HERMÈS - 2020 Universal registration document

RISKS AND CONTROL RISK FACTORS

CHANGES IN MAJOR GLOBAL CLIMATE AND BIODIVERSITY ISSUES ●

4.1.4.1

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. In accordance with the recommendations of the TCFD (Taskforce on Climate-related Financial Disclosures), the Group’s work to reduce risk is organised around four axes: 1. Governance at the highest level (Executive Committee); 2. A strategy aligned with the Paris Agreements: defossilisation: 100% renewable energy in our direct operations by • 2030, a 50% reduction in emissions by 2030 in absolute terms for • scopes 1 and 2, and relative (decoupling) for scope 3; 3. Operational risk management by: taking the subject into account in the updated risk mapping within • the Group, the implementation of a prospective analysis of climate risks for our • main activities by 2030 (leather goods, textiles), specific risk analysis for certain sectors (cashmere, silk, etc.); • 4. Monitoring of results and alignment with objectives, with a Carbon Assessment drawn up on the three scopes each year and the gradual implementation of indicators within the métiers and subsidiaries. As a reminder, 10% of the Executive Chairmen’s variable compensation is subject to CSR criteria, including industrial energy consumption (scopes 1 and 2 GHG emission performance). In addition, it is committed to an active policy of offsetting its greenhouse gas emissions (scopes 1 and 2). A biodiversity strategy, formalised in 2018, was launched and updated in 2020 as part of the commitment to Act4Nature international. It was reviewed by external stakeholders. It is divided into four areas: train all employees in biodiversity by 2025, • collaborate with recognised external stakeholders (WWF France, • ICFA, SAOBC), assess: measure the Group’s biodiversity footprint (IPBES • pressures) and its supply chains (leather, silk, cashmere, wood, cotton) by 2025, act through action plans commensurate with the issues and pursue • positive actions beyond the Group’s activities (Livelihoods, Fondation d’entreprise). The content of these action plans is detailed in chapter 2 of this report.

Climate change causes disruption of the climate system (heat, rising water levels, extreme events) and impacts on biodiversity and ecosystems. It also involves operational, regulatory and political transition issues (taxation, restriction of operations). The loss of biodiversity and the degradation of ecosystems threaten the sustainability of the natural resources from which the House’s materials are sourced, weaken the planet and disrupt the living conditions of populations. POTENTIAL IMPACTS ON THE GROUP s Rapid changes could impact our supply chains, manufacturing operations, logistics or distribution, as well as the behaviour of our customers.

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