HERMÈS - 2018 Registration document

Corporate social responsibility

planet: raw materials

PLANET: RAW MATERIALS

2.4

The durability of Hermès’ business depends on the availability of the high-quality raw materials that are at the heart of the objects and are key to the House’s unique character. Hermès makes a conscious effort to respect, protect and work to achieve the sustainability of the natural resources that it needs, and of the environments in which these mate- rials are developed and enhanced. Our materials - leather, silk, cash- mere, wood, and more - are all natural and renewable. They undergo a thorough selection process detailed in specifications and complyingwith regulations and best practices, in a constant quest for the best quality and ethical integrity. For decades, theHouse’sapproachhasbeen to learnmoreabout its sup- ply chains, to share our requirements with our suppliers (often long-stan- ding partners), and to develop them to achieve the highest quality and thus prepare for future growth. Over time, the search for new materials, the rediscovery of savoir-faire , the emergence of new standards and regulations, the development of new products, and growth in volumes were all opportunities to enhance dialogue and improve practices. The model and values of craftsmanship guiding the House have always promoted the careful and respectful useof these rareandpreciousmate- rials. Minimising offcuts is already a way of ensuring the most appro- priateuse ofmaterials, but additionally, with leather, for example, smaller and larger leather goods can also be coordinated to maximise their use. In all métiers , the best channels are also identified to recover and recycle manufacturing offcuts. Securing high-quality supplies and responsible sourcing: the durability of Hermès’ business depends on the availability of the high quality raw materials that are at the heart of the products and are key to the House’s unique character. Policy The Group’s policy, which has remained constant for decades, involves getting to know our supply chains better, strengthening them to ensure the highest level of quality and ethical compliance, and developing them to prepare for future growth. The main challenges in materials concern the métiers of leather, silk and jewellery. Measures implemented and results Hermès attaches great importance to knowing its supply chains and the applicable regulations: The attention paid to raw materials begins with compliance with the regulations pertaining to them. This notablymeans legislativeprovisions: 2.4.1.1 2.4.1.2 2.4.1 CHALLENGE: SECURING HIGH-QUALITY SUPPLIES

respecting the Washington Convention (CITES), an agreement between states for the worldwide protection of species of flora and fauna threate- ned with extinction, and which can have an impact on the materials used in the Leather Goods division, tanneries, or some ingredients in perfumes. Each métier works to constantly improve the use of these rare and pre- cious materials, consuming only what is necessary and optimising use of the material Leather Leather is an animal product, specially tanned and made imputrescible, either in a mégisserie for lamb, sheep, and goatskin or in traditional tanneries for hides from cattle or reptiles. Hides used in leather goods are by-products of livestock farming. People sometimes refer to hides as the “5th quarter”, which suggests we can consider tanning to be the oldest recycling industry in theworld. Hermès uses only full-grain leather, the top part of the skin, without altering it in order to improve its appea- rance. To maintain consistency in the finished product it also only uses entire hides. Leather reflects the animal’s life. It may bear traces of inju- ries, health issues, like parasites, and other factors. You will only get a good hide from an animal that has been treated well. Hence, the Group’s demand for high quality helps to improve the industry by encouraging livestock farming methods that respect the animals’ welfare. All leathers used for manufacturing are directly purchased from tanne- ries, withno intermediaries. The vastmajority of theneeds are coveredby the House’s own tanneries, and by French, Italian, German and Spanish tanneries, all of which must adhere to European standards, which are some of the highest in the world for the industry. Hermès uses more than 35 different types of leather to make its goods, most of which come from calves raised in France (including our flagship “Box” leather, made using an English tanning technique), but also natu- ral cowhide (in our saddlery leather products line) and “exotic” leathers. These exotic leathers include the skins of crocodiles, alligators, lizards and ostriches. Raw hides from cattle and members of the sheep family, the raw mate- rials for tanneries, come exclusively from animals that were raised for their meat. Calfskin comes from abattoirs within the European Union, in practice almost exclusively in France. Hermèsworks together with its tan- nery and “megisserie” partners (Francemainly, and Europe), with a view to long-term cooperation. It has a dedicated annual budget to organise programmes to improve the quality of the industry, working together with farmers, their cooperatives and their professional associations. These partnerships with suppliers enable the Group to secure supplies of high quality raw hides, while managing growth in demand.

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2018 REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

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