Sustainable beauty: L’Oréal successfully launches inaugural €3 billion bond with sustainability-linked tranche

The sustainability-linked tranche of L’Oréal’s inaugural bond offering aims to tackles GHG emissions and drive sustainable innovation in packaging.


Global French beauty leader L’Oréal benefitted from an exceptional market reception for its €3 billion inaugural public bond offering, which is composed of three tranches, one of which is sustainability-linked. The issue saw strong investor demand with an oversubscription of over 3.5 times the full offering. 

The sustainability-linked tranche is in the form of a €1,250 million 4.25-year sustainability-linked bond (SLB) to target notably emissions reductions and more sustainable packaging. The SLB underlines L’Oréal’s ambitious sustainability journey, the L’Oréal for the Future programme, by embedding three Sustainability Performance Targets (SPTs):

  • SPT 1: Reach absolute zero Scopes 1 and 2 GHG emissions of all operated sites by 31 December 2025
  • SPT 2: Achieve a reduction of “cradle-to-shelf” Scopes 1, 2 and 3 GHG emissions by 14% per unit of sold product by 2025 from a 2021 base year
  • SPT 3: 50% of the Group’s plastics used in packaging to be from recycled or bio-based source by 2025.
Sophie Javary

L’Oréal is setting a unique standard with an issue that has it all: materiality and ambition of the SPTs, commitment to short term positive impact, with a 2025 horizon for targets, and best-in-class vision.

Sophie Javary, Vice-Chairman, CIB EMEA, BNP Paribas

The bonds, which are rated AA (Stable) by S&P and Aa1 (Stable) by Moody’s, are published under L’Oréal’s new Sustainability-Linked Financing Framework, aligned to ICMA’s 2020 Sustainability-Linked Bond Principles. BNP Paribas acted as joint Global Coordinator and Bookrunner on the transaction.

L’Oréal’s decision to issue its inaugural bond with a sustainability-linked tranche underlines the Group’s global leadership on sustainability. It also demonstrates how circular economy KPIs are becoming increasingly embedded into capital markets products to tackle emissions across the whole supply chain and drive innovation in materials use.

Sustainability-linked bonds (SLBs) embed ESG-related key performance indicators (KPI) that issuers commit to, with additional payments to bondholders accrued if they fall short. Unlike green or sustainable bonds, SLB funds are used for general corporate purposes but they allow the issuer to anchor its medium to long-term sustainability goals in its financing.

The science behind sustainable beauty

L’Oréal has 35 global brands and operates across more than 150 countries. As part of its holistic approach to sustainability, L’Oréal Groupe has undergone an internal transformation process since 2019 to ensure it operates within planetary boundaries. This led to the Group setting 2030 objectives on climate, water, biodiversity, and natural resources in accordance with scientific experts.

An example of L’Oréal’s targeted measurement includes the introduction of SPOT (Sustainable Product Optimization Tool). The tool was uniquely developed by L’Oréal’s research teams to assess the environmental and social impact of a product across the design, production and packaging stages, and help reach its target of 100% of eco-designed products by 2030.

In January 2022, BNP Paribas supported the Korean subsidiary of L’Oréal on its first sustainable deposit. The cash management arrangement was a fixed-term deposit through which L’Oréal lodges its surplus cash with BNP Paribas, then deployed by the bank towards loans that support the achievement of the UN Sustainable Development Goals.

Sustainable finance towards a circular economy

Across multiple sectors, BNP Paribas has played a leading role in scaling up circular economy approaches through finance, helping corporate clients to address waste, material footprint, and innovate across their supply chains. In 2021, this included:

  • Food waste: Food retailer Ahold Delhaize’s €600m SLB targets a reduction of food waste by 32% in 2025 from a 2016 baseline, as well as emissions reductions.
  • Recycled materials:
    • Fashion giant H&M issued a €500m SLB, which included a target to increase the share of recycled materials used to 30 percent.
    • The world’s leading industrial thread company Coats finalised a $360m ESG-linked bank refinancing embedding a KPI on thread made from recycled raw materials.
  • Plastic footprint: Leading UK retailer M&S’ £850m sustainability-linked loan (SLL) targets several KPIs including the cumulative number of individual disposable units of plastic packaging that have been removed from its packaging portfolio.
Related news

Hear from Alexandra Palt, Chief Corporate Responsibility Officer and CEO of the L’Oréal Foundation, speaking to BNP Paribas CIB’s George Holst, Head of Corporate Clients Group, at the Sustainable Finance Forum 2021.