HERMÈS - 2018 Registration document

Corporate social responsibility

communities: suppliers & partners

If the risk is confirmed, an audit will be carried out with the support of an external firm recognised for its expertise in environmental, health and safety issues. Audits are also required for strategic suppliers and for suppliers located outside Europe, which are all audited once every three years on average. These audits make it possible to perform an on-site check of supplier commitments, ensuring that relevant regulations are being complied with, and verifying the actual working conditions and well-being of employees. A feedback meeting is held at the end of these audits to share all findings with the supplier and define the corrective action plan to be implemented to prevent or mitigate the risks identified during the audit. The métiers ’ purchasers are responsible for monitoring each sup- plier’s progress in implementing these action plans. In keeping with the “know your supplier questionnaire”, these audits cover the following issues in particular:

2.6.2.3 Risk mapping The Group has produced a risk mapping, into which the mappings pro- duced by each of themainmétiers, distribution subsidiaries and support activities are fed. Each of thesemappings takes risks related to suppliers and subcontractors into account. In addition, to guarantee the thorough assessment of each supply chain, the purchasers within each métier formalise a risk mapping for each of their purchasing categories, assessing inparticular the risks of the entire supply chain with respect to human rights and fundamental freedoms, the health and safety of people, social aspects, the environment, and corruption risks. These risks are prioritised based on their criticality, on the one hand, calculated as the product of the impact on the Group or its stakeholders by probability of occurrence, and on the level of control, on the other hand. In 2018, the focus was turned to direct purchasing. With its 13 métiers, the Group recognises about 100 different direct purchasing categories, of which one-third were covered by a mapping formalised in 2018. The target for 2019 is to map 50% of the purchasing categories. Ensuring the durability of artisanal savoir-faire and maintaining our capacity in France are major challenges for several divisions, just like strengthening the traceability of raw materials throughout the supply chain. Conversely, since most suppliers are based in France, the risk of violating human rights and fundamental freedoms is considered very low. For each purchasing category previously covered in a risk mapping, the purchasers within each métier carry out a second-level risk analysis of suppliers. It aims to assess the performance (deliveries, quality, etc.) and financial independence of each supplier, but also the risks related to human rights and fundamental freedoms, the health and safety of people, and more generally employment conditions, as well as the pro- tection of the environment. Corruption risks are also assessed depen- ding on the country in which the supplier is based, and on its activity. If a risk is identified, an audit is organised to confirm or deny this risk, supported by a “know your supplier questionnaire” setting out the various topics included in the previously completed supplier risk ana- lysis framework. This “know your supplier questionnaire” was revised and expanded in 2018 to better assess respect for human rights and fundamental freedoms, employment conditions, in particular the health and safety of people, compliance with environmental regulations, and the risk of corruption and personal data protection. This “know your supplier questionnaire” is more generally used by purchasers as a supporting document when visiting a supplier, with a view to constantly increasing our understanding of our supply chains. Purchasers also use this questionnaire during pre-accreditation visits before starting toworkwith a newsupplier. These pre-accreditation visits are compulsory within the scope of direct purchasing. Procedures to regularly assess the situation of suppliers and subcontractors

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Health and safety

Social, human rights, ethics

Environment

Supplier audit

Confidentiality and security

Continuity plan

Finance, governance and integrity

For direct purchasing, the number of audits conducted in 2018 doubled compared with 2017 and will double again in 2019. For direct purchases, about 2,300 hours were spent on audits. The three major topics covered, which meet our obligations under the duty of care law, are: s s Environment (regulatory compliance, emissions/discharge manage- ment, wastewater management, waste management, chemical sto- rage, SD policy) s s Personal health and safety (fire prevention, risk analysis, PPE, trai- ning, medical checks, etc.) s s Social and ethical (child labour, forced labour, labour rights, discri- mination, gender equality, undeclared work, employment contracts, wages, working hours, overtime, etc.) Moreover, purchasers are requested tobe involved in theauditing of their suppliers by supporting the process upstream, participating in audits alongside the external firm, and monitoring the progress made in the action plans alongside their suppliers in a more formal manner. This will

2018 REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

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