Hermès - Registration Document 2016

Corporate social responsability

Raw materials and suppliers

2.4.4 Suppliers monitoring Within the context of the Group’s monitoring plan, jointly led by the indus- trial department, the audit and risk management department (A&RMD), and the legal department, new concrete actions have been launched or planned, while others have been expanded. On the legal front, Hermès is formally asking suppliers for their support in complying with its corporate and regulatory responsibilities. TheGroup is also asking them to check their own suppliers, throughout their supply chain, to ensure that they are fulfilling their obligations. The contract clauses provide for the possibility of verifying that these undertakings are real through an operational audit. In terms of IT, there is a central platform. This tool makes it possible to share all supplier data throughout the Company. Its purpose is two- fold, hosting legal documents (agreements, commitments, etc.) from partners and providing an overview of revenue. With the support of an external firm, theGroup also carries out risk audits (EHS, corporate, etc.) with its partners. These audits make it possible to perform an on-site check of their commitments, ensuring that relevant regulations are being complied with, and verifying the real working condi- tions and well-being of their employees. These audits end with a shared understanding and an action plan, where applicable. Finally, the industrial department runs the network of purchasers for the House, which operates andmaintains the information system serving as the structure for these functions. It also carries out joint actions, such as creating industry questionnaires in order to do preliminary diagnostics on EHS compliance, implementing common rules to be used in filling out questionnaires for new suppliers, and organising the sharing of this knowledge through the entire network. Training is also prepared and delivered by and for this network. The training pertains to the purcha- sing policy of the Group, legal rules, and tools, but also relates to raising awareness around risk and how to evaluate it. The example of Tanneries As part of the division’s commercial relations with its subcontractors and hide suppliers, the industrial department regularly performs audits in order to check that theGroup’s requirements – notably in terms of quality as well as compliance with social and environmental commitments – are actually being respected. At the end of 2015, more than 40% of the partners had been visited. Over the last three years, 90% of them have been audited.

Footwear Waste disposal was entrusted to a new service provider at the end of 2016. Several new recycling solutions are being proposed. Logistics When handling products, each of the quality control agents wears a pair of single-use textile gloves. During the campaign to collect clothing car- ried out as part of Sustainable Development Week, a process to give a second life to these gloves was launched: they will be reused for other purposes during the processing activities of an external partner. Construction Since 2014 a proportion of the leather offcuts from leather goods workshops is systematically used to cover counters in all stores and arti- sans’ workbenches. In2015, the concept of thepop-up store, with re-use of furniture, was rolled out to Europe, the Americas and Asia. In 2016, window displays at the store in King of Prussia, Pennsylvania (US) were decorated using objects created with leather offcuts from France. Also in 2016, selective sorting and recycling of materials for stores or stands being dismantled after their useful life had ended was organised progressively to send the output to local recycling facilities. For example, the annual display stand of La Montre Hermès at the clockmaking fair in Basel, Switzerland, measuring approximately 1,000 m 2 , is rebuilt each year using 80% recycled structural materials as well as the technical equipment for lighting and the furniture from the previous year. The remaining 20% of used materials (carpet, flooring, linoleum) goes to local recycling facilities. Furthermore, in France the Group has also defined and implemented a methodology for recycling furniture that has reached the end of its life by sending it to the service industry, working together with green organisa- tions approved by theMinistry of Ecology and Sustainable Development.

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2016 REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

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