Nov 18, 2010

To our stakeholders:

I am pleased to confirm that Oriflame Cosmetics reaffirms its support of the Ten Principles of the United Nations Global Compact in the areas of Human Rights, Labour, Environment and Anti-Corruption.

In this annual Communication on Progress, we describe our actions to continually improve the integration of the Global Compact and its principles into our business strategy, culture and daily operations. We also commit to share this information with our stakeholders using our primary channels of communication.

Sincerely yours,


Magnus Brännström

CEO

Responsible business practices are the key to Oriflame’s success and future growth. Whether in the day-to-day business
activities or the impact of the products, Oriflame is committed to achieving ever higher standards of quality,
social and environmental performance. From employees to consultants, paper sourcing to product development,
manufacturing to events, Oriflame believes its global reach and marketplace success comes with a duty of care to
the people involved and the natural resources it uses.

In our Code of Conduct we state:

"We believe that corporations have the same ethical responsibilityes as individuals. That is why we adhere to the Universal Declaration of Human Rights and the Global Compact Principles on Human Rights and Labour Standards

We act according to the following fundamental principles and beleifs:
- Everyone is to be given an equal chance. All employees are to be treated equally, fairly and with respect, regardless of race, gender, age, national origin, religion, sexual orientation or political affiliation.
- Oriflame strictly opposes child labour and nother forms of exploitation of childres and minority groups. Oriflame does not employ staff who are below the national minimum age for employment. Employment of underage workers by a supplier, either directly or as outworkers constitutes grounds for the termination of Oriflame's trading relationship with that supplier.
- Oriflame is highly committed to the safety of its workers and customers. We respect all international laws and regulations concerning employement principles such as minimum wage, working hour requirements and wage equality. Local and national standards of health and safety in the workplace are also adhered to.
- At Oriflame, we respect all international laws and regulations concerning information provided to, and cooperation with, work councils and unions. By promoting good relationships with the representatives of our employees, Oriflame aims to create an atmosphere of open communication and fair treatment
- We consider privacy as a fundamental human right. All business activities shall respect international and national privacy laws, employee data will be strictly confidential and all information data shall be guided by the principles "need to know" and "need to do".
- Oriflame is strongly opposed to and does not tolerate any form of sexual harassment, meaning all unwelcome behaviour of a sexual nature which violates the integrity of the employee.
- Oriflame is also strongly opposed to and does not tolerate "mobbing", meaning a situation in which one or more employees in the workplace show hostile behaviour and moral harassment towards another employee. Constand or repeated ignoring of a co-worker is also defined as mobbing. "

...and:

"Corporate Social Responsibiltiy
-We at Oriflame contribute to the communities in which we operate, not only by providing income opportunities through its distribution method, but also through charity programmes on a regional and global level, such as our involvement in the World Childhood Foundation and Livslust. For more information visit www. orfilame.com We are conintuously developing our social compliance programme with the goal of becomming even better corporate citizens. "

Oriflame’s view of corporate social responsibility includes applying a
responsible business model, which empowers people and provides them
with tools to enrich their lives. Becoming a sales consultant for Oriflame
provides financial opportunities from the first day, without risk. Apart from
providing employment and business opportunities, Oriflame contributes to
local communities by supporting good causes on a local, regional and global
level. As a responsible Company, it is what society expects from Oriflame
and it also reflects its long-term commitment to pursue ethical business
principles throughout its operations and to fulfil people’s dreams.

Oriflame philanthropy
For many years Oriflame has tried to support the most responsible nongovernmental
organisations and charities around the world. This includes
World Childhood Foundation, founded by HM Queen Silvia and
co-founded by Oriflame and the Af Jochnick Foundation, a relationship
which continues to this day. In order to reach its full potential, all of Oriflame’s
philanthropic work is now being gathered under one umbrella -
Oriflame Foundation.

The mission of the Oriflame Foundation is to help children and young
women through a wide range of educational initiatives, providing opportunities
for them to change their lives for the better and be empowered
to turn their dreams into reality. Efforts are focused on various activities
beyond traditional classroom-based education; from building social skills
and mentoring to supporting orphans and foster families. Examples of existing
projects are Oriflame’s Contemporary Girls’ Initiative in Turkey to
help young girls complete their secondary education, and social rehabilitation
for teenagers in Latvia through the Livslust Foundation.
Co-ordinating all the philanthropic activities from one platform, Oriflame
Foundation, is a way to improve communications and collaboration
between the different projects and to increase the overall level of community
investments across different markets. All employees and consultants
are encouraged to engage in local charity projects and each employee is
offered one day per year of paid leave to do volunteer work for good causes
in their markets.
Oriflame will support projects in different markets of operation through
the sale of regionally selected cosmetic products and specially-developed,
global accessories. This will be supplemented by local fundraising events
organised by Oriflame employees and sales consultants.

The key actions taken by our company to implement human rights policies, reduce risks and respond to violations include:

- We have incorporated CSR and Human Rights risks into our normal business risk assessment process, and are taking actions to manage them accordingly.
- We train / inform employees on human rights issues and the Oriflame policies and Code of Conduct via the Oriflame Academy Training programme
- We have a confidential email adress to which employees can email any concers they may have. The owner of this email adress is Corporate HR and emails sent to this adress will be treated confidentially and will not be forwarded to anyone without the approval of the sender. This email can be used when in doubt regarding any issues relating to Oriflame policies / code of conduct etc.

Oriflame monitors performance regarding human rights in numerous ways.

- CSR is a regular point at Executive Comittee meetings as well as on the annual budget and target discussion.
- When it comes to human rights and ethical issues among our suppliers, we conduct our own CSR audits of some of our highest risk suppliers (in particular accessory suppliers in China) in addition to the external audits already being carried out, to ensure that they comply with our ethical policies.

Our three core values within the company are Togetherness, Spirit and Passion.

Our five operating principles are;
- Respect people
- Focus on Customers
- Demand Quality
- Seek simplicity and Cost Efficiency
- Pursue Sustainabiltiy and Long-term Growth

In our Code of Conduct we state:

"We believe that corporations have the same ethical responsibilityes as individuals. That is why we adhere to the Universal Declaration of Human Rights and the Global Compact Principles on Human Rights and Labour Standards

We act according to the following fundamental principles and beleifs:
- Everyone is to be given an equal chance. All employees are to be treated equally, fairly and with respect, regardless of race, gender, age, national origin, religion, sexual orientation or political affiliation.
- Oriflame strictly opposes child labour and nother forms of exploitation of childres and minority groups. Oriflame does not employ staff who are below the national minimum age for employment. Employment of underage workers by a supplier, either directly or as outworkers constitutes grounds for the termination of Oriflame's trading relationship with that supplier.
- Oriflame is highly committed to the safety of its workers and customers. We respect all international laws and regulations concerning employement principles such as minimum wage, working hour requirements and wage equality. Local and national standards of health and safety in the workplace are also adhered to.
- At Oriflame, we respect all international laws and regulations concerning information provided to, and cooperation with, work councils and unions. By promoting good relationships with the representatives of our employees, Oriflame aims to create an atmosphere of open communication and fair treatment
- We consider privacy as a fundamental human right. All business activities shall respect international and national privacy laws, employee data will be strictly confidential and all information data shall be guided by the principles "need to know" and "need to do".
- Oriflame is strongly opposed to and does not tolerate any form of sexual harassment, meaning all unwelcome behaviour of a sexual nature which violates the integrity of the employee.
- Oriflame is also strongly opposed to and does not tolerate "mobbing", meaning a situation in which one or more employees in the workplace show hostile behaviour and moral harassment towards another employee. Constand or repeated ignoring of a co-worker is also defined as mobbing. "

... and:
"Diversity
-Diversity is a source of our strength. Embracing and actively working to sustain diversity, Oriflame aspieres to be a company that reflects the globally diverse audience whom we serve. In addition to hiring best talent, we beleive that our diversity of gender, nationalities and cultures leads to the creation of better perspectives, ideas and products. The diversity of our employees and partners serves as the foundation of better service for our customers and stakeholders all over the world. "

The key actions taken by our company to implement labour policies, reduce labout risks and respond to labout violations include:

- The Oriflame Academy Training programme which focuses on our Code of Conduct as well as all our HR policies, covering all relevant labour issues
- The confidential email adress to which employees can email any concers they may have. The owner of this email adress is Corporate HR and emails sent to this adress will be treated confidentially and will not be forwarded to anyone without the approval of the sender. This email can be used when in doubt regarding any issues relating to Oriflame policies / code of conduct etc.

Oriflame monitors performance regarding labour issues in numerous ways.

-When it comes to diversity, for example, statistics are taken regarding the top 450 employees (gender / nationality / training received etc. ) four times per year.
- Senior management review all relevant statistics / people concerns / labour issues etc. annually during the Global People Review
- When it comes to labout issues among our suppliers, we conduct our own CSR audits of some of our highest risk suppliers (in particular accessory suppliers in China) in addition to the external audits already being carried out, to ensure that they comply with our ethical policies.

Oriflame has always benefited from the ethics of its founding fathers. In
2010, the Board of Directors decided to deepen its focus on sustainability
by instigating a new corporate strategy for environmental responsibility.
The sustainability plan contains a series of commitments across four key
areas: sustainable sourcing, climate change, water and waste. It also reaffirms
the Company’s strong sense of social mission, from the wellbeing of
Oriflame employees and consultants to innovative community investment
partnerships and philanthropic activities. The overall purpose is to live up
to the expectations of customers, sales consultants, employees, shareholders,
and society in general, who all aspire to be part of a responsible business
with a positive environmental footprint

In 2009, Oriflame commissioned a life-cycle assessment of the Company’s
operations. The analysis spanned all phases of the life cycle, from raw
material extraction to production and disposal, focusing mainly on
the carbon footprint. The study identified Oriflame’s most significant
environmental impacts and serves as the foundation for the new Oriflame
environmental sustainability plan.
Oriflame’s new sustainability strategy aims to reduce environmental
impacts through a number of key priorities across four main areas: sourcing
of sustainable natural resources such as paper, palm oil and other ingredients;
reduction of CO2 and other greenhouse gas emissions; reducing water
consumption and emissions to water and; minimising waste throughout
the supply chain.

Oriflame is now rolling out an ambitious series of improvements designed
to embed sustainability principles into the core DNA of the business, guided
by a set of clear values, priorities and a number of short-term targets and
long-term goals spanning every part of the Company’s operations.
Oriflame’s sustainability plan is overseen by the Chief Executive and
Board of Directors. It will be regularly updated, with new commitments
added and existing standards raised. Oriflame’s goal is one of continuous
improvement, informed by a range of external stakeholders and partners.

Product Development
To generate meaningful performance improvements, sustainability needs
to be an integrated part of the product development process. When
formulating new products, Oriflame strives to design innovative products
using ingredients with the lowest possible environmental impact that are
ethically sourced. All Oriflame’s primary surfactants and preservatives have
a good biodegradability profile and scientific reports on environmental
issues are continuously monitored to ensure that action is taken to replace
ingredients or packaging materials wherever possible.
In addition to continuously improving the environmental profile of
existing product ranges, Oriflame will launch a new range of sustainable,
natural and ethically sourced beauty products during the coming year.
Sustainable Sourcing

The life-cycle assessment study revealed that a large proportion of the
environmental impact of Oriflame products occurs beyond the direct
scope of the Company’s operations. Sourcing of raw materials is therefore
a critically important impact area.

Paper and wood-based products are Oriflame’s number one raw material,
used in packaging materials as well as in publications such as catalogues.
In 2010, Oriflame started working in collaboration with the Rainforest
Alliance, a global conservation organisation, to develop a responsible global
paper sourcing strategy and set ambitious sustainability targets. The
ultimate aim is to ensure that all Oriflame paper and board packaging
and publications are sourced from credibly certified sources and/or from
recycled origins.

Oriflame uses palm oil as an ingredient in numerous cosmetic formulations.
Palm oil contributes to the economic development of the producing
countries. Nonetheless there are environmental pressures on its rapid
expansion to eco-sensitive areas. It is vital that production and use of
palm oil must be conducted in a sustainable manner based on economic,
social and environmental viability. In 2010, Oriflame joined the Round
Table on Sustainable Palm Oil (RSPO) and made a commitment to strive
towards buying all of the palm oil consumed in the Company’s products
from certified sustainable sources. On the way to achieve this goal, for
2010, Oriflame helped to fund sustainable palm oil production through
the purchase of Green Palm certificates covering 100 percent of its total
palm oil consumption.

Animal Welfare
Oriflame implements strong animal welfare policies. Oriflame cosmetic
products have never been tested on animals, and no Oriflame cosmetic
products contain ingredients that cause suffering to animals.

Factories and Suppliers
Oriflame manufactures about 60 percent of its cosmetics product volumes
in-house. Five Oriflame-owned factories produce skin care creams and
liquids, foundations, mascaras, lipsticks and lip-glosses, personal care and
hair care products as well as fragrances. A sixth facility is manufacturing
food supplements for the Chinese market. Increasing the sustainability
profile of Oriflame’s own facilities and operations is therefore a key priority.
Audits are being conducted at the current manufacturing sites for improved
profiles in regard to energy use, CO2 emissions, waste control and water
consumption. Each of these areas has ambitious targets to be met by 2015.
During 2010 many actions have been carried out in each of these areas.
For example, we have reduced energy use and water use by approximately
one fifth and the total effluent produced by approximately a quarter per
unit produced during the past year. As for the new production facility
under construction, Oriflame is actively working to pursue LEED Green
Building Certification, and is currently developing a strategy for greening
offices and conferences to engage employees and consultants in the Company’s
sustainability work.

External suppliers in Europe (including Russia), the United States and
Asia produce the remaining part of the product range, including cosmetics,
accessories and food supplements. Local sourcing of accessories for
sales actions and recruitment campaigns is particularly challenging as
the products are selected on short notice and the suppliers are constantly
changing, limiting control of content and working conditions. As a consequence,
the sourcing of the products for sales actions and recruitment
campaigns will be increasingly channelled through the central purchasing
functions. Moreover, supplementary audits are being conducted at accessories
suppliers in China, to ensure that they comply with ethical policies.

Logistics
Oriflame is currently implementing a supply and sourcing strategy for
logistic operations in addition to the existing ISO Cosmetic Good
Manufacturing Practice Standard (GMP), integrated in Oriflame’s Code of
Practice. The general strategy is to move sourcing of products and printing
of catalogues closer to the current and future Group Distribution Centre
facilities and major markets to improve transportation routines to reduce
lead times, transportation cost, CO2 emissions and energy consumption.
Oriflame favours sea shipping, truck freight and railway cargo and
attempts to limit air shipments to the extent possible. The packaging and
loading routines for ship containers are being reviewed to improve space
usage, thereby reducing energy consumption and transportation costs. As
for truck freight, demands have increased on the choice of vehicles, aiming
at the Euro5 standard for all road transport.
Oriflame’s strategy is to consolidate the warehouses, i.e. inventory group
distribution centres (GDCs) to eliminate unnecessary cargo, optimise
transportation cost and minimise inventory levels. Consultants are served
directly from the GDCs whenever possible. Previously, each market has
had stock-holding in local market warehouses.

Key initiatives to implement environmental policies, adress environmental risks and respond to environmental incidents include:

Environmental Training
Environmental Sustainability has been integrated at every level of the Oriflame Academy training for all employees

Environmental Responsibility
During 2009, a Senior Advisor on Environmental Sustainability, reporting
directly to CEO, was recruited to design and implement the Company’s
sustainability strategy. Moving forward, the responsibility of fulfilling
Oriflame’s ambitious commitments will sit firmly within every part of the
organisation. Oriflame is also exploring exciting new ways to engage employees
as well as 3.5 million consultants globally on these crucial issues.

Environmental Committments:
As part of its renewed sustainability strategy, Oriflame has unveiled a series of commitments across its key impact
areas. During 2011, implementation of these pledges will intensify as they are rolled out globally across every part of
the business. Oriflame will report regularly on its progress in meeting these commitments and will add new targets
and commitments in the months and years ahead.

- Palm oil: We will continue to pursue our goal of purchasing all our
palm oil from certified sustainable sources. During 2010, this goal was
approached through the purchase of Green Palm credits.
- Paper: By 2015, 75 percent of the wood fibre used in our publications and
our paper and board packaging will come from credible certified sources
and/or be of recycled origin. By 2020, our goal is 100 percent.
- Animal Welfare: We will continue to pursue our policy of never using
ingredients in our cosmetic formulations derived from dead animals or
which cause harm or suffering to animals.
- Packaging: By the end of 2011, all newly specified cosmetic display cartons
and leaflets for global products will be FSC certified.
- Greenhouse Gas Emissions: We will reduce greenhouse gas emissions
from our factories by 20 percent by 2015 (per unit produced based on the
2010 baseline).
- Greenhouse Gas Reduction Targets: During 2011, we will present a
comprehensive set of greenhouse gas reduction targets that will have a
wider scope than our current manufacturing targets and consider the
overall Oriflame footprint.
- Energy Use: We will reduce energy use at our factories by 15 percent
by 2015 (per unit produced based on the 2010 baseline).
Travel: By the end of 2011 Oriflame will roll out an online communication
tool to all our office-based employees and provide them with relevant
training in order to reduce travel.
- LEED certification: We will reduce future greenhouse gas emissions at
our new facilities by actively working to pursue LEED green building
scheme certification for all our new production facilities
- Responsible Water Use: We will reduce water use at our factories by
10 percent by 2015 (per unit produced based on a 2010 baseline).
- Biodegradability: In order to reduce the environmental impact at the end
of product life, we will pursue our existing policy with only use readily biodegradable
primary surfactants and conditioning agents in our cosmetic
formulations.
- Education: To reduce the environmental impact during the use phase and
at the end of product life, we will start to communicate with our more than
3 million consultants worldwide on environmental issues relating to water
consumption and pollution.
- LEED certification: We will reduce water use and emissions to water
at our new facilities by actively working to pursue LEED green building
scheme certification of all our new production facilities.
- Manufacturing waste: We will reduce waste at our factories by 10 percent
by 2015 (per unit produced based on the 2010 baseline).
- Recycled Plastic: We will increase the use of post-consumer recycled
(PCR) plastic in our cosmetic packaging materials. In 2011, all new
coloured PET bottles will specify PCR material and we will start to
implement the inclusion of PCR material in tubes and jars.
- Education: In order to encourage end-of-life recycling of our packaging
materials and catalogues, we will start to communicate with our more than 3
million consultants worldwide on environmental issues relating to waste.
- Facilitate recycling: We will increase the availability of recycling facilities
at our service centres worldwide as part of the roll-out of the upgrade of
our service centres commencing in 2011.
- LEED certification: We will reduce construction waste at our new facilities
by actively working to pursue LEED green building scheme certification
of all our new production facilities.

The sustainability plan contains a series of commitments across four key
areas: sustainable sourcing, climate change, water and waste.

Each of these areas are regularly discussed by the Executive Committee
during their monthly meetings as well as during annual budget and target
reviews.

Future perfomance according to our indicated commitments will be reported
on annually.

An inital focus are has included performing environmental audits at our
manufacturing sites for improved
profiles in regard to energy use, CO2 emissions, waste control and water
consumption. Each of these areas has ambitious targets to be met by 2015.
During 2010 many actions have been carried out in each of these areas.
For example, we have reduced energy use and water use by approximately
one fifth and the total effluent produced by approximately a quarter per
unit produced during the past year.

In our Code of Conduct we state:

- Legal Compliance: Wherever we doe business we comply with existing laws. In situations where local or national laws do not provie adequate guidance, Oriflame applies its own policies and procedures.

- Corruption and Bribery: Oriflame adheres to the UN Global Compact Principle 10; "Busienss should work agains corruption in all its forms - including extortion and bribery". All forms of compensation to external parties shall refer ontly to justified products or services. Gifts and other favours as elements of expected hospitality must not exceed local customs and must be in line with local laws.

- Outside business interests: Engaging in business with any firm that is owned / managed by or employes an Oriflame employee or a close relative of an Oriflame employee, constitutes a conflict of interest. Holding an undisclosed financial interest in any firms that is doing or seeking to do business with Oriflame, or that is a competitor of Oriflame, constitutes a conflict of interest. However, ownership of less than one percent of securities of a publicly traded company shall not be deemed contrary to this policy.

- Communications: We strive to be transparent, accurate and proactive in our communications. The people with whom we are interacting should have confidence in us and find our communications reliable, trustworthy and correct. We want to show that we are a credible, open, honest and responsible company.

- Independent Sales Consultants: There are also separate rules for the conduct of Oriflame Independent Sales Consultants. It outlines a set of principles for proper business behaviour; being honest and truthful, treating customers in a fair, thoughtful and responsive manner, demonstrating high standards of integrity and responsibility, not marketing products other than Oriflame products, not selling to any retail outlet and respecting local laws and regulations.

All employees receive the Oriflame Code of Conduct
If in doubt regarding any issues in the Oriflame Code of Conduct employees are encouraged to confidentially email to a separate email address. The owner of this email adress is Corporate HR and emails sent to this adress will be treated confidentially and will not be forwarded to anyone without the approval of the sender. This email can be used when in doubt regarding any issues in the Oriflame Code of Conduct.
Training regarding the Code of Conduct and Oriflame Policies are an integral part of the Oriflame training system, The Oriflame Academy. A whole separate session on teh Code of Conduct is held as part of this training.
Governance and anti corruption issues are ultimately owned by our CEO, but in practice sit under our CFO.
Oriflame is a member of the Direct Selling Association (www.dsa.org) where our CEO is vice chairman, who work to promote ethical business practices in the direct selling industry.

Compliance and Non Compliance Procedures
Reporting Procedures: Conduct or actions that are, or may for good reasons be perceived as, infringements of National Laws or the Oriflame Code of Conduct, are to be reported. Employees are encouraged to report any such conduct or action to their superiors, or, if the superior is involved in the situation or will not act upon it, to the next level in the organisation. We expect superiors/ managers to treat reported matters seriously and in compliance with Oriflame's policies and values. If employees are in doubt about the interpretation or application of any law or regulation, they are encouraged to contact the Corporate Legal Department. In accordance with the Code of Conduct, no one will be dircriminated against or punished for reporting, in good faith, actual or suspected infringements.
Employees are also able to send confidential emails to a separate email adress. The owner of this email adress is Corporate HR and emails sent to this adress will be treated confidentially and will not be forwarded to anyone without the approval of the sender. This email can be used when in doubt regarding any issues in the Oriflame Code of Conduct.