Christophe Babule, Chief Financial Officer, explains how L’Oréal drives the creation of financial, social and environmental value in the Group’s day-to-day business.
At L’Oréal, we’re convinced that financial performance is inextricably linked to social and environmental performance. And that’s why our ambition is not only to be successful in terms of business, but also to be exemplary in corporate responsibility.
One number to sum up 2023?
The magic number is 37, which is the number of our global brands enriched by the recent acquisition of the iconic Aesop brand, the Group’s largest acquisition so far.
2023 in three keywords?
Determination, which drives our teams worldwide to keep our sustained growth pace. Confidence in the strength of the Group’s growth model and in its agility to respond and adapt to a world with ever-changing challenges and constraints. And cooperation with all teams in all Group entities and functions to build sustainable and responsible growth.
The beauty trend of the year?
More eco-friendly products: less packaging, recyclable or biodegradable materials and greener formulas. Take, for example, refillable products, which are now available within each of our Divisions and for many products. I hope refills will soon be part of consumers’ everyday beauty routines.
What progress have you made in Beauty Tech//New technologies for the beauty industry designed to enrich beauty science, making cutting-edge solutions widely available to deliver unparalleled beauty experiences.//?
First and foremost, our well-structured set of data. For more than a hundred years, L’Oréal has acquired a rich data legacy, covering all our Divisions, brands and regions. This year, for the first time, this data has been structured, catalogued and made accessible through our global Beauty Tech Data Platform. These data foundation supports the acceleration of our journey to gain insights and make better decisions to serve the specific needs of each of our consumers.
Tech is also more responsible. It’s more inclusive, to create bespoke beauty for each and all, as illustrated by Lancôme HAPTA, which was included in the accessibility category of Time Magazine’s “Best Innovations of 2023”. And it’s more sustainable, to create innovative products that help reduce our environmental impact, like the L’Oréal Water Saver showerhead.
How is L’Oréal prepared for the future?
L’Oréal is ready for the future thanks to its well-balanced business model and multipolar organisation, along with the diversity and appeal of its brand portfolio, which was recently enriched by the acquisition of the iconic Aēsop brand, enabling it to meet every beauty aspiration. All of this goes hand-in-hand with our digital leadership and ever renewed ability to seize what is emerging. L’Oréal has always made visionary choices, especially when it comes to its sustainable transformation. For almost 30 years, the Group has made sustainability a strategic priority. It is these forward-thinking choices that have helped us better prepare, along with our consumers, for a future that science tells us will be in major upheaval.
How are you advancing on L’Oréal for the Future objectives?
We’re working seamlessly right across the Group, building on a real collaborative mindset to identify the financial resources behind the L’Oréal For the Future targets and the levers needed to reduce our carbon footprint in line with our Net Zero pathway. The collective mobilisation of all entities within the Group – from brands and Divisions to countries and regions – keeps advancing our roadmap. And beyond our own transformation, one key area of progress is also on an industry scale: along with around 70 other members of the EcoBeautyScore Consortium, we’re working for more transparency to enable consumers to make more informed and sustainable choices.
How can finance catalyse change in our value chain?
At this pivotal moment, finance serves as a compass for making the right short- and long-term decisions. It’s also a driving force for collective change for the benefit of all. Profit is not the only currency; we’re changing its perspective and broadening its definition. Profit is not an end, it’s a means – to create positive value for our entire ecosystem, on human, social and environmental dimensions. Finance allows our brands to support their own sustainable transformations, from their product formulations to their packaging and their end-of-use. It also allows them to go further and give back, by creating engagement programmes that support non-profit organisations. Our iconic brand L’Oréal Professionnel, for example, launched its “Head Up” programme in 2023, to raise awareness of the mental health challenges facing hairstylists and provide them with free mental health resources.
And beyond?
Finance provides expertise and tools to determine investments in line with the Group’s strategy and commitments. For example, we invest through BOLD, our corporate venture capital fund, created five years ago as an innovation tool to prepare the future. We’ve now built a strong and agile ecosystem to support innovative startups and open innovation. All of this allows us to learn from new territories or services while increasing our capabilities in many fields, such as Green Sciences with Microphyt.
We believe that, as an industry leader, we have a responsibility to contribute to solving the world’s challenges. That is the goal of our impact investing strategy, to simultaneously generate positive social and environmental impacts, as well as financial returns. With the L’Oréal Fund for Nature Regeneration, for example, we can play an important role in tackling biodiversity loss with expert local partners. This year, we’ve financed restoration and adaptation projects in key areas affected by climate change, such as the Amazon Forest in Brazil and the Great Barrier Reef in Australia.
How do we finance a fair and equitable transition?
We believe paying a living wage is a primordial first step in ensuring a fair and equitable transition, and we’re proud of being a certified global living wage employer — but we’re not stopping there. We’ve extended our commitment beyond internal practices to our strategic suppliers. By 2030, 100% of their employees will be paid at least a living wage covering their basic needs and those of their dependents. We believe this approach addresses the interconnected nature of supply chains, by aiming to provide fair compensation throughout the entire production process.
A fair and equitable transition also requires giving back to communities in need, to reduce inequalities. With our two philanthropic funds, we aim to empower vulnerable communities to help build their resilience.
With the L’Oréal Fund for Women, we support frontline non-profit organisations that help disadvantaged women. Since 2020, the Fund has already provided support to nearly 240 organisations around the world. The Fund was extended in 2023 for another three years, with an endowment of €30 million, bringing its total endowment to €80 million. And with the new €15 million L’Oréal Climate Emergency fund, we support the most atrisk communities through partnerships with grassroots organisations, to help them prepare for and recover from climate disasters. This holistic approach underscores L’Oréal’s belief that responsible business practices and philanthropy are interconnected components crucial in achieving a sustainable and fair transition.
How are your teams working to meet L’Oréal for the Future goals?
We’re shifting from traditional P&L management to more comprehensive performance monitoring, driving a ROI mindset in all areas of the company. Financial rigour is necessary to measure our impact and meet our objectives and regulatory requirements. Our new Science-Based Targets Initiative (SBTi) decarbonisation trajectory and its associated roadmap will require us to be even more ambitious and collaborative in 2024. Because it’s only by working together that we can meet our 2030 objectives.