HERMÈS - 2019 Universal Registration Document

CORPORATE SOCIAL RESPONSIBILITY COMMUNITIES: SUPPLIERS & PARTNERS

COMMUNITIES: SUPPLIERS & PARTNERS

2.6

Introduction Most of Hermès’ production is integrated, in line with its strategy of preserving unique savoir-faire and securing supplies. 61% of our objects are made in Hermès exclusive and internal workshops. Our ability to grow is, however, also linked to the retention and development of our suppliers and subcontractors, whose exceptional savoir-faire and future success will contribute to that of the Hermès Group and whose social and environmental practices must be irreproachable. The House’s subcontractors and suppliers are mainly long-term partners. As such, for direct purchasing (production purchases), the average length of trading relationships with the Hermès Group’s top 50 largest direct suppliers in 2019 was 19 years. They operate mainly in the Leather Goods division and Tanning and Precious Leathers division (tanneries, suppliers of metal parts and manufacturers) but also in other métiers such as silk and textiles. This stability is also true for small suppliers, some of which may have been working with the House for more than 50 years.

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 suppliers’ premises or at their own suppliers’ and subcontractors’ premises (tier 2), with a view to better understand all of our supply chains. The Hermès 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. In particular on subjects relating to human rights, which have their own section in an undertaking handbook that suppliers sign.

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

2.6.1

Maintaining the existing savoir-faire through close long-term partnerships with our suppliers, both local (France and the EU) and further afield. The vast majority of these suppliers have been partners of the Hermès Group for many years. Moreover, aware of its social responsibility, Hermès 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. Hermès’ policy is to cultivate its savoir-faire by supporting its suppliers in the long term. Hermès seeks excellence among various French craftspeople with traditional, scarce and precious savoir-faire. In so doing, it aims to safeguard and perpetuate our national artisanal heritage. Some creations also rely on savoir-faire that is scarce worldwide. The Hermès Group has a long-standing disability policy, developing partnerships with socially supported organisations (EA 1. , Esat 2. ) in France, and strives to strengthen these partnerships whenever possible with a target of increasing them by 20% per year. This is an opportunity for the House to support companies to improve their skills. The métiers are responsible for Group suppliers management and favour a pragmatic, long-term approach. It is supervised by two Executive Vice Presidents for direct and indirect purchases, respectively. The House’s supplier policy, which is explained externally by the two “undertaking handbooks”, is put into operational practices by the purchasers (who were specifically trained on 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. POLICY 2.6.1.1

average length of business relations with the main industrial suppliers 19 year’s

For direct purchasing, relations with our suppliers are based on proximity, facilitated by the fact that they are mainly based in France, or at least in Europe, good knowledge based on regular visits, and cultural proximity. To find a particular savoir-faire , in the quest for excellence, the Group also works with a few distant suppliers. These suppliers produce small volumes that are subject to special monitoring, in particular through audits conducted by an external third party at least once every three years, action plan monitored 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

EA: adapted company. 1. Esat: sheltered work establishment. 2.

2019 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

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