HERMÈS - 2018 Registration document

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Corporate social responsibility

Business model

to craft an object, it is unthinkable to skip a step to save time. Each step is part of a continuum; they are all essential. This approach also serves to learn to complete what we have begun. This way of working has guided us and encourages us to implement responsible policies and practices in a collaborative approach, focusing on the quality of the end result, happily taking the necessary time, while taking account of the pace needed for sustainable change for employees, our partners and the natural ecosystems. This is how sustainable development echoes the House’s founding values. These values constitute a powerful engine for a family group that produces more than 70% of its goods in-house and therefore controls most of its value chain. Hermès’ corporate social responsibility (CSR) is the way in which the Group integrates social, environmental and econo- mic concerns into its activities and its interactions with its stakeholders on a voluntary basis. A STRATEGY OF CONTROLLED GROWTH The Group’s craftsmanship model is one of measured growth, in line with sustainable development requirements. Hermès crafts high-qua- lity objects in limited quantities. It’s a human-size company with 14,284 employees employees worldwide, including 8,846 in France. The attention paid to people is at the heart of the House’s business model, both those at its sites as well as partners and suppliers. Hermès is attentive to working conditions, respecting a balance in terms of diver- sity and stringently applying the fundamental principles of the United Nations andOECD.With thebulk of its operations inFrance, it contributes to regional development through the creation of long-term, high-quality jobs. Our supplies mainly consist of renewablenatural rawmaterials, obtained in ways that have a low impact on biodiversity. For example, since cattle hide is a by-product of livestock breeding for human consumption, the production of leather goods consists in the recycling and transformation of something that could otherwise be considered as waste. Our manufacturing activity , being manual, emits little pollution, and our craftsmenparsimoniouslymanagetherawmaterialstheyrendersublime through their savoir-faire . Leather Goods and Saddlery account for half of the Group’s sales, while the silk, textile (clothing) and accessories métiers generate one-third of the total. A dozen other métiers round off our revenue. Outsourcing is limited: more than 70% of Hermès objects are made in-house, a proportion which is particularly high for the luxury sector. Relations with most of our subcontractors – mainly based in France or other European countries – consist of long-term partnerships which are highly controlled in terms of quality, ethics, labour aspects and the environment. 2.1.2

While our products are made in France, they are distributed worldwide. Our distinctive approach in this area is the freedom given to store mana- gers to compose their own offerings as they see fit, during the four annual meetings held for the presentation of the new Hermès métiers’ collec- tions. This method makes it possible to meet local demand closely and reduce waste. Crafted from the best available materials using the best savoir-faire , the objects that meet Hermès’ high standards are, by nature, objects made to last. Most of them improve over time, as the patina and signs of use that mark their passage through time give them a unique character. Hermès objects are often passed on from one generation to the next, and can be repaired. Hermès, which is currently managed by the sixth generation of family shareholders, is aware of its social responsibility and strives to give back to the world part of what it gives to the Company. The development of production activities in France, where we have 42 sites, contributes to creating sustainable value in the country’s numerous rural areas. Developing in France (62% of our workforce) is a strategic choice, under- pinned by the conviction that there can be no creation of economic value without the creation of value for employees and society. Each site gives us the opportunity to fulfil our responsibility through local initiatives to improve our social and economic environment. Hermès also shows its generosity through the initiatives of its Fondation d’entreprise , founded in 2008 and provided with a five-year budget of €35.8 million (excluding skills sponsorship) (2018-2023, see section 1.8). IMPASSIONED WOMEN AND MEN Since 1837, Hermès has based its long-term project on the quality of the men and women who join the Company, often for a lengthy period of time (more than60%of the employeesworking for theCompany 10 years ago are still there). Participating in the collective adventure, they make a successful contribution to Hermès’ activities through their sense of belonging, their commitment and the ability they are given to develop every day thanks to the diversity of their responsibilities and the quality of management. With 14,284 employees worldwide, of whom62% are in France, Hermès is continuing to develop its creativity, craftsmanship and trade projects around diversified teams, comprising 68% women. Almost half of its employees work in the French production sector. With a presence in more than 50 countries, our Group provides close support to its managers so they can embody, on a daily basis, a res- ponsible management style, capable of conveying the House’s values and culture and a dynamic vision of continuous renewal. Relationships with its people are as important as economic success. Exercising enlightened leadership is not a matter for improvisation. Management is a demanding job, which can be learned through in-house training and by forging ties with other managers. It needs to be cultivated over awhole lifetime, through confrontation and experimentation. 2.1.3

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2018 REGISTRATION DOCUMENT HERMÈS INTERNATIONAL