SUSTAINABLE DEVELOPMENT REPORT
AN ORGANISATION DEVOTED TO
A Sustainable Development Steering Committee
is made up of managers from the functional and
operational Divisions within the company.
Seven working parties cover different aspects of
sustainable development: Vision and Strategy,
Corporate Governance, Finance and Economics,
Research and Development, Safety, Health and Environment,
Social and Human Affairs, Sponsorship and Partnerships.
The work is co-ordinated by the Director of
Several subject areas are studied by the Committee,
in regular meetings with the Divisions concerned:
• enhancing the capacity of internal reporting and
measuring, with particular reference to the Global
Reporting Initiative recommendations,
• increasing the attention paid to all stakeholders,
• giving to group managers in all countries,
to operational and functional Divisions and to brands,
the means to take part in L’Oréal’s sustainable development,
• participating in the work of “progress circles”
that contribute to the development of these subjects and
which offer collective thinking (World Business Council for
Sustainable Development, etc.).
L’Oréal has produced its first Sustainable Development report
after examining existing practices and studying the recommendations
of international institutions and specialist organisations,
such as the UN, OECD, European Commission, WBCSD
(of which L’Oréal is a member). The Global Reporting Initiative
(GRI) reference guide, defined the objective to be reached in
terms of reporting, and helped guide the study.
L’Oréal’s Sustainable Development Steering Committee covers
seven working groups, each devoted to a different subject
area. Each subject area involves discussion of the issues facing
the company and the objectives to be attained. Data has been
collected, checked and consolidated in order to provide the
most effective description of the situation of the group.
Data relating to safety, health and the environment was examined
and certified by the Environmental Resources Management,
a firm specialised in this area. Social data and data relating to
purchasing and research, shown with an asterisk (*), were validated
This report is a first step along the path of sustained progress,
which has always been an objective of L’Oréal. It will enable the
group to measure and improve its performance in the future.
For more detailed information,
consult the on-line version of this report
on the group Internet site
This report was published in 2004.
It is based on data from fiscal year 2003.
Department for Sustainable Development
+ 33 (0)1 47 56 86 55
L’Oréal and sustainable development
Our values and professional conduct
L’Oréal and Corporate Governance
ECONOMIC AFFAIRS A sustainable and dynamic growth policy p10
A growing market
A sustainable growth strategy
Our business categories and brands
Sustainable financial resources
RESEARCH AND DEVELOPMENT Innovating each day for future generations p14
Research as a central strategic theme
Responding to the specific needs of a diverse human population p16
Selecting raw materials
Developing alternatives to animal testing
SOCIAL AND HUMAN AFFAIRS Sharing and communicating our experience p20
A growing workforce
International and multi-cultural executive recruitment
Personalised career development
A policy for the development of skills
A pay policy to motivate everybody
A permanent dialogue at all levels
Integration and apprenticeship programmes
Favourable working conditions
SAFETY, HEALTH AND ENVIRONMENT Consideration and respect for all environments p28
Organisation and Management
Limiting the impact of our industrial activities
RESPONSIBILITY AND SOCIETY Commitment to the community p40
Our commitment to society
L’Oréal-UNESCO For Women in Science
Rewarding talent and encouraging vocation
A partnership with international influence
From sustained growth to
Going beyond the financial concerns of our organisation, as
detailed in the Annual Report, we wish to see this first document
as an expression of our values and of the principles which
guide us. They embody the conviction, built up over almost a
century, that growth should be both sustainable and responsible.
This report describes the most significant steps taken over
a number of years. It also sets goals for the future, for we are
fully aware of the work that remains to be done. We are determined
to move forward step by step thanks to initiatives that
are tangible and measurable.
Looking beyond a purely financial
We have always been guided by a strong central idea: that
there can be no sustainable development for the company
without long-term economic growth. In 2003, for yet another
year, the growth in L’Oréal’s operating profit was measured in
double figures and all our energy is devoted to maintaining
this progress. That is our ambition. Nonetheless, true to our
corporate culture, we are absolutely convinced that, for that
growth to be truly sustainable, we must look beyond a purely
financial model. That is why we constantly seek to link our
financial performance to robust ethical principles and a genuine
awareness of our responsibility towards all within the
company, and to our environment and the wider community.
The ambition to be socially responsible is closely bound up
with our mission: L’Oréal is dedicated to serving all expressions
of beauty and well-being, which it seeks to make accessible to
women and men all over the world. Our cosmetic products
enable everyone to feel at ease with their body, to express
their beauty, to assert their identity and to express their
creativity. In that respect, they serve human beings in all that
is most profoundly human.
A social project
This corporate project is a thrilling one, and it relies first and
foremost on our 50,000 employees. Motivation, a sense of
belonging, and commitment to financial and societal objectives
are essential in a company whose business development
model is essentially based on internal growth. This great
human adventure is founded on one ambition: to make growth
an element of our social policy and our social policy an element
Respect for different cultures and
We also wish our company to be open to diversity for we are
totally convinced that the differences between us enrich our
lives. That diversity shows again in our approach to brand
development. Since it does not seek to project a single image
of beauty, L’Oréal aims to encourage the expression of all the
forms of beauty that make up the incredible diversity of human
Respect for cultural diversity goes hand in hand with the will
to limit the impact of our activities on the environment. In an
industry which by nature generates little pollution and consumes
little in the way of resources, the Group has already
made significant progress over the past ten years or so and has
set new, ambitious objectives for the future.
Similarly, our responsibility is demonstrated through our commitment
to manufacturing our own products. This provides an
additional guarantee, not only of overall product quality, but
also of respect for social, ethical and environmental rules.
But for L’Oréal, corporate responsibility goes much further.
It is also reflected in actions that demonstrate our desire to
remain close to the communities in which the group operates.
We intend that this document should be factual, in order to
show in real terms how L’Oréal assumes its share of responsibility.
It is an initial report that we shall use as an instrument
for progress. The report and the objectives set out in it commit
the Management Committee, myself and all our employees
worldwide to adopting a much broader view of the corporate
development of L’Oréal. It is our way of asserting our vision of
truly sustainable growth for the future.
Chairman and Chief Executive Officer of L’Oréal
Responsible behaviour includes respect for rules and ethical principles, care for the
environment, support for and development of the men and women within the
company, engagement with the communities in which the group is active. L’Oréal
aims to go yet further by emphasising a commitment focussed on five core values.
to well-being based on scientific foundations
Through its brands, which respect different cultures and identities, L’Oréal is dedicated to the beauty and well-being
of women and of men all over the world. For a century, L’Oréal has worked continually to better understand consumers
and their expectations in order to provide for them. It is thanks to the knowledge acquired and to recognised scientific
expertise that the group can anticipate today the needs of tomorrow. L’Oréal’s continued investment in research
helps guarantee quality, safety and innovation in its products. The group puts on the market only products whose
effectiveness is proven and whose safety is guaranteed by rigorous testing for tolerance and absence of risk. Their
performance is scientifically recognised and proven.
Making its technology available to
as many people as possible
A major thrust of the group’s responsibility is towards making its products accessible and
the technology developed by its Research teams widely available. All the brands within
the group and all distribution channels ensure this accessibility. L’Oréal makes the most
advanced technology available to as many people as possible, whether in hygiene, hair
colouring, skincare and make-up products, or in sun protection products that guarantee
increased defence against the risks of exposure to the sun.
self-expression and diversity
Cosmetics are a time-honoured means of expression for all cultures and all peoples. Thus, since each of its brands
promotes an ideal of beauty in all parts of the world, L’Oréal is attentive to the diversity of skin types, to beauty rituals
and to the perception of beauty.
L’Oréal takes care not to favour any particular model of beauty, but to respond as effectively as possible to the needs
and the desires of all. It does so through:
• research open to the world. L’Oréal’s Research teams seek to discover and evaluate the varying characteristics of
skin and hair in different parts of the world in order to provide scientific responses tailored to the most diverse
• a varied brand portfolio: L’Oréal offers a range of brands and beauty concepts, with diverse cultural origins,
• multicultural advertising. The challenge for each brand is to contribute to the diverse perceptions of beauty,
in particular through its choice of ambassadresses who express the many varieties of beauty.
L’Oréal is convinced that variety is synonymous with creativity and enriches the company, and it relies on the diversity
of its teams to ensure that international development respects local cultures.
Creating continuous value for
all the company’s partners
Creating value means offering consumers high-quality, technologically high-performing
products born out of permanent innovation. It also means ensuring that the company
performs well financially, for the benefit of its shareholders and all its partners. This
continuity is based on a strategy that gives priority to internal growth, promotes
investment in research, focuses on high added value areas of specialisation, on the
most buoyant market sectors, and on a unique worldwide brand portfolio. This strategy,
implemented on a continuous basis, led yet again to L’Oréal’s recording a year of doubledigit
growth in 2003.
Integrated, locally-based manufacturing
Almost 94% of products marketed by L’Oréal are made at the group’s manufacturing sites by group employees.
By controlling its production, L’Oréal can guarantee its commitment to quality, reliability and safety vis-à-vis its
customers and partners. Industrial production is built around local rather than external production facilities.
Most products come from manufacturing plants located close to the area where they are marketed. Production
integration and commitment to local production provide an assurance of respect for the law and for people.
Our values and
A Code of Business Ethics to disseminate
L’Oréal’s values and guiding principles
L’Oréal’s corporate culture is based on strong ethical principles
compiled in a Code of Business Ethics that gives formal expression
to the fundamental values and guiding principles to which
L’Oréal is committed.
The Code of Business Ethics, a major reference document,
articulates what is expected of employees both in the way they
do business and in their day-to-day contacts with others within
the organisation. The Code of Business Ethics, available in
the languages of all countries in which the group operates,
focuses on six areas:
• respect for the law,
• respect for individuals,
• respect for the consumer,
• respect for the environment,
• partnership with customers, distributors and suppliers,
• the principles of loyalty and integrity.
The Code of Business Ethics was distributed to the group’s
50,000 employees in the year 2000, and every person coming
into the group is given a personal copy on joining.
Prohibiting child labour and the use of forced labour are issues
that receive special attention. The group forbids the employment
of anyone under the age of 16 and ensures that these
principles are respected by its subcontractors and suppliers, as
specified* in the group’s General Terms of Purchasing and
Payment. The preservation of privacy in the context of IT and
Internet access is covered by various documents adapted to
the legal framework of the countries concerned. The social,
humanitarian and environmental policy followed by L’Oreal for
many years illustrates the concrete expression given by the
company to its values and guiding principles.
Consciousness raising, training and improvement initiatives,
either in the business units or at product category level, ensure
that these values and principles are properly disseminated and
applied. These initiatives enable the development
of managerial capabilities that respect ethical principles.
In 2003, numerous training modules took place during our
induction seminars for line managers, whose job includes monitoring
the day-to-day application of the Code of Business
Ethics, and for the benefit of Management Committee members.
An international working party has been set up within L’Oréal
to specify, in the most concrete terms possible, the relevant
indicators for the measurement of the actual implementation
of the Code in an international environment. To achieve this,
the working party focussed on key universal principles and the
documents in which these principles are set down: the United
Nations Universal Declaration of Human Rights, the European
Union Charter of Fundamental Rights, European Directives on
equal treatment and discrimination, and the main Conventions
and Recommendations of the International Labour Organisation.
The strict application of the Code of Business Ethics is the duty
of the Group Management. The Human Resources Department
in each country is responsible for providing the necessary guidance
at local level. In addition, everyone has the option of
contacting the Office of the General Counsel, Human
Resources, of the group.
Lindsay Owen-Jones, Chairman and Chief Executive Officer of
L’Oréal, has delegated to François Vachey, Executive Vice-
President for Human Resources, responsibility for ensuring that
all of the values described in the group’s Code of Business
Ethics are strictly adhered to, in particular those concerning
Human Rights as defined in the United Nations Universal
Declaration of Human Rights.
Additional specific codes
In some business areas, the Code of Business Ethics is supplemented
by codes of practice, such as the one that defines
L’Oréal’s principles and practices applied to purchasing. Their
aim is to establish the relationship with suppliers within a
strict framework and to address specific issues to which the
group’s buyers may be exposed (conflicts of interest, courtesy
The group’s General Terms for Purchasing and Payment, introduced
in 2003, ensure that suppliers comply with all the laws
and regulations in force and that they respect the rules of conduct
stated in the fundamental Conventions of the ILO, particularly
on the abolition of forced labour, the eradication of child
labour, equality and freedom of association.
EXTRACT FROM THE CODE OF BUSINESS ETHICS
“Respect for the individual is a fundamental principle at
L’Oréal. It is applied daily and is the focus of human
relations within the company. L’Oréal believes in
the virtue of difference and diversity for the development
of its human assets: L’Oréal categorically rejects all forms
of discrimination, both in thought and deed,
notably concerning sex, age, physical disability,
political and philosophical opinion, union activity,
religious conviction, as well as race and social,
cultural and national origin. Each individual has a right to
respect and human dignity; all behaviour or acts likely to
create a hostile working environment and, in particular,
any form of sexual or moral harassment, will not be tolerated.
Respect for the individual is also demonstrated by L’Oréal’s
commitment to its employees and to those management
values upon which the Company sets great store.
Respect for the individual is maintained through an
ongoing dialogue between individuals and management.
Thus recruitment and career development are based on
competence and quality, appraised objectively in relation to
the Company’s needs.
The group’s Training and Development programmes play
a vital part in the development of each employee’s skills
and potential. L’Oréal is committed to facilitating
the professional integration of those who require
special attention: young adults, persons from disadvantaged
backgrounds and those with special physical needs.”
In June 2003, L’Oréal signed the
Global Compact declaration (a United Nations
agreement), thus committing itself to adopting
and promoting nine universal principles concerning
Human Rights, labour and the environment.
L’Oréal and Corporate Governance
L’Oréal is a Société anonyme (the equivalent in French law of a
joint stock company) with capital of €135,212,432 made up of
676,062,160 shares with a par value of €0.2 negotiable on the
Paris Stock Exchange.
At the end of 2003, Gesparal held a 53.85% controlling interest
in L’Oréal. As might be expected, eight members of the
Board were also on the board of this holding company.
Nevertheless, all Board members are aware of their duty to
represent all shareholders. The Board of Directors of L’Oréal
takes its decisions on a collective basis, in accordance with the
law and codes of good conduct, and guided by preliminary
studies carried out, on its instructions, by Review Committees.
Capital structure at 31 December 2003
Actively involved Directors with
The members of the Board have a range of complementary
experience and bring their expertise to bear on the work of the
Board; they are required to act with due vigilance and enjoy
complete freedom of judgement. Each Board member must
devote the required time and attention to his or her duties.
In 2003, the method of allocating directors’ fees was changed
by the introduction of a variable element based on actual
attendance at meetings.
Increasingly well-informed Directors
and her family
The aim is to provide Board members in advance with a coherent
set of information that is relevant, necessary and sufficient
for them to carry out their work, to facilitate their evaluation
of the operations and financial situation of the group, and to
prepare for discussions and decision-making.
Organisation of Board meetings
This structure is likely to change in 2004.
Members of the Board are aware of the need for responsible
corporate governance and effective and transparent practices.
In 2003, the Board adopted Internal Rules, which are published
in the Reference Document.
In 2004, following a proposal by the General Management and in
agreement with the Statutory Auditors, the Board decided to bring
forward by more than a month the publication date of the certified
results by examining and then closing the 2003 accounts at
a single meeting at the end of February 2004. The Board also held
a strategy meeting at which General Management commented on
the group’s situation and plans and at which the Board approved
the main strategic development priorities drawn up by the
company, whose steady economic growth has once again been
confirmed. The Directors draw attention to the fact that the strategy
is intended to be implemented over the long term.
Review of the Board’s modus operandi
At the end of 2003, the Board reviewed its modus operandi, as
it has done every year since 1996. Interviews were conducted
with regard to the regulations and recommendations in force.
The summary of the main observations and proposals showed
that the Board is well balanced, and that individual Board
members complement each other to a high degree. Dialogue is
open and discussions are constructive. Board members were
well briefed and were able to express individual views freely
and to propose changes to important aspects of their own work
and to that of the Review Committees.
The specific character of the internal audit
The Audit Committee had the opportunity to give a completely
independent hearing to the Internal Audit Department in the
presence of the Statutory Auditors. This hearing enabled the
Committee to acquaint itself with the current situation in
respect of internal auditing and risk management, and with the
ways in which standards and procedures are applied, particularly
with regard to financial, accounting and management
information. The Committee noted the importance of the information
and control systems currently in place, and which are
constantly upgraded. The Board was subsequently informed of
the Committee’s conclusions.
The Board’s Review Committees
The Board acknowledged the high quality of the work done by
its Committees, whose remits are set out in the Internal Rules.
The Review Committees have the duty to make regular reports
on their meetings to the Board in order further to facilitate
discussions at plenary sessions.
The Audit Committee
The Audit Committee met completely independently on four
occasions in 2003; each meeting was attended by all three
members. In accordance with the Board’s wishes, the Audit
Committee has enjoyed greater security, and has enhanced its
work, particularly as regards the financial statements, thus
leading to more detailed subsequent discussion.
The Committee familiarised itself with L’Oréal’s Code of Stock
Exchange Ethics, as updated by General Management, and
approved it prior to its publication within the company. The
Committee also reviewed a draft of the Internal Rules for the
Board of Directors; the draft was discussed and approved by
the Board at a plenary meeting.
The Management and Remuneration Committee
The Management and Remuneration Committee held three completely
independent meetings in 2003; they were attended by
all three members. The Committee may meet at any time it
deems appropriate, for example to evaluate the performance of
the Company’s senior management. The Committee reviewed
the ways in which the remuneration of Company officers is
fixed and reported its findings to the Board. It then put forward
proposals to the Board, which decided on levels of remuneration
for 2003. The Board’s decisions are set out and
explained in the Reference Document.
The Committee is also responsible for drawing up proposals for
the allocation of stock options, in accordance with the authorisations
given by shareholders at the Annual General Meeting
(AGM), and for reviewing the composition of the Board with a
view to recommending changes when appropriate.
For detailed information on corporate governance within the L’Oréal group,
please refer to the Management Report in the Reference Document, volume 3.
The Chief Executive Officer, Lindsay Owen-Jones, and the Executive Vice-Presidents present
the dynamics of L’Oréal’s growth model. The expansion strategy is centred on innovation and
geographic expansion of the brands, particularly in the new Asian markets.
Consolidated turnover (€ millions)
13,740 14,288 14,029
The group’s net operational profit
Net dividend per share (in euros)
The net dividend per share excludes tax credit.
A dynamic and
sustainable growth policy
L’Oréal is the world cosmetics leader in a growing market. It is dedicated to a single
business activity, and has achieved strong growth for many years. The group has
demonstrated that it is possible to combine financial success and social commitment
while implementing a strict environmental policy.
• DIVIDEND put forward at the Annual General Meeting on
29 April 2004:
0.73 euro, up 14.1% compared with 2003.
• WORKFORCE: over 50,000 employees of approximately
100 different nationalities at 31 December 2003.
• WORLDWIDE PRESENCE:
the group is active in 130 countries and has 290 subsidiaries.
• INDUSTRIAL PRESENCE:
the group has 42 factories worldwide.
• INVESTMENT IN RESEARCH:
·3% of turnover devoted to research,
Almost 2,900 scientists engaged in cosmetics and
·515 patents registered in 2003.
A growing market
Since 1990, average annual growth in cosmetics has equalled
twice the average growth of global GNP. This growth is continuing
in developed countries, thanks to new demands and new
markets, and it has been stiking in countries that have recently
converted to the market economy.
A sustainable growth strategy
L’Oréal considers internal growth to be the main focus of its
development. The group ensures healthy long-term geographic
and sector-based balance for its brands and increases the rate of
its international expansion through a highly selective acquisition
policy. As a result, L’Oréal has enjoyed double-digit growth
in earnings for many years.
L’Oréal manufactures more than 94% of its products. Control
over its processes is an essential strategic issue and proof of
its civic responsibility. L’Oréal looks to the growth of new markets,
especially in developing regions such as South East Asia.
However, the group’s growth is never at the expense of a
responsible attitude: by manufacturing locally as soon as practically
possible, it contributes to local economic development
and applies the principles outlined in its Code of Business
12 ECONOMIC AFFAIRS
Our business categories and brands
L’Oréal is active in cosmetics (98% of consolidated sales in 2003) and dermatology.
In cosmetics, L’Oréal is structured in terms of distribution channels.
DIVISION SALES MISSION BRANDS
Professional Products 1,900 Development of products for L’ORÉAL PROFESSIONNEL
Consumer Products 7,506 Development of beauty products accessible to all, L’ORÉAL PARIS
by offering the most innovative products
at affordable prices through the widest
range of distribution channels.
MAYBELLINE NEW YORK
Luxury Products 3,441 Development of prestige global brands sold LANCÔME
through a selective distribution network
designed to add value to the products, and
providing both advice and service based on
a personal relationship with the customer.
Active Cosmetics 749 Development of dermo-cosmetic brands VICHY
that meet the highest standards of
skincare safety and effectiveness
(proven by clinical tests), confirmed by
the recommendation of the pharmacist.
Sustainable financial resources
The group is committed to a strategy of growth in developing
countries. The group’s presence in the market is frequently
accompanied by the setting up of manufacturing facilities in
the country, creating jobs and directly contributing to the
expansion of the geographic region.
Turnover and production of cosmetics
by geographic zone
Net operational profit per share before exceptionals
n 2003 cosmetics turnover
n Cosmetic production
in millions of units produced,
excluding acquisitions in 2003
Rest of the World
10-year investment in L’Oréal shares (in euros)
Purchase of 75 shares at €198.95 on 31 December 1993 (1) 14,921.25
Valuation at 31 December 2003 (1) 59,995.00
(923 shares at €65)
Capital invested multiplied by: 4
Total shareholder return (maturity): 14.3% per year
(1) There was a ten-for-one share split on 3 July 2000.
In creating products, the group sets itself the highest standards
in quality and innovation to ensure total consumer satisfaction.
This approach involves considerable investment in technology,
whether in terms of production or research.
Capital expenditure in cosmetics and dermatology
L’Oréal is firmly committed to a policy of improving its financial
information. The Reference Document, the AGM and the
modern financial communication resources intended for international
shareholders are channels that the group is actively
developing. Indeed, they are all regularly recognised as being
of high quality by financial information professionals and by
the shareholders themselves.
ááá L’Oréal is included in the main stock exchange
indices that include sustainable development
criteria, such as the FTSE4Good and the DJSI.
For detailed information on the group’s financial data,
consult the group’s Annual Report or www.loreal-finance.com
Clean room in L’Oréal’s cutaneous bio-engineering centre, in Gerland,
in the suburbs of Lyons, France
Each week, more than a hundred Episkin reconstructed skin plates are produced for the evaluation of
product safety. The Episkin skin model has been validated as an alternative method to animal testing
for chemical corrosion.
Personnal engaged in Research
2,743 2,823 2,860
Number of patents registered annually
493 501 515
RESEARCH AND DEVELOPMENT
Innovating each day for
the benefit of future generations
Since it was set up in 1907 by a chemical engineer, Eugène Schueller, L’Oréal has
constantly invested in cosmetics research with one specific objective – to ensure
that all the group’s products derive benefit from the scientific advances of its
Research as a central strategic theme
Each year, L’Oréal invests more than 3% of its revenues in R&D,
the equivalent of about €3bn over the last ten years. L’Oréal has
made it a priority to create its own molecules in all its strategic
product categories: hair styling, hair care, make-up, skin care,
sun protection and body care. Thus, over the last 40 years, more
than 120 different molecules have been developed by the company’s
Advanced Research facilities. Laboratories in France, the
USA and Japan employ almost 2,900 people specialising in some
thirty areas, including chemistry, biology, medicine, physics,
physico-chemistry and toxicology.
To consolidate the competitive advantage resulting from its
technological advances, the group is careful to encourage the
registration of patents. Over the last ten years, more than
3,300 patents have been registered, including 515 in 2003.
The aim in Research is to bring to the market products which
are effective and safe, and which respect the natural qualities
of the skin and hair.
To achieve this aim involves:
• improving knowledge of healthy skin and hair,
• studying the mechanisms of skin and hair ageing (wrinkles,
loss of elasticity, dryness, blemishes, whitening and hair loss),
• synthesis of new, active molecules,
• design and development of new products in all areas of cosmetics:
skin and hair care, hair styling and colouring, sun protection,
body care, make-up and fragrance. Each year, over
3,000 new formulas are developed by our laboratories and marketed
RESEARCH AND DEVELOPMENT
The pursuit of optimum quality is the driving force at every
stage of a product’s design. The aim is continually to improve
a product’s current performance or to add an as yet unknown
property. Performance is assessed at every point in the
One of the main objectives of our Research effort is to eliminate
from the substances being studied any ingredient that
might pose a threat to the consumer or the environment.
Before any ingredient finds its way into a product, L’Oréal tests
it using all the scientific knowledge and techniques available
to it for assessing human and environmental safety.
The International Safety Assessment Department closely examines
the toxicological profile of all ingredients used and
assesses the safety and tolerance of all formulations before
they are accepted and put on the market. Products which are
on the market undergo monitoring by a global network of specialist
doctors set up by L’Oréal over twenty years ago.
Testing centres have been set up by L’Oréal Research in a large
number of countries in all five continents. These centres
enable the group’s laboratories to test new formulas directly
among the people for whom they are intended. Thanks to this
structure, the different product categories in the group benefit
from studies and tests that take into account the whole
range of requirements, attitudes and characteristics of people
all over the world. Large-scale cosmetics testing studies are
carried out in Latin America, the USA and China, with a view
to identifying the skin and hair types of women of African,
Hispanic and Asian origin.
Selecting raw materials
L’Oréal attaches great importance to the selection of the raw
materials used. To ensure constant improvement in product tolerance
and effectiveness, all of the 2,800 raw materials used
are continuously being renewed - at a rate of 150 per year.
As part of its environmental policy, L’Oréal Research submits
its formulations to risk assessment by outside international
Responding to the specific needs of
a diverse human population
L’Oréal’s Research scientists direct their efforts towards providing
a scientific response to the most varied requirements.
In vitro, human skin models obtained from cultures of skin
cells from donors of different ages and ethnic groups facilitate
the constant improvement of knowledge of the variations
between skin types. In vivo, hair samples from all over the
world are meticulously examined in terms of colour, composition,
structure, resistance to the effects of contact with
mechanical equipment and reaction to hair treatment. They are
also cultivated in vitro.
The group is in permanent dialogue with its suppliers all over
the world, with a view to obtaining the highest quality fats,
surfactants, solvents, polymers, plant extracts, propellants,
dyes, pigments, UV filters, active biological ingredients,
preservatives and antioxidants.
It is active in promoting and developing the use of raw materials
from natural, renewable sources. In 2003, 39.7% of raw
materials by volume came from plants*. Ethanol, for example,
can be obtained from beetroot, and coconut can be used to
produce fats and surfactants. The remaining raw materials are
either synthetic or products that are very commonly found in
nature (iron or titanium oxides, clay and schist).
A PRE-EMPTIVE APPROACH TO HUMAN AND ENVIRONMENTAL SAFETY
When the first scientific data on the potential hazards associated with the outbreak of bovine spongiform encephalopathy (BSE)
in the United Kingdom became available, L’Oréal took immediate action.
Although the conclusions of the experts were reassuring, the group asked its suppliers of bovine extracts to provide certificates of
origin and of production process. From 1992, long before regulations made it compulsory in 1996, all ingredients derived from
organs defined as high risk by the WHO were eliminated from our formulations.
Chlorofluorocarbons (CFCs) were suspected of depleting the ozone layer in the upper atmosphere as early as the 1970s.
As a precaution, under the aegis of the United Nations, the Montreal Protocol was signed in 1987 and has been amended several
times since. Some 160 countries have committed to the Protocol, the aim of which is gradually to phase out the production,
sale and consumption of substances that deplete the ozone layer.
The Montreal Protocol resulted in a European Regulation issued in 1994. L’Oréal had already replaced CFCs used as aerosol
propellants by 1989.
L’ORÉAL INSTITUTE FOR ETHNIC HAIR AND SKIN RESEARCH
This Advanced Research institute was created in Chicago in 2000, in order to increase knowledge of the properties and
specific requirements of the skin and hair of people of different origins, in particular those of African descent.
It is the first of its kind in the world. In addition to its own research, it collaborates with Northwestern University in Chicago and
Howard University in Washington.
In order to share and disseminate knowledge on the ethnicity of hair and skin from all over the world, L’Oréal initiated a series of
symposiums. The first, held in September 2001, was entitled Ethnic hair and skin: what is the state of the science? and brought
together 170 participants, mainly research scientists from universities and industry, dermatologists and cosmetic surgeons.
The most recent, on Ethnic hair and skin: new directions in research, took place in September 2003 and was attended by
even more participants.
RESEARCH AND DEVELOPMENT
The principle guiding our choices is the wish to balance product
quality, the health of employees, professionals and consumers,
and respect for the environment. These new raw materials are
the product either of L’Oréal Research or of research carried out
in partnership with our suppliers. This diversified approach has
enabled much progress to be made in the selection of raw materials,
and the group intends to develop it in order to achieve
greater respect for the environment and for biodiversity.
Developing alternatives to animal testing
The group’s research laboratories have always devoted considerable
resources to ensuring the safety of its products and, in
addition, to developing and validating alternative methods to
animal testing. In 1989, L’Oréal had already stopped this practice
and had developed alternative methods used routinely to
assess tolerance of new formulas. These methods include cell
culture testing and testing on reconstructed skin models
(Episkin). They enable the study of several areas of toxicity (eye
and skin irritation, photo toxicity and percutaneous absorption).
The Episkin model is used routinely in L’Oréal laboratories
to evaluate skin tolerance of formulas and ingredients.
It is manufactured by the group on an industrial basis at
the Cellular Bioengineering Centre recently built in Gerland,
near Lyons, France.
Episkin has been scientifically validated in Europe as
an alternative method for the carrying out of skin corrosion
tests. L’Oréal is currently involved in the campaign to
validate Episkin for skin irritation testing, and is pursuing
its work in other areas, in collaboration with industrial and
academic partners, the ECVAM (European Centre for the
Validation of Alternative Methods) and the OECD.
Suppliers of chemical ingredients are required to guarantee
their safety and harmlessness before they reach the market.
At the present, most testing required under the various regulations
can be carried out only on animals.
For a number of years, L’Oréal has also been committed to
research, development and validation of methods leading to
reducing and replacing animal testing of the chemical ingredients
used in cosmetics.
There are currently three areas of toxicity for which alternative
methods have been validated and which replace animal testing:
skin corrosion, phototoxic potential and percutaneous
absorption. L’Oréal Research has contributed extensively to the
development, validation and international regulatory acceptance
of these tests.
As part of the search for alternative methods, L’Oréal has developed
original in vitro techniques, particularly in the area of
human skin models. Among the different models developed,
the group’s research teams are credited with the world’s first
skin model containing Langerhans cells, which play a crucial
role in allergic response.
L’Oréal conducted this research as the lead laboratory within a
European Commission programme. In the future, if this model
were reproduced on an industrial scale, it could be put forward
as an alternative to skin allergy testing, alongside other cellbased
Looking beyond the progress already made, industry and scientific
research as a whole face a complex challenge: that of
developing and validating alternative methods of evaluating
chemical ingredients in fields where there are currently
no alternatives to animal testing – and within the timeframe
set by the seventh amendment to the European Cosmetics
L’Oréal is committed to bringing all its skills to bear on developing
these new methods.
Permanent dialogue, sharing knowledge, comparing ideas
At L’Oréal, teamwork is part of everyday life, and takes place in an environment that is dynamic,
international and convivial.
Growth of the workforce
Breakdown of personnel by
geographic zone in 2003*
Breakdown of managers by gender in 2003*
49,150 50,491 50,500
SOCIAL AND HUMAN AFFAIRS
Sharing and communicating
L’Oréal has based its Corporate plan on the determination to establish a close link
between economic performance and social achievement. The clear aim is to be one
of the most dynamic companies in terms of remuneration, career development, profit
sharing and overall attractiveness to employees. The monitoring of expectations all
over the world ensures that motivation and commitment to the company go hand in
hand with a share in the group’s continued success.
The quality of L’Oréal’s products, as well as the group’s overall
development, depend on every employee at every level of the
organisation, who now benefit from local profit-sharing
schemes in line with the growth of results in each country.
Growth and forward planning enable us to carry out changes
in the interest of employees and to anticipate restructuring
For L’Oréal, developing a sustainable human resources policy
means adopting the following objectives:
• motivation of our teams, particularly through a highly
dynamic approach to remuneration and mobility,
• recruitment of talented people from multicultural backgrounds
and encouragement of diversity,
• offer of exceptional international career opportunities,
• promotion of personal and professional development through
the training programmes offered by Continuing Education and
through contrasting experience,
• encouragement of social dialogue,
• support for the inclusion of people in difficulty, especially
youngsters and those who are handicapped. L’Oréal intends to
maintain this activity as a principal focus of its Corporate
Social Responsibility initiatives,
• guarantee of the best possible working conditions.
A growing workforce
The group’s expansion brings about the creation of many jobs.
In 10 years, L’Oréal’s workforce has risen from 32,261 to
50,500 employees. L’Oréal is convinced that variety is a source
of enrichment, and attaches great importance to the development
of a highly diverse workforce: 94 different nationalities
are represented within the group*. The group has built a database,
currently limited to managerial staff, that gives precise
figures for the number of people joining and leaving the company
or moving within it, as well as for in-house training and
the size of the workforce in each country.
SOCIAL AND HUMAN AFFAIRS
The group carefully monitors the male/female balance of its
workforce worldwide; women represent 51% of managerial staff
and, on average, a third of all Management Committee members*.
International and multi-cultural
The recruitment of executives is a key aspect of L’Oréal’s sustainable
RAISING AWARENESS OF OUR ACTIVITY AND
PASSING ON KNOWLEDGE
To share its management expertise, make L’Oréal’s skills
more widely known and identify talented individuals,
the group has developed the L’Oréal e-Strat Challenge and
the L’Oréal Marketing Award.
This corporate strategy game gives students from all over
the world (undergraduates and MBA students) the opportunity
to take the virtual helm of a leading international cosmetics
In 2003, L’Oréal e-Strat Challenge was won by a cosmopolitan
team from INSEAD (see photo above).
This competition, which focuses on creativity and marketing,
is intended for the students of targeted colleges and
universities. Teams of 3 students are required to imagine
a new product range with its associated packaging and
The Universum 2003 survey involved 6,776 students
from 81 schools and universities in 18 European countries.
L’Oréal was ranked second among both men and women and
first among women as the company they would “most like
to work for”.
Developing diversity and openness
Whether in terms of culture, qualifications, training or nationality,
L’Oréal’s policy is to continue to enrich its workforce by
recruiting talented, open-minded people from diverse backgrounds.
For L’Oréal, earlier education or training is not the only criterion
for selection. L’Oréal attaches great importance to candidates’ personality
and individual qualities: creativity, capacity for commitment,
openness to the idea of a truly international organisation.
An international focus
In 2003, L’Oréal recruited 1,418 managers of 70 different
nationalities in 53 countries*. 11% of candidates recruited in
2003 were of a nationality other than that of the country in
which they were recruited.
Developing partnerships with universities
The group’s involvement with universities has been increased
and it now has close partnerships with 125 universities in all
parts of the world*. These take different forms: endowment of
chairs, business games, business case-studies, lecture series or
internships. The internship scheme is the key to a first practical
experience of work. An internship is not merely a brief period
spent in the company: more often than not it is the first
stage of a career within the group. In 2003, 1,916 internships
were offered in 46 countries*.
Personalised career development
It is the group’s intention to give its employees outstanding
and personalised career opportunities.
Showing trust in young people by
giving them early responsibility
L’Oréal gives priority to recruiting young graduates with a view
to constructing careers over the long term. Of the future managers
recruited worldwide in 2003, 47% were either beginners
or people with less than 3 years’ work experience*. The group
thus includes a pool of talented young individuals to whom it
entrusts responsibilities at an early stage.
L’Oréal was ranked first for the “promotion of leaders” in the
survey carried out by Hewitt Associates in October 2003.
Organising a personalised and
imaginative approach to career tracking
The group is attentive to the career plans and expectations of
its employees. L’Oréal relies on its worldwide human resources
network as a measure of the quality of its career development.
To ensure that the needs and aspirations of individuals are
taken into account, L’Oréal has developed a formalised appraisal
system that ensures transparency and includes a reference
guide covering managerial skills and job-specific skills*.
The intention is that each employee should have the benefit of
a year-end appraisal interview giving them quality time in
which to engage in dialogue with management; young managers
(less than 5 years in the company) also benefit from a
mid-year appraisal interview.
The diversity that L’Oréal seeks relies on a policy of geographical
and occupational mobility.
Encouraging international mobility
International mobility is part of L’Oréal’s strategy for the
growth and development of its business, which is increasingly
international. L’Oréal seeks to enhance the quality of its international
management and local workforce by the addition of
young or experienced expatriates. They contribute to the
group’s development while broadening their knowledge and
honing their skills.
At the end of 2003, 493 expatriates of 47 different nationalities
were employed in management roles in 53 countries*.
21.5% were women.
To support and facilitate these international movements, the
group offers employees a handbook and a set of guidelines to
provide a framework for expatriates and their families during
their missions abroad, and on their return home.
Enabling occupational mobility
Internal mobility gives employees the opportunity to acquire
skills in various areas and to gain early access to jobs involving
responsibility. As a result of their varied experience, they
are better able to pass on L’Oréal’s know-how. In 2003, 27% of
executives took on new responsibilities.
A policy for the development of skills
L’Oréal expects all its employees to be part of an ongoing
process aimed at increasing and enhancing their knowledge
and their skills.
SOCIAL AND HUMAN AFFAIRS
Providing quality training
In 1970, L’Oréal set up a Corporate Continuing Education
Department in order to make career development a real lever
for the group’s growth strategy.
This Department is backed up by the training departments in
the divisions and the Management Development Centres based
in Singapore, New York, Rio and Paris. In 1971, the European
Centre for Continuing Education (CEDEP) in Fontainebleau,
France, was set up by a number of international companies,
including L’Oréal, in conjunction with INSEAD. CEDEP enables
L’Oréal to develop management training programmes adapted
to its own aims and business categories, with the advantage of
academic input at the highest international level.
Adapting training and development initiatives
to individual needs
In 2002, L’Oréal launched the “Talent Development” project,
accompanied by a vast publicity and training campaign*. This
evaluation programme is intended to facilitate listening and
dialogue; it centres on 9 managerial competencies for which
specific training or development action may be provided.
Many countries, including France and the USA, immediately
made the programme available to all employees.
Introduction of indicators
A global reporting system provides for the analysis of Training
activity. In 2003, 42% of employees (60% of managerial staff)
underwent training, for an average period of 5 days.
Better access to training for all
By devolving training, the Management Development Centres
have made it much more accessible and opened up high quality
programmes to many more people. An educational kit entitled
“Discovery” has been distributed in all the subsidiaries.
Everyone who joins L’Oréal is provided with essential information
about the group and made aware of the management
values set out in the Business Code of Ethics.
Diversity is being gradually incorporated into management
training programmes at CEDEP.
“COOL” (CAREERS AND OPPORTUNITIES ON LINE)
“COOL” is an intranet-based job exchange. It encourages
employees’ occupational and geographical mobility by
giving them access to all vacancies in a particular country.
An international and inter-Divisional Corporate Training Course
was given in New York to raise managers’ awareness of the multicultural
nature of L’Oréal’s brands and workforce.
A pay policy to motivate everybody
“COOL” was developed and launched in April 2000 by
L’Oréal USA. In 2003, 26.3% of job vacancies were filled
internally via “COOL”.
In May 2002, “COOL” was introduced in France,
chosen as the pilot country for Europe. The system shows
all job vacancies available, with the exception of those at
management level. Of the 264 job vacancies posted online
in 2003, 122 (46%) were filled via “COOL”.
L’Oréal’s global pay policy reflects its recognition of its employees’
involvement in the company’s development and simultaneously
aims to attract talented individuals.
Although it applies to all the group’s employees, the application
of the policy varies according to the job and to the level of
Recognising individual qualities
A permanent dialogue at all levels
L’Oréal offers competitive rates of pay. Remuneration is linked
to the job and takes into account potential as a means of playing
a role in managers’ long-term development and involvement.
In 2003, 2,500 managers, a fifth of the group’s managers
worldwide, benefited from stock-options.
Sharing in collective achievement
L’Oreal gives financial rewards to all employees, in line with
collective achievement. Since 2001, a “Worldwide Profit Sharing”
(WPS) scheme has been implemented in every country*. It is a
variable and collective share of remuneration, depending on
the results of each country, and is a mainstay of the group’s
remuneration policy – similar to profit sharing in France, which
represents 16% of employees’ overall remuneration. The group
hopes that WPS will strengthen its employees’ sense of belonging
and increase their motivation. In 2003, L’Oréal’s General
Management required countries to pay employees the equivalent
of two and a half weeks’ salary if performance objectives
were fully met*. The group looks to continue the development
of WPS, with the aim of bringing it up to 4 weeks’ salary by
The quality of the “social climate” within the group is the
result of permanent dialogue and of the pursuit of consensus
between Management, employees and their representatives.
These exchanges are facilitated by decentralised structures of
representation, both legal and informal.
In 1996, an agreement was reached between the Management
and French and European trade unions (FECCIA and EMCEF) for
the setting up of L’Oréal’s European Social Dialogue Works
This agreement, renewed each year, anticipates the integration
of 10 new Union European member countries in 2004. The purpose
of this body is to inform and consult staff representatives
(social exchange and dialogue) about the group’s current situation
and its economic, financial and social prospects. In 2004,
the IEDS is made up of 30 members representing 15 countries,
for whom economic and social training is provided. A Secretariat
for Liaison, in which at least two nationalities must be represented,
is responsible for maintaining links between Management
and the members.
SOCIAL ET HUMAIN
Integration and apprenticeship
L’Oréal is developing an active apprenticeship policy and
numerous vocational integration initiatives in France and
Passing on experience and know-how to young people is a tradition
that is strongly anchored in the corporate culture of the
group. L’Oréal sees apprenticeship as a means of achieving
• training young people and giving them their first work experience,
• developing a channel for recruiting high-calibre personnel in
some of its business areas (a third of qualified apprentices has
been taken on in France).
In France, 1,750 apprentices have been taken under the wing of
almost 1,200 apprenticeship supervisors since 1993. In 2003,
they numbered 401 (or 3.3% of the workforce), and 89% of
them were studying for qualifications involving 2 years or more
of post A-level study*.
Internationally, the concept of work-based training takes different
• work-based training in Belgium, Spain, Italy, the UK (Student
Sponsorship scheme) and the USA,
• international programmes for French apprentice engineers.
Encouraging integration of the socially
disadvantaged and giving disabled employees
access to the workplace
In order to facilitate professional integration of the disadvantaged,
particularly the young and disabled people, L’Oréal has
set up partnerships with specialists in professional integration:
• establishment of integration programmes for unemployed
young people who lack qualifications,
• a policy for the employment of disabled people: internships,
adapting sites and tools, cooperation with specialist centres,
• solidarity initiatives,
• providing neighbourhood services in the workplace.
In Brazil, the “Viva Rio” programme provides hairstyling training
for women from the “favelas”. At the end of the training
programme, they are awarded a certificate to promote their
professional and social integration.
The L’Oréal plant in Burgos, Spain, collaborates with the
ASPANIAS sheltered workshops (subcontracting) and has set up
full training programmes.
L’Oréal Thailand launched the “Coiffeurs du cœur” project in
partnership with the Pakkred women’s integration and training
Centre in the province of Nonthaburi.
The aim is to provide unemployed or disadvantaged women
with training leading to a qualification in cutting, styling and
In France, L’Oréal increased its involvement with the Association
Valentin HAUY in 2003; the Association helps the blind and visually
impaired to overcome their disability through:
• short-term and long-term contracts,
• employment workshops: preparation of a curriculum vitae and
covering letters, interview practice.
A wealth of resources is provided to help employees in their
day-to-day work: a worldwide directory, L’Oréal intranet,
Internet access, etc.
Looking after employees’ health
Keeping employees healthy is a permanent priority for L’Oréal:
• removal of biomechanical causes by the phasing out of packing
lines that involve a lot of manual handling,
• increasing awareness and training initiatives for employees
• carrying out job and design ergonomics studies,
• dissemination of best practices,
• personalised medical care.
Recognising initiative and sharing experience
Sharing experience: the group seeks to pass on the results of
successful actions carried out on one site to all other units.
With this in view, the “L’Oréal Apprenticeship Award” is made
every 2 years, alternating with the “L’Oréal Integration Award”.
These awards provide an opportunity for L’Oréal to show its
appreciation to the partners on which it relies.
L’ORÉAL FINLAND - “GENEROSITY PROGRAMME”
Since May 2002, 5 beauty advisers have been giving their
services to sick people and children, within the framework
of a partnership between L’Oréal Finland and three
institutions based in Helsinki:
Favourable working conditions
L’Oréal attaches great importance to creating the best possible
Creating spaces for living and working
Working and interacting with others in a convivial atmosphere
are additional factors affecting staff motivation. Communal
facilities such as a company restaurant, a café and meeting
rooms are particularly appreciated. Particular attention is paid
to interior features such as plants and lighting. Special facilities
provide access for those who are disabled.
• Mental Health Clinic
This psychiatric institution cares for people with serious
mental problems. Skin care and make-up sessions are held
once a week and are very successful.
• Radiotherapy Hospital
Patients spend the day in this hospital for intensive cancer
care. Skin care and make-up sessions are now provided for
them every Thursday.
• Children’s Hospital
A beauty adviser makes a weekly visit to this hospital for
children and teenagers.
Transferring raw material to a manufacturing vat
At each stage in production, health and safety rules are respected.
The conventional frequency rate
Transportable waste recycling coefficient
83.3 86.3 88.9
Water consumption per finished product
0.85 0.83 0.85 0.84
The conventional frequency rate represents
the number of L’Oréal personnel involved in
an accident (absent from work on the day after
the accident) per million hours worked.
The recycling coefficient represents the relationship,
expressed as a percentage, between the mass of
transportable waste recycled and that of all
SAFETY, HEALTH AND ENVIRONMENT
Consideration and respect for
Faithful to its commitment to improve industrial safety, occupational health conditions
and environmental protection, and to meet well-defined objectives, L’Oréal has followed
a strict Safety, Health and Environment (SHE) policy for a number of years.
This policy involves in particular:
• respect for the law and local standards in terms of Safety,
Health and Environment,
• manufacturing compliant with SHE standards developed by
L’Oréal, in addition to the required minima,
• encouraging employees to improve SHE practices and implementing
a permanent process of improvement,
• ensuring that individuals and companies with whom L’Oréal
has dealings respect these principles,
• implementing environmental initiatives and active policies,
notably for the reduction of energy and water consumption,
• recycling of waste in all areas of activity.
Organisation and management
L’Oréal has implemented practices that lead to optimum environmental
performance on all its sites: manufacturing sites,
research laboratories and office buildings throughout the world.
The group has put in place the mechanisms needed for this
task: dedicated organisation and management, staff training
and an audit process.
The Production and Technology Department (DGT) ensures functional
responsibility for the protection of people, property and
the environment at all the group’s sites through the SHE and
Sustainable Development Departments. These Departments are
linked to each operational entity through SHE managers who
coordinate the actions of local experts at each of their sites.
30 SAFETY, HEALTH AND ENVIRONMENT
The SHE Department is responsible for:
• internationally available technical assistance in relation to
Safety, Health and Environment,
• the supervision of experts and SHE specialists at all levels of
• on all manufacturing sites,
• monitoring the application of standards,
• circulating best practices in the interest of constant
The Sustainable Development Department is responsible for:
• informing, training and raising the awareness of employees
throughout the world,
• coordinating environmental and sustainable development
• informing people both inside and outside the group of the
Together, the two Departments set the objectives to be
achieved and monitor progress.
Resources in support of SHE management
The RIO and RIS (organisation and safety of industrial risks)
are in-house documents issued by the Production and Technology
Department setting out the rules governing L’Oréal’s overall
policy regarding SHE. They define the responsibilities of each
person, the information systems, training, and measures for
improvement to be implemented, as well as the means for
The “Safety, Health and Environment” performance indicators
are used on all sites. Each month, they record 65 accident
prevention parameters, provide information on incidents and
report on figures relating to water and energy consumption,
atmospheric discharges, effluents, waste and recycling. They
are carefully analysed by the group’s SHE experts and form the
basis for corrective action to enable objectives to be met.
The SHE Awards are in-house prizes designed to motivate
employees to improve risk management and contribute to environmental
• award for the best safety initiative (factories),
• award for the best environmental initiative (factories),
• award for the best safety, health and environment initiative
(distribution centres and office buildings),
• award for the best improvement (factories, distribution centres
and office buildings),
• Production and Technology Department SHE awards for excellence
(factories, distribution centres).
The aim of the awards is to pass on the fundamental values of
continued improvement: initiative, improvement and stability.
SHAP (Safety Hazard Assessment Programme) is an analytical
programme for risk prevention. The SHAP identifies the risks
involved in different areas of activity; when standardised
across the group, it provides a precise cartography of inherent
risks at each plant, enables their extent to be assessed and
leads to new methods for monitoring residual risks.
Training and informing employees
Each employee, regardless of position, is made aware of safety,
health and environmental issues, thanks to specific modules
incorporated into the group’s and the sites’ training programmes.
Information about SHE initiatives carried out and the results
obtained is an integral part of communication within the group.
It is circulated to all employees in the company, through internal
publications such as En direct and Usine, the group intranet
site, videos, CD-ROMs, etc.
L’Oréal has 120 industrial sites (factories and distribution centres),
of which five are rated “Seveso” high.
A quarter of L’Oréal’s plants are audited each year
Monitoring through multiple audits
An in-house and/or external audit programme for industrial
sites has been in place for about ten years. It aims to give a
systematic assessment of the progress of the sites in terms of
A quarter of the plants is audited each year, which means that
each plant undergoes an in-depth inspection every four years.
In 2003, 10 plants out of 42 were audited. Outside consultants
perform about a third of these audits.
Audits are also carried out at the factories and distribution
centres by insurance companies. In 2003, 9 such inspections
dealt with environmental issues and 30 with safety conditions.
Factories and distribution centres operate the group’s policy
for their decentralised purchasing: units within the group carry
out audits of their suppliers, and these include aspects related
Specific Safety, Health and Environment training in
SAFETY, HEALTH AND ENVIRONMENT
Limiting the impact of our industrial
Scope: environmental and safety indicators apply to
100% of the 42 factories and 78 distribution centres,
almost the whole of the group’s activity.
Occupational safety at manufacturing sites
The reduction of accidents and occupational illness at all manufacturing
• adhering to local regulations and in-house rules that apply to
the whole group in terms of health, safety and working conditions,
• developing and improving the constructive work process with
employees or their representatives,
• carrying out constant checks and implementing corrective
• communicating “best practices” in the interests of constant
During the reporting period in question (since 1999), no fatal
accidents at work were recorded and the work injury frequency
rate was reduced by 62%.
ááá THE TARGET: zero accidents
In 2003, 55 distribution centres and 11 factories hit the “zero
accident” target. These were Tours, Saint-Quentin and Villepinte
in France, Settimo in Italy, Suzhou in China, Savannah, Linden
and West Caldwell in the USA, Gujarat in India, Carrascal in
Chile and Cosmelor in Japan.
The accident severity rate
The accident severity rate expresses the number of days lost by L’Oréal personnel (as a
result of accidents at work) per 1,000 hours worked.
Although the cosmetics industry consumes little energy compared
with other areas of activity, the group pursues an active
policy of limiting its consumption, for both environmental and
Total energy used
n Total consumption
in million kWh (1)
Breakdown by energy source
(in million kWh (1) )
(1) One million kWh is equivalent to 3.6 gigajoules.
1999 2000 2001 2002 2003
Electricity 252 264 306 336 355 44%
Gas 271 297 333 354 387 49%
Fuel oil 38 39 54 55 57 7%
Total 562 601 693 745 799 100%
(1) One million kWh is equivalent to 3.6 gigajoules.
Consumption for 1,000 finished products
productivity, have also contributed to a significant increase in
Even though the group has achieved a high standard in this
area and the possibilities for saving energy are at present limited,
reduction in energy consumption remains our objective.
L’Oréal’s energy policy exploits the experience built up over ten
years as a means of seizing every opportunity in this area.
The group’s water consumption is linked to the water content
of its products. Some products, such as shampoos, require more
water in their manufacture than others. The composition of the
group’s product portfolio therefore has a direct impact on the
average water consumption per finished product.
Total water consumed
n Total consumption
in thousand of m 3
Consumption per finished products
0.85 0.83 0.85 0.84
Electricity used by the sites locally is provided by local utilities
with their own means of production. It is therefore difficult to
trace the energy required by each site to produce the electricity
used by L’Oréal factories.
The rise in energy consumption at L’Oréal’s manufacturing sites
is the result of increase in production and the acquisition policy
of the last five years. The automation of manufacturing systems
and the improvement of health procedures to enhance
safety and working conditions for employees, and to increase
The manufacture of products like shampoos, which require the
most water, has increased during the last three years. In spite
of this, over the past ten years technological innovation and
the day-by-day vigilance of employees have reduced the
amount of water needed for manufacturing by 27%: in 1993,
1.16 litres were used per finished product.
34 SAFETY, HEALTH AND ENVIRONMENT
ááá THE TARGET
5% reduction in water consumption
per finished product in the next two years
All manufacturing sites have a drop-off centre
To reduce waste, the cooling water for machines and products
is recycled and reused. In addition, during demineralisation of
the water needed to manufacture products, several factories
recycle the mineral-concentrated water and use it for cleaning
Since 2003, a special programme focused on reducing water
consumption includes the development of new cleaning technologies
and methods to identify and reduce water loss.
At many sites, the pipes transporting the product are cleaned
at the end of each cycle by a special cleaning system. A “pig”
is propelled through the pipe, scraping the inner surface as it
goes. This system not only reduces the amount of water consumed
in the cleaning process, but also leads to less product
loss, less waste and less residue in the effluent.
Waste is sorted at source
None of L’Oréal’s manufacturing processes directly emits greenhouse
gases. Only steam production and oil-fired heating of
the group’s buildings produce CO2 emissions.
Other atmospheric emissions
SO2 emissions are related to the use of oil for heating. In order
to limit these emissions, the group uses natural gas to fuel its
heaters whenever possible.
n Total emissions
in thousands of tonnes
Emissions per finished product
20 22 22 23
n Total emissions
Emissions per finished product
Motor vehicles are a major source of CO2 emissions.
Comprehensive detailed information about the discharges due
to their use in transporting the group’s products and as a
means of transport for employees is not however available.
Nonetheless, the group has for many years been developing
less polluting transport solutions, such as the use of electric
vehicles for certain urban sites and the adoption of combined
road/rail transport methods. Some of the main initiatives in
this area have been carried out on the France-Italy and France-
Spain links, as well as for supplying northern Norway from the
Copenhagen distribution centre.
Gases that deplete the ozone layer
The only gas emissions that deplete the ozone layer come from
propellants for aerosols. The main offending gases (CFCs) have
not been used by L’Oréal since 1989, well before the final ban
came into effect in 1995.
The group makes reducing waste a priority and sets precise
annual targets at each manufacturing site. In the manufacture
of its products, L’Oréal generates various types of discharge,
including so-called “transportable” waste, as opposed to effluent
or atmospheric emissions. Transportable waste is waste
resulting from the manufacturing process that is intended to
leave the manufacturing site (pallets, packaging, building
debris, leftover finished products and materials used in the
n Total transportable waste
in thousands of tonnes
Transportable waste per finished product
37.5 33.2 33.2 33.9 32.7
36 SAFETY, HEALTH AND ENVIRONMENT
Transportable waste (in thousands of tonnes)
1999 2000 2001 2002 2003
technical 28.4 31.1 34.0 38.7 40.0 31.2%
Sludge 9.7 8.2 8.0 10.0 10.3 8.0%
Packaging 17.3 15.2 14.1 14.3 14.8 11.6%
transportable waste 54.8 54.1 62.2 64.3 63.0 49.2%
Total 110.2 108.6 118.3 127.3 128.1 100%
(1) Special technical waste is made up of finished or semi-finished products, solvents,
raw materials, used oil, cleaning water containing large amounts of product, etc. This
type of waste is subject to regulations and its treatment is strictly controlled.
L’Oréal has set up a waste recycling programme. Dumping
waste is an option only when incineration is not available.
39 manufacturing sites do not dump any of their waste.
ááá THE TARGET: zero landfill for all sites
Transportable waste recycling coefficient
n Total quantity of recycled waste
in thousand of tonnes
87.3 83.3 86.3 88.9
Transportable waste recycling in 2003
(Factories and distribution centres)
Less than 11% of waste from L’Oréal is not re-used or recycled.
89% Re-used, recycled and
n Recycling: 44%
n Re-use: 24%
n Energy value: 21%
The Karlsruhe plant in Germany has put in place best practices
to enable it to achieve the zero non-recycled waste target.
To this end, two systems for treating aerosol waste and sludge
from the purification plant have been set up.
Thanks to a partnership with a company specialised in recycling,
aerosols, including the leftover product and gas, are recovered
or recycled in their entirety: the various components of the
product are separated and reused, the gas is used for other
aerosols, the metal parts are recycled and the plastics are used
to generate energy.
The sludge is dried and transformed into a powder which will
be burned as a source of energy. The water vapour produced by
the drying process will be condensed and retreated in a purification
Scope: this indicator concerns only factories. The
distribution centres do not discharge any waste
water other than that resulting from the normal
activity of an inhabited building (sanitary waste)
and are not therefore included in this indicator.
In the majority of its factories, L’Oréal pre-treats waste water
before sending it to local treatment plants. However, all the
waste water is tested before being sent to such plants or discharged
into the ecosystem.
COD – Chemical Oxygen Demand (1)
n Total COD waste
COD waste per finished product
2 1.9 2.1
Raw material storage areas
(1) Chemical oxygen demand (COD) – the amount of oxygen needed to oxidise all the
pollutants contained in the effluent – is the value commonly used to measure the properties
of waste water.
The Rambouillet plant in France has a novel water treatment
plant. Instead of treating the waste water using first a physico-chemical
then a biological process (the usual technique), it
performs only the biological (bacterial) stage, combined with
an innovative filtration process.
This technique has the benefit of avoiding the production of
sludge, caused by the use of the reactants required for physicochemical
treatment, and of increasing the total purification
capacity of the plant by the same amount.
38 SAFETY, HEALTH AND ENVIRONMENT
L’Oréal is responsible for the design and production of its own
packaging, although it is not manufactured in-house. L’Oréal
sees its approach to packaging one of the elements that set
the group’s products apart, by using packaging that is as safe
as possible to use and that shows respect for the environment.
The innovative approach of having in-house teams dedicated
to packaging research leads to continuous improvement in
terms of aesthetic appearance, intelligible information, ease of
transport and storage, ergonomics and environmental impact.
Permanent quality and safety checks of packaging
from design to end production.
Reducing the environmental impact of the packaging used by
the group is governed by four basic principles:
• reduction at source,
• promoting recycling,
• use of recycled materials,
• prolonging product life.
Numerous developments have been introduced, such as refills
and reusable pump systems and the elimination of heavy metals
from plastics dyes and printing inks.
Some examples of reduction at source:
• Vichy Laboratoires: information leaflet discarded in favour of
information printed on the back of the box, saving 4 tonnes of
paper each year,
• Garnier: the weight of Synergie cleansing milk and toner bottles
reduced from 26g to 20g and box replaced by film wrapping,
saving 3 tonnes of cardboard per year,
• L’Oréal Germany: four brands reduced the weight of shampoo
bottles, resulting in a reduction in plastics consumption of
200 tonnes each year,
• Lancôme: smaller cardboard box for samples, making them
40% lighter and saving 59 tonnes of plastic and 110 tonnes of
cardboard each year.
The reuse of transport packaging has been extensively developed.
Raw material containers are now returned to the supplier
• thermoformed plastic trays for delivering glass bottles can be
reused 15-25 times,
• large plastic bags used by suppliers to deliver plastic bottles to
the manufacturing sites are returned to the supplier when empty,
• boxes for plastic bottles can be reused 5-10 times.
REDUCING THE CONSUMPTION OF MATERIALS AT SOURCE:
Elsève (Elvive, El’Vital) shampoo bottles have been improved
and now require almost 25% less material, the equivalent of
saving of almost 450 tonnes of polyethylene a year. In addition
to this reduction, the indirect effects on transport and
recycling are also minimised.
ENVIRONMENTAL RESOURCES MANAGEMENT (ERM)
Scope and methodology
Environmental Resources Management (ERM) was called upon to
certify the Safety, Health and Environmental (SHE) data relating
to L’Oréal production sites published in this report, concentrating
• the SHE data collection process;
• the SHE data management process;
• the SHE data and tables presented in the report.
ERM has reviewed the data and data management systems. To
date we have visited 14 factories out of 42 and interviewed the
staff responsible for collection, management and analysis of data.
Reducing the environmental impact of packaging at the manufacturing
stage is a key objective. But the group is also especially
interested in what happens to packaging after it has
been used by the consumer. That is why it is conducting
advanced research in this area, and so influencing design.
L’Oréal is also taking part in various programmes – such as
“Eco-emballages” in France and “Der Grüne Punkt” in Germany
– to organise the recycling of consumer product packaging.
The review has indicated that, in the representative sample concerned,
the data collection and management systems provided
accurate and reliable information. Some minor inaccuracies, of
little importance for the consolidated group results, were identified
and quickly corrected. Progress has been made in 2003 to
improve the precision of data and the monitoring and consolidation
of key SHE indicators. The selection of indicators published
is pertinent, even though the scope of the review might
usefully include research and administrative activities for information
We believe that the SHE data for 2003, as set out in this report
in the text and diagrams, provide a fair, transparent and reasonable
representation of the factories’ and distribution centres’
performance in these areas.
For future improvement, however, we recommend:
• increasing the consistency of accountability reporting in safety
training and the validation of equipment safety,
• improving the assessment of SO2 emissions,
• considering reasonable ways of broadening the scope of the
examination of data related to safety.
Paris, March 2004.
Jacques Roman, Manager, Corporate Advisory Services.
Professor Lucia Mendonça Previato, L’Oréal-Unesco “For Women in Science” Award winner
for Latin America, in the Institute for Biophysics at the Federal University of Rio de Janeiro,
which she shares with her husband, Professor José Previato.
Her career has been principally devoted to the study, treatment and prevention of Chagas disease.
This often fatal condition, transmitted to humans mainly via an insect, is endemic in Latin America,
where it is thought to affect some 16 to 18 million people.
RESPONSIBILITY AND SOCIETY
Commitment to the community
L’Oréal is a socially responsible company, and seeks to support projects that
contribute to the public good, through long-term sponsorships and partnerships that
are consistent with its values. The most striking and symbolic example of L’Oréal’s
social commitment is the international programme For Women in Science, developed
in partnership with UNESCO.
Our commitment to society
Since L’Oréal’s business is at the centre of people’s everyday
lives and well-being, the group is closely involved in the life
of the communities in which its facilities are located. L’Oréal
has a duty to conduct itself as a socially responsible company
and seeks to support projects that are for the public good, in
the form of long-term sponsorships and partnerships.
These are often local initiatives focusing on specific, clearly
identified issues – women and science, solidarity, education –
that are consistent with the values that the group has advocated
for almost a century. The aim of these initiatives is to
provide a strong foothold in the economic and social life of the
countries in question.
The group endeavours to preserve what gives these initiatives
their strength and effectiveness, namely the independence of
our locally-based companies and their ability to adapt to specific
For Women in Science
Six years ago, L’Oréal decided to work alongside UNESCO, a global
organisation that speaks on behalf of all the world’s cultures.
By supporting an organisation that facilitates understanding of
cultural identities and recognition of their diversity, L’Oréal
seeks to participate in the dialogue between cultures and to
work for a better understanding between men and women from
For L’Oréal, 55% of whose research teams are women, science
and women stand out as the two best vehicles for progress in
the global community. The group therefore chose to give support
to women scientists who, through their research work,
contribute to the progress of the modern world, and to highlight
those women students who will carry their work forward
into the future.
42 RESPONSIBILITY AND SOCIETY
Rewarding talent, and encouraging
women to follow their vocation –
an international partnership
Following the first Awards in 1998, L’Oréal and UNESCO made a
commitment, in September 1999, “through agreed and concerted
cooperation, to set up joint projects to improve the situation
of women internationally, and in particular to promote
their scientific work.” (Extract from the Partnership Agreement
signed by L’Oréal and UNESCO).
The For Women in Science programme
has three parts
The L’Oréal-UNESCO Awards
Each year, the L’Oréal-UNESCO Awards go to five outstanding
scientists, representing all continents, for their contribution to
the advancement of science in areas not related to the group’s
activities. With the 2003 Awards, 26 scientists have received
The L’Oréal-UNESCO Awards are presented in alternate years to
women engaged in scientific research in the Life Sciences and
in Material Sciences.
The two juries for the L’Oréal-UNESCO Awards are made up of
eminent scientists from twenty countries and are chaired by a
Nobel prizewinner. For the Life Sciences, they are Professor
Christian de Duve, winner of the 1974 Nobel Prize in Medicine
and Founding President of the L’Oréal-UNESCO Awards, and
Professor Günter Blobel, winner of the 1999 Nobel Prize in
Medicine. For Material Sciences: Professor Pierre-Gilles de
Gennes, winner of the 1991 Nobel Prize in Physics.
The UNESCO-L’Oréal Fellowships
Each year, the UNESCO-L’Oréal Fellowships help 15 young
women scientists, involved in promising, exemplary projects,
to pursue their research in laboratories throughout the world.
By sponsoring these young scientists, the programme aims to
increase the role of women working in scientific disciplines.
Forty-five young scientists from forty countries, including
South Africa, Morocco, New Zealand, Bangladesh, Peru,
Albania, Congo, Nigeria, Azerbaijan and China have received
recognition since the UNESCO-L’Oréal Fellowships were set up.
The L’Oréal-UNESCO partnership reaches many different countries
through national programmes in support of women scientists,
in collaboration with UNESCO’s national commissions.
• A “Girls’ Mentorship Program” has been launched in Canada
with Actua, a non-profit organisation dedicated to increasing
the scientific and technical literacy of young Canadians of both
sexes. This programme offers “Mentor Fellowships” to young
women research scientists every year.
• National Fellowships designed to promote young women scientists,
as in Poland where, for the second year running, five
Fellowships have been awarded with the support of UNESCO’s
Polish National Commission.
• In Spain, L’Oréal has sponsored the publication of a book,
compiled under the direction of Margarita Salas, President of
the Spanish Institute and winner of the L’Oréal-UNESCO Award
in 2000. The book, entitled “Nosotras Biocientíficas Españolas”,
profiles over 250 Spanish women scientists.
• In Germany, the ministry of Education and Science, with
L’Oréal’s support, has set up a series of some twenty seminars
entitled “Kick-off for your career”, aimed at helping young
scientists studying in the country’s top universities in their
studies and careers.
• Many other initiatives have been launched, including in the
Republic of Korea, Finland, Romania, the UK and Turkey.
All the national initiatives, taken in a large number of countries,
help to improve the position of women in science all over
Philippa Marrack Christine Petit Jennifer Thomson Nancy Ip
A partnership with
“For Women in Science” highlights work whose quality helps to
change the perception, particularly among scientists, of the
role of women in furthering knowledge, and gives support to
young women from all over the world who wish to pursue a
career in the sciences.
The quality of the relationship forged with UNESCO and its
representatives all over the world during the past six years has
led L’Oréal to carry this collaboration further. It has drawn
inspiration from the ideas and projects that have emerged in
this global environment to increase its own understanding of
global cultural issues and of less well-known identities.
Philippa Marrack, winner of the Award for North America,
is known for her work on T cells, which help the body to fight
Christine Petit won the Award for Europe, in recognition of
her work on the molecular and cellular bases of deafness and
other hereditary sensory defects in human beings.
Jennifer Thomson, winner of the award for Africa, has
devoted much of her research career to the development of
transgenic plants that are resistant to viral infections,
drought and other risks.
ááá L’Oréal’s initiatives are a way of asserting
the group’s social responsibility. But, sponsorship
and partnership initiatives must on no account
displace the first priority of any company,
that of behaving responsibly in its “role”
as a citizen.
Nancy Ip, a Chinese neurobiologist, won the Award for the
Asia-Pacific region. Her studies have led to the identification
of neurotrophic factors as potential pharmaceutical agents
in the treatment of neurodegenerative disorders, such as
Alzheimer’s and Parkinson’s diseases.
Statutory Auditor’s statement on certain information relating to corporate
affairs and R&D contained in the 2003 Sustainable Development Report
As Statutory Auditor for the L’Oréal Group and in accordance with the request made of me, I undertook the work described below
relating to the procedures for collecting and consolidating certain information published in the present report and identified by
an asterisk (*). Since this is the first year these measures have been in force, neither the implementation of the procedures in
the subsidiaries nor the information itself came within the scope of my remit. General Management was responsible for preparing
the information. It is my duty to inform you of the results of my review.
Nature and extent of the review
I carried out the following tasks:
• For each set of information reviewed: meeting with the various parties listed below, who are responsible for the organisation
of reporting and data consolidation at group level:
· for corporate information: Group Department of HR Information Systems, Apprenticeship and Training Department, Continuing
Education Department, Department of International Corporate Relations, International Mobility Department, International
Recruitment Department, General Purchasing Department;
· for R&D information, within the Research and Development Department: Management Control Department, International
Department of Central Functions, International Industrial Property Department, International Raw Materials Department.
• Working with these various parties and on the basis of interviews and documentary evidence (instructions sent to subsidiaries,
subsidiary reporting, group consolidation), we ascertained:
· that formalised and precise instructions regarding the definitions of the data to be collected and the methods of calculation
have been drawn up;
· that reporting and consolidation procedures are in place;
· that the information published is consistent with the area to be covered;
· on the basis of surveys, that the data generated by the reporting systems have been duly taken into account in the consolidation;
· that the general conditions governing purchasing, production, promotional items and POS advertising drawn up at Head Office
contain clauses forbidding the employment of young people under 16 years of age.
In carrying out this review, I was assisted by experts in the Sustainable Development Department at PricewaterhouseCoopers.
This review was not intended, and therefore does not enable me, to draw any conclusions expressing moderate (1) or reasonable (1)
confidence in the information reviewed.
My investigations lead me to make the following observations:
• With regard to the information reviewed, the L’Oréal group has put in place formalised and precise reporting and consolidation
• A rigorous methodology has been used in drawing up these procedures.
• Their implementation at Head Office is based on a clearly structured organisation and well-defined responsibilities.
Paris, 5 March 2004
Pierre Coll, Partner
(1) The Statutory Auditor’s reports on the Sustainable Development Reports include a conclusion expressing moderate or reasonable confidence (the latter being the higher level)
in the information and/or procedures. Given the limitations of the Statutory Auditor’s review, the purpose of the declaration reproduced above was intended solely to describe our
Photographs: Craig McDean (cover), Jillian Edelstein
(portrait of Mr Owen-Jones); Research and Development:
Patrick Messina; Social and Human Affairs: Amid Fadavi,
Jean-Jacques Pallot, David Arrenz, Richard Gardette,
Richard Pak, Patrick Messina, Raphaël Trapet; Responsibility
and Society: Micheline Pelletier / Gamma; X.
Design and production
133, avenue des Champs-Elysées, 75008 Paris.
Incorporated in France as a “Société Anonyme”
with registered capital of €135,212,432
632 012 100 R.C.S. Paris
41, rue Martre
92117 Clichy - France
Tel.: +33 1 47 56 70 00
Fax : +33 1 47 56 80 02
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75008 Paris - France