Modern Slavery

Introduction

Every day at The Estée Lauder Companies (we, us, our or ELC),¹ we make choices that we know will have impact far beyond our business, and that is a responsibility we take very seriously. As we approach our operations and our supply chain, we aspire to foster respect for people and the environment and to be a positive influence in every community in which we operate and from which we source.

As a global company, we comply with laws and regulations where we conduct business. We also look to those who provide us with services or goods (collectively 'suppliers') to operate in compliance with all applicable laws, including, but not limited to, supply chain integrity, employment laws pertaining to forced labour and human trafficking, child labour, minimum wages, overtime compensation, hiring and occupational safety.

This statement outlines our approach to respect human rights across our global operations and supply chain and recognises these international protocols:

United Nations Guiding Principles on Business and Human Rights
Universal Declaration of Human Rights

This Modern Slavery statement is made in accordance with section 54(1) of the UK Modern Slavery Act 2015, the Australian Modern Slavery Act 2018, the Canadian Fighting Against Forced Labour and Child Labour in Supply Chains Act 2023 and the California Transparency in Supply Chains Act, and outlines the actions undertaken in the fiscal year ended 30 June 2023, to identify and minimise risks relating to modern slavery in our business and enterprise.

Respect for Human Rights

ELC respects human rights across our global operations and supply chain.

The UN Guiding Principles on Business and Human Rights provide a framework to help us identify and prioritise our human rights risks and impacts. Proactive human rights due diligence is an ongoing process, and we have policies, processes, training and systems in place to identify, assess, monitor and mitigate or eliminate actual or potential human rights impacts.

We are required by the aforementioned Guiding Principles and the UK Modern Slavery Act 2015 to disclose publicly the steps we are taking to identify and eradicate forced labour and human trafficking in our supply chains. The following describes ELC’s relevant global commitments and initiatives.

Organisational Structure and Supply Chains

Business Structure

ELC is one of the world’s leading manufacturers, marketers and sellers of quality skin care, makeup, fragrance and hair care products. Established in New York in 1946, the company’s products are now sold in approximately 150 countries and territories under brand names including: Estée Lauder, Aramis, Clinique, Lab Series, Origins, M·A·C, La Mer, Bobbi Brown Cosmetics, Aveda, Jo Malone London, Bumble and bumble, Darphin Paris, TOM FORD, Smashbox, AERIN Beauty, Le Labo, Editions de Parfums Frédéric Malle, GLAMGLOW, KILIAN PARIS, Too Faced, Dr.Jart+, and the DECIEM family of brands, including The Ordinary and NIOD.

ELC has three main geographic regions: Asia/Pacific; Europe, the Middle East & Africa (EMEA); and The Americas. Each region is composed of one or more affiliates. Today we have affiliates in 50+ countries and territories.

Our products are sold on our own and authorised retailer websites, on third-party online malls, in stores in airports, in duty-free locations and in our own and authorised freestanding stores. In addition, our products are sold in brick-and-mortar retail stores, including department stores, specialty-multi retailers, upscale perfumeries and chemists and prestige salons and spas.

Employee Population

With over 60K+ employees worldwide, we recognise that in order to properly serve the communities in which we live and work, our workforce and products must reflect and represent this global diversity.

We strive to promote a safe, inclusive and diverse work environment where all employees feel welcome and valued. It is the policy and practice of this company to provide all employees and applicants for employment with equal employment opportunities without regard to race, creed, colour, religion, sex, gender, age, national origin, alienage or citizenship status, sexual orientation, gender identity or expression, marital, partnership or familial status, disability, genetic information, veteran/military status, domestic violence victim status, or any other characteristic protected by law. This policy applies to all company activities, including, but not limited to recruitment, hiring, compensation, assignment, training, promotion, discipline and discharge.

Supply Chain

Our Global Supply Chain includes a vast network of direct and indirect suppliers (collectively, 'ELC Suppliers') through which we purchase materials and services that are an integral part of our operations. Our direct supply chain is comprised of suppliers that directly contribute to ELC’s products, packaging and/or production, such as those that provide the raw ingredients for our product formulations, the materials that contribute to our packaging solutions and third-party manufacturers. Our indirect supply chain is composed of suppliers who sell us goods and services not directly used in the manufacturing of our products, such as creative partners, stores/visual merchandise, IT services and more. We aim to develop long-lasting, trusting and mutually beneficial relationships with a common basis of shared values and commitment to operating responsibly and ethically.

Our Global Supply Chain includes our world-class Manufacturing and Fulfilment, Distribution and Logistics, and Procurement and Planning operations. The collective team plans, crafts and delivers the highest quality products and packaging for our consumers around the world. The Global Supply Chain partners closely with Global Research and Development (R&D)/Innovation as an end-to-end supply chain, which encompasses the lifecycle of the company’s products – from inception to delivery to our consumers’ hands. Underpinning the supply chain are shared teams that ensure the quality, sustainability, safety and innovation that spans across all that we do.

We manufacture our products primarily in our own facilities in the United States, Belgium, Switzerland, Japan, the United Kingdom and Canada, while also leveraging global third-party manufacturing networks. We continue to evaluate our manufacturing facilities and processes and identify sourcing opportunities to improve innovation, increase efficiencies, minimise our impact on the environment, ensure supply sufficiency and reduce costs.

Sourcing Responsibly

We’re committed to helping our suppliers uphold the same ethical standards to which we hold ourselves accountable, within the context of local jurisdiction.

ELC sources ingredients and materials from around the world to manufacture our beauty products. Our teams work diligently to source ingredients responsibly and with attention to potential impacts on people and the environment. We aim to continuously strengthen our sourcing practices while remaining sensitive to the local communities in which we operate.

Our Responsible Sourcing team is part of our Global Procurement organisation and broader Global Supply Chain function. The team works closely with the Global R&D, Global Corporate Citizenship and Sustainability, Packaging and Legal functions. The team establishes, implements and monitors environmentally and socially responsible and ethical sourcing practices to ensure that performance is aligned with our goals and objectives. We collaborate with our brands, suppliers, industry groups and peers to continuously advance our practices.

As a condition of doing business with ELC, we expect our suppliers to honour our company values and our commitment to operating as a responsible and sustainable corporate citizen. In partnership with our suppliers and everyone we touch, we are committed to compliance with the law, ethical business practices, and fostering our heritage of respect for people and the environment and serving as a positive influence in the communities we serve and from which we source.

We aim to support businesses owned by a wide cross section of individuals, including ethnic minorities, women, the LGBTQIA+ community, veterans and people with disabilities through our procurement practices. Our objective is to help drive inclusive economic development and growth of diverse and small businesses in the supplier base.

Policies in Relation to Modern Slavery and Human Trafficking

Human Rights Policy

We have conducted a corporate-level Human Rights Assessment (HRA) based on the methodology outlined by the UN Guiding Principles on Business and Human Rights, the global standard for HRAs. Through the HRA process, we assessed human rights risks and impacts across our operations, including our corporate policies and procedures, as well as our supply chain, manufacturing and retail operations. The HRA has provided us with a framework to help identify and prioritise our salient human rights risks and impacts, and to identify key actions for improvement. Our Human Rights policy is available here: https://www.elcompanies.com/en/our-commitments/viewpoints/human-rights-policy

This policy applies to all ELC employees, locations, operating companies and employees of subsidiaries and joint ventures in which we hold a majority interest. We also expect our suppliers to respect human rights in their own operations and supply chains. We promote a culture of uncompromising ethics and integrity and put forth standards to uphold the principles and ideals that make us a global leader in prestige beauty. We have tailored approaches for various stakeholder groups that focus on key risks and opportunities.

Supplier Code of Conduct

Our Supplier Code of Conduct ('Supplier Code'), along with ELC’s Human Rights Policy, outlines our expectations for suppliers with respect to human rights and local communities, as well as the workplace. It is the foundation of our programme to source responsibly. The Supplier Code, which is based on internationally recognised standards, including the Universal Declaration of Human Rights and International Labour Organisation’s Conventions, is organised into three sections:

Engage in lawful and ethical business practices
Promote a respectful, fair and inclusive workplace
Provide a safe, healthy workplace and protect the environment and community

It covers areas including Confidentiality and Privacy, Fair Competition, Child Labour and Forced Labour, among others. To meet the needs of our diverse and global network of suppliers, the Code is available in several languages.

In conjunction with our standard purchasing contracts, the Supplier Code requires that suppliers be in full compliance with all applicable governmental, legal, regulatory and professional rules and regulations governing minimum wages, work hours, overtime compensation, hiring, occupational safety, forced and/or child labour. This policy sets forth the basic requirements we expect of suppliers, including vendors, service providers, independent contractors and consultants, as a condition of doing business with ELC.

The Supplier Code specifies that ELC Suppliers must not employ child labour. The term 'child' means any person employed under the age of 15 (or 14 where the law of the country permits) or under the minimum age for employment in the country, whichever is greater. ELC Suppliers employing young workers (workers above the minimum age of employment but under the age of 18) must comply with applicable laws and regulations regarding hours, compensation and must avoid conditions or restrictions that could be harmful to their morals, health, safety and development. These same expectations are upheld at all ELC owned and operated sites.

The Supplier Code also specifies that ELC Suppliers must not use or benefit from any form of human trafficking, or forced or compulsory labour of any kind, be it prison, bonded, indentured or otherwise. Furthermore, mandatory overtime is not permitted, and workers must be allowed to leave their employment after giving reasonable notice. Imposing monetary fines, withholding identity papers (such as passports), work permits, remuneration or requiring recruitment deposits or other constraints as a condition of employment, is not allowed.

Supplier Sustainability Guidelines

In addition to the Supplier Code, our Supplier Sustainability Guidelines provide suppliers with practical actions they can take to manage the environmental and social impacts of their own operations. These Guidelines help suppliers to build on the foundation and standards of the Supplier Code requirements and apply to its business sustainability and human rights best practices and continuously improve.

Supplier Sustainability Guidelines can be found here: https://media.elcompanies.com/files/e/estee-lauder-companies/universal/our-commitments/supplier-code-of-conduct/elc_supplier%20sustainability%20guidelines.pdf

Supplier Due Diligence and Risk Assessment

We take a risk-based approach to supplier due diligence. We conduct due diligence as part of new supplier qualifications and assess risk of existing direct and indirect suppliers annually. We risk-rank direct and indirect suppliers globally based on pre-established criteria, such as location of operations, type of goods or services being sourced, and potential impact to our business. Based on the risk ranking of the supplier, we conduct additional due diligence using third-party on-site audits or assessments, as appropriate. To help us determine country risk, we use a third-party provider that assesses each country based on its approaches to social impact and sustainability topics including environment, health and safety, social issues, corruption and human rights risks.

Effectively addressing the challenges related to sustainable sourcing requires collaboration between governments, civil society, local communities and private enterprise. As part of this process, we are committed to partnering with organisations that help us build and strengthen our sourcing strategies and participating in multi-stakeholder collaborative initiatives to ensure continuous improvements in our sourcing practices.

We monitor our suppliers to ensure adherence to the Supplier Code and pay careful attention to potential risks. We conduct risk assessments and perform due diligence on select direct and indirect suppliers. We also monitor supplier performance and implement corrective action plans as needed.

Notably, ELC works with ELC Suppliers, as appropriate, to ensure they fully understand the intent and requirements of the Supplier Code. ELC Suppliers are expected to make all reasonable efforts to communicate the Supplier Code, to their workers, as appropriate, and provide workers with the opportunity to ask questions and raise concerns.

ELC approves new suppliers or new manufacturing plants after suppliers meet the requirements set forth in the Supplier Code evaluation process, which requires all ELC Suppliers to sign the Supplier Code and applicable ELC Suppliers to complete an assessment or on-site audit. ELC then contracts with third parties to conduct on-site audits for ELC Suppliers that are selected based on criteria such as geography, type of material and impact to the business.

We also use EcoVadis, an online ratings service, to help us assess direct and indirect suppliers on their environmental, labour and human rights, ethics and procurement policies, practices and reported results. The EcoVadis tool ranks suppliers with numerical scores that reflect the maturity level of their sustainability programmes, practices and initiatives. We expect our direct strategic suppliers – those with the highest level of collaborative partnership – to achieve an 'advanced' EcoVadis score and other direct suppliers to achieve at least a 'satisfactory' score. We engage with direct suppliers to help them improve.

Internal Accountability and Training

We promote a culture of uncompromising ethics and integrity with standards to help us uphold the principles and ideals that make us a global leader in prestige beauty.

Accountability

We expect our employees and business partners to conduct business in compliance with applicable laws and regulations and with the high ethical standards and policies set forth in our ELC Code of Conduct ('Code') and Supplier Code.

Our Code helps to protect our reputation as an ethical corporate citizen. Newly hired employees are required to sign an acknowledgement that they have received, read and will comply with the Code. In addition, annually, employees above certain levels are required to complete code of conduct training and acknowledge the Code. From time to time, we conduct additional trainings on the Code for groups of our employees.

Remediation

We promote a speak-up culture and provide a mechanism for reporting suspected misconduct. The ELC Integrity Helpline (https://integrity.elcompanies.com) is a resource available for employees, suppliers, customers and other stakeholders to report conduct that may be illegal, unethical or a violation of our Code, Human Rights Policy or Supplier Code. Concerns may be reported to the ELC Integrity Helpline via telephone or web, 24 hours a day, 7 days a week and in many languages.

We have standard operating procedures to manage reports to ensure consistent investigation and response procedures across incident types and reporting channels. Serious violations are reviewed by the company’s Ethics and Compliance Committee, which oversees implementation of the Code.

We will not tolerate retaliation against anyone who in good faith raises questions or concerns about a potential violation of the law, our Code or company policies, or who assists in an investigation of a reported violation. Retaliation in any form is itself a serious violation of our Code and is strictly prohibited. Acts of retaliation or potential retaliation should be reported immediately. Anyone found to have retaliated against an individual will be subject to disciplinary action, up to and including termination of employment.

For further information about our wider sustainability efforts, please see our latest Social Impact and Sustainability Report found here: https://www.elcompanies.com/en/our-commitments/social-impact-and-sustainability-report

The Estée Lauder Code of Conduct

The ELC Code of Conduct ('Code') outlines our expectations for promoting a respectful workplace, engaging in ethical business practices and operating in a socially responsible and fair manner.

ELC employees are expected to conduct themselves at all times within the letter and the spirit of the Code. Employees are required to sign off on the Code upon hire and certain employees receive Code refresher training. We conduct training for managers, supervisors and other appropriate employees on topics related to our Code, inclusive of unconscious bias and inclusion and diversity training. ELC has policies, processes, training and systems in place to identify, assess, monitor and mitigate or eliminate actual or potential human rights impacts. Our Code of Conduct is available here.

E-Learning

We lean on the tools of collaboration and partnerships to advance our responsible sourcing practices, and that includes bringing our employees along on our journey. ELC launched 'Sourcing Responsibly at ELC', an E-learning programme available on our internal ELC Learning Hub.

The primary objective of this course is to equip our employees with a comprehensive understanding of Sourcing Responsibly at ELC. Through this learning journey, participants are introduced to the internal and external initiatives undertaken by the Responsible Sourcing team, all of which are aligned with the core principles of ELC’s Sourcing Responsibly Strategy.

¹ELC, we, us, and our refer to The Estée Lauder Companies Inc. and its subsidiaries. In the case of recently acquired subsidiaries or businesses (e.g., DECIEM), application of this policy will be subject to a transition period, the length of which will depend on the status and capabilities of the acquired businesses and/or entities. As part of an overall integration plan, ELC would bring non-shared suppliers (i.e. suppliers not already covered by ELC’s programme) into ELC’s programme. As such, there may be a gap in some elements of the programme as the onboarding and integration plans take place. During this transition period, DECIEM is reporting separately from ELC for the fiscal year ended 30 June 2023.