HERMES_REGISTRATION_DOCUMENT_2017

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CORPORATE SOCIAL RESPONSIBILITY

RAW MATERIALS

RAW MATERIALS

2.4

All leathers used for Hermès manufacturing needs are directly pur- chased from tanneries, with no intermediaries. The vast majority of the needs are covered by in House tanneries, and by French, Italian, German and Spanish tanneries, all of whichmust adhere to European standards, which are some of the highest in the world for the industry. Hermès uses more than 30 different types of leather to make its goods, most of which come from calves raised in France (including our flagship “box” leather, made with an English tanning technique), but also natural cowhide (in our saddlery leather products line) and “exotic” leathers. These exotic leathers include the skins of crocodiles, alligators, lizards and ostriches. Raw skins 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, which in practice means almost exclusively abattoirs in France. Hermès works together with its tannery partners, with a view to long-term coo- peration, and 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. In the European context of farms that are mostly sustainable, our presence is in line with the practices of high-quality farming (a well-treated animal will have a nice skin), local incomes and contributes to the management of rural landscapes and territories. Exotic tanneries essentially use the skins of crocodilians. The vast majo- rity of the skins come from farms located in the United States, Africa, and Australia. All Hermès partner farms must scrupulously comply with the rules drawn up under the aegis of the UN for theWashington Convention, which defines protections for endangered species. Hermès requires that its partners meet the highest standards for the ethical treatment of alli- gators and crocodiles following recommendations by expert veterina- rians and local authorities such as United States Fish and Wildlife, the federal nature protection agency. These husbandry practices have also contributed to saving the species in the United States by repopulating alligators into their natural habitat. In addition to strictly complying with the Washington Convention, a study was conducted in 2016 by Hermès with the help of an international NGO to evaluate the social and environmental footprint of the supply chain for alligator skins in the United States Work continued in 2017 and a progress plan was established with this partner. In 2017, the house conducted a complete audit of the ostrich breeding sector (an animal raised mainly for its meat and feathers), which is used in the production of its leather goods. Conducted with a veterinary expert on the subject, and notably on questions of ethical treatment of animals, the recommendations were shared with the various stakeholders on the ground. It will be followed by an action plan in 2018.

The durability of Hermès’ business depends primarily on the future avai- lability of the high quality raw materials, which are at the heart of the products and are key to Hermès’ unique character. Hermès makes a conscious effort to respect, protect and work for the sustainability of the natural resources that it needs. Our materials are all natural and renewable. They are obtained with a view to respecting regulations and good practices, in a constant quest for the best quality and ethics. The Group has used an approach that has remained constant for decades: getting to know our supply chain better, consolidating them to ensure the highest level of quality, and developing them to prepare for future growth. Keeping craftsmanship close to its heart, the Group works every day to focus on optimising the use of rare and precious raw materials. Respect for raw materials obviously begins with Hermès respecting the regulations pertaining to them. This means legislative provisions: s to respect the Washington Convention or the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), another framework that can have an impact on the rawmate- rials used in the leather business, tanneries, or some ingredients of perfumes; s to combat the illegal exploitation of forest products, as stipulated in the Lacey Act in theUnitedStates or theEUTimber Regulation (EUTR). Leather Goods Leather is an animal product, specially tanned and made imputrecible, either in "mégisserie" for lamb, sheep, and goatskin or in traditional tan- neries for skins from cattle or reptiles. Hides used in leather goods are by-products of animal husbandry. People sometimes refer to hides as the “5th quarter ”, which means that tanning could be the most ancient recy- cling industry in the world. Hermès uses only full-grain leather, the top part of the skin, in an unadulterated condition. To maintain consistency in the finished product it also only uses entire hides. Leather reflects the animal’s life. It may bear traces of injuries, health issues, like para- sites, and other factors. You will only get a good hide from an animal that has been well-treated. Hence Group demand for high quality helps to improve the industry by encouraging animal husbandry that respects the animal’s welfare. 2.4.1 KNOWING OUR SUPPLY CHAINS, COMPLYING WITH REGULATIONS

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2017 REGISTRATION DOCUMENT HERMÈS INTERNATIONAL