HERMÈS - 2018 Registration document

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Corporate social responsibility

communities: suppliers & partners

Hermès Maison At CATE, the handbooks on undertakings with respect to non-disclosure and fair trading (C1) and for social, environmental and ethics policy (C2) were signed by 98% of suppliers. For our French suppliers, we also implement the obligations pursuant to the 2014 law on undeclared work aimedat combating unfair business competition. In addition, we conduct extensive inspections to ensure that suppliers and/or customs declara- tions indicating that the components purchased have been “Made in France” are accurate. At Beyrand, the purchasing and supply department takes care on a daily basis to ensure a good relationship is maintained with all suppliers. Since January 2018, the implementation of a Supply Chain coordination function has been strengthening the management of the supplier rela- tionship. The purchasing and supply department implements sustaina- bility and security action plans with the various suppliers. Furthermore, the system of having strategic and/or sensitive suppliers sign the C1 and C2 handbooks has continued. Today, they have been signed by 60% of suppliers. In 2018, Puiforcat strengthened its investment in the duty of care by including components such as human rights and fundamental freedoms, health, social aspects and security, and the environment into its supplier risk analysis. At the same time, the collection of legal documents within the scope of the law on undeclared work was entrusted to an external partner for greater effectiveness. The full inventory of our equipment at one of our key suppliers was taken, and a risk audit conducted. The results of this audit were shared with the supplier. Puiforcat continues to have its C1 and C2 handbooks signed before starting any new tra- ding relationship, and has obtained the signatures of more than 85% of suppliers. Construction Since 2017, the purchasing policy with our construction partners was gradually rolledout to subsidiaries.Witheachnew relationship, suppliers are asked to make an undertaking to comply with local regulations and accept the fair trading charters and social and environmental responsi- bility policies prior to working with the Hermès Group. The contractor’s social responsibility forces it to reach beyond legal obligations and to implement all approaches that would benefit society. An internal methodology for analysing and managing supplier risks in construction has been defined. We would like our partners to also drive this ambition. As such, our suppliers are invited to determine their “CSR” profile. Based on the importance of the risks identified, specialised third-party firms are requested to conduct an on-site audit. They will be responsible for determining action plans that will be shared with the suppliers for actions to be monitored internally by the Hermès Group.

2.6.2.6 Evaluation and control The Hermès Group has put in place an internal control and risk manage- ment system to better prevent and control the risks it has to face. As part of this system, the audit and risk management department conducted supply chain audits in 2018 and these will continue into 2019. These audits enable the correct implementation of the systemdescribed above to be verified. First introduced in 2005, self-assessment of internal control by the subsidiaries contributes to thedissemination of an internal control culture in the Group. This systemmakes it possible to assess the level of internal control and to understand to what extent operational and functional risks are properly addressed, as described in section 1.9.1 Internal control system in response to risks. Operational examples of risk management and mitigation procedures The following examples concern the supply chain challenges of the main métiers. The supply of raw materials is detailed in section 2.4.1.2 (tan- neries, etc.) RTW For example, in 2018, the use of two subcontractors working with a men’s ready-to-wear manufacturer was refused following an audit that highlighted significant discrepancies between these subcontractors’ practices and the House’s social and ethical values. Perfumes A study on securing the supply of packaging materials and articles was presented to the Group in the first half of 2018, which classified all sup- ply chains based on their level of risk. Following this study, an action plan was drawn up and the related investments made. For example, these actions concern theduplicationof certain suppliers of sensitiveproducts (duplication of bottle moulds) or securing the supply chains for certain sensitive materials (double sourcing). Silk Following the closing of various Chinese units, which were not environ- mentally compliant, a watch unit was established in house tomonitor the supply of several chemical products and sensitive dyes. This unit comprises the purchasing, processes and production depart- ments. The first corporate actionwas the establishment of a risk assess- ment document targeting sensitive products in terms of production and their shortage risks. This document enabled the establishment of an action plan suited to each site to minimise the risk: use of an alternative product, change in stock management, discontinuing the product, etc.

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2018 REGISTRATION DOCUMENT HERMÈS INTERNATIONAL