Hermès // 2021 Universal Registration Document

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RISK FACTORS AND MANAGEMENT RISK FACTORS

AVAILABILITY AND PROPER USE OF NATURAL RESOURCES ●

4.1.4.2

DESCRIPTION OF THE RISK s

POTENTIAL IMPACTS ON THE GROUP s

The Group seeks to secure quality supplies of natural and renewable materials, obtained while fully respecting biodiversity. The risk relates to access and availability of materials, as well as the conditions under which they are obtained: social and environmental impact and their societal acceptability (animal welfare).

Decrease in the quality and volumes of exceptional natural raw materials, increase in costs. Loss of some customers who choose not to purchase leather.

IMPACT PROBABILITY

RISK MANAGEMENT s The Group works in each of its métiers , under the coordination and control of the industrial affairs department, to gain a better understanding of the supply chains and develop operational practices in order to jointly build the resilience of these channels. This entire system is described in § 2.4.2 of chapter 2 "Corporate social responsibility". The approach undertaken aims to: 1. control the entire value chain with operational traceability and long-term partnerships with suppliers, partners and NGOs; 2. contribute to the development of the most demanding standards for responsible and sustainable management of supply chains: environmental footprint: biodiversity, water, energy, carbon, • social: working conditions, ethics, corruption, • societal: link with communities; • 3. support regenerative agriculture that is more respectful of nature; 4. set the highest standards in terms of animal welfare and ethics in our relationship with living organisms: a dedicated committee has been in place since 2019 and a policy was formalised in 2021; 5. create circularity: a committee, which includes all métiers , has been leading projects to innovate, reuse and recycle materials in order to prolong their life since 2020. Audits supplement this system and are carried out regularly with specialised service providers, or on certain channels with the WWF, in order to best manage risks. With a view to continuous improvement, these processes are reviewed on a regular basis and action plans are implemented. The content of these action plans is detailed in chapter 2.

O Strategy & operations

Industry O

CSR O

O Regulatory compliance

O Finance

342 2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL