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

CONTEMPORARY ISSUES IN ACCOUNTING 1
CONTEMPORARY ISSUES IN ACCOUNTING
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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