A management standard, which is deeply integrated into budget processes, ensures that each entity takes sustainability factors (including decarbonisation efforts) into account in its financial planning. However, while this holistic approach is effective for understanding the impacts at company level, it does not separate out investments undertaken in respect of the climate transition, particularly those concerning Scope 3 emissions, which are often integrated into the operating budgets drawn up by the various entities.
L'Oréal is actively working to refine its methodologies for monitoring and reporting these investments more precisely, but is not currently in a position to publish specific amounts for future investments related to decarbonisation.
It should be noted that the Group's Scopes 1 & 2 emissions, which now account for less than 1% of total emissions, have already been reduced by 51% compared to 2019 thanks to substantial investments in previous years, and therefore currently represent only a small part of the Company's overall commitment to sustainability. As a result, the overall investment – €78 million of eligible CapEx (excluding leases) currently recognised under the European Taxonomy’s climate change mitigation objective – does not fully reflect the scale and depth of the transformation of L'Oréal's business.
L'Oréal is anticipating the risks posed by climate change to its supply of plant-based raw materials. To ensure the long-term future of its business activities, the Group has put in place an adaptation strategy based on scientific knowledge and risk analysis. Working collaboratively, the Research & Innovation teams focus on assessing the climate impact of the main raw materials, while the Purchasing teams work in parallel to identify specific climate risks in the supply chain. L’Oréal is seeking to diversify its sources as swiftly as possible, not just when there are material threats, and to adapt production areas, seek alternatives and work with partners to develop more sustainable farming practice within the overall goal of building a resilient supply chain while guaranteeing product quality.
L'Oréal works proactively to protect its sites against extreme weather events. Its approach comprises four key stages: (i) an external risk audit is carried out, followed by (ii) an analysis of climate scenarios, the results of which are incorporated into (iii) site risk reviews before (iv) tailored adaptation plans are put in place. Using this approach, the Group is able to anticipate climate challenges while ensuring business continuity.
With the increasing scarcity of natural resources such as water, L'Oréal is striving to reduce the quantity of water needed to rinse off its products. In order to achieve this goal, the Group is innovating with formulas that use less water or that do not require rinsing. L'Oréal is also investing in innovations such as the L'Oréal Water Saver showerhead, which reduces water consumption in hairdressing salons. L'Oréal's commitment covering its downstream value chain aims to offer products that meet environmental challenges and heightened consumer expectations in terms of sustainability.
