Hermès // CSR Extract 2023

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RISK FACTORS AND MANAGEMENT RISK FACTORS

4.1.4.1 CHANGES IN MAJOR GLOBAL CLIMATE AND BIODIVERSITY ISSUES ●

DESCRIPTION OF THE RISK s

POTENTIAL IMPACTS ON THE GROUP s

Rapid changes could impact supply chains, manufacturing operations, logistics or distribution, as well as customer behaviour.

Climate change causes disruption (heat, rising water levels, extreme events) and impacts on biodiversity and ecosystems. It also involves operational, regulatory and political transition issues (taxation, restriction of operations). The loss of biodiversity and the degradation of ecosystems threaten the sustainability of the natural resources from which the House’s materials are sourced, weaken the planet and disrupt the living conditions of populations.

IMPACT PROBABILITY

RISK MANAGEMENT s

To anticipate risks and ensure the resilience of its business model, Hermès has implemented a climate strategy described in chapter 2 “Corporate social responsibility and non‑financial performance”, § 2.5. Climate issues are managed by the Executive Committee, which has defined the Group’s main objectives. A Group Decarbonisation Committee ensures the consistency of the various actions according to the activities concerned (purchasing, production, transportation, real estate). All the entities concerned have included a decarbonisation target in their CSR roadmap. The analyses carried out by the Group cover both physical risks and transition risks (see chapter 2 “Corporate social responsibility and non‑financial performance”, § 2.5.7.1). With a strategy aligned with the Paris Agreements and validated by the SBTi (Science Based Targets initiative), Hermès is committed to reducing its scopes 1, 2 and 3 emissions, in a trajectory aimed at limiting global warming to 1.5 degrees Celsius. At the same time, adaptation measures are taken into account by activity and by country. Hermès has set up a decarbonisation programme for its own activities (scopes 1 and 2) and is committed to reducing scope 3 emissions. In particular, actions are carried out on major sources of emissions such as purchases, transportation, real estate and employee travel, as well as with its suppliers. The Group publishes its greenhouse gas emissions calculations annually, which are audited by a third party. Since 2018, the Group has implemented a formal biodiversity strategy which, through better understanding of the relationships between nature and its activities, enables Hermès to control its dependence on them (chapter 2 “Corporate social responsibility and non‑financial performance”, § 2.4.3). This strategy benefits from the eyes of stakeholders thanks to the mechanism set up by the Act4Nature International initiative. Biodiversity risks mainly concern Hermès’ supply chains for natural raw materials and, to a lesser extent, its production sites. Since 2020, Hermès has methodologically mapped 90 sectors in order to identify risks, including on the environment (water, deforestation, biodiversity, carbon). The great diversity of types (more than 35 different leathers) and geographical origin of Hermès' natural materials makes it possible to reduce its exposure to the occasional or chronic deterioration of certain ecosystems. The rollout of the biodiversity strategy is overseen by the Executive Committee and the Sustainable Development Board. It monitors four areas: biodiversity training for all employees by 2025; s collaboration with recognised external stakeholders via partnerships (WWF France) and sectoral (ICFA, SAOBC) or cross‑functional (Science Based Targets Network Corporation Engagement Program, Lab Capital Natural, Club B4B+) initiatives; s the measurement of the Group’s biodiversity footprint via the Global Biodiversity Score and SBTN targets; s sector analyses and the activation of action plans commensurate with the issues. s These action plans give rise to matrix monitoring at least once a year, horizontally by the entities or working groups in charge of the issues in the House, and vertically by the Sustainable Development Board and the central functions.

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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