Hermès // CSR Extract 2023

CORPORATE SOCIAL RESPONSIBILITY AND NON ‑ FINANCIAL PERFORMANCE COMMUNITIES: SUPPLIERS & PARTNERS

2.6 COMMUNITIES: SUPPLIERS & PARTNERS

Hermès’ sustainable development is linked to the ability of its partners and suppliers to develop sustainably with regard to social, environmental and ethics issues, in particular human rights, fundamental freedoms, employment conditions, respect for nature and its biodiversity. More broadly, Hermès contributes to the deployment of responsible sustainable development practices through its influence, and by exercising a duty of care towards its partners as well as by promoting socially supported organisations and local economic activity, particularly in disadvantaged areas.

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POLICY A key part of its strategy of preserving unique savoir‑faire and securing supplies, most of Hermès’ production is integrated. In 2023, 55% of objects were made in exclusive in‑house workshops, and this share has remained stable in recent years. Our ability to grow is however also linked to the retention and development of our suppliers and subcontractors, whose exceptional savoir‑faire and future success will contribute to that of the Hermès Group and whose social and environmental practices must be irreproachable. These subcontractors and suppliers of the House are, for the most part, historical partners. As such, for direct purchasing (production purchases), the average length of trading relationships with the Hermès Group’s 50 largest suppliers in 2023 was 19 years. They operate mainly in the Leather Goods division (tanneries and manufacturers) but also in Textiles (HTH division) and other sectors (Jewellery and Shoes, notably). This stability is also true for smaller suppliers, some of which have been working with the House for more than 60 years. The Hermès Group has also been working with socially supported organisations in France for many years for its direct and indirect purchases, and this practice is growing steadily every year. The system of making purchases with a social contribution is now being extended to other players located, for example, in economically disadvantaged areas, whether urban or rural. It now includes suppliers in the social and solidarity economy. In 2017, Hermès thus set itself the target of increasing the volume of purchases made from organisations helping people with disabilities into work in France by 20% each year.

GOVERNANCE In terms of organisation, indirect purchases are supervised by a Group department, which pools certain items (such as packaging) and coordinates a network of dedicated buyers in the métiers, subsidiaries and central services. It also coordinates Group action plans on major topics, such as the elimination of single‑use plastics (§ 2.4.1.4). Direct purchasing ( i.e. related to production) is also supervised by a dedicated Group department which coordinates a network of buyers within the métiers and coordinates the process of analysing supply chains (§ 2.4.2), managing supplier risks and the supplier audit programme. Moreover, it also defines the Group’s purchasing policy as well as the CSR objectives for suppliers and partners (human rights and labour‑related rights, biodiversity, energy and carbon, water, plastics). Close attention is paid to the management of human rights issues. A dedicated section in a commitment handbook is notably signed by all of the Group’s suppliers (available in French and English). Hermès is pursuing a corporate project in which respect for ethics and good business conduct are the foundations and ensure responsible and sustainable performance. Traceability software is starting to be systematically rolled out for better monitoring and control of risks, for example within the Home and PAP H métiers for 2023. An Ethics Committee has been set up to collect and process alerts issued by internal stakeholders and within the value chain. This committee also issues advice and recommendations on the Group’s ethics culture (§ 2.8).

In 2023, the Group made progress on the major procurement issues, with the aim of making a long‑term difference through steady improvements with a significant impact. Among these, the selected elements below are particularly illustrative of the year for this section: CSR brief and supply chain brief communicated to suppliers, a total of 66 materials covered, including new material risk analyses and more precise requirements on decarbonisation issues; s rollout of the CSR self‑assessment questionnaire for direct purchases from suppliers, which can be completed on the Hélios digital supplier portal, online since 2023; s opening of the ethics whistleblowing line to our suppliers and external stakeholders (105 alerts); s in France, among our social value‑added suppliers (organisations helping people with disabilities into work, regional revitalisation, social and solidarity economy), which represent a total of €293 million in purchases, 44% are SMEs. s

2023 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL EXTRACT FROM 2023 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

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