PERNOD RICARD - 2018-2019 Universal registration document

4.

RISK MANAGEMENT Risk factors

Legal and regulatory risks III. Regulatory changes 1. Business ethics 1 a.

Risk identification and description

Potential impacts on the Group

Pernod Ricard is a decentralised company present in 73 countries where anti-bribery laws apply with potential extraterritorial effect. Such as, for instance, the US Foreign Corrupt Practices Act, the UK Bribery Act or the Sapin II law in France. In particular, recent regulations concerning the fight against corruption and the promotion of business ethics expose Pernod Ricard to sanctions and reputational risk should it fail to comply. In this context, Pernod Ricard is required to consider and strongly monitor the risk of corruption all around the world.

Company employees regularly interact with political and administrative officials. The nature of Pernod Ricard’s activity (production of wines and spirits enjoyed at the table or in a bar , and for which the Group’s motto is “C réateurs de convivialité ”) means that inappropriate invitations may be issued to people in a position of public authority as part of a lobbying effort. Such acts, even in the absence of deliberate intention to obtain an undue advantage, are severely punished by the anti-corruption laws of three of the Group’s main business countries, which provide for heavy pecuniary sanctions for the Company, as well as penal penalties for the people committing them. Reputational damage resulting from an official conviction or breach of the rules could damage the Company’s overall credibility, and an illicit or reprehensible act, even on a single occasion, could affect all Group employees seeking to deliver a message to public authorities. This could in turn limit the Company’s ability to legally influence laws that are harmful to its business. It could also result in regulatory developments harming the Company’s business (tax increases, marketing restrictions, etc.). As a result, these regulations could together result in a significant increase in financial expense or a reduction in the Group’s activities.

Risk control andmitigation Pernod Ricard has established an anti-bribery risk mapping tool in order to identify and manage risks inherent to the Group activities and specific to production, distribution and cross-functions risks. Pernod Ricard is also committed to a zero-tolerance policy as clearly communicated by Top Management, rules for employees and stakeholders and user friendly dedicated digital tools to support its compliance efforts (“Speak Up” – a global whistleblowing hotline, “Gifted!” an app accessible on smartphones in order to declare and authorise gifts and hospitalities – e-learning platform – MOOC – based on educational videos and quizzes in order to make employees able to identify and manage the risk of corruption). Furthermore, the Group's lobbying policy is guided by the various professional or institutional codes, and a training course on lobbying, part of which focuses on ethical issues, is open to all employees. Part of the course is delivered by Transparency International, of which Pernod Ricard has been a member since early 2013. In France, Pernod Ricard is a signatory of the joint declaration on lobbying presented by Transparency International’s corporate members and is also a joint signatory of a best practice guide on parliamentary lobbying expenditure published by Transparency International.

Note that this risk is also covered in Section 3.4 of the Extra-Financial Reporting. 1

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PERNOD RICARD UNIVERSAL REGISTRATIONDOCUMENT