Solidarity Sourcing Q&A

The Solidarity Sourcing program is L’Oréal’s social and inclusive purchasing program, launched in 2010. Each year, L’Oréal sourcing teams in partnership with suppliers dedicate a substantial part of their budgets to cocreate inclusive programs and to open the Group’s calls for tenders to companies that employ people from vulnerable communities to allow them to have durable access to work and income. Also, the program is aimed at companies that traditionally do not have access to large calls for tenders of multinational companies.

The Solidarity Sourcing program involves for example: fair trade producers, companies which employ disabled workers, 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, Contract-Manufacturing, Promo&Retail, Marketing, Business services, Industrial & Property) 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.

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

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 purchasing power to have a positive impact to go beyond its direct footprint. We apply our Diversity & Inclusion strategy to our suppliers, who represent our “extended ecosystem”. This is the Solidarity Sourcing Program.

The Solidarity Sourcing Program covers all purchasing categories in all geographic zones.

L’Oréal purchasing teams and their suppliers identify and co-build Solidarity Sourcing projects together, with the support of the Solidarity Sourcing Corporate Team of L'Oréal.

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

The Solidarity Sourcing is included from the beginning, at the definition of the purchasing strategy by the Purchasing Category Managers. 

It is part of the buyers’ missions to develop Solidarity Sourcing projects on 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 Solidarity Sourcing performance is managed exactly the same as economic performance.

3 general conditions are necessary to validate a new Solidarity 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 Solidarity Sourcing program is audited by external auditors each year. 

The sustainability commitments and performance of suppliers play a significant role in the choice of the Group’s business partners.

In this respect, L’Oréal’s purchasing teams have defined five pillars of performance that make it possible to assess and choose suppliers: Quality, Corporate Social and Environmental Responsibility, Innovation, Supply Chain & Service, Competitiveness.

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 5 pillars is weighting for 20% of the final supplier assessment, and Solidarity Sourcing represents 25% of the Sustainability pillar.

The sustainability strategy and action plans of the suppliers are fully integrated into their relationship with L’Oréal and are therefore discussed at business review meetings.

To facilitate the deployment of projects, L’Oréal has developed Solidarity Sourcing hands-on guide for its suppliers.

In 2020, the Solidarity Sourcing program enabled 81,138 people from socially or economically vulnerable communities all over the world 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.

This represents an additional 10,226 people (+14%) compared with 2019 on a like-for-like basis. Solidarity Sourcing has 379 projects up and running in 57 countries, with the support of 72 third parties.

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

In 2020, 22% of these suppliers have thus applied a similar program. L’Oréal pledged that 20% of them would be involved in the project by the end of 2020: this goal was achieved.

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. 

This global program which is led by purchasing departments constitutes a strategic pillar of  the Sustainability program of L'Oréal: L’Oréal for the Future. It is also embedded in the Diversity & Inclusion strategy of the Group.

The projects are managed by the purchasing teams, in close collaboration with their suppliers.

This program has offered the opportunity for the Group’s purchasers to enrich their jobs by contributing to improving the lives of thousands of people involved in the production of the goods and services purchased.

As a result, in 2020, 165 buyers were involved in a Solidarity Sourcing project, an increase of 18% compared to 2019.

The Solidarity 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.

If Solidarity Sourcing is managed by Purchasing teams with suppliers and third parties, its success relies in the global involvement of all teams at L'Oréal. The Brands are notably key to drive inclusive choices since the prescription brief, and Solidarity Sourcing projects can be designed to fuel their Brand cause.

The objective for our Solidarity Sourcing program, was to reach 72,000 beneficiaries by 2020.

In fact, we overachieved our goal and reached 81,138 beneficiaries in 2020. Solidarity was the master word in the unprecedented 2020 Covid year. More than ever, it was meaningful to support the most vulnerable ones to overcome the crisis.

Our objective is to double the number of beneficiaries between 2020 and 2030. This is why we are targeting a total of 160,000 beneficiaries in 2030.

There are several criteria to launch a new Solidarity 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.

• Gender equity, women empowerment and LGBTQIA+: The aim of Solidarity Sourcing is to valorize the suppliers who show substantial and outperforming achievements in terms of women empowerment.
• People with disabilities: Solidarity 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 Solidarity Sourcing.
• Long-term unemployed: Long-term unemployment for Solidarity Sourcing is when workers are jobless/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 Solidarity Sourcing.
• Minorities: Are eligible to Solidarity Sourcing the minorities who are groups combining the following characteristics: less in number to the rest of the population of a state, in a non-dominant position, accessing a job they are recognized as usually discriminated against 
• Veterans: Who have a status delivered by the government are eligible for Solidarity Sourcing (eg: USA, UK, China)  
• 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 business: Are eligible to Solidarity Sourcing the independent small and medium enterprises (SMEs) “in a world of big companies” comparing the  different sourcing alternatives for this activity (notably in terms of number of employees, turnover and number of production sites)
• Diverse suppliers “owned certified” business (*women, minority, LGBTQIA+, veteran, disabled): Women-Owned Business, Minority-Owned Business, LGBTQIA+-owned Business.
• Natural disaster: Are eligible suppliers having undergone a natural disaster threatening their activity and their staff retention (such as floods, hurricanes, tornadoes, volcanic eruptions, earthquake, tsunami).
• Specific local know-how: Are eligible 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.

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

Beneficiaries have access to employment and a decent revenue and/or improve substantially their main source of revenue.

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

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.

Last July 2019, L’Oréal also became corporate member of WeConnect International, a global non-profit organization, to promote women empowerment and women 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% 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.

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). 

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 on the long term. This is the reason why “one shot” projects are not eligible for the program.

The Solidarity Sourcing Program covers all L’Oréal divisions and brands, from the sourcing of the raw materials entering in the product formula to the product packaging components, the retail point 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 program is deployed in 57 countries where L’Oréal operates. In developing countries we mainly have fair sourcing of natural raw materials, and Solidarity Sourcing also concerns developed countries where we source various materials, goods and services, supporting diverse economic activity and local employment for disadvantaged communities.

In 2020, the top 10 countries where most of the beneficiaries are located are Burkina Faso, Indonesia, Madagascar, USA, France, China, India, Senegal, Marocco, and Mexico. 

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