HERMÈS - 2018 Registration document

Corporate social responsibility

communities: suppliers & partners

COMMUNITIES: SUPPLIERS & PARTNERS

2.6

CHALLENGE: LONG-TERM PARTNERSHIPS AND WORK WITH SOCIALLY SUPPORTED ORGANISATIONS

Most of Hermès’ production is integrated, in line with its strategy of pre- serving unique savoir-faire and securing supplies. Accordingly, 70% of our objects aremade in-house. Our ability to grow is, however, also linked to the development of our suppliers, whose exceptional savoir-faire and future success will contribute to that of the Group. The House’s subcontractors and suppliers are mainly long-term partners. As such, for direct purchasing (production purchases), the ave- rage length of trading relationships with the Group’s top 50 largest direct suppliers in 2018 was 21 years within the scope of x These suppliers operate mainly in the Leather Goods division (tanneries, suppliers of metal parts andmanufacturers). This stability is especially true for small suppliers, with which our partnership may go back more than 50 years. For direct purchasing, relations with our suppliers are also based on proximity, facilitated by the fact that they are mainly based in France, or at least in Europe, which makes regular visits possible. For reasons of savoir-faire , in the quest for excellence, the Group also works with a few distant suppliers. For example, we can mention lacquer in Vietnam, cashmere spinning in Nepal, and woodwork in Indonesia. These sup- pliers produce small volumes, but are subject to special monitoring, in particular through audits conducted by an external third party every three years, action plan monitoring by senior purchasers, and regular visits by Hermès (at least once a year). This stability and proximity of relations with our partners enable us to establish long-term, close collaboration with them in several areas as part of the continuous improvement of our supply chains. Hermès is committed to providing long-term support for all our partners, and maintaining balanced relationships characterised by goodwill and high standards; we ensure that all our partners share and respect our social, environmental and ethics ambitions. We pay special attention to human rights and fundamental freedoms, working conditions (health, safety, working hours, wages, etc.) and the environment - whether at our sup- pliers’ premises or at their own suppliers’ and subcontractors’ premises, with a view to better understanding all of our supply chains. Aware of its social responsibility, the Group has also been working with socially supported organisations in France for many years for its direct and indirect purchases, and this practice is growing steadily every year. Accordingly, as part of the first Disability Agreement signed for 2018- 2020, Hermès has set itself the ambitious goal of increasing its use of socially supported organisations by 20% every year, and this target was achieved in 2018.

2.6.1

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Maintaining savoir-faire through long-term partnerships with local sup- pliers (France, EU) as well as more distant suppliers, and supporting socially supported organisations in France. Policy Hermès’ policy is to cultivate this savoir-faire by supporting its suppliers in the long term. Hermès seeks excellence among various French craftsmen and women with traditional, scarce and precious savoir-faire . In so doing, it aims to safeguard and perpetuate our national artisanal heritage. Some crea- tions also rely on savoir-faire that is scarce worldwide. This policy is based on two departments at the headquarters (direct pur- chasing and indirect purchasing) and decentralised purchasing mana- gers by métier . The Group has had a policy of developing partnerships with socially supported companies (EA 1 , ESAT 2 ) in France for many years.Through this policy for the disabled, the Group strives to strengthen these partnerships whenever possible, with a target of increasing them by 20% per year by the end of 2020. This is an opportunity for the House to support companies to improve their skills. In addition, theGroup develops long-termpartnerships with goodwill and high standards, in particular regarding quality, respect for the environ- ment, and social and ethics commitment. The management of the Group’s suppliers (in an environment where 70% of production is performed internally) is the responsibility of the métiers, which use a pragmatic, long-term approach. It is supervised by two Executive Vice Presidents for direct and indirect purchases, respectively. ItisbasedontheHouse’ssupplierpolicy(seeabove),whichisexplained externally by the “undertaking handbooks”, put into operational prac- tice by the buyers (who were specifically trained in the subject in 2018 at an ad hoc seminar) and verified by internal and external audits. Internally and externally, compliance with ethics, environmental and social regulations is mandatory. 2.6.1.1

(1) EA: Adapted company providing work to people with disabilities. (2) ESAT: Sheltered work establishments whose purpose is the social and professional integration of adults with disabilities.

2018 REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

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