Organizational Strategy - Sustainable Development - L'Oréal

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9 L’OréaL - GrI DaTa SHEETS 2011 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
9 L’OréaL - GrI DaTa SHEETS 2011 - 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
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Organizational Strategy - Sustainable Development - L'Oréal

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