Rating agency Standard & Poor’s (S&P) has given French cosmetics giant L’Oréal an ESG Evaluation of 85 out of 100.
S&P said the rating reflects its view that L’Oréal will continue to deliver a strong ESG performance via its comprehensive sustainability strategy and its leadership’s commitment to conducting business in an environmentally and socially responsible manner.
According to the rating, L’Oréal has a stronger environmental profile than peers, reflecting its early development of a science-based product lifecycle methodology. This has led to the company meeting ambitious targets and achieving above-average performance in greenhouse gas (GHG) emissions and waste.
S&P noted that L’Oréal wants to eradicate waste across its value chain; it has a leading role in the application of green chemistry principles, especially improving the biodegradability of products:
“While targets related to sustainable packaging are common, we view L’Oréal’s strategic partnerships with innovation firms, its bioplastic developments, and its co-founding (with Quantis) of the Sustainable Packaging Initiative for CosmEtics (SPICE) as setting the company apart from its industry peers.”
Equally, S&P noted, L’Oréal’s ambitions to achieve carbon neutrality in its scope 1 and 2 emissions by 2025, and reduce scope 3, demonstrate a best-in-class approach to emissions reduction:
“L’Oréal already has low emissions across all scopes, is less exposed than peers who have more carbon- intensive supply chains and is consistently in the lowest quartile of emissions performance at 166 CO2-e tons per $m of revenues in 2019 (well below the sector median of 200). It has achieved this without carbon offsets, which we view as evidence of strong mitigating actions.”
“To meet its 2030 scope 3 target, L’Oréal is engaging in supply chain monitoring, encouraging suppliers to adopt less carbon-intensive materials, and providing some financial assistance for on-site renewable power generation, actions we view as standing out among peers.”
S&P also noted that L’Oréal is committed to sourcing raw materials responsibly, including a group-wide zero deforestation policy:
“We view favourably the company’s short- and long-term biodiversity targets; it aims to have 100% of renewable raw materials sustainably sourced by 2030. Similar to peers, L’Oréal is a member of the Roundtable on Sustainable Palm Oil and is one of the few companies to source 100% certified palm oil. Yet, most of this comes from mass balanced sources, as opposed to segregated palm oil where traceability of trusted suppliers is higher.”
The full report is available here.