HERMÈS - 2019 Universal Registration Document

OVERVIEW OF THE GROUP RISK FACTORS

RISKS RELATED TO CHANGES IN MAJOR GLOBAL ISSUES REGARDING CLIMATE AND BIODIVERSITY ●

1.11.4.1

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DESCRIPTION OF THE RISK s

RISK MANAGEMENT s

Hermès’ French craftsmanship model, through its presence across France, reduces its vulnerability to extreme events already experienced in certain parts of the world. The diversity of métiers and supplies (by type and by geography) is also a factor reducing potential impacts. The industrial affairs department, in coordination with the métiers concerned, and other Group departments (audit and risk management department, sustainable development department) factor in these issues in the strategic monitoring of operations, through diagnostics, such as on the issue of control of our carbon emissions and on the impact of climate change on our operations, and by contributing to the preparation of operational action plans (the work conducted in-house was rated B by the agency CDP). The Group is working to better understand the precise impacts on its operations of these potential risks and to be better prepared. In addition, it has undertaken an active greenhouse gas emission offset policy, as detailed in chapter 2 of this report. The Group works at different levels, under the coordination and active control of the industrial affairs department, and involves the main métiers of the House in an initiative aimed at improving the understanding of supply chains and developing operating practices in order to jointly develop the resilience of these channels. These measures are complemented by audits, which are carried out regularly by specialised service providers, or with the WWF on certain channels, in order to address in the best possible manner the risks related to these materials (alligators, cashmere, wood, natural essences). Action plans are then implemented. With a view to continuous improvement, these processes are reviewed on a regular basis and action plans are implemented. The mitigation and prevention mechanisms for these risks are addressed specifically on pages 112 to 120. The métiers , with the support of the industrial affairs and property department, are working on the optimised use of resources in our operations. Projects focusing on recycling and the circular economy have been launched with the métiers or the distribution network (see in particular chapter 2 of the report). RISK MANAGEMENT s

Major climatic deterioration (more intense natural disasters, substantial rise in temperatures, loss of habitats due to the rise in water levels and desertification). Change in regulatory requirements related to these issues (taxation, restriction of operations). POTENTIAL IMPACTS ON THE GROUP s Rapid changes could impact our supply chains, operations (production, logistics or distribution) and the behaviour of our customers.

RISKS RELATED TO AVAILABILITY AND JUDICIOUS USE OF NATURAL RESOURCES ●

1.11.4.2

DESCRIPTION OF THE RISK s

The Group seeks to secure quality supplies of natural and renewable materials, obtained while fully respecting biodiversity. The Group also pays particular attention to the impacts of climate change on its supply chains in order to ensure the durability of activities in a rapidly changing environment. The risk relates to access and availability of materials, as well as the conditions to procure them: social & environmental impact; and impact of their societal acceptability (animal welfare). POTENTIAL IMPACTS ON THE GROUP s Reduction in the quality and volumes of very high quality natural raw materials, increase in costs. Inappropriate management of waste or of the end-of-life of our products and materials could impact the Group’s reputation.

2019 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

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