Contemporary Issues in Accounting: A Case Study of L'Oreal

This article discusses the contemporary issues faced by L'Oreal, a leading cosmetics company, including product testing on animals and ethics. It also covers the company's policies on human rights and sustainability.

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CONTEMPORARY ISSUES IN ACCOUNTING
Student’s Name
Course Name
Professor’s Name
University Name
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Introduction
L’oreal is a company of cosmetics dealing with different products of skincare, perfume,
hair color, hair care, make-up and sun protection. The company has been dealing with beauty for
over a hundred years. It has over thirty-four brands and makes sales worth 26.06b euros(Parr,
2018).It has got employees from all corners of the world. Being one of the leading beauty
companies in the world has a chain distribution network to reach its customers worldwide. These
networks are mass market, departmental stores, pharmacies and drug stores, hair salons, travel
retail, branded retail and e-commerce (Parr, 2018). The company also has research and
innovation departments in order to reach its beauty aspirations and also reach the commitment of
sustainability by 2020. Its brands are Lancome, Biotherm, Cacharel, Ralph Lauren, Giorgio
Armani, Shu Uemura, Kiehl’s, Yves Saint Laurent Beaute.
Product testing on animals; the company has been accused by PETA (People for the
Ethical Treatment of Animals) as one of the companies that still test their products with animals.
This is because it failed to adopt a policy against animal test in ingredients and final products.
Another reason for this claim is that L’oreal still sells its products to China which still deals with
testing its cosmetic products on animals which are approved by law. For PETA, a company to be
termed ‘cruelty- free’ must not conduct, commission pay, or allow animal tests on their
ingredients and products anywhere in the world.(Daniel, Strickland, Allen, 2018). The chief
marketing officer also noted that the brands should not wait for the business to start going down
so as to start their innovations, but correct the mistakes they are encountering when it is still
strong(Schreppler, Lu, Buchmann, Motzoi and Siddiqi, 2018). The company is now taking
important steps to end product tests on animals. It has adapted to the policy of not to test
ingredients or final products on animals. The company has generated a lot of resources in

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research and development of methods which can replace the archaic method of testing products
on animals which are still used by some. It is using a lab-produced tissue to test the efficacy of
ingredients and tolerance to products before they go to the market. This has reduced the use of
live rabbits, mice and other laboratory animals in tests and experiments(Stephens et al.2011).
The company is also advocating the Chinese government to end the test of cosmetics on
animals(Holmes et al, 2017). However, the company has not been included in the list of cruelty-
free by PETA since it is still selling its products to China. The government relaxed some of the
company's provisions but still carries out tests on animals to some types of cosmetics. The
company admitted that some of the cosmetics it sells to China are required by law to be
tested(Devinney, 2009). It also pays the government to test its products on animals. PETA is
urging the company to withdraw or refuse to sell its products to China as other companies have
done until the Chinese market test on animals is no longer required by law.
L’oreal and Ethics; the world's most ethical companies is based on Ethics Quotient
(EQ)by the Ethisphere Institute. It has quantitative ways to assess the performance of a company
in an objective, consistent and standardized manner. Information collected sets a comprehensive
sampling of definitive criteria of key competencies. Scores are analyzedregarding; ethics
compliance program, corporate citizenship, and responsibility, the culture of ethics, governance,
and leadership, innovation and reputation(Devinney, 2009).When it comes to the code of ethics,
the company has a "Constitution" that guides them. It inspires the choices, action and their
everyday ethical principles on professionalism. This applies to all employees and subsidiaries
internationally(Haski-Leventhal,Roza and Meijs, 2017). Each employee has access to the code of
ethics either digitally or a printed copy on joining. The company was one of the first in France to
come up with the code of ethics. It is available in different languages. These ethics cover its

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activities in research, innovation and design of the products from manufacturing to marketing,
human resource to operations, administration and finance to sustainable developments,
communication, public affairs to digital. On the side of digital transformation, the company
needs specific expertise(Stephens et al.2011) and (Nghiem and Carrasco, 2016). That is
marketing specialist, community manager and audience manager. Each member has a personal
commitment to follow the code in letter and spirit. Key things the members have to remember is
that the principles are not optional and they should respect them because they will be evaluated
by not only what they do but also how they do it(Wickert, Vaccaro and Cornelissen,2017).
The company has also been ranked as the leading NGO on environmental performance.
It also has a high score in the fight against climate change, deforestation, and responsible water
management. In promoting standards for business ethics, it is the most ethical company in the
world and promotes gender equality(Schreppler, Lu, Buchmann, Motzoi and Siddiqi, 2018).
L’oreal is managing its sustainability goals with the same entrepreneurial spirit and ambitious to
its business goals(Schreppler, Lu, Buchmann, Motzoi and Siddiqi, 2018). The company has also
set new goals for the future. The company notes that there are still major challenges ahead and is
determined to overcome them. It is also keen on ensuring that its products are used more
responsibly by the people who buy them.
L’oreal policies; the company has an approach which entails respecting all recognized
international human rights. The international standards it must comply with are ILO Convections
which focuses on forced labor, child labor, rights to freedom of association, nondiscrimination
and collective bargaining. In circumstances where the local laws may contradict the international
standards, it seeks to bring awareness of different jurisdictions(Stephens et al.2011). The
company also favors partners who share their commitment to respect human rights which are

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known internationally and willing to end their ties with the business partners unwilling to do the
same. It also supports the actions of the public on health regarding skin cancer with their
initiative Active Cosmetics Division(Epstein, 2018).
The company is also focused on addressing human rights with their value chain. To the
consumers, it seeks to ensure that they choose the raw materials carefully with quality and
safety(Nghiem and Carrasco, 2016). L’oreal also respects the rights of its employees according
to therecognized international human rights. Their code of ethics covers the prohibition of forced
labor, sexual harassment or bullying, prohibition of discrimination, prohibition of child labor and
young workers, collective bargaining and respect for privacy and freedom of association. They
also support their employee’s wellbeing. To the workers and suppliers the company requires
them to practice transparency, remedy non- compliances and focus on continuous improvement.
Workers and clients should also adopt a similar commitment(Nghiem, and Carrasco, 2016). They
are also attentive to the rights of the women in their general Diversity policy. They recognize
their contribution to the continuous of humankind(Sarason, Y.A., 2018).
Governance, due diligence, remediation, and reporting. This policy is regularly updated
to reflect their continuous. The Vice president and Chief Ethics Officer oversee the
implementationofthe human rights. There are grievance reporting mechanisms that employees
use to report incidents of human rights abuse(Nghiem, and Carrasco, 2016). This calls for a
course of action when necessary. It prevents the issue from recurring again and looks for a
remedy to the individuals harmed. Commercial relations may also be broken in serious cases or
fail to approve a new partner(Stephens et al., 2011.).
Conclusion

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Loreal being a booming cosmetics and beauty company for all generations is eying
towards a bright future regarding product and customer satisfaction, research and technology.
The company is also keen to improve the social profile by a hundred percent that the products
that they put on the market require a radical paradigm change. Due to the challenge of product
testing on an animal, they have been going through the company is keen on the initiative to rule
it out completely with the progress in research they are making. They want the information
accessible to all consumers so that they can make their own informed choices.The company
notes that there are still major challenges ahead and is determined to overcome them. It is also
keen on ensuring that its products are used more responsibly by the people who buy them.

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