closely with these entities to identify partners, implement projects, and monitor as well as assess social impact. 

4/ Performance measurement 

“Solidarity Sourcing”programme wishes to measure the results of each project. In addition to its internal evaluation criteria, the programme 

actively seeks independent performance indicators. This external evaluation system of both quantitative and qualitative indicators will 

help objectively examine the social impact of the programme overall. 

5/ A programme in multiple locations 

The goal of the programme is to develop in all countries where the group exists. Collaborative tools have been implemented so that 

projects that arise out of local initiatives (for example, in South africa, Brazil, China, France and Morocco) can subsequently inspire all 

group employees who are in a position to engage in solidarity sourcing. 

EXAMPLE OF A SOLIDARITY SOURCING / FAIR TRADE PROJECT: SHEA BUTTER IN AFRICA 

This fair trade project was implemented with L’Oréal research & Innovation and The Body Shop. Its goal is twofold: to improve the wellbeing 

of the women who gather shea nuts and to improve the quality of the shea butter. To do this, L’Oréal relies on the know-how of The 

Body Shop and is working with two suppliers and three very locally involved NGOs (Helvetas, SNV and GTZ). The goal is to export this project 

to other areas and other products. This project, which is based in sub-Saharan africa, will help ensure income for more than 12,000 people. 

It will enter into effect in 2012. 

THE BODY SHOP’S “COMMUNITY FAIR TRADE” PROGRAMME 

In 2011, as for the last 35 years, The Body Shop continued to put its ethical values into daily practice - from research and development to 

motivating the public. 

Thanks to revolutionary campaigns, the brand continued to motivate its clients to promote sustainable change through its “Stop sex 

trafficking of children and young people” campaign. Teams around the world mobilized over seven million people to sign petitions calling 

on national governments to take concrete measures to protect children and young people vulnerable to sex trafficking. In addition to 

being presented to national governments, the petitions were submitted to the United Nations in Geneva. This campaign, which received 

impressive media coverage, created change on an unprecedented scale and convinced 15 governments from the four corners of the 

globe to introduce legislation to protect children and young people. 

as a result of its fair trade programme, The Body Shop can source quality products with ensured traceability from its 25 suppliers in 21 

countries. This programme directly benefits over 300,000 people from marginalised communities throughout the world. Since its 2006 

acquisition by L’Oréal, The Body Shop has been presenting its fair trade suppliers to the group’s buyers. Today, the group uses four 

ingredients from The Body Shop product ranges: aloe vera, olives, sesame and sugar. 

Moreover, The Body Shop is a member of the Ethical Trading Initiative (ETI). 

The Ethical Trading Initiative (ETI) is an alliance of companies, non-governmental organizations (NGOs) and unions. ETI endeavours to 

promote and improve the implementation of corporate codes of conduct that also pertain to working conditions in the supply chain. 

The goal is to ensure that the working conditions for people who produce for the English market comply with, or surpass, international 

standards. The method has two parts: (1) the NGO, union and company members of the ETI work together to identify good practices in 

implementing the code and promoting these practices; (2) ETI encourages companies to approve the code of conduct and to have it 

applied throughout its supply chain. 

> For more information, visit http://www.ethicaltrade.org/ 

In 2011, ETI acknowledged The Body Shop as a leader in the beauty sector. Peter Mcallister, Director of ETI, speaks about the brand: “Being 

truly open to the world is a key element of the leadership that the company has always assumed in managing issues, such as worker’s 

rights. It shoulders its responsibilities by adopting an approach that is both visionary and commercially viable.” 

In 2011, The Body Shop provided comprehensive training programmes to its suppliers in Thailand and the United Kingdom. Furthermore, it 

trained its own teams on sourcing and quality to ensure that they comply with the strictest fair trade standards. It continues to monitor all 

of the products it offers in its boutiques. The audit was expanded to include second tier suppliers, such those providing store fixtures and 

fittings, office services and services pertaining to personnel uniforms. 

4/8


A DAY OF CITIZENSHIP AND SOLIDARITY: CITIZEN DAY 

In 2009, to celebrate its 100-year anniversary, the group rolled out 100 citizen projects across the globe. Concretely, each subsidiary 

designed and implemented a solidarity project to help local disadvantaged communities. The objective: to make the 100-year anniversary 

a time to share and to reaffirm the group’s commitment to being a responsible, supportive company. To continue along these lines and 

involve its employees in its commitment to citizenship and solidarity, 2010 saw L’Oréal launch a day of citizenship and solidarity worldwide: 

Citizen Day. For the second edition of Citizen Day in 2011, 15,600 employees worldwide were able to contribute to a day of solidarity. 

In 2010, the very first Citizen Day enabled staff throughout the world to discover or rediscover the philanthropy programmes of the group 

and its Foundation. In 2011, there was a change of scene: convinced that we all have a role to play in making L’Oréal a better and 

better corporate citizen, the group shifted gears to let everyone become involved in concrete, useful solidarity actions in the field. From 

asia to Europe, from Latin america to the Middle East, over 15,600 employees in 58 countries stepped forward. On the programme: a 

wide selection of social or environmental actions performed with hundreds of partner associations around the world: cleaning beaches, 

collecting waste, renovating a school, giving blood, visiting an orphanage or reaching out to isolated or destitute people….In a single day, 

everyone gave time, energy and enthusiasm to make a useful contribution to the communities around us. It was a day that undoubtedly 

marked a turning point in the group’s commitment: “It is no longer just L’Oréal being committed, but each and every one of us rallying 

around in a tangible way,” mentioned L’Oréal Chairman and CEO Jean-Paul agon. “By enabling everyone to become players, not mere 

spectators, this mobilisation has given another dimension to L’Oréal’s commitment to corporate citizenship.” The next stage: Citizen Day 

2012, with the same slogan: “We all have a role to play”. 

CORRuPTION 

I. CONTENTS 

CORE 

SO2 

Percentage and total number of business 

units analyzed for risks related to corruption. 


SO2 

L’Oréal supports the fight against corruption, complies with the United Nations Convention of 31 October 2003 against corruption and is 

committed to applying current legislation, and especially anti-corruption laws. 

L’Oréal’s Code of Business Ethics publicly stipulates a zero tolerance policy on corruption and discusses themes, such as bribery and 

“facilitation payments”, conflicts of interest, gifts and entertainment. 

The anti-corruption policy set forth in the Code of Business Ethics applies to all employees, officers, directors and members of executive 

committees and boards for the group’s subsidiaries worldwide. Other policies, such as “The Way We Buy”, a practical guide, whose 

objective is to govern the relationships between suppliers and all buyers involved in sourcing decisions, also address these issues. 

This commitment is supported at the highest corporate level, and particularly by L’Oréal’s Chairman and CEO who, for example, responded 

to employee questions on this theme in an online discussion that took place on group Ethics Day, which took place in October 2011. 

Country managers are responsible for implementing L’Oréal’s anti-corruption policy. The group Ethics Director systematically meets with 

each new Country Manager to raise his or her awareness on corruption issues. 

The tool for analysing and assessing ethical risk helps Country Managers evaluate risks in their country (including the risk of corruption) and 

take the necessary measures to eliminate this risk. 

L’Oréal’s commitment is supported by Human resources procedures. Subsequently, the “Obtain results with integrity” competency is now 

included in the annual review system for all employees. 

Training and communication on Ethics address bribery and “facilitation payments” as well as gifts, entertainment and conflicts of interest. 

Within the scope of L’Oréal’s “Open Talk” culture, employees are encouraged to raise their concerns online. a dedicated, secure website 

enables them to ask their questions or submit their concerns directly and anonymously to the group Ethics Director. 

L’Oréal’s internal audit teams are especially vigilant about this. The risks for corruption are systematically examined during these missions 

5/8 

CORE 

SO3 

Percentage of employees trained in organization’s 

anti-corruption policies and procedures. 

SO4 

actions taken in response to incidents 

of corruption.


through individual ethics interviews. 

These interviews use questions on corruption. They are conducted independently with the Country Manager and the administration and 

Finance Manager. They are subject to an individual report that is reviewed and signed by the aforementioned managers. 

SO3 

L’Oréal monitors the number of countries that have integrated Human rights (health, hygiene and safety, diversity, moral and sexual 

harassment, privacy, community contribution, fair selection and treatment of suppliers) into its training. 

Country reporting Ethics is an annual reporting system on ethical issues. It covers all subjects mentioned in the Code of Business Ethics 

and thus provides an analysis of the initiatives in place in the countries. In particular, this information helps L’Oréal assess the group’s 

performance in enforcing Human rights. 

In 2011, 77% of the group countries included Human rights issues in their local training programmes. 

SO4 

Country managers are responsible for implementing L’Oréal’s anti-corruption policy. This commitment is supported by Human resources 

procedures. Subsequently, the “Obtain results with integrity” competency is now included in the annual review system for all employees. 

at L’Oréal, training on Ethics addresses bribery and “facilitation payments” as well as gifts, entertainment and conflicts of interest. 

Within the scope of L’Oréal’s “Open Talk” culture, employees are encouraged to raise their concerns online. a dedicated, secure website 

enables them to ask their questions or submit their concerns directly to the group Ethics Director. 

L’Oréal’s internal audit teams are especially vigilant about this. The risks of corruption are systematically examined during these missions. Finally, 

the Country reporting Ethics, annual reporting system on Ethical issues in the group, helps track the group’s performance in this area. 

The tool for analysing and assessing ethical risk helps Country Managers evaluate risks in their country (including the risk of corruption) and 

take the necessary measures to eliminate this risk. 

PuBLIC POLICY 

I. CONTENTS 

CORE 

SO5 

Public policy positions and participation in 

public policy development and lobbying. 


SO5 

as a leader in the cosmetics industry, L’Oréal believes that it has a responsibility to be proactive and participate in drafting local regulations in 

countries where it is present. This is why the group is committed to being involved in Cosmetics Europe (formerly Colipa), the reference professional 

association almost systematically solicited to speak to stakeholders and within different professional associations, such as the CaFFCI 

- the China association of Fragrance Flavour and Cosmetic Industries, ISTMa – the Indian Soap and Toiletries Mfrs association, the JCIa (Japan 

Cosmetics Industry association), PErKOSMI (Persatuan Kosmetika Indonesia), the Korea cosmetic association, The Cosmetic & Perfumery association 

of Hong Kong, the Taipei Cosmetic Industry association and the Vietnam Oil, aromatherapy & Cosmetics association in asia as well 

as the CaSIC and CONarS (for issues of self-regulation and advertising responsibilities) in South america. 

Each of L’Oréal’s directors of Public affairs is in charge of this lobbying in its geographic area, with the support of working groups of scientific and 

regulatory experts in the areas under discussion. 

For example, for hair dye products, L’Oréal has been very committed to the think tank in place on the subject, which involved scientific bodies 

and the European Commission. L’Oréal largely contributed to reassessing all of the ingredients that are used in hair dyes. 

L’Oréal is subject to the same laws as all companies and seeks to maintain an impeccable reputation. L’Oréal asks its subsidiaries to comply with the 

6/8


regulations of the countries in which they operate. as an active member of professional associations in the countries where its industry is represented, 

L’Oréal takes part in the ongoing dialogue between the local and regional authorities in charge of specific product regulations in its sector in order to 

prevent or adapt to any risks related to regulatory changes. 

The European rEaCH regulations (on the registration, Evaluation restriction and authorisation of CHemical substances), which entered into effect 

in June 2007, aim to reinforce the human and environmental safety of chemical products by obliging any company that uses such products to 

show proof that they take appropriate risk management measures. L’Oréal takes an active role in this process when it comes to substances that are 

manufactured or imported by its European legal entities. Within the national and European associative framework, L’Oréal takes part in analysing and 

drafting practical guides for implementing these regulations. 

In Europe, L’Oréal is also governed by the 7 th amendment of the European Cosmetics Directive, which prohibits animal testing for ingredients. a L’Oréal 

action plan was created to help develop ways to discover and assess the safety of raw materials. This plan benefits from expedited implementation. 

COMPLIANCE 

I. CONTENTS 

BASE 


SO8 

SO8 

Monetary value of significant fines and total 

number of non-monetary sanctions for non- 

compliance with laws and regulations. 

Within the normal scope of its activities, the group is involved in legal actions and is subject to inspections by tax, customs and administrative 

authorities. It is also subject to procedures initiated by national competition inspection authorities, and especially in European countries. 

In order to prevent the risk of becoming subject to such inspections, the group Legal Department implemented training on competition 

law for relevant employees. also, in 2011, it distributed a legal and ethical guide on unfair competition practices, called, “Day-to-day 

competition”. 

a provision is booked each time the group has an obligation to a third party and must face the possibility of outgoing resources, the cost 

of which can be reliably estimated. 

L’Oréal deems that, to date, there is no highly probably exceptional event or governmental, legal or arbitrage procedure that is likely to 

significantly affect or that recently significantly affected the financial situation, assets or activity of the Company and L’Oréal. 

7/8


Provisions for liabilities and charges 

In millions of Euros 31.12.2011 31.12.2012 31.12.2009 

Non-current provisions for liabilities and charges 226,1 181,3 125,6 

Provisions for restructuring - - 0,4 

Other non-current provisions (1) 226,1 181,3 125,2 

Current provisions for liabilities and charges 500,7 536,9 510,0 

Provisions for restructuring 93,6 90,6 179,8 

Provisions for product returns 219,2 209,4 174,6 

Other current provisions (1) (2) 187,9 236,9 155,5 

Total 726,8 718,2 635,6 

(1) This item includes provisions for tax risks and litigation, industrial, environmental and commercial risks relating to operations (breach of contract), personnel-related costs 

and risks relating to investigations carried out by competition authorities. 

(2) National competition authorities from several European countries have launched investigations focusing on the cosmetics industry. 

Notifications of complaints were sent to the group’s subsidiaries in Germany, the Netherlands, Spain and Switzerland. a decision regarding 

Italy was handed down by the national competition authority on December 15th, 2010. an appeal against this decision is in progress. 

On 31 December 2010, total provisions for competition disputes amounted to 93.1 million Euros. 

In 2011, investigations and/or financial sanctions initiated against its subsidiaries in the Netherlands and Switzerland were abandoned. 

Spain received notification of a fine, which it has provisioned and challenged on appeal. In Italy, the appeal is still in progress but the fine 

was paid to avoid any late-payment interest. The provision was revised accordingly to 35.1 million Euros on 31 December 2011. 

Other requests for information have also been sent and investigations have been launched in Europe, although no notifications of 

complaints had been received as of 31 December 2011. 

In France, on 26 January 2012, the Paris Court of appeals, to which the case was referred back following a decision by the Cour de 

Cassation (France’s highest civil court), decided to uphold the 13 March 2006 decision of the French Competition Council resulting from 

its investigation of 13 suppliers and 3 distributors in the luxury perfumes and cosmetics industry from 1997 to 1999. 

This decision of the Court of appeals may be appealed before the Cour de Cassation. The financial sanctions against L’Oréal have 

already been provisioned and paid. 

. 

> For more information, see note 22 of chapter 4 of the 2011 reference Document. 

8/8


Product Responsibility 


Product responsibility at L’oréal encompasses various facets, such as consumer health and safety, product and service labelling, marketing 

communication, respect for customer privacy and regulatory compliance. 

L’oréal complies with all national regulations throughout the world. In countries that do not have applicable regulations, the group 

adheres to European regulations at a minimum (in terms of safety and labelling). 

Product safety is crucial to L’oréal, which is why the same safety requirements are applied across the globe so that consumers always 

have access to products of uniform quality. 

all of the products developed by the group undergo systematic and rigorous safety evaluations. L’oréal integrates this principle at each 

step of product development. First, L’oréal teams analyse all of the information on each ingredient and evaluate the safety for each 

specific use of these ingredients once they are incorporated into a finished product. The effects on humans of the use of an ingredient at 

a given concentration in mascara can markedly differ from the effects of the same ingredient at the same concentration in a sunscreen. 

These analyses help determine the dose of the product each time it is applied. The evaluation teams also consider other aspects of a 

product’s life cycle, such as the length of time an ingredient remains on the skin, whether or not it is exposed to sunlight, the risk of skin 

reactions and the possible abuse of the product. 

CUSTOMER HEALTH AND SAFETY 

I. CONTENTS 

CORE 

PR1 

Life cycle stages in which health and safety 

impacts of products and services are assessed 

for improvement, and percentage of significant 

products and services categories subject to 

such procedures. 


PR1 

The L’oréal group is totally committed to complying with international regulations on the safety evaluation of cosmetic products and their 

ingredients. For example, in Europe, L’oréal complies with the requirements of European Directive 76/768/EEC on cosmetic products and 

the European rEaCH regulations (EC regulation 1907/2006). In addition to these requirements, 10 years ago the group implemented a 

systematic evaluation process for all products commercialised worldwide, including for products launched in regions where the regulatory 

requirements are permissive or even non-existent. 

1 - THE SAFETY EVALUATION: AT THE HEART OF NEW PRODUCT DEVELOPMENT 

Evaluating the safety of products intended for consumer use is a prerequisite for commercialising any L’oréal group product. 

This evaluation is not performed once, but rather is repeated throughout product development, from discovery until commercialisation. 

This evaluation entails examining the safety of both individual product ingredients and the finished product. 

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ADD 

PR2 

Total number of incidents of non-compliance 

with regulations and voluntary codes 

concerning health and safety impacts of 

products and services during their life cycle, 

by type of outcomes.


EVALUATING THE SAFETY OF SUBSTANCES USED IN PRODUCTS, FROM DISCOVERY UNTIL PRODUCT COMMERCIALISATION 

Each substance that has the potential to be used as an ingredient in a cosmetic product (100% of the substances) is subject to a safety 

evaluation performed by a toxicologist. 

The toxicologist first analyses all of the available information pertaining to this substance - the physicochemical characteristics, the 

bibliographic and experimental data – to determine its toxicological profile. If necessary, the toxicologist decides to generate new data 

to complete the existing dossier (see the paragraph entitled, “Shifting to a new evaluation procedure”). Finally, the toxicologist considers 

the foreseeable consumer exposure. This exposure is related to the percentage of substances used in the cosmetic products and the type 

of cosmetic product in question (which will in turn determine such parameters as the exposed surface area, the time in contact with the 

skin, and the sun exposure). 

Subsequently, toxicologists assess the safety of each specific use of a substance integrated into a finished product. They also take into 

consideration the impact of the cumulative use of substances that may be in various types of cosmetic products. 

Using this information, the group’s toxicologists determine the concentration of a substance that enables it to be used in total safety. 

This concentration corresponds to a level of ingredient use that is at least 100 times less than the level considered to be safe under 

experimental conditions of use given the toxicological profile of and exposure to the substance. all of this information becomes an integral 

part of the regulatory dossier for all substances. 

This evaluation follows the development of products. In fact, the safety evaluation of a substance begins as soon as its incorporation 

into a future product is foreseen. at this stage, the formulator (the person who produces future cosmetic products) asks their “reference 

toxicologist” if the incorporation of this substance is possible from an end-user safety point of view. 

Throughout the development stages, each of which may lead to changes in the composition of a formula, formulators refer to their 

toxicologist to verify what is possible from a consumer safety point of view. 

EVALUATING THE SAFETY OF FINAL COSMETIC PRODUCTS PRIOR TO COMMERCIALISATION 

While substance safety is being evaluated, the toxicologist assesses the consumer tolerance of the finished cosmetic product. This 

evaluation also occurs during formulation conception. Toxicologists have acquired the expertise needed to determine the formula on 

paper and identify any possible substance interactions or potentiation. 

This evaluation uses existing bibliographic and experimental data and can require new studies to be conducted if necessary. These new 

studies can be in vitro tests or clinical trials with volunteers. The clinical trials on volunteers are only performed when the group has already 

determined that product safety is satisfactory for the volunteers, since the purpose of these trials is to verify that the target population 

tolerates the product before it is commercialised. 

The safety evaluation of products becomes concrete when a safety certificate endorsed by a toxicologist involved with a dossier is issued. 

The certificate and dossier are systematically in place for 100% of the commercialised products, and this pertained to more than 8,000 

formulations in 2011. 

COSMETOVIGILANCE AND THE IMPACT ON THE DEVELOPMENT OF SAFETY (PLEASE REFER TO SECTION PR2 ON THIS SUBJECT AS WELL) 

Finally, after being commercialised, L’oréal continues to evaluate the use and tolerance of its products on the market worldwide through 

the international cosmetovigilance network, which was created 25 years ago. This network uses rigorous, recognised methods to collect, 

verify and analyse the adverse events related to the use of a product. 

This tool helps identify exceptionally “abnormal” cases of intolerance on the market. In such cases, additional investigations can be 

suggested to the consumers in question (see section Pr8 on Customer Privacy). The product dossier is then re-examined to identify the 

cause of this intolerance so that appropriate measures can be taken, such as re-issuing labelling if it was inappropriate, adding warning 

labels or even changing the composition of the formula if necessary. 

This information is used to update the dossiers of substances eventually found to cause intolerance and as well as to update the 

corresponding cosmetic product dossiers. 

2- SHIFTING TO A NEW EVALUATION PROCEDURE 

This evaluation procedure has been able to adapt to an increasingly strict regulatory environment, which prohibits, among others, the use 

of animals to test product safety, since the L’oréal group anticipated this; therefore, for the last 30 years, the group has been developing 

new safety evaluation methods. 

a new regulatory framework, the 7 th amendment to the European Cosmetics Directive, entered into effect in 2004. In 2009, it imposed the 

ban on the use of animals to assess the safety of finished cosmetic products as well as certain toxicity parameters for substances intended 

for use in cosmetics in Europe. 

Within this regulatory context, a new paradigm, similar in scope to that of eco-design, was developed within research and Innovation 

for the safety evaluation of ingredients and products. Innovation is now part of the process of developing high-performance cosmetic 

ingredients that are initially selected for having no impact on health and the environment. 

This capacity is the result of L’oréal’s investment in building tools to help predict the impact of raw materials and finished products on 

human health and the environment without resorting to animal testing. 

The following were the main steps involved in building the L’oréal group’s expertise in safety evaluation based on predictive 

methods. 

1995: ECVaM/CoLIPa validation of in vitro phototoxicity test. 

amalthée Prize for alternative methods (oPaL). 

1997: acquisition of Episkin SNC, an industrial centre for skin engineering. 

Introduction of Langerhans cells into reconstructed skin (4 th European framework programme). 

1999: CoLIPa instructions on in vitro percutaneous absorption. 

2/6


2005: Participation in the SENS-IT-IV evaluation of alternative methods for allergens (6 th European framework programme). 

Founding member of the EPaa (European Partnership for alternative approaches to animal Testing). 

acquisition of SkinEthic. 

2007: Validation of the Episkin model for skin irritation. 

2008: Validation of the SkinEthic rHE model for skin irritation. 

2009: L’oréal’s disclosure of its predictive method strategy during the 7 th International Congress on alternative methods in rome . 

2010: Entry of the HCE model for corneal reconstruction into the validation phase for ocular irritation. 

2011: Production of 130,000 units of reconstructed tissue (skin and cornea) in Gerland. 

The predictive capacity of these tools is augmented day after day by contributions from new tissue engineering technologies, modern 

biology, mathematical modelling, computer calculations and century-long database development. 

Thanks to this array of predictive methods, L’oréal was able to comply with the 2009 regulatory deadline set forth by the 7 th amendment 

to the Cosmetics Directive without any negative impact on the innovation and safety of its ingredients and products. 

From now on, the group intends to build an integrated strategy of safety evaluation and take part in the “toxicology of the 21 st century” 

by continuing to develop these tools and refining their relevance. In this context, the programme to simulate the first human application 

using a combination of predictive and in vitro tools was pursued. It pertains to certain ingredients used exclusively for cosmetic purposes. 

In 2010, this integrated safety evaluation strategy, along with the tools that support it, were presented by research and Innovation at the 

SoT Congress in Baltimore, at the ESTIV Congress in Linz and at the CoLIPa contact allergies workshop. 

PREDICTIVE METHODS 

Predictive methods combine data and tools to predict the safety of ingredients and formulas. 

L’oréal’s added value in evaluating the safety of its ingredients and finished products comes from the investments it made in tissue 

engineering as well as a panel of diverse predictive methods, including statistical and mathematical models, in silico methodology and 

QSar models developed internally or during external collaborations. They are used in combination to optimise their predictive capacities. 

They now help perform raw material safety evaluations, thereby helping avoid the use animal models 99% of the time. 

RECONSTRUCTED TISSUE 

L’oréal research has long been performing cellular biology research and developing tissue engineering in order to reconstruct various 

human skin and tissue models. 

The various models have five main applications: 

• Developing an understanding of the skin without using invasive clinical trials. 

• Developing and evaluating the efficacy of new active ingredients. 

• Contributing to the evaluation of the safety of raw materials and finished products. 

• Creating, validating and standardising alternative new tests to assess product safety. 

• Developing tests to assess efficacy (e.g., sunscreens). 

In 2010, the commercialisation of reconstructed tissue models used to evaluate ingredient and formula safety continued. The HCE 

reconstructed human corneal epithelium model has entered into the validation phase. as soon as the methods are validated, L’oréal will 

make them available to manufacturers and university laboratoriess. 

ASSESSMENT OF SKIN IRRITATION 

research and Innovation developed two validated methods to evaluate skin irritation using skin models (Episkin and rHE). The entire raw 

material portfolio of L’oréal and The Body Shop has been tested using these models. This action helped deepen the understanding of the 

ingredients and enrich the database as well as the ingredient regulatory dossiers. 

EVALUATION OF OCULAR IRRITATION 

SkinEthic’s HCE model of reconstructed corneal tissue is undergoing regulatory validation for ocular irritation. In 2010, a published study 

demonstrated the reliability of the protocol developed by L’oréal, which has been proven on more than 400 ingredients. New ingredients 

are systematically tested on this HCE model. 

Moreover, the evaluation of formulas for skin and ocular irritation continues. In total, since 2006, more than 12,000 formulas and 2,000 

ingredients have been evaluated. 

> For more information, read: 2011 Sustainable Development report, p. 12: article on predictive evaluation. 

The IEDS/EWC (Instance Européenne de Dialogue Social/European Works Council) encourages discussions and meetings with the IEDS/ 

EWC members on the group’s current and future situation. 

3/6


PR2 

In the area of controlling compliance with regulations and voluntary codes on the health and safety impact of our products, there have 

been no cases of non-compliance to our knowledge. 

L’oréal has a cosmetovigilance network, with teams present in the majority of the markets where it operates, including those markets 

where there are no cosmetovigilance requirements. The mission of this network is to record any analyse all cases of adverse events related 

to the use of one of L’oréal’s commercialised products. This network thereby monitors and analyses all incidents that arise following the 

use of L’oréal’s products. In 2011, this network did not register any cases of non-compliance with product safety and consumer health 

regulations. 

For over 25 years, L’oréal has been monitoring the safety of its commercialised products. This monitoring is an integral part of group 

policy and internal control regulations. This strategic activity is currently performed by dedicated teams: centrally by the International 

Post-marketing Surveillance Department and locally by a multidisciplinary international network devoted to this task. This network has 99 

employee physicians, pharmacists, biochemists, toxicologists and scientists in 53 countries. 

The goal of this organization is to analyse and exploit the post-marketing surveillance data of all commercialised L’oréal products to 

optimise their safety profile and rational use as well as to ensure continuing consumer benefit and compliance with current regulations. 

In addition to working closely with the International Consumer relations Department and the Local Consumer opinion Department, 

the main missions of the post-marketing surveillance organization is to collect and analyse adverse events spontaneously reported by 

consumers, to assess each reported case and to determine whether or not the product in question was the cause. The exploitation of 

the post-marketing surveillance data helps detect signals and anticipate and prevent risks. It also serves as a guideline for those teams 

responsible for pre-marketing safety. 

PRODUCT AND SERVICE LABELLING 

I. CONTENTS 

CORE 


PR3 

PR3 

Type of product and service information 

required by procedures, and percentage 

of significant products and services subject 

to such information requirements. 

all L’oréal brands have websites where consumers can find information on product composition and quality. 

L’oréal provides various types of information to its customers: Business-to-authority (B2a), Business-to-Business (B2B) and Business-to- 

Consumer (B2C), on a voluntary (V) or obligatory (o) basis. 

• o B2a regulatory dossiers for the commercialisation of products or for notifications 100% of the commercialised products comply with 

these requirements. 

Systematically applied. 

• o B2B Transmission of product composition sheets to help physicians fulfil their occupational medicine obligations (INrS – French Institute 

of research and Safety). 

• o B2C Information related to the known potential adverse events following the use of products or to composition data. In Europe, 

providing this information is required upon explicit consumer request. The time lapse to response cannot exceed 21 days. responses are 

provided to 100% of the requests received. 

4/6 

ADD 

PR4 


with regulations and voluntary codes 

concerning product and service information 

and labeling, by type of outcomes. 

PR5 

Practices related to customer satisfaction, 

including results of surveys measuring customer 

satisfaction.


• V B2C Miscellaneous consumer requests made through call centres that require regulatory expertise: responses are provided to 100% 

of the requests received (for example: Does my product contain nanomaterials? Does my product contain animal-based extracts?). In 

2011, there were 1,520,422 consumer contacts (vs. 1.5 million in 2010). 

• B2B Technical information provided to logistics intermediaries (transporters, warehouses) to help them comply with their own regulatory 

obligations. 100% of the products are covereds. 

PR4 

No formal charges were filed by a competent authority with the courts in 2011 to the group’s knowledge. However, the DGCCrF (General 

Directorate for Competition, Consumption and Fraud Control) issued a regulatory reminder. This reminder pertained to information on 

product leaflets that has become obsolete and was consequently considered to be likely to constitute a misleading commercial practice. 

an area for improvement in this domain may therefore be to contemplate improving document updating response time to ensure that 

L’oréal communication media are correct at all times. 

PR5 

The Consumer relations Department is a key L’oréal group department. It is responsible for upholding and protecting the reputation 

and image of L’oréal and its brands, as well as for adapting to changes in the behaviour of the general public and constantly improving 

communication with consumers. 

one of the main objectives of the Consumer relations Department is to remain easily accessible to consumers. There are specialised 

teams whose role consists of ensuring that all consumers can contact us and obtain a response to their questions. Providing a response to 

each question is a requirement that enables L’oréal to position itself as a recognised beauty authority. 

L’oréal is currently conducting an audit of the Consumer relations Department with the Forrester Company to position and redefine this 

department’s organization within L’oréal. 

THE MISSIONS OF THE CONSUMER RELATIONS DEPARTMENT ARE: 

• To effectively communicate with the general public: listen, advise, support and educate are the watchwords for each consumer who 

enters into contact with L’oréal. 

• To resolve disputes: responsibly and effectively manage disputes as soon as they arise and find a solution that satisfies both consumers 

and L’oréal. 

• To constantly communicate with the marketing teams: allow them to benefit from the public’s experience to constantly improve their 

products and consistently deepen their understanding of consumers. 

• To anticipate current affairs topics and ensure that awareness is raised at L’oréal on the subjects and issues that emerge from society. 

In 2011, the Consumer relations Department processed over 1.5 million contacts. There are 53 Consumer relations Departments in the 

L’oréal group. These departments cover 68 countries and have 404 employees devoted to consumer relations. 

MARKETING COMMUNICATIONS 

I. CONTENTS 

CORE 

PR6 

Programmes for adherence to laws, standards, 

and voluntary codes related to marketing 

communications, including advertising, 

promotion, and sponsorship. 

5/6 

ADD 

PR7 


with regulations and voluntary codes concerning 

marketing communications, including advertising, 

promotion, and sponsorship by type of outcomes.



PR6 

The group has an international department that analyses product communication to assess all product communication elements and 

their effects; such elements include the presentation, the claims and the advertising images. The Department assesses the communication 

of each product prior to commercialisation to ensure compliance with the advertising regulations in each market. 

The department is supported by a scientific director network that the group began to implement nearly 20 years ago. Today, this network 

has over 200 employees from 50 countries. The missions of this network include monitoring local marketing communication regulations and 

self-disciplinary codes as well as verifying that communication complies with local requirements. 

The L’oréal Code of Business Ethics (http://www.loreal.com/_en/_ww/html/our-company/the-code-of-business-ethics.aspx) imposes 

responsible advertising. The group thereby ensures that its advertising and promotional materials are based on proven results and scientific 

data, and that the information provided is readily available to consumers. The group also adopted many principles from advertising 

codes on an international scale. 

THE UDA RESPONSIBLE ADVERTISERS CHARTER 

The UDa Charter (from the French advertisers union) on responsible advertisement covers responsible communication, marketing and 

confidentiality as well as social and environmental impact. Since 2007, L’oréal (which signed this Charter and its five principles) has taken 

advances made in this area each year into consideration. 

http://www.uda.fr/communication-responsable/charte-uda/ 

> For more information, read: 2011 Sustainable Development report, p. 12: article on predictive evaluation. 

CHARTER FOR VOLUNTARY ENGAGEMENT ON BODY IMAGE 

L’oréal also fully supports the French government’s Charter for Voluntary Engagement on Body Image. 

PRODUCT PERFORMANCE AND ADVERTISEMENT 

advertised product performance is always supported by rigorous scientific data and sophisticated measurement techniques. Since the 

protocols vary by country, L’oréal must constantly ensure that it takes local requirements into consideration. 

PR7 

In 2011, L’oréal was questioned by advertising control authorities, both judicial and self-disciplinary, on 83 occasions and, after investigation, 

was obliged to modify/withdraw advertisements upon which the group had been interrogated 30 times. These figures need to be put into 

perspective: there were 8,174 new formulas commercialised in 2011. These aforementioned data come from 49 group subsidiaries that 

represent 90% of turnover. 

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Organizational Strategy - Sustainable Development - L'Oréal

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