Inclusive Sourcing Q&A

1. What is Inclusive Sourcing?

The Inclusive Sourcing program is L’Oréal’s inclusive sourcing program, launched in 2010. Each year, L’Oréal sourcing teams in partnership with suppliers dedicate a sustainable part of its purchasing volumes to concrete inclusive programs that provide employment and sustainable income. Moreover, the program aims to support also companies  that traditionally do not have access to large calls for tenders of multinational companies. 

The inclusive sourcing program involves, for example: fair trade producers, companies which employ workers with disabilities, social insertion enterprises or companies owned by minorities (when this is permitted by the national legislation).

The program covers all purchasing categories (raw materials, packaging, manufacturing, industrial equipment, points of sale and advertising in the sales area,  marketing services and general services) and has been deployed in all geographic zones where L’Oréal operates.

The ambition of the program is to associate economic performance with a positive social impact.

2. When was the Inclusive Sourcing program launched?

The program was launched in 2010. It is part of L’Oréal’s sustainability program. In June 2020 L’Oréal announced its most recent sustainability commitments for 2030 and inclusive sourcing is a tangible proof point for one of the three main pillars of the program - Empowering our business ecosystem.

3. Why did L’Oréal decide to launch the Inclusibe Sourcing Program?

Thanks to L’Oréal’s large number of purchasing activities and its many entities, all over the world, L’Oréal contributes to many local inclusive projects.

L’Oréal has decided to use its important sourcing power to have a positive impact to go beyond its direct footprint. We apply our Diversity, Equity & Inclusion strategy to our suppliers, who represent our extended ecosystem.

4. How Inclusive Sourcing projects are managed and implemented?

The program covers all sourcing categories in all geographic zones.

 L’Oréal purchasing teams and their suppliers identify and co-build inclusive sourcing projects together, with the support of the Solidarity Sourcing Global team of L'Oréal.

The suppliers are coached on the program and are invited to complete the supplier checklist to identify and develop projects through their activities for L’Oréal.

The inclusive sourcing is included from the beginning, in the definition of the purchasing strategy by the Sourcing Category Managers.

It is part of the buyers’ missions to develop inclusive sourcing projects in their categories. The program is fully embedded all along our purchasing process, our performance monitoring, and our supplier relationship animation.  For example, Solidarity Sourcing is part of the supplier selection, and it is a competitive advantage influencing business decisions, notably through social clauses in tenders, and it is 25% of the Sustainability Pillar at supplier evaluation annual review. 

Ultimately, the inclusive sourcing performance is managed exactly the same as economic performance.

5. What are the criteria to validate a Inclusive Sourcing project?

3 general conditions are necessary to validate a new inclusive sourcing project:

It complies with our fundamental criteria (incl. social audit exemplary, decent & safe working conditions).

The beneficiaries are working on the production of materials or services purchased by L’Oréal.

The project has a durable and substantial impact: at least 5 full time beneficiaries & 3 years business perspectives.

The program addresses a large panel of people who are recognized as under-privileged by independent referential.

The  program is audited by external auditors each year.

6. Are the suppliers evaluated on their commitments on the Inclusive Sourcing program?

Sustainability commitments are at the heart of our partnerships with suppliers and are an essential part of our extra-financial performance.

In this regard, sustainability commitments play a significant role in the choice of the Group’s business partners.

More broadly, suppliers are assessed and chosen on five essential pillars of performance: Quality, Corporate Social & Environmental Responsibility, Innovation, Supply Chain & Service, Competitiveness by L’Oréal’s purchasing teams.

These five pillars form the basis, both for daily and long-term performance and strategy. A global scorecard has been deployed for all purchasing fields and makes it possible to precisely measure suppliers’ results, in their compliance with their environmental and societal commitments.

Each of the five pillars is as important in the final assessment of suppliers with a weighting of 20% each. As for Solidarity Sourcing, it represents 25% of the Sustainability pillar.

The sustainability strategy and action plans of L’Oréal’s suppliers are fully integrated into their relationship with L’Oréal, in this regard, business review meetings are an opportunity to address this essential commitment. Furthermore, to facilitate the deployment of inclusive projects for its suppliers, L’Oréal has developed the Solidarity Sourcing hands-on guide.

7. How many beneficiaries does the program have?

In 2023, the Solidarity Sourcing program enabled 93,165 people to gain access to work or to keep a job and receive a decent income. Our objective for 2030 is to reach 160,000 beneficiaries. 

Solidarity Sourcing has 429 projects up and running in 67 countries, with the support of 86 third parties.

In addition, L’Oréal encourages its strategic suppliers to implement programs inspired from the Solidarity Sourcing program for their own purchases.

8. How do you count the number of beneficiaries?

The number of beneficiaries is calculated at the pro rata of L’Oréal business with the supplier in each Solidarity Sourcing project.

We ensure the individual impact by counting full time jobs of workers directly involved in the production of the materials and services we purchase. For farmers, an individual impact threshold is defined by a local expert and independent NGO to make sure of the substantial individual impact on their livelihood thanks to the fair price applied to the volumes sold to L'Oréal.

9.  Who, at L'Oréal, contributes to the Inclusive Sourcing program?

This global program, led by sourcing teams, constitutes a strategic pillar of  the sustainability program of the Group: L’Oréal for the Future. It is also embedded in the Diversity, Equity & Inclusion strategy of L’Oréal.

In close collaboration with suppliers, inclusive sourcing projects are managed by the sourcing teams. This program has offered the opportunity for the Group’s purchasers to enrich their jobs contributing to improving the lives of thousands of people involved in the production of the goods and services purchased.

The Inclusive Sourcing is completely embedded in the purchasing process, including in the definition of the purchasing strategy, in the tender (with social clause) and supplier selection, as well as in the supplier’s evaluation.

Even though, the Inclusive Sourcing is managed by the sourcing teams with suppliers and third parties, its success relies on the global involvement of all teams at L'Oréal. L’Oréal’s brands are notably key players in our Solidarity Sourcing program, by anchoring their actions in strong values and demanding ethical principles, as well as, making inclusive business choices on a daily basis, including sourcing.

10. How does L’Oréal choose the beneficiaries and on what criteria?

There are several criteria to launch a new inclusive sourcing project locally. People are recognized as vulnerable through independent referential.

Some of the projects are developed in partnerships with NGO’s or associations who identify the beneficiaries:

  • Fair sourcing: Fair Sourcing projects consist in empowering small farmers and improving substantially and durably their livelihood while producing L’Oréal volumes, with a minimum of 3 years business commitment. The most prevalent levers are supporting farmers to organize into cooperatives, learning sustainable and efficient agricultural practices, pre-financing of harvests, paying a fair price, offering a “premium” to finance community investments.
  • Women empowerment: Women empowerment in our Inclusive Sourcing program is carried out through activities where women are undoubtedly facing discrimination accessing work as well as activities where women represent the majority of the labor force.
  • People with disabilities: Inclusive sourcing is advocating for the inclusion of people with disabilities in the workforce involved at our suppliers in L’Oréal productions, all along the value chain. If there is a local regulation and the supplier either complies with it or shows continuous substantial improvements over the years, the project is eligible.
  • Senior workers: Whatever the local legal retirement age is, giving access to a decent and durable work to people hired who are more than 50 years old is eligible for inclusive sourcing.
  • Long-term unemployed: Long-term unemployment for Inclusive Sourcing is when workers are jobless/have been looking for work for 12 months or more.
  • Refugee & asylum seekers: Giving access to a decent and durable work to people who have a formal refugee or asylum status is eligible for Inclusive Sourcing.
  • Minorities
  • Veterans
  • Other socially and economically vulnerable people: All people identified as underprivileged by local governmental or non-governmental organizations are eligible.
  • Local employment in vulnerable zones: The project contributes to revive economically distressed urban or rural communities by supporting local employment.
  • Work integration social enterprise: Such suppliers are recognized as work integration social enterprises in their country. Their core mission is the social and professional inclusion of people away from employment:
    • Work integration social enterprises (WISE)
  • Suppliers recruiting people who just completed a WISE program and seeking work in the ordinary sector.
  • Small businesses
  • Diverse suppliers “owned certified” business (women, minority, LGBT, veteran, disabled): women-owned business, minority-owned business, LGBT-owned business.
  • Natural disaster: Suppliers having undergone a natural disaster threatening their activity and their staff retention (such as floods, hurricanes, tornadoes, volcanic eruptions, earthquake, tsunami) are eligible.
  • Specific local know-how: Companies with an official mark of recognition (economic heritage, specific know how, rare skills) as soon as it applies to the activities concerned by the L’Oréal productions are eligible.

The aim is to enhance their growth, ensure the development of employment and encourage their continued existence

11. What are the main benefits for the beneficiaries?

Beneficiaries gain access to employment, a decent revenue and/or improve substantially their main source of revenue, offering them stability, as well as inclusion by integrating them into the job market and through training opportunities.

12. How does L’Oréal work with beneficiaries? 

The beneficiaries are working with our suppliers’ and are involved in L’Oréal production of goods or services.

13.Does L’Oréal work with partners on Inclusive Sourcing projects?

L’Oréal is developing partnerships with inclusive organizations such as NGO’s, associations, governments, inclusive companies as well as other industries.

For example, we have joined in 2019 the initiative Business for Inclusive Growth (B4IG). A group of major international businesses has pledged to tackle inequality and promote diversity in their workplaces and supply chains as part of a G7 initiative led by French President Emmanuel Macron and overseen by the OECD.

Within this initiative, L’Oréal is leading the working Group Inclusive Value Chain.

In July 2019, L’Oréal also became a corporate member of WeConnect International, a global non-profit organization, to promote women empowerment and women’s leadership in our supply chain.

WEConnect International identifies, educates, registers and certifies women's business enterprises based outside of the U.S. that are at least 51% women-owned, as well as managed and controlled by one or more women, and then connects them with multinational corporate buyers.

Our partnership with WeConnect International completes our commitments and current results regarding responsible and inclusive sourcing, on topic of women’s economic empowerment.

14. Are there NGOs involved? If yes, which ones?

We have developed partnerships with several NGOs in order to develop our programs.

For example, all natural ingredients sourcing projects are co-built with the support of local NGOs who are in charge of implementing and monitoring each year the project with the local communities, L’Oréal and our suppliers.

We have also developed some partnerships with other NGOs dedicated to the support of vulnerable people (for example, Max Havelaar for Fair Trade, WeConnect for Women Empowerment, Redes Da Maré for vulnerable people in Brazil).

15. Is this program a durable one or a “one shot” for the beneficiaries? 

The program has a durable impact, and this durability criterion is compulsory for each project validation. The objective is to give access to work and improve the revenue of underprivileged people in the long term. This is the reason why “one shot” projects are not eligible for the program.

16. What are the main L’Oréal products that benefit from the program? What brands? 

The Inclusive Sourcing program covers all L’Oréal divisions and brands, from the sourcing of raw materials entering the product formula to the product packaging components, retail points of sale and promotional items as well as the services.

It also covers corporate activities such as facility management as well as professional services (meetings, conferences and exhibitions/events, temporary work, media and communication agencies).

The sustainable sourcing of our natural ingredients represents the main part of the beneficiaries. The acceleration of services represents future opportunities, for example in Supply Chain and IT Tech.

17. In what countries does the program exist? What are the top 5 countries in terms of number of beneficiaries? 

The program is deployed in nearly 70 countries where L’Oréal sources goods or services. 

The countries where most of the beneficiaries are located are the ones where we source our raw materials natural ingredients.

For example: Burkina Faso for Shea, Malaysia & Indonesia for the Palm Derivatives, Madagascar for the Centella, India for the Guar. 

18. Among the similar B2C companies (in cosmetics sector, but not exclusively), is L’Oréal the only one who has this type of program?

Other B2C companies implemented their own inclusive sourcing program, usually based on one social inclusion lever (for example, women empowerment or natural ingredients sourcing). 

This being said, L’Oréal’s Solidarity Sourcing program offers a novel purchasing approach due to its global, holistic nature:

  • It is deployed in all the geographical zones

  • It concerns all areas of purchases

  • It includes an environmental aspect for the projects that require it

  • All inclusion levers are engaged

It is completely embedded in our purchasing process and in our business with suppliers.

This makes the L’Oréal Inclusive Sourcing program a unique one and positions the Group as a thought leader on this topic among peers today.

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