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SUSTAINABLE DEVELOPMENT SUMMARY

2010

FOR SUSTAINABLE

CONSUMPTION

LOral is committed to making beauty universal in a sustainable and responsible way. LOral can only achieve this ambition by taking a long-term perspective, involving all its employees and engaging consumers. The objective of serving two billion consumers is inseparable from the ambition of making LOral a model corporate citizen, based on sustainable, responsible and shared growth. In working to achieve this, LOral has made a firm commitment to sustainable development, and more specifically, sustainable consumption. Our approach provides a focus for all areas of our business to ensure that what we consume today does not exceed what the world can provide tomorrow. However, we also recognise that sustainable consumption is a shared responsibility, and we are engaging closely with our stakeholders, to make a difference collectively.

KEY FIGURES

E665
million invested in research and innovation

1.5

million postsale contacts with consumers

700

products carry the Forest Stewardship Council logo

MORE ONLINE sustainabledevelopment.loreal.com

LOrals full report is available online and provides comprehensive information on our strategy and performance in sustainable development.

CONTENTS

08

16

24
DEVELOPING AND GROWING RESPONSIBLY

28
CONSUMPTION .................................................... 24

32
MEETING THE NEEDS OF NEW LIFESTYLES
Sustainable consumption applies to all our activities. But from a global perspective, companies cannot meet the challenge of sustainable consumption alone. Consumers have a major role to play along with the rest of society.

BUSINESS ............................................................ 02

As an international business, LOral is committed to sustainable, responsible growth through a strong business model underpinned by our core values.

INNOVATION ......................................................... 08

TALENT ................................................................. 28

REVEALING UNIVERSAL HUMAN BEAUTY


LOrals capacity for innovation contributes to sustainable consumption by offering products adapted to specific needs, cultures and purchasing power, with respect for the environment and biodiversity through the product lifecycle.

ASSURING THE FUTURE THROUGH DIVERSITY


LOrals diversity of talents is a source of creativity in a business founded on understanding and engaging with the most diverse socio-cultural aspirations.

PRODUCTION ....................................................... 16

COMMUNITIES ..................................................... 32

PROTECTING THE BEAUTY OF THE PLANET


Our industrial commitment is based on ambitious objectives in environmental terms, and relations of mutual trust with local authorities and communities.

BUILDING TRUST BETWEEN GLOBAL BUSINESS AND COMMUNITIES


We take a proactive approach to our corporate responsibility, contributing to local communities around the globe to create a more beautiful world.

01

BUSINESS

TOWARDS RESPONSIBLE, SUSTAINABLE AND SHARED DEVELOPMENT

Creating economic prosperity and generating value in society are the two major pillars of sustainable development at LOral.
JEAN-PAUL AGON
Chairman and Chief Executive Officer

Reaching one billion new consumers through the universalisation of beauty is the groups strategic objective for years to come. This great project of ours is accompanied by our commitments to show exemplary corporate conduct, meet demanding targets to lighten our environmental footprint, find new ways to consume more sustainably, and contribute to the wellbeing of communities. In other words, our corporate citizenship is inseparable from who we are and what we do, and our core purpose goes to the heart of what it means to be a human being. The use of cosmetics creates a sense of wellbeing, and enables individuals to express their personality and build self-esteem. When individuals share this sense of self and wellbeing with others, the social bonds that are essential to quality of life are strengthened and reinforced. This is LOrals true purpose, and the focus of our activity.

Attracting a billion new consumers means reaching out to extremely diverse groups and populations by offering products tailored to specific needs and contexts but which also reflect a universal vision. Universalisation certainly does not mean uniformity. On the contrary for LOral, beauty for everyone means beauty for each person. Our research teams, present in every continent, are radically transforming in order to create products for a diverse world, using their expert knowledge of local needs and customs to offer beauty that is perfectly suited to many different consumer aspirations across the world.

A human adventure
At the heart of our ambition is a human adventure, which is based on our belief in individual talent and the recognition that our company is built from the talent and enterprise of many individual men and women. Equally important, our group is founded on strong values of social responsibility, respect, a pioneering spirit, boldness, integrity and excellence. These attributes are valued by potential young recruits to our company, reflecting LOrals recent ranking as 11th among all global companies that they aspire to join. LOrals human resources strategy has been recognised in several countries, particularly in France, where the group was awarded the 2010 Human Capital Trophy for the quality of its initiatives.

A vision of universal beauty


LOrals vision depends first and foremost on meeting ambitious economic goals, which provide the basis for achieving sustainable growth and delivering the groups financial results. The ambition to win over a billion new consumers is a significant increase in our scale of operations, effectively doubling our existing consumer base. LOrals adventure is beginning a new chapter, to universalise beauty and this mission offers our group tremendous, long-term prospects for growth.

02

It is this human adventure that lends strength, coherence, originality and, above all, great vitality to our corporate ambition to serve two billion consumers in the coming years. Inseparable from this is our dedication to becoming a model of responsible, shared and sustainable development. Our efforts to date have placed LOral among the 100 most sustainable companies in the world for the fourth year running. To become the model corporate citizen of our ambition, we have identified four key priorities. We know that the sustainability of our company depends greatly on maintaining relationships of trust with all our internal and external stakeholders, including shareholders, private and public partners, and consumers. Each expects exemplary conduct from LOral. This is why we are constantly striving to add to employee and stakeholder awareness and knowledge of ethics and corporate responsibility. At our last Ethics Day event, which we organise every year, more than 16,000 employees took part in our online seminar during which they communicated directly with myself and other senior management and asked more than 800 questions. We are convinced that tomorrows leaders will be companies that have integrated ethical considerations into corporate strategy as well as daily business activities. We firmly believe that diversity, which forms part of our business culture, creates value because it brings greater creativity, greater performance and a better understanding of our consumers. Our first Diversity Overview Report for France, published in 2010, shows the wide scope of our engagement. Our goal is to extend this internationally and to establish across the entire group initiatives to promote, measure and recognise efforts in diversity management. The world leader in beauty has an absolute duty to help to preserve the beauty of the planet and environmental sustainability is a key commitment for LOral. Even though the cosmetics industry has a limited environmental footprint, for many years LOral has been proactive in driving forward major programmes in resource efficiency, biodiversity and protection of the biosphere. As a result, we are well on the way to achieving extremely stretching targets to reduce our CO2 emissions, water consumption and waste production by 50% in each case, from 2005 to 2015. Already, at the halfway stage, we have reduced water consumption by 19%, CO2 emissions by 27% and waste volumes by 23%. We are equally convinced that sustainable innovation is the pathway towards better, responsible consumption. Our laboratories have for many years embraced this strategy, which encompasses all the lifecycle stages of our products. We continue to invest in ecodesign, the eco-evaluation of our ingredients and green chemistry.

We are incorporating more and more renewable raw materials with a low environmental impact and today 40% of our raw materials are of plant origin. For 12 years, our corporate citizenship has developed and grown. Led by the LOral Foundation (the second largest Foundation in France in terms of funds), our programmes have had a real impact in three key areas: science, education and solidarity. Many of the programmes focus on occupational integration, rehabilitation and restoring self-esteem and dignity to individuals. This, for us, is the true meaning of beauty for everyone. Our sustainability strategy is built on five key principles: Integrating sustainable development within the groups global strategy. Our corporate governance is fully aligned with this ambition, and in 2010 the Strategy and Implementation Committee of the Board of Directors became the Strategy and Sustainable Development Committee. The change reflects the Boards commitment to ensuring that all necessary means and resources are directed towards the broad range of challenges associated with sustainable development. A long-term vision. This is demonstrated in the actions and commitments of our teams: 20 years effort in environmental protection; 30 years research effort into alternative methods to avoid animal testing; more than 12 years partnership with UNESCO to promote the role of women in science and create a better world. These programmes and investments are sustained and long term in order to maximise their positive impacts. Engagement by our employees on a daily basis, at every level and in every area, complemented by a network of employees specifically focused on sustainable development. Achieving continuous progress through concrete goals, efficient initiatives and measurable, sustainable change. Systematic evaluation of global performance across a broad range of economic, human, environmental and societal indicators. At the heart of all the groups activities, there is a profound desire to engage everyone in a sense of mission to achieve our goals: to offer men and women everywhere the best cosmetics in terms of quality, efficacy and safety, and meet their needs and aspirations for beauty in all its diversity. LOrals engagement draws on a vision of corporate responsibility in which economic success, human progress and social development go hand in hand. Providing access to products that add to quality of life, while safeguarding the planets natural capital and contributing to society, are the key ways in which LOral can create value to benefit everyone. Contributing to a more beautiful life and a better world is LOrals constant ambition.

Share the benefits of sustainable growth

Behave ethically and responsibly in every daily activity

Promote the diversity of human capital

Invent new approaches to environmental sustainability

03

VIEWPOINT

EXPERT OPINION ON WHAT SUSTAINABLE CONSUMPTION MEANS


As a global business and corporate citizen, we want to learn and share from others insights and understanding as part of the journey to greater sustainability. We invited leading experts, both internal and external, to give their views on LOrals strategy and the challenges that are involved.
WATCH VIDEO ONLINE

FOR SUSTAINABLE CONSUMPTION


LOrals approach to sustainable consumption incorporates and focuses the various institutional and operational agendas which are interdependent within the company. Strategic management of sustainable consumption requires responsible dialogue with consumers to define together new aspirations for evolving lifestyles, respecting diversity and ensuring the largest number of people can access the benefits of innovation. It also requires the development of new research paradigms and new production technology to protect the natural and societal environment.

AN OUTCOME OF OUR SUSTAINABLE GROWTH STRATEGY


At LOral, our strategy for sustainable growth is based on: Integrating sustainable development principles into innovation, products and processes; Equitable and sustainable business that respects the environment and that delivers economic performance while at the same time meeting our societal responsibility; A commitment to optimising intangible value drivers, particularly human and intellectual capital, and stakeholder relations. Sustainable development is therefore a driver for responsible growth and a source of inspiration for our brands.

FRANCIS QUINN, Sustainable Development Director, LOral

Sustainable consumption is a shared responsibility between industry and all of its stakeholders.
Francis Quinn, Sustainable Development Director, LOral

It means growing responsibly


As we progress in our ambition to win the trust and confidence of a billion new consumers in the next 10 years, a responsible approach becomes even more essential. In emerging markets we see an increasing aspiration for a western lifestyle, and the economic and societal benefits associated with it.

2010

RECOGNISED FOR GOOD BUSINESS ETHICS

In 2010, LOral was recognised by the Ethisphere Institute as one of the Worlds Most Ethical Companies.

This trend worries some stakeholders


Their first query is: How is LOral going to meet the necessary goals on environmental footprint at the same time as substantially growing the total volume of consumption? To respond to this key challenge, LOral is embedding sustainable consumption at each stage of the lifecycle of its products: First of all, through sustainable innovation that integrates ethical policies and advanced research in choosing new ingredients and developing eco-design and green chemistry; Also, by responsibly managing our production, packaging and supply chain to significantly reduce our environmental and societal impact wherever we operate. Our 2015 targets are ambitious: a 50% reduction in greenhouse gas emissions, waste and water consumption. Our fair trade policy and commitment to local communities are fully integrated into our business decision making process.

To meet the challenge of sustainable development, businesses can help to foster more sustainable levels and patterns of consumption. There is a significant opportunity for business to help consumers choose and use their goods and services sustainably.
The World Business Council for Sustainable Development
04

BUSINESS

The other question some stakeholders ask is: Are you destroying local cultures in emerging nations by transferring or imposing our Western model? LOral strongly believes that innovation must be conceived close to where consumers are living, and must be responsive to their perceived needs and aspirations. The best way to achieve sustainable consumption is to: Deliver on performance and quality, based on the best global practices; Take into account local cultural habits; for example, in India, the kajal, used in traditional make-up, is a great source of inspiration for us in developing new products. We are particularly vigilant to take care of the local natural and societal environment that drives the way consumers choose and use cosmetics.

SUSTAINABLE CONSUMPTION: A VIRTUOUS CIRCLE

The responsibility for consuming more sustainably is shared between companies and society. LOral is integrating sustainable development principles into every part of the business.

CORPORATE CONSUMER RESPONSIBILITY POLICY


At LOral, we apply Corporate Consumer Responsibility in every activity from research and innovation to sourcing and production, and from marketing to consumer relations. From a global perspective, it is essential to understand that companies cannot meet the challenge of sustainable consumption alone. Consumers have a major role to play along with the rest of society, to ensure that what is consumed today does not exceed what the world can provide tomorrow.

THE ING ECT NT IN ESP ONME AND R IR ENV URCINGTION SO ODUC PR

SUSTAINABLE CONSUMPTION

SUSTAINABILITY TOPICS OF CONCERN TO STAKEHOLDERS

Climate change

Ageing society Product innovation Globalisation

SUSTAINABILITY TOPICS
Key sustainability topics have been identified through active engagement with our stakeholders, then mapped according to level of stakeholder concern and relevance to the company. Factsheets on these topics are available at www. sustainabledevelopment. loreal.com

GMOs

Shareholder value Biodiversity Product accessibility & availability Preservatives/Parabens Labour relations Governance & transparency Diversity

Ethics & compliance

Water Responsible marketing & advertising Transport Palm oil Trace heavy metals Stem cells Sustainable consumption Nanotechnology

Packaging, waste & recycling

Community engagement Fair trade Endocrine disruptors

Product safety assessment Employee engagement Supplier relations

Animal testing

SUSTAINABILITY TOPICS OF RELEVANCE TO LORAL

IN SU VES IN STA TIN NO IN G VA AB IN TIO LE N

NG S GI ER E GA M RAT TY EN NSU PO IBILI R CO CO NS O IN SP RE

RE EXP SPOND EC IN NEW TATIONG TO WO S OF RLD S

DEVELOPING TALENT AND CAPABILITY IN COMMUNITIES

05

BUSINESS

IN CLOSE-UP:

SUNCARE PRODUCTS
The development of suncare products mirrors the growth of leisure, forming part of a real social and cultural revolution in industrialised nations. Suncare products also have a functional role to protect people continuously exposed to the sun due to work or living conditions.

Sunscreens are vitally important in reducing the risk of skin cancer.

Dr Henry W. Lim, MD, FAAD, Chairman of the Department of Dermatology, Henry Ford Hospital, Detroit, USA

Suncare products are closely linked with the pleasures of free time but they also have a true public health purpose.
Franois Cottard, International Director of Suncare Development, LOral

Rules and laws


LOral complies with and respects prevailing international regulations. In Asia and Latin America, sunscreen products are regulated in a positive list of approved cosmetic substances. In the United States and Australia, they are listed in parapharmaceutical monographs. LOral has pioneered and campaigned to strengthen public protection against UVA rays and there is now a specific UVA logo for suncare products in Europe, with Asia to follow suit.

Ethics and integrity


LOral uses an array of scientific methods and tools to evaluate the performance, safety and potential environmental and social impact of every ingredient used in its suncare products. The evaluation strategy uses predictive methods based on reconstructed skin models, which enables us to limit in vivo testing.

Diversity
LOral is an expert in geocosmetics, which includes the study of skin characteristics, consumer and cultural norms in every part of the world. This helps us to evaluate the impact of exposure to the sun according to individual skin type (greasy or dry), different climatic conditions and different uses such as swimming in the sea. While tanning may be an aspiration in certain societies, in others, the desire is to keep a light skin colour.

06

WHAT GOES IN
Raw materials
Today it is widely recognised that mineral filters such as titanium dioxide provide greater efficacy in the protection of skin exposed to ultraviolet A and B rays. An added benefit for image-conscious individuals is the lack of white smearing on the skin after application.

Expert knowledge
LOral research teams apply in-depth knowledge of the damaging effects of the sun on skin, including ageing and brown marks, to develop continuous innovations in skin protection. Today, an important line of study is long UVA rays. Across the world, our laboratories are collaborating to find new ways to protect the skin, for greater efficacy and performance, such as the new sun filtering system, Mexoplex.

Talented employees
Since Eugene Schueller created LOrals first suncare product in 1936, our research teams have continued to develop and share scientific advances and have registered many patents to protect innovations.

WHAT COMES OUT


Value for consumers
Today, suncare products are indispensable in helping to protect the skin against the suns harmful rays. All the formulators art has combined to deliver three key properties: efficacy, safety and ease of use, making these products agreeable to apply as well as delivering performance.

Commercial demand
Protective suncare products have strong growth potential in the emerging markets, not only because people have more leisure time but also because of their integration into skincare products in countries where climate and culture favour their use.

Value beyond cosmetics


Suncare products help to reduce the incidence of skin cancers, slow down premature ageing of the skin and protect skins that are sensitive to ultraviolet rays.

07

INNOVATION

REVEALING UNIVERSAL HUMAN BEAUTY


LOrals capacity for innovation contributes to sustainable consumption by offering products adapted to specific needs, cultures and purchasing power, with respect for the environment and biodiversity through the product lifecycle.
MORE ONLINE sustainabledevelopment.loreal.com/innovation

08

CONSUMER-CENTRED, RESPONSIBLE AND SUSTAINABLE INNOVATION


In 2010, LOral Research underwent a major transformation to meet the diverse needs of a new generation of consumers in the emerging markets. With new tools, new structures and new approaches, LOral Research is now ready to take up the challenge of beauty for all while actively promoting sustainable innovation and consumption. Three key values underpin the work of LOral research teams around the world. First, openness to generate and exchange cutting-edge knowledge through dialogue, partnership and collaboration. Second, ethics products created with respect for the environment, biodiversity, ecosystems and future generations; and created with scientifically and clinically proven efficacy for the consumer. Third, responsibility preventing any unwanted impacts throughout the entire lifecycle of our products.

KEY FIGURES

40 %
are plant-based

of raw materials

26 %

of raw materials
comply with green chemistry principles

612
in 2010

patents registered

DETAILED SUMMARY
Viewpoint New routes to innovation Raw materials Expertise in organic and natural products Respect for biodiversity Green chemistry and eco-design Ethical, safe products p. 10 p. 10 p. 11 p. p. p. p. 11 12 12 13

09

VIEWPOINT

EXPERT OPINIONS ON WHAT SUSTAINABLE INNOVATION MEANS


As a global business and corporate citizen, we want to learn and share from others insights and understanding as part of the journey to greater sustainability. We invited leading experts, both internal and external, to give their views on LOrals strategy and the challenges that are involved.
WATCH VIDEO ONLINE

NEW ROUTES TO INNOVATION


In 2010, LOral Research & Innovation strengthened its commitment to put the consumer at the heart of their mission and sustainable development at the core of their activities. Our research capability is built upon scientific knowledge, which we continued to develop in 2010 with the demonstration of the vulnerability of the papillary dermis, and the publication of the Asian version of the skin-ageing atlas. There was also knowledge exchange and networking with the African dermatological community during the third workshop on African skin and hair, held in Ghana. In the area of raw materials and formulas, we continued to rationalise the raw materials portfolio, and progressed the Sustainability Assessment framework for qualifying new raw materials with our suppliers. Ecocert labelling for dozens of formulas extended across various brands and 58 new products were registered under the Ecocert standard.

Advances in life science


In 2010, after 10 years of research and collaboration with the University of Cleveland, life science researchers identified one of the keys to young-looking skin: papillary fibroblasts, cells in the outer dermis of the skin that play a major role in skin regeneration. Papillary fibroblasts alter and disappear gradually with age, while the reticular fibroblasts of the inner dermis skin layers are preserved. This discovery enabled the researchers to select and patent a skinrepair substance, Rhamnose.

First Asian reconstructed skin models in China


PATRICK DIXON, Chairman, Global Change

Sustainable innovation is innovation thats designed to produce a sustainable future. This is a fundamental shift in our world. It is part of what I have called the 40 trillion dollar green tech revolution. Green tech innovation is a fundamental shift that is here to stay. It will transform our future over the next 20 to 30 years. And the reason is consumers demand it, politicians are required to deliver it in terms of regulation, and businesses are expected to build it into every aspect of their systems, processes and products.

LOral is entering a new era of innovation with the systematic use of reconstructed skin. After five years of research work, the LOral advanced research laboratories in Pudong have developed the first Asian models. These are used to study pigmentation and to ensure the innocuousness of products, so replicating the Europeanapproved skin-irritation protocol.

LORAL HAS INVESTED IN SUSTAINABLE INNOVATION FOR MORE THAN 20 YEARS

20

JACQUES LECLAIRE, Worldwide Scientific, Research and Innovation


Director, LOral

Sustainable innovation means taking human, environmental and ethical considerations into account very early in the research process in order to create new ideas and concepts. This is exactly what we have done at LOral for more than 20 years. For example, we have strongly invested in the field of alternative methods. Today we are accelerating this process by developing predictive methods that use integrated strategies to innovate better, faster and earlier.
10

INNOVATION

Our Research & Innovation teams have selected and patented a skin-repair substance, Rhamnose, which is a plant sugar.

In 2010, LOral established a new Asia division of Research & Innovation.

RAW MATERIALS
Every year, LOral introduces new raw materials into its portfolio for enhanced product quality and performance. At the same time, various other raw materials are eliminated if their performance is considered inadequate when new regulations are anticipated. As an example, LOral eliminated triclosan very early on and since 2009, LOral no longer adds raw materials containing decamethylcyclopentasiloxane (D5) to its portfolio. LOral aims to increase the use of renewable, low impact raw materials in its products. 40% of materials included in the portfolio in 2010 are of plant origin and 26% adhere to the principles of green chemistry. This approach has in some cases enabled plant-based alternatives to be sourced as replacements for raw materials made in the laboratory. 70% of the polymers registered recently are of plant origin, and some synthetic polymers are being replaced by polysaccharides (a class of carbohydrate). In 2010, LOral achieved its objective of assessing all new raw materials against the Raw Material Sustainability Assessment framework for the whole lifecycle of a raw material. This will now be extended to the raw materials of plant origin already in use, with priority being given to the largest volumes and the ingredients for which the potential challenges have been identified.

EXPERTISE IN ORGANIC AND NATURAL PRODUCTS


LOral continues to work with COLIPA, the European Cosmetics Association, to define the meaning of natural and organic in the cosmetics industry. More and more LOral brands are using natural raw materials in their new formulations for example, Garnier Fructis Style Pure Clean gel and Vivelle Dop Green Fix gel. In 2010, several dozen formulas were labelled Ecocert organic and 58 new products were Ecocert registered. A dedicated research and innovation laboratory, set up in 2008, aims to identify and promote skin-friendly and hair-friendly plant extracts that are just as effective as conventional cosmetics. The activity of certain essential oils has been demonstrated in vitro on reconstructed tissue, including the anti-ageing effect of essential oil of geranium and the soothing properties of lemon balm.

ST11, THE FIRST HAIR CARE PROBIOTIC


The probiotic ST11 has been selected after years of research work, in collaboration with Nestl, as a new active substance in the prevention of dandruff and the scalp irritation that frequently accompanies it. Together we are conducting a long-term study into the major cause of dandruff by improve the scalps barrier function.

1 NATURAL RAW MATERIALS GARNIER FRUCTIS STYLE PURE CLEAN GEL

Pure Clean is Garniers first naturally derived styling line with acacia gum. Acacia gum is used around the world for its natural holding properties.

2 VIVELLE DOP GREEN FIX GEL

Green Fix haircare product contains 98% ingredients of natural origin, with plant resins.

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BIOMASS FROM THERMAL PLANKTON


LOrals biotechnologies department in Tours, France produces a pure biomass from thermal plankton previously believed to be impossible to cultivate. LOral researchers have developed and perfected this industrial tool, which uses water, sugar and controlled plant extracts to produce a biomass, enabling fermenter energy to be reduced by a factor of 10 while guaranteeing quality.

RESPECT FOR BIODIVERSITY


LOral systematically analyses impacts on biodiversity through identifying potential issues linked to the use of a plant, in three key criteria: ecology, fair trade and society. We also use the Raw Materials Sustainability Assessment framework to minimise impacts in the supply chains concerned. If the use of a given plant in one of our raw materials is likely to have a negative impact on biodiversity, a plan of action is implemented to remedy this with the supplier concerned, calling on the support of third parties if necessary.

Rhamnose and skin repair effects


Rhamnose is a plant sugar selected and patented for its skin repair effect. It is extracted through hydrolysis, which preserves its natural origin and ensures a low impact environmental profile. Its efficacy has been demonstrated in vitro on reconstructed skin models and confirmed in vivo through a proof of concept study.

GREEN CHEMISTRY AND ECO-DESIGN


Green chemistry aims to develop products and processes that are more eco-efficient. The commitment to adhere to green chemistry principles in the design of ingredients is the cornerstone of LOrals sustainable development initiatives. Throughout the lifecycle of the product, innovation processes increasingly focus on re-use of byproducts, manufacture requiring low levels of energy and solvents, recyclable packaging, and so on. In the view of Professor J. Warner, one of the co-founders of the principles of green chemistry, By bringing natural materials and renewable feed stocks into their science, LOral is addressing the principles of green chemistry at the highest level. LOral has an excellent internal green chemistry programme that places them at the forefront of the industry. Throughout 2010, LOral continued to reinforce its eco-design processes. This included research into biocatalysis: the use of natural catalysts, such as protein enzymes, to perform chemical transformations on organic compounds. LOral also progressed its partnerships with other industry research groups studying green processes using biomass.

26% of materials included in our portfolio comply with the principles of green chemistry.

12

INNOVATION

ETHICAL, SAFE PRODUCTS


Consumer protection is one of LOrals absolute priorities. The stringent safety tests carried out on products before they are brought to market ensure that LOral meets all current safety regulations in 130 countries where our products are marketed. LOral is committed to replacing animal testing for ingredients with approved alternative methods based on tissue engineering and in vitro tests, and the development of predictive methods. LOral has not tested end products on animals since 1989. However, the authorities in certain countries still use animal testing in order to register substances marketed in their territories, and LOral is obliged to adhere to these national regulations with respect to products manufactured and sold locally. Predictive methods are a combination of data and tools through which the safety of ingredients and formulas can be predicted. This includes reconstructed tissue, which enables LOral to develop knowledge without invasive clinical trials, evaluate the effectiveness of new active substances and assess the safety of raw materials and end products. In 2010, LOral continued to exploit commercial opportunities relating to the use of reconstructed tissue models for the safety assessment of ingredients and formulas. As methods are validated, LOral makes them available to industry at large. In 2010, LOral also continued its training initiative in alternative methods involving eight suppliers, principally using reconstructed skin. The aim is to enable suppliers to integrate these tools into safety assessment procedures for their own ingredients.

WE HAVE EVALUATED MORE THAN 13,000 FORMULAS USING RECONSTRUCTED TISSUE SINCE 2008

13,000

A WORLD CENTRE FOR PREDICTIVE ASSESSMENT


The LOral Gerland centre in Lyon is on the way to becoming the worlds leading centre for predictive assessment in cosmetics. It is developing cutting-edge predictive tools and techniques, including the production of biological tissues (skin and cornea) in accordance with ISO 9001 quality standards. The suite of predictive tools includes in vitro tests and eco-toxicology assessment methods for sunscreen formulas in freshwater and marine aquatic ecosystems, the latter in collaboration with the Pasteur Institute.

Product innovations from Kiehls


Founded in 1851 as an old-world apothecary in New York, Kiehls combines cosmetic, pharmaceutical, herbal and medicinal knowledge with a commitment to sustainable innovation. New products for 2010 include Midnight Recovery Concentrate, 99.8% naturally derived and paraben-free; Cross-Terrain All-In-One Refueling Wash, 99.9% biodegradable and paraben-free; and Superbly Smoothing Argan Hair Collection, sulphate-free, siliconefree and paraben-free.

NSABLE EC PO

CONSCIOUS O-

ODUCT PRO PR

IT ECO-RES DU

1 ETHICALLY SOURCED KIEHLS

Kiehls sources fairly traded argan oil from Morocco for its Superbly Smoothing Argan Hair Collection.

2 ECO-CONSCIOUS THE BODY SHOP

Rainforest shampoos contain responsibly sourced Brazilian pracaxi oil, without silicones, parabens or colourants, and sulphate-free.

3 100% BIODEGRADABLE SHOWER GELS THE BODY SHOP EARTH LOVERS

A range of 100% biodegradable shower gels in 100% recycled bottles, containing no sulphates, parabens or colourants.

13

INNOVATION

IN CLOSE-UP:

HAIR COLOUR
The launch of permanent hair colourants at the end of the 1950s was a real social revolution that fundamentally changed the perception and image of women in their prime.

Is there such a thing as black hair that never changes?


Xie Tiao 464499

Rules and laws


The European Cosmetics Directive is a strict one. In 2003 the European Commission, in conjunction with the member states and stakeholders, adopted a global strategy to maintain a positive list of approved hair dye substances. We use these in our existing products in full compliance with approved concentrations, and any new product developments are submitted to the Scientific Committee on Consumer Safety (SCCS).

Integrity and responsibility


LOral evaluates scientifically and exhaustively the performance, safety and potential environmental and social impact of every ingredient used in its products. LOral also attaches great importance to the proper use of its products by consumers. Labelling and advice on the front of our packaging alerts consumers to the risk of allergic reactions and recommends that a skin allergy test is carried out before using the product. A use-by date is also shown in the case of multi-use professional products (as opposed to single-use products that by their nature are used in one go). LOral provides single-use gloves in hair colouring kits for consumers.

Ethics
LOral categorically advises against colouring the hair of children aged under 16.

Diversity
LOral is an expert in geocosmetics, which includes the study of hair characteristics and consumer preferences (hairstyles) in every part of the world. As a result, our product formulations can vary according to hair type from naturally curly to straightened hair, or hair that has a very dark base.

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WHAT GOES IN
Raw materials
PPD and PTD are base colourants that have been in use for decades. In rare cases, they have been known to induce allergic reactions where there has been pre-sensitisation, in particular by black henna tattoos. In 2008, experts at the International Agency for Research on Cancer (IARC), which is part of the WHO (World Health Organization), concluded that a link with cancer in individuals who colour their hair at home could not be established.

Care for the environment


Before considering a new raw material, LOral carefully assesses any potential impact associated with its use. Certain hair colour products can have undesirable effects on the environment due to the nature of their ingredients. Over the last few years, LOral has changed a number of its formulas, enabling improvements to be made with respect to the environment. Furthermore, LOrals Sustainable Salon initiative helps turn professional hairdressing salons into places that are ever more respectful of the environment, in which the hairdressers play an eco-responsible role and to which customers will want to return again and again.

Expert knowledge
LOrals worldwide research and innovation laboratories develop hair colour products based on rigorous science. Recent progress in hair colourant formulation has resulted in products that are easier to apply while delivering increasing levels of performance, for consumers and professionals alike.

Talented employees
LOrals researchers are at the forefront of hair colourant innovations. With INOA, we launched a revolutionary hair colourant with no ammonia or odour, which helps to respect the hairs natural protective film.

Hair colour is a symbol of identity, and colouring the hair has become a language that expresses personality.
Jean-Marc Ascione, International Director of Haircolour Product Development, LOral

WHAT COMES OUT


Value for consumers
Hair colour products enable women to affirm their identity and lead their life fully in society without having to suffer from grey hair syndrome and this is increasingly important as people are living longer and longer.

Commercial success
Hair colour products have strong growth potential in emerging markets, due to ageing demographics in the medium term and also as a result of a growing interest in hair colouring among men and young people everywhere.

Value beyond cosmetics


LOral supports programmes to help people made vulnerable through illness or life events. The use of cosmetics, including hair colourants, enables numerous women and young people to regain their self-confidence and rebuild a positive self-image.

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PRODUCTION

PROTECTING THE BEAUTY OF THE PLANET


Our industrial commitment is based on ambitious objectives in environmental terms, and relations of mutual trust with local authorities and communities.
MORE ONLINE sustainabledevelopment.loreal.com/production

16

INDUSTRIAL OPERATIONS CONTRIBUTING TO SUSTAINABILITY


LOral has 38 factories and 78 distribution centres across the world. In 2010, we made and distributed more than five billion units of product. Making and distributing our products with respect for the environment and for people is vital to LOrals sustainability vision. Our factories and distribution centres are committed to stretching environmental targets: 50% absolute reduction in greenhouse gas emissions (scope 1 and 2); 50% reduction in waste generated per finished product; 50% reduction in water consumption per finished product. Reductions will be calculated on a like-forlike basis (20052015). How our products are consumed as well as how we make and distribute them is of paramount importance. All LOral factories and Galderma factories (50% owned by LOral) are accredited to internationally recognised standards in environment, health and safety apart from two factories which are recent acquisitions or startups. These standards include OHSAS 18001 (or VPP in the US) for occupational health and safety, and ISO 14001 for environmental management.

KEY FIGURES

27%

absolute reduction
in greenhouse gas emissions (tonnes of CO2, scope 1 and 2, 200510)

17%
reduction
in volume of returnable packaging per finished product (200510)

19.2%
reduction
in water consumption (litres per finished product, 200510)

DETAILED SUMMARY
Managing environment, health and safety (EHS) Recognising excellence Health and safety Viewpoint Reducing carbon emissions Water conservation Waste reduction Packaging Recycled materials Viewpoint Responsible sourcing Solidarity sourcing What makes a natural ingredient sustainable? Raw materials Sustainable palm oil p. p. p. p. p. p. p. p. p. p. p. p. 18 18 19 19 20 20 21 21 21 22 22 22

p. 22 p. 23 p. 23
17

PRODUCTION

OF OUR FACTORIES OPERATE USING INTERNATIONALLY RECOGNISED EHS STANDARDS

100%

MANAGING ENVIRONMENT, HEALTH AND SAFETY (EHS)


LOral has had an Environmental, Health and Safety (EHS) policy for many years. This sets out our commitments to the development, production, distribution and sale of innovative products of the highest quality in an ethical manner, by minimising our impact on the environment and guaranteeing the safety and health of our employees, our customers and the communities in which we work. There are clear accountabilities for EHS at every level. The Managing Director of the LOral Operations department is responsible for EHS and reports to the CEO. The EHS department is linked to each part of our operations through EHS managers. Each LOral division has a dedicated EHS function. In a typical factory of 350 workers, there would be three to four full-time EHS staff. Factory managers and distribution managers remuneration is linked to environmental, health and safety performance. In 2010, we initiated a project to bring together in one place all the elements that support implementation of our EHS policy across LOrals worldwide sites. The result is our EHS manual the first level of documentation in our EHS system. Within our worldwide audit programme, external experts regularly visit LOrals production and distribution sites to assess progress and risks. Third party audits are also carried out at supplier sites using the same standards that we apply to ourselves.

Several of our factories and distribution centres have worked for millions of hours without a single lost time accident.

RECOGNISING EXCELLENCE
We continued our Excellence Manufacturing worldwide programme, which has once again enabled substantial improvements in efficiency. This was recognised with the presentation of the Manufacturing Excellence award at the European Manufacturing Summit in Dusseldorf. The jury stressed the rapidity of the results obtained and their regular improvement, as well as the innovative and collaborative nature of this approach, based on the sharing of best practices between sites. We also recognise achievements internally, through our annual EHS Awards Scheme. This is an important part of encouraging and motivating operational teams and employees, and rewarding exceptional EHS performance across our factories, distribution centres and administrative sites. Previous winners have included an ergonomics programme, water reduction initiatives and recycling projects. Future winners will be announced in October 2011.

SAFEGUARDING BEES AND BIODIVERSITY


Bee populations have suffered dramatic declines in recent years. The Chimex factory at Tours, France, has allocated 8,000 square metres of its land to wildowers and other native ora, providing bees with an ideal habitat. The factory is also providing funding so that a hive can be safely observed from a distance as part of an educational outreach programme with local schools.

18

VIEWPOINT

EXPERT OPINIONS ON WHAT SUSTAINABLE PRODUCTION MEANS


As a global business and corporate citizen, we want to learn and share from others insights and understanding as part of the journey to greater sustainability. We invited leading experts, both internal and external, to give their views on LOrals strategy and the challenges that are involved.
WATCH VIDEO ONLINE

HEALTH AND SAFETY


The health and safety of our employees is paramount and LOrals ultimate goal is zero accidents and incidents. We have comprehensive health and safety measures focused on risk reduction and continuous improvement. We want to create and maintain a culture of safety, which sets high standards, recognises excellence and involves employees at all levels of the company. In line with the positive trend we have seen over several years, there was continuing very good performance in 2010. Our accident rate fell by 23% compared with the previous year. Several of our factories and distribution centres have worked for millions of hours without a single lost time accident.

Creating a safety culture


MESUR (Managing Effective Safety Using Recognition & Realignment) is a group EHS programme that develops the capacity of an individual to identify risk and act accordingly. The programme requires management to systematically speak to employees about their safety. Employees are observed in day to day activities by management and are then engaged in discussion about their safety, their at risk practices and the potential for injury. Solutions are then developed with the individual, with a preference for immediate solutions. MESUR has been extended to all our operational sites. In 2010, 6,788 MESUR visits took place. These led to 14,210 actions for improvement, and 92% of these were completed.

JOS-MARA FIGUERES, CEO, IJ Partners

36.8%
(CONVENTIONAL FREQUENCY RATE)

LOral is developing a strategy which is fundamentally about creating ecosystems close to where your consumers are, and because your industrial facilities are well integrated with your supply chain, the whole ecosystem becomes much more efficient. The beauty of that, in a globalised environment, is that you bring a very important local component to everything you do. What I love about this approach is that if we consider sustainability as a combination of economic, environmental, human and social factors, creating these ecosystems actually strengthens the human factor.

IMPROVEMENT IN OUR ACCIDENT RATE SINCE 2006

MIGUEL CASTELLANOS, General Manager, Global Environment,


Health and Safety, LOral

One of the goals we have set ourselves is a 50% absolute reduction in CO2 over the 10 years 2005 to 2015. When we talk of acquiring one billion new consumers, were talking 2020. That means we have to do much more than we said that we would do in 2009 to reduce our CO2 emissions because, of course, we have to build new factories, and these will probably be in China and Indonesia. Our policy is that all these factories must have very low CO2 emissions so by the end of 2020 we will be meeting or beating our target.
19

SUSTAINABLE FORESTS
90% of our wood fibre comes from certified sustainable sources. Our target is 100% by the end of 2011. The worlds forests are vital for ecosystems, biodiversity and carbon capture, and support livelihoods and communities around the world. LOral only uses wood fibre from well-managed, sustainable sources.

n1

IN THE ANNUAL CLIMATE COUNTS SURVEY OF COMPANIES THAT ARE MANAGING THEIR CLIMATE IMPACTS

REDUCING CARBON EMISSIONS


To help address climate change, LOral has set a significant pledge to achieve a 50% absolute reduction in carbon emissions (scope 1 and 2) in the period 20052015. We are making good progress and as of 2010 have achieved an absolute reduction of 27% since 2005. Our Vichy factory has already reduced its carbon footprint by 38% (200510). It is partnering with energy provider EDF on three new technology projects, with the aim of reducing carbon emissions by 50% by 2011. This includes the use of triple energy recovery processes, free cooling, and geothermal energy.

WATER CONSERVATION
Over the past five years we have reduced water use per finished product by 16.5% and cut absolute consumption by 7.6%. This is in the context of a 10.8% increase in production over the same period. Our factory in Settimo more than doubled production in 2010, and water and energy use might have increased in direct proportion. To avoid this, we have transferred technology from the chemical industry and now use a component that breaks down the emulsion, so helping us to reduce the amount of water and energy used in cleansing the production vats. This method has improved the quality of the cleansing process and made the activity less physically demanding for factory workers.

KEY GROUP TARGETS


*Reductions will be calculated on a like-for-like basis (20052015)

ABSOLUTE REDUCTION IN GREENHOUSE GAS EMISSIONS, SCOPE 1 AND 2*

50%

REDUCTION IN WATER CONSUMPTION PER FINISHED PRODUCT*

50%

REDUCTION IN WASTE GENERATED (EXCLUDING RETURNABLE PACKAGING) PER FINISHED PRODUCT*

50%

20

PRODUCTION

PACKAGING
MADE IN CHIMEX
LOrals Chimex subsidiary in France specialises in the production of cosmetics ingredients and formulas. Made in Chimex provides assurance that sustainability factors have been taken into account during product design and manufacture, using environmentally friendly technologies and a clear understanding of the environmental footprint of individual products and ingredients.
LOrals packaging programme has achieved significant reductions in weight and volume, contributing to lower material use, lower energy consumption and reduced carbon emissions throughout the lifecycle. Since the beginning of the 1990s and as new packaging technologies have become available, LOral has developed lighter and lighter packaging. Today, LOrals plastic bottles are among the lightest on the market. In 2010, we saved a further 590 tonnes of plastic, and a total of 2,110 tonnes since 2008.

RECYCLED MATERIALS
Garnier, Vichy and Biotherm brands now use recycled glass jars. This is a technical breakthrough: recycled glass with the same appearance and clarity as non-recycled. It comes from mineral water bottles, which are processed using new technology, with lower energy use. The result is high quality glass containers and reduced environmental impact. Kiehls, The Body Shop, Sanoflore and LOral Professionnel use recycled PET, and in some cases this comprises 100% of the content of the packaging. Lancme, Matrix and Sanoflore use recycled PE in tubes and bottles for example, Lancme Aroma blue tube has 50% recycled PE.

WASTE REDUCTION
At LOral effective waste management involves our whole lifecycle. In 2010, we started new initiatives across the group. These focus on reducing waste production at source, recycling unavoidable waste where possible and recovering energy from waste, which is an increasingly important area for us.

2010 highlights
In 2010, we reduced waste per finished product by , by re-using pallets, using more eco-efficient wrapping and packaging, and reducing obsolete products. of our waste is re-used, recycled or used in energy recovery. More than

7.4%

96%

LORAL PARIS AND POINT OF SALE MATERIALS


Following an in-depth study of its point of sale (POS) footprint and an eco-design process, LOral Paris has made significant savings in materials, electricity consumption and achieved a 46% reduction in carbon emissions. The back of its PEARL display cabinet, which was previously made of metal, has been replaced with wood, reducing the total amount of metal used in the cabinet by 50%. The plastic drawers have been redesigned, and are now 50% thinner. The unit now uses low-energy lamps, without reducing brightness. These changes have reduced the total carbon footprint of the display unit by 46%, reduced the cost per unit by 20% and reduced the in-store energy consumption by 50%.

50% of our sites send zero waste to landfill.

1 PACKAGING WITH RECYCLED PET GARNIER USA 1

Garnier packaging innovations include containers using 50% recycled PET.

2 RECYCLED GLASS GARNIER VICHY BIOTHERM

Garnier, Vichy and Biotherm now incorporate 40% recycled glass in their skincare jars.

21

VIEWPOINT

EXPERT OPINIONS ON WHAT A SUSTAINABLE SUPPLY CHAIN MEANS


As a global business and corporate citizen, we want to learn and share from others insights and understanding as part of the journey to greater sustainability. We invited leading experts, both internal and external, to give their views on LOrals strategy and the challenges that are involved.
WATCH VIDEO ONLINE

RESPONSIBLE SOURCING
Strategic management and responsible sourcing of raw materials is key to LOrals sustainability strategy, the conservation of natural resources and the protection of biodiversity and ecosystems. Through our Buy & Care programme, we work to share good practice, values and standards with our suppliers. To do business with LOral, suppliers operations must meet the same standards as LOrals own sites. We have a programme of Social Audits to assess working conditions and labour policies at our suppliers sites. These are paid for by LOral and carried out by independent assessors on our behalf.

SOLIDARITY SOURCING
LOrals new global purchasing programme Solidarity Sourcing, launched in 2010, aims to reach new groups of disadvantaged suppliers all around the world, with particular focus on small scale suppliers, minority-owned suppliers, social enterprises employing people with disabilities, and fair trade companies. Solidarity Sourcing will be implemented during 2011 and success will be measured using precise indicators such as the number of jobs created. The Body Shops Community Fair Trade programme was one of the worlds first fair trade initiatives. From small beginnings 20 years ago, it now includes 18 ingredients from 14 countries around the world, and more than half of The Body Shops core lines contain one or more Community Fair Trade ingredients.

DAVID LOGAN, Co-founder, Corporate Citizenship

A central question for me is are you, in driving forward with the supply chain, sharing with your suppliers the kind of knowledge they need to be sustainable economically, socially and environmentally, so that they can support your goals of reducing your carbon footprint?

WHAT MAKES A NATURAL INGREDIENT SUSTAINABLE?


LOrals portfolio of ingredients comprises man-made chemicals created in the laboratory and materials that are found in nature. Our Sustainability Assessment Framework (below) is used to evaluate potential raw materials against a range of sustainability criteria.

Traceable Sustainable supply: longterm availability

Accessible Obtained with respect for biodiversity

LAURENT GILBERT, Advanced Research International Development Director, LOral. BARBARA LAVERNOS, Chief Procurement Officer, LOral

LOral has a tradition of long-term relationships with its suppliers. More than a third of LOrals existing suppliers have worked with us for decades. The people we started with when we were implementing our facilities in Indonesia, China, Brazil and elsewhere in the world are not just still with us, but they have developed with us. (BL) In 2006, we have worked to assess suppliers to ensure that the supply chain we are using is not affecting biodiversity and is compliant with all international, regional and local regulations. We have made the decision and the commitment to source raw materials of natural origin while fully respecting the Convention on Biological Diversity discussed in Rio. (LG)
22

Value to LOral and customers

SUSTAINABLE INGREDIENTS

Obtained with respect for people

Providing high quality/ performance Fairly traded Safe in use

Lifecycle analysis

PRODUCTION

OF ALL INGREDIENTS USED BY LORAL GROUP BRANDS ARE OF RENEWABLE PLANT ORIGIN

40%

THE BODY SHOP


Through its Community Fair Trade programme, The Body Shop sources the highest quality ingredients from 14 countries around the world. These include shea butter from Ghana, supplied by the Tungteiya Womens Shea Butter Association. The Association has invested in local community projects and facilities including schools, health clinics and feeding centres, benefiting tens of thousands of people every year. The brand added new ingredients and suppliers to the programme in 2010: hemp seed oil from the United Kingdom, honey from Bezamarin, Ethiopia and beeswax from Cameroon. More than 65% of products by The Body Shop contain ingredients sourced through its Community Fair Trade programme.

RAW MATERIALS
LOrals strategy for raw materials is fundamental to sustainable development. Using our Sustainability Assessment framework, we measure the environmental impact of the raw materials used, promote the use of raw materials having a favourable impact, evaluate those raw materials having an unfavourable profile, and promote raw materials of renewable plant origin with optimum respect for biodiversity. As at the end of 2008, 99% of raw materials were assessed in this way and all new raw materials systematically undergo this assessment before they can be accepted into the ingredients portfolio. There are more than 1,200 raw materials of renewable plant origin in our portfolio.

SUSTAINABLE PALM OIL


Despite being a low volume purchaser of palm oil, in 2008 we committed to playing our part in the protection of biodiversity and forest ecosystems by sourcing all our palm oil from sustainable plantations. Since 2010, 100% of our palm oil comes from sustainable, well managed plantations which have been certified by the Roundtable on Sustainable Palm Oil (RSPO). In 2009 LOral was recognised by WWF as one of the 10 most responsible companies using this ingredient.

1 DREAMS UNLIMITEDTM THE BODY SHOP

Launched in 2010, Dreams UnlimitedTM perfume is inspired by the personality and beliefs of the brands founder, Dame Anita Roddick, and contains Community Fair Trade organic alcohol.

2 CERTIFIED ORGANIC GARNIER BIO ACTIVE

Garnier Bio Active contains 95% ingredients of natural origin, and up to 20% organic ingredients, including samphire with anti-ageing properties. It is designed using an eco-responsible approach at each stage of its development.

23

CONSUMPTION

MEETING THE NEEDS OF NEW LIFESTYLES


Sustainable consumption applies to all our activities. But from a global perspective, companies cannot meet the challenge of sustainable consumption alone. Consumers have a major role to play along with the rest of society.
MORE ONLINE sustainabledevelopment.loreal.com/consumption

24

SUSTAINABLE CONSUMPTION
LOrals growth ambition is to double our consumer base and make our products available to one billion new consumers by 2020 in markets around the world. It is imperative that we grow and consume sustainably. However, companies alone cannot meet the challenge of sustainable consumption. We must involve and engage our consumers to play their part. Together, we need to ensure that what we use today does not exceed what the world can provide tomorrow. We are committed to creating relationships with our consumers and other stakeholders based on trust. This commitment includes responsible advertising and communications, for which we are guided by, and meet, nationally and internationally recognised standards. Sustainable consumption also means ensuring that we create safe, sustainable, accessible and suitable products in order to bring our beauty promise to more consumers in different parts of the world.

KEY FIGURES

30,000

visits in one year


to the website pages dedicated to Garniers work in packaging eco-design

15,000

recycling containers
for the bathroom distributed free by Garnier to consumers

357

specialist
Consumer Advisors in 54 countries

DETAILED SUMMARY
Corporate Consumer Responsibility Engaging externally Why sustainable consumption matters Accessible, sustainable products Responsible, transparent communications Viewpoint p. 26 p. 26 p. 26 p. 27 p. 27 p. 27

25

CONSUMPTION

st

ENGAGING WITH CONSUMERS FOR SUSTAINABLE CONSUMPTION


Garnier, in partnership with sustainable packaging experts EcoEmballages, designed a recycling container for the bathroom, to help people to consume responsibly and recycle. In 2010, 15,000 free containers were distributed to consumers.

GARNIER: THE FIRST TO CARRY THE SOURDLINE LOGO FOR HEARING-IMPAIRED CONSUMERS

CORPORATE CONSUMER RESPONSIBILITY


LOrals Corporate Consumer Responsibility (CCR) vision formalises our contract with consumers, puts them at the heart of everything we do and sets out seven key commitments that reinforce trust in our brands. This trust is essential to engaging with our consumers and encouraging responsible consumption. Our CCR commitments are the basis for engaging with our consumers, sharing a vision of responsible, sustainable consumption then acting together to achieve it: Innovative products and product efficacy Product safety Sustainable marketing Responsible advertising Transparency and care Availability of our products Sharing best practice with industry and stakeholders In the annual Brand Sustainable Futures report, which assesses the sustainable health of brands over time based on a survey of 30,000 consumers in nine countries, LOral Paris was one of the most improved brands compared to 2009.

ENGAGING EXTERNALLY
We participate in industry groups and engage with consumer organisations, listening to concerns and taking action when needed. In 2010, LOral took part in various external initiatives to discuss the challenges of sustainable consumption. At the European Business Summit held in June 2010 in Brussels, LOral led a panel which included Commissioner John Dalli and Madame Monique Goyens, Director General of BEUC, the European Consumers Organisation. Corporate responsibility and consumer engagement were also discussed at the French industry association MEDEF, which aims to share good practices, particularly among small and medium enterprises.

WHY SUSTAINABLE CONSUMPTION MATTERS


Sustainable development and sustainable consumption go hand in hand. The model opposite shows LOrals Corporate Consumer Responsibility vision, which is based on a relationship of trust with consumers.

FROM RESPONSIBLE PRODUCTS AND MARKETING TO SUSTAINABLE CONSUMPTION

Sustainable consumption

Stakeholder dialogue Media education Consumer associations partnership Responsible communication Consumer relations management Alternative dispute resolution Consumer services good practices

MEETING THE CITIZENSHIP AGENDA

CONSUMER RELATIONS QUALITY

Innovation Creativity Safety

Value for money Eco-design

SUPPLY QUALITY

26

VIEWPOINT

EXPERT OPINIONS ON WHAT SUSTAINABLE CONSUMPTION MEANS


ACCESSIBLE, SUSTAINABLE PRODUCTS
LOrals strategy is to reach new consumers by making our brands as widely accessible as possible. Our commitment to product accessibility and suitability for consumers in different parts of the world (for example, offering products in tubes rather than bottles, or in smaller-format containers and sachets) goes hand in hand with our commitment to performance, safety, and respect for people and the environment. In 2010, LOral brands continued to offer accessible innovation to consumers. Approximately 4% of the worlds population have some visual impairment, so Garnier added information in Braille notation (in French, English, German and Spanish) to its skincare products.

As a global business and corporate citizen, we want to learn and share from others insights and understanding as part of the journey to greater sustainability. We invited leading experts, both internal and external, to give their views on LOrals strategy and the challenges that are involved.
WATCH VIDEO ONLINE

A hair salon for everyone


An accessible hair salon in Grenoble is the first of its kind in France. LOral Professionnel provided half of the funding needed for a fully adapted salon equipped with audio loops, information in Braille, wide-opening automatic doors, a ramp, adjustable chairs and sensory and tactile features.

RESPONSIBLE, TRANSPARENT COMMUNICATIONS

Our Code of Business Ethics commits us to responsible advertising, which ensures that our advertising and promotional material is based on proven performance and scientific data, and that the information we provide is readily understandable by consumers. We adopted the French Union of Advertisers (UDA) Charter in 2007. We are also guided by the International Chamber of Commerces International Code of Advertising Practice. LOral is one of the few international groups to have published a Sustainable Development Report in China. In July 2010, Jean-Paul Agon officially presented the report to the Chinese authorities.

TONY BLACKSHAW, Senior Lecturer, Sheffield Hallam University

There is a sense that the world is changing and becoming more hybrid. There are different markets emerging and different ways of consuming. The world that we are living in is becoming increasingly uncertain. Its what you might call a liquid world where people are confronted with many uncertainties, and it seems that they look to the things that are consistent in their lives such as consumer products.

1 ACCESSIBLE INNOVATION GARNIER BIO ACTIVE


After four years of research, Garnier launched Bio Active in 2010 its first certified organic skincare range.

2 NEW ANTI-AGEING PRODUCTS YOUTH CODE

Youth Code by LOral Paris is a range of new anti-ageing products and the result of pioneering research in the science of genes.

MARIA JONES, International Consumer Affairs Director, LOral 1

No more can we say that the dominant market is the western world. Thats why we are so conscious of the way in which we feed back information received from the many different countries where we sell our products. Its absolutely critical that we feed this information back robustly to our marketing people and to our research teams. Today people want to retain their culture and dont want to be swallowed up by other countries. It is important for us to remember that.

27

TALENT

ASSURING THE FUTURE THROUGH DIVERSITY


LOrals diversity of talents is a source of creativity in a business founded on understanding and engaging with the most diverse socio-cultural aspirations.
MORE ONLINE sustainabledevelopment.loreal.com/talent

28

TALENT CREATES VALUE


Our culture is rich in talent and diversity and we encourage our people to contribute to our business with creativity and enthusiasm. Attracting the best people to our business and empowering them to realise their full potential is key to our ability to be a sustainable business and promote sustainable consumption. We work to ensure our employees are fulfilled, tailoring personal and professional development opportunities to individual needs. Our Human Resources policy reflects our innovation-based strategy, a passion for our products and brands, and a shared belief in the beauty industry. This approach helped LOral to win the Trophe du Capital Humain 2010 in recognition of its investment in its employees. The award, organised by recruitment company, Michael Page International, in association with eight other companies, recognises the best human capital initiatives of companies in the CAC 40 (the top 40 companies on the French stock exchange).

KEY FIGURES

66,600
employees
in 130 countries

58%
are women

of our managers

113

nationalities
are represented on our management teams

DETAILED SUMMARY
Viewpoint Managing our people Reward and recognition Dialogue and communication Recruiting talent Diversity at LOral Career development and international mobility p. p. p. p. p. p. 30 30 30 30 31 31

p. 31

29

VIEWPOINT

EXPERT OPINIONS ON WHAT SUSTAINABLE TALENT MEANS


As a global business and corporate citizen, we want to learn and share from others insights and understanding as part of the journey to greater sustainability. We invited leading experts, both internal and external, to give their views on LOrals strategy and the challenges that are involved.
WATCH VIDEO ONLINE

MANAGING OUR PEOPLE


We believe that building long-term, mutually beneficial relationships with our employees is central to our sustainable growth and success. We are actively committed to developing our skilled workforce in three key ways: by maintaining our management training scheme; by continuing our international mobility policy to support our geographic expansion; and by strengthening our LOral & Me programme, which aims to generate a lasting mutual commitment between LOral and all its employees. In 2010, we enhanced the LOral & Me programme which now includes online employee appraisals and a new digital learning platform My Learning.

REWARD AND RECOGNITION

At LOral, we recognise our employees achievements and reward them with competitive remuneration and a range of benefits. LOral believes that all our employees should share in the success they helped create: in 2010 employee profit-sharing totalled 185 million. The total cost of our pension programmes was 438 million in 2010, compared with 422 million in 2009.

DIALOGUE AND COMMUNICATION


We place great importance on open communication with our employees, seeking their views on LOral and the issues that affect them. We work to foster good labour relations with our employees and their representatives based on trust and mutual respect. LOral carries out a global employee opinion survey (Pulse), and the last survey covered 28,000 employees in 28 countries. 150 taskforces are turning the ideas generated, such as timemanagement guidance, car-share schemes and individual Training Passports, into action around the business. The survey will be repeated in 2011 and 2012 across the group.

VALRIE GAUTHIER, Professor, HEC

The capacity to recruit internationally minded local talent enables global companies to develop strong insights, combining both international and local aspects. Within LOral the tradition is to recruit younger people who go on to develop their whole career with the group. While its probably harder for people who have already had a career to integrate into the LOral culture, they are still very important because they tend to join at a stage in their career where they can add real value and influence the approach.

93%

OF LORAL MANAGERS
IN EUROPE HAVE RECEIVED OUR ONE-AND-A-HALF DAY TRAINING PROGRAMME IN DIVERSITY

OLIVIER LECOCQ, Human Resources and Organization


Development Director, LOral Asia Pacific

We have a very important strategy and objective, to acquire one billion new customers. That relies on a much deeper understanding: where and how these new consumers live, how they use their products, and what beauty means for them now and in the future. You have to rebuild the key elements that will make the brand meaningful. In every single country that means having teams who work exceptionally hard to understand diversity and all its components, and to really understand the expectations of todays men and women.
30

TALENT

RECRUITS USED OUR REVEAL ONLINE RECRUITMENT TOOL

120

CAREER DEVELOPMENT AND INTERNATIONAL MOBILITY


We aim to provide our employees with career development opportunities throughout their professional life as a means of maintaining LOrals competitive edge. Through the LOral & Me global framework, employees receive two reviews each year to identify and discuss career paths, personal development and compensation. In 2010, we launched the My Learning digital learning platform internationally in 18 languages, reaching 20,000 employees in 32 countries. My Learning provides employees with an individualised online learning space and innovative training tools and will be extended to 45,000 people in 56 countries in 2011. We believe international mobility is beneficial both to individuals and to our group, fostering diversity and encouraging innovation. At the end of 2010, 752 employees from 49 countries were on long-term international assignments in 57 countries a 13% increase on 2009.

RECRUITING TALENT
LOral has partnerships with over 200 university campuses to help us attract the leaders of tomorrow to our group. In 2010, we launched REVEAL a unique recruitment tool to source diverse candidate profiles which match The LOral Spirit. Through the online story and situations, participants can learn more about their own skills, explore LOrals company culture, discover potential career opportunities, and get the chance to join the group at the end. In 2010, almost 60,000 people and 120 recruits (interns and trainees) used REVEAL. We have continued to reinforce our talent pipeline through investment in our management training programme. Our Pepinire management training scheme grew by 35% in 2010 and we also created a new regional function called Talent Sourcing Director, tasked with identifying and developing future leaders and talent.

DIVERSITY AT LORAL
At LOral we believe individuality should be valued and diversity embraced. We want our workplace to reflect the diversity of our consumers and our markets, in terms of nationality, ethnicity, disability, gender, age and social background. Diverse teams allow for greater creativity, a better understanding of our consumers and products that measure up to their expectations. In 2010, we produced our first Diversity Overview Report, which includes over a hundred indicators. Dedicated to our employees, partners and other key stakeholders, this report is a basis for managing our policy and for dialogue with those concerned.

DIVERSITY AWARD
Our rst Diversity Overview Report, produced in 2010, achieved a Grand Prix award at the 6th International Diversity Forum. Among the many indicators included, it showed that in France LOral has improved the employment rate of people with disabilities to more than 5% since 2007. For 2011, the objective is to create our rst international Diversity Overview Report.

Young potential recruits using REVEAL LOrals online recruitment tool.

LOral and Me was launched internationally in 2010.

COMMUNITIES

BUILDING TRUST BETWEEN GLOBAL BUSINESS AND COMMUNITIES


We take a proactive approach to our corporate responsibility, contributing to local communities around the globe to create a more beautiful world.
MORE ONLINE sustainabledevelopment.loreal.com/communities

32

MAKING A DIFFERENCE TO OUR COMMUNITIES


LOrals commitment to philanthropy is a fundamental part of how the company operates and is based on three focus areas of science, solidarity and education. This commitment has a global reach, with LOral brands and subsidiaries supporting hundreds of projects worldwide. The LOral Foundation, created in 2007, reflects the companys ambition to give meaning to the beauty profession, by developing actions which mirror the groups values of generosity and social responsibility. This is all part of our effort to make a more beautiful world. 2010 saw new partnerships initiated as well as existing programmes developed and extended internationally. LOral-UNESCO For Women in Science expanded further with the launch of the first pan-Arab and pan-African regional awards. The LOral-UNESCO Hairdressers Against AIDS programme also grew, with a successful launch in the US in 2010.

KEY FIGURES

E32.6m 103
allocated
to community projects worldwide

countries reached
through LOral-UNESCO For Women in Science

1.3m
hairdressers
reached through LOral-UNESCO Hairdressers Against AIDS

DETAILED SUMMARY
LOral Foundation Promoting science Helping vulnerable individuals Increasing access to education Viewpoint p. p. p. p. p. 34 34 34 35 35

33

COMMUNITIES

530,000

LORAL PRODUCTS DONATED IN 2010 TO CHARITABLE ORGANISATIONS

All proceeds from the LOral-UNESCO Hairdressers Against AIDS celebrity calendar go to UNESCOs HIV education programmes.

LORAL FOUNDATION
With a 40 million budget over five years, the LOral Corporate Foundation is the second largest foundation in France. Its key role is to strengthen and maintain the companys commitment to social responsibility, and it has three main goals: Promoting scientific research and the role of women in science; Helping people made vulnerable because of a change in their appearance to regain their self-esteem and confidence; Facilitating access to education and occupational integration. Since its inception, the Foundation has engaged in projects that reflect LOrals values. In 2010, LOral invested 32.6 million in international community programmes (an increase of more than 17% compared to 2009). This comprised 8.6 million from the Foundation (6.1 million according to London Benchmarking Group methodology); 16.1 million in corporate donations; and 16.5 million from the group brands.

PROMOTING SCIENCE
Currently, just 29% of scientists worldwide are women(1). LOral promotes science and supports the cause of women through the LOral-UNESCO For Women in Science programme. Every year, five research awards are given (one per continent) in recognition of scientific excellence. 15 international fellowships are awarded to young women whose projects have been accepted by leading research institutions outside their country of origin. Numerous LOral national fellowships are also awarded to young women doing research in their home country. In 2010, we launched the first pan-Arab and pan-African regional fellowships, as part of the awards programme, extending the scheme to include young women pursuing scientific careers, particularly in countries where LOral is not present.
(1) Statistical Institute of UNESCO, November 2009

HELPING VULNERABLE INDIVIDUALS


Beauty is connected to self-esteem and a positive self-image. Through our Beauty from the Heart programme we donate cosmetics and hygiene kits for women and young people to regain their confidence. In 2010, we set up more than 150 skincare and make-up workshops in France, in medical and social action centres. The LOral Foundation supports Opration Sourire (Operation Smile), a programme of reconstructive surgery, run by Mdecins du Monde, for people who have been disfigured by disease, malnutrition or war. In 2010, 834 people were helped by the programme (62% more than in 2009), bringing the total to more than 1,500 since 2007. The group donated almost 1 million to the Haiti earthquake disaster appeal and teamed up with the non-profit organisation CARE to provide survivors with 7,000 personal hygiene care kits to help prevent the spread of disease.

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VIEWPOINT

EXPERT OPINIONS ON WHAT SUSTAINABLE COMMUNITY MEANS


INCREASING ACCESS TO EDUCATION
The LOral Foundation supports a range of educational activities for students from low-income backgrounds, international students studying in French universities and higher education establishments, and secondary school students in disadvantaged neighbourhoods. It also helps disabled students studying at the French university Sciences Po, and supports a schools tutoring programme, facilitated by the Museum of Science and Industry, in partnership with the Association de Prvention Site de la Villette. As part of the companys centenary celebrations and continued commitment to corporate responsibility, the group rolled out 100 Citizen Projects in 2010, sponsored by LOral subsidiaries around the world. For example, in Indonesia, LOral is supporting scientific discovery programmes in 10 underprivileged junior high schools. Hairdressers Against AIDS, the educational HIV prevention programme set up in partnership with UNESCO, was launched in four new countries in 2010, including the United States. The programme is now active in 30 countries, with nearly 500,000 hairdressers receiving training each year, and has set itself the target to reach 50 countries by 2012.

As a global business and corporate citizen, we want to learn and share from others insights and understanding as part of the journey to greater sustainability. We invited leading experts, both internal and external, to give their views on LOrals strategy and the challenges that are involved.
WATCH VIDEO ONLINE

MARK HALLE, Executive Director, International Institute for


Sustainable Development

Its important to develop a concept of consumer responsibility that creates a true link between business and consumers. This is the route to embedding responsible behaviours, citizenship and sustainability. Business needs to show, for its part, that it is making a serious, major effort in this area. Without that, it cannot ask consumers to share the responsibility and make lifestyle changes that are needed to consume more sustainably.

AN INSPIRING VISION OF BEAUTY


At the Womens Forum, the LOral Foundation organised a meeting on the theme of appearance where Aimee Mullins gave a talk. Despite having both legs amputated below the knee, Aimee overcame her disability to become both a model and an elite athlete.

LOC ARMAND, Senior VP External Affairs, LOral

There can be no sustainable consumption without showing consumers what responsible production looks like. If businesses, and we at LOral are among them, can develop an offer for consumers that is responsible in all senses of the term, then the enlightened consumer, armed with the right information, will be able to exercise their choice and finally make the vision of sustainable consumption into a reality.
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BUSINESS

PERFORMANCE SUMMARY
BUSINESS
Total shareholder return over 20 years Consolidated sales Net profit** Key data 2010* 14.61% 19,496 million 2,371 million

INNOVATION
Cosmetic and dermatological research Investment in research and innovation 612 patents registered 665 million

PRODUCTION
CO2 emissions Total energy use Energy use per 1,000 finished products Water use Water quality after on-site treatment Waste and recycling 27% absolute reduction in CO2 emissions, scope 1 and 2 (200510) 1% increase (200910); 1.2% decrease (200610) 9.2% decrease 6% reduction per unit of finished product 11.2% reduction (improvement) in COD per finished product*** 7.4% reduction in waste generated (including returnable packaging), per unit of finished product 96.1% of our waste is reused, recycled or recovered for energy More than 50% of our industrial sites sent no waste to landfill Atmospheric emissions LOral Buy & Care programme Social audits, breakdown of non conformities 8.5% increase in volatile organic compounds (VOCs) 83.3% reduction in sulphur dioxide 567 social audits of supplier sites Child labour 7% Compensation and benefits 25% Working hours 26% Health and safety 35% Other 7% Collaboration with suppliers Health and safety International standards 30% of our supplier base, by revenue, involved with LOral in Carbon Disclosure Project (CDP) Lost time injuries: 20% improvement (based on enlarged frequency rate) All our factories are certified to ISO 14001 and either OHSAS 18000 or VPP, except for two, which are recent acquisitions or start-ups

CONSUMPTION
Responsible advertising Consumer advice All the marketing directors (and 70% of agencies) of two divisions have received training More than 1.5 million contacts with consumers in 54 countries

TALENT
Professional training Diversity training Female representation 57% of all employees and 72% of managers received training 93% of managers in Europe have received LOrals one-and-a-half day diversity training 58% of managers 39% of Management Committees Worldwide profit sharing 185 million of profit shared with employees

COMMUNITIES
LOral Foundation LOral-UNESCO For Women in Science 40 million multi-annual budget 32.6 million invested by LOral in international social projects in 2010 Since launch 62 laureates in 28 countries and 1,004 fellowships in 100 countries
EHS data verified by ERM. Social data (indicated by ) reviewed by PricewaterhouseCoopers. * Comparisons are with 2009 unless stated otherwise. ** Net profit excluding non-recurrent items after minority interests. *** Chemical Oxygen Demand an indicator used to test water quality. 36

Professor Lourdes J.Cruz, Biochemist, the Philippines. LOral-UNESCO For Women in Science 2010 Laureate For the discovery of conotoxins produced by certain marine snails that can serve as painkillers and pharmaceutical probes to study brain function.

ABOUT THIS SUMMARY


This summary covers the key elements of LOrals full Sustainable Development Report 2010, which is available online at www.sustainabledevelopment.loreal.com. The report covers all of LOrals operations for the year JanuaryDecember 2010. LOrals previous Sustainable Development report was published in June 2010. In preparing its report, LOral examined current practices and studied the recommendations of international institutions and specialist organisations such as the UN, OECD, European Commission and WBCSD. The Global Reporting Initiative (GRI) G3 Sustainability Reporting Guidelines have also helped guide this review of our sustainability performance. Following self-assessment, LOral considers that the online Sustainable Development Report 2010 meets GRI Application Level B. Environment, health and safety data has been verified by Environmental Resources Management (ERM). Social affairs data has been reviewed by PricewaterhouseCoopers Audit, as indicated by the symbol .
Published by the Corporate Communications, Sustainable Development and Public Affairs of LOral group. Photo credits: Abacapress (p. 34, p. 35), Anton Angeles (p. 31), Christina Archer (p. 23), Blueberries (p. 31), Alain Buu (p. 1, p. 16, p. 18), Stphane de Bourgies (p. 2), Bruno Gente (p. 14/15), Catherine Henriette (p. 1, p. 32), Richard Kalvar (p. 4, p. 10, p. 19, p. 22, p. 27, p. 30, p. 35), LOral/DR (p. 12, p. 26), Roine Magnusson/Getty Images (p. 20), Matteo (p. 11, p. 13), John Nollet (p. 34), Gaul Pawel/Getty Images (p. 18), Richard Peireira (p. 1, p. 24), Micheline Pelletier (cover), Picturegarden/Getty Images (p. 6/7), Pierre Raoult (p. 1, p. 28), Kristina Sazonova (p. 19, p. 21), Bertrand Stark (p. 1, p. 8, p. 11), Isabelle Walter (p. 12), X. Design, consultancy, copywriting and production: Flag www.flag.co.uk

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MORE ONLINE
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