THE FAIR TRADE SHEA BUTTER SUPPLY CHAIN 2013 REPORT

THE FAIR TRADE SHEA BUTTER SUPPLY CHAIN 2013 REPORT

contents p 03. Introduction Ingredients: the L'OCCITANE commitments p 09. A PARTNERSHIP THAT CONTRIBUTES TO THE DEVELOPMENT OF BURKINA FASO Economic impacts p 04. Key events in 2013 p 10. Social impacts A FAIR and SUSTAINABLE partnership p 05. Women's gold p 06. A historic partnership p 07. A focus on progress p 11. p 12. p 13. The action of the L OCCITANE Foundation Our local partnerships Recognition by the United Nations Development Programme CHALLENGES FOR THE FUTURE p 08. Fair trade certification p 14. Objectives for the next three years

INGREDIENTS: the L OCCITANE commitments Priorities: LOCAL, TRACEABILITY, SUSTAINABILITY and EQUITY L OCCITANE takes a committed approach to the supply of its ingredients and forges long-term partnerships with high added value, built on trust and respect. Priority is given to direct, integrated supply chains, in order to have control over the traceability and quality of the raw materials right up to their delivery. Since 2008, a dedicated team has guaranteed the quality of the Group's supplies and takes steps to develop sustainable supply chains, working directly with producers. 60 traceable supply chains Over 200 partners in France 23 multi-year contracts SHEA BUTTER L OCCITANE gives priority to local network for most of its supplies. The shea butter supply chain is linked to a longstanding North-South relationship. As the biggest purchaser of traditional shea butter processed in Burkina Faso, L OCCITANE has built up a true longterm fair trade industry that guarantees the creation of added value on site and enables local communities to reap the benefits. See behind the scenes of our shea butter network in Burkina Faso in this first supply chain report. The story of the L OCCITANE Group is intimately linked to plants, but also to the men and women who grow them. 3 Founder of L OCCITANE

KEYS EVENTS IN 2013 660 tons of fair trade shea butter were ordered this year. This is a new record! Exemplary company The United Nations Development Programme (UNDP) recognized L'OCCITANE as an "exemplary company" for its activities in relation to the shea butter industry. Shea butter platform Implementation of a 3-year action plan, "The Shea Butter Platform", focused on making improvements in three areas: mechanization, added value and the environment. NGO Rongead An agreement has been signed with the NGO Rongead, with the aim of reducing the environmental impacts of shea butter production (budget: C50K) Multi-year contracts Multi-year contracts have been renewed with the 5 unions of women's cooperatives, who gather and produce shea nuts and have a partnership with L'OCCITANE. 3 missions on the ground There have been 3 missions on the ground, to carry out extensive audits in the production centres. Coordinator A Burkinabé coordinator has been recruited with the aim of developing added value within Burkina Faso. 4

A tree SYMBOLIC OF LIFE Just as the olive tree does in the Mediterranean, the shea tree (or karite tree) plays a key role in the culture of West Africa. Hence the name "karite", which means "life-giving". In Burkina Faso, women use shea butter for cooking, as well as to protect and nourish their skin and that of their children. Also known as "Women's Gold", shea butter is a precious source of income for those involved in collecting the nuts and producing the butter. WOMEN'S GOLD Women, organized into cooperatives, are the only ones who know the secret to how this butter is made. They can use the income they earn from shea butter to pay for household needs, and also for the education of their children. 5

A HISTORIC PARTNERSHIP 1980 - Olivier Baussan discovers about shea butter on a journey to Burkina Faso. - The start of sustainable joint development with the women of Burkina Faso. 2004 - L'OCCITANE works to obtain ECOCERT organic certification for 3 cooperatives. - Industrial partnership begins. The story of L OCCITANE and the women of Burkina Faso began in the 1980s, when Olivier Baussan, founder of L OCCITANE, heard about shea butter for the first time on a journey to Dakar. He decided to postpone his return and meet the women who produce it. Since 1989, L OCCITANE has continued to work with these women in a spirit of sustainable joint development. From 2000 onwards, the growth accelerated and the volumes of shea butter purchased were multiplied by 7 from 2003 to 2013. - A partnership that goes back to the 1980s - Purchased directly in Burkina Faso - Development of a fair trade supply chain over the long term 2008 The down payment is increased to 80%. 2010 The first products with the Fair Trade label are sold in stores. 2013 L OCCITANE is recognized as an exemplary company by the United Nations Development Programme (UNDP) for its sustainable supply chain in Burkina Faso. 1994 - Launch of the Shea Butter Hand Cream - A 30% down payment is made on orders. 2003 The down payment on orders is increased to 50%. * "Association pour le développement de la coopération industrielle internationale" (an association of industrial corporations aiming to develop industrial partnerships) 2006 - Creation of the L OCCITANE Foundation, to group together all philanthropic activities to support women s entrepreneurship in Burkina Faso and the visually impaired. - L OCCITANE is awarded an Industrial Partnership trophy by ADECI*. 2009 2012 L OCCITANE works with the cooperatives to obtain Ecocert fair trade certification. Over 500 tons of shea butter ordered. 6

A FOCUS on PROGRESS A Shea Butter Hand Cream is sold every 3 seconds around the world! L OCCITANE is the biggest purchaser of traditional shea butter processed in Burkina Faso. 700 600 500 400 300 200 100 0 2003 2004 2005 x7 in 10 years 2006 2007 2008 2009 2010 2011 2012 2013 keys figures Quality has been improved, thanks to technical support and training in Burkina Faso. The acid value has been halved in 5 years. Since 2010, there has been an increase in technical support in Burkina Faso: - 3 missions per year by the L OCCITANE teams. - 2 Burkinabé correspondents are responsible for on-site follow-up and NGO has been approached for environmental support. - Total budget of almost H200K for 3 years. In 2013, orders increased by 20%, i.e. 660 tons of shea butter reserved. Shea butter purchases in tons 7 * ESR standard (Fairness, Solidarity and Responsibility), available at www.ecocert.com

FAIR TRADE CERTIFICATION In 2009, L OCCITANE professionalized its shea butter network and worked to obtain Fair Trade certification from ECOCERT Environnement in accordance with the ESR standard*. The women's cooperatives can now use this label to make their products more attractive to international clients, thus helping to secure their long-term emancipation. WHAT ARE THE GUARANTEES FOR PRODUCERS FROM THE SOUTH? Ethical: producers are assured of selling their produce at a guaranteed minimum price; workers are assured of a decent wage. Social: decent working conditions, a collective organization and the setting up of a development fund for the communities of producers. Health and environment: production methods that respect both natural resources and the health of producers and workers. Development: the approach involves a sustainable partnership with purchasers and gives greater autonomy to producers. * ESR standard (Fairness, Solidarity and Responsibility), available at www.ecocert.com Since 2008 Multi-year contracts have been signed with all the cooperatives of producers A fair price, which covers production, environmental and social costs, and leaves a margin for investment, is set each year by a working committee A minimum annual order is guaranteed In 2013 Despite the events in West Africa, close ties have been maintained with the cooperative unions, and for the first time, the annual working committee meeting was held via videoconferencing. Evaluation of the accounting management of the cooperatives completed Training related to the ESR standards given to all cooperatives An increase in the development fund from 2 to 3% of the price of the butter per kg 8

Clear economic IMPACTS L OCCITANE purchases shea butter that has already been processed by the women, rather than purchasing the nuts, in order to create value within Burkina Faso and ensure better distribution of wealth. over 80% 600 tons down payment on orders placed before the harvest (since 2008) Shea Butter ordered by L OCCITANE in 2013 9 + 18% vs MINIMUM WAGE FOR FARM WORKERS 3,5 times higher than at the local market A producer of fair trade shea butter produces, on average, 1 kg of butter per hour and earns 18% more than the guaranteed minimum wage for farm workers A woman can sell her fair trade shea butter to L OCCITANE at a price that is 3.5 times higher than on the local market

SIGNIFICANT SOCIAL IMPACTS 3% of the price of the butter is transferred to a community development fund, which helps to finance social and technical development initiatives. OVER 15,000 women collecting and processing shea butter are direct beneficiaries. OVER 200,000 People in rural areas indirectly impacted by the L OCCITANE orders. 5 unions of women's cooperatives in BROKEN DOWN INTO: 10 provinces OVeR 200 OVeR 40 cooperatives production centres 10

The L OCCITANE FOUNDATION IN BURKINA FASO The L OCCITANE Foundation focuses on two areas, with a budget IN BURKINA FASO of over H700K in 2013. Women's entrepreneurship The Foundation chose to extend the partnership between L OCCITANE and the women who produce shea butter by focusing its actions on women's entrepreneurship and particularly the three following areas: basic skills (through literacy programmes), technical and financial development (through access to management training and microcredits) and encouraging initiatives (by rewarding exemplary women's projects). Over 9,700 of these women have been given literacy lessons, training or microcredits, thanks to the support of the Foundation. The fight against avoidable blindness At present, almost 285 million people across the world are visually impaired, and yet 80% of these cases are avoidable. In Burkina Faso, the Foundation supports five NGOs, which are working to fight avoidable blindness through long-term projects. These include improving access to good-quality eye care by training local medical staff, offering vision-screening sessions that are available to all, and organizing awareness campaigns. In 2013, over 400,000 people will have received eye care in Burkina Faso through these programmes. 11

OUR PARTNERS Koudougou UNAPROKA Ouagadougou CLUB BIO Toussiana SOTOKACC Bobo-Dioulasso UGPPK Houet Leo FEDERATION NUNUNA Partner cooperative unions: The women group together in order to pool their expertise and optimize orders. Some of them gather the nuts, while others produce the butter. Foundation action areas 12

An EXEMPLARY industry Following a study by an independent body, the United Nations Development Programme (UNDP) decided to recognize L OCCITANE as an exemplary company for its action in Burkina Faso, within the framework of its 2013 "Growing Inclusive Markets" initiative. Today, this recognition of our action by the UN is proof of the value of the partnership set up with the women of Burkina Faso 30 years ago. The shea tree is what binds us to these women, but it has also paved the way for their economic emancipation." Founder of L OCCITANE Since September 2013, L OCCITANE has been a member of Business Call to Action (BCTA). This platform was launched by the UNDP and brings together companies that contribute to the Millennium Development Objectives set by the UN. 13

Challenges for the future: OBJECTIVES for the next three years The aim of the last L OCCITANE audit mission was to EVALUATE the situation of the cooperative unions in order to define THE CHALLENGES WE WILL FACE IN THE NEXT THREE YEARS: Achievements in 2013: 2 The 3 The The Mechanization project ENVIRONNEMENTAL project Added Value project Supply our partner production centres with equipment in order to improve the working conditions of the women and give a new boost to the supply chain 100% organic production by 2016 - Reduce to a third the amount of untreated discharged wastewater - Halve wood consumption - Re-use of 75% of residual waste Fill the missing links in the supply chain locally, so that 100% of the added value can go to Burkina Faso Evaluation of the needs of each production centre completed Agreement signed with the NGO RONGEAD (budget: E50K) L'OCCITANE purchased a plot of land in the town of Léo, to build a unit dedicated to diversifying production Two people have been recruited to develop and follow up the action plans relating to these ambitious objectives. 14

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