Organizational Strategy - Sustainable Development - L'Oréal

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5 L’oréaL - GrI DaTa SHEETS 2011 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. II. STATE OF THE L’ORéAL’S POLICY IN 2011 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%
5 L’oréaL - GrI DaTa SHEETS 2011 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
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