Hermès // CSR Extract 2023

RISK FACTORS AND MANAGEMENT RISK FACTORS

4.1.2.4 BUSINESS DISRUPTION ●

DESCRIPTION OF THE RISK s

POTENTIAL IMPACTS ON THE GROUP s

Hermès relies on a highly integrated French production method. The vast majority of our objects (74%) are made in France in exclusive in‑house workshops (over 55%). The Group’s ability to deal with a major industrial accident at one of its production, distribution or logistics sites (fire, flood), a natural disaster (tsunami, earthquake) or a major health crisis, is a key issue for Hermès.

The occurrence of such events on the production chain would impact the conduct of activities and would have consequences on the Group’s commercial and financial performance.

IMPACT PROBABILITY

RISK MANAGEMENT s

The management of industrial risks is carried out by the Group’s industrial department. It is based on EHS networks in both the Group and internally within the métiers , as described in chapter 2 “Corporate social responsibility and non‑financial performance”. The production sites are spread across the country and comply with French regulations, some of the most demanding in the world, thus reducing the risk of a complete shutdown. Regulatory changes are monitored in the countries where the sites are located. Hermès implements initiatives designed to protect its manufacturing assets, employees and the environment on all of the House’s production sites. The Group’s industrial department relies on the métiers ’ industrial departments and Site Managers to carry out internal diagnostics. Audits conducted by external specialists enable operational improvement plans to be drawn up. The recommendations resulting from these analyses in the areas of organisation, procedures, training or investment are subject to careful follow‑up. Safety‑related expenditures and investments are considered to be a priority when making budget choices. Two studies were carried out in collaboration with the Group’s insurer in order to quantify the financial exposures related to production and storage sites as well as strategic suppliers for the Leather and Silk métiers . These analyses identified the sites, subcontractors and critical suppliers on which the Group should target its actions in order to ensure activity continuity. The Leather study was updated in 2020 and the Silk update was finalised in 2022. In 2023, a study was also conducted on the supply chain to identify the physical and transition risks related to climate change, thus enabling the construction of resilience plans. During its audits, the audit and risk management department ensures that activity continuity plans are formalised and tested on the Group’s various sites and, where appropriate, issues recommendations. The process of coordinating plans for the entire Group continued in 2023. In addition, the Group safety department, in collaboration with internal experts, coordinates regular site visits. Dedicated action plans are implemented and monitored operationally by the sites concerned.

4

Strategy and operations

Industry

CSR

Regulatory compliance

Finance

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

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