PERNOD-RICARD - URD 2020-21

____ 3. SUSTAINABILITY & RESPONSIBILITY THE FOUR PILLARS OF THE GOOD TIMES FROM A GOOD PLACE ROADMAP

Impact on the Group’s strategy and financial planning

Climate-related risks and horizon

Potential financial impact and magnitude of impact

Type

Area of business impacted

Physical risks

Extreme Long-term risks: Extreme variability in weather patterns, such as frost, hail and drought, can affect the supply and quality of agricultural raw materials and, more broadly, their price. For example, price volatility might impact grains and grapes. Wine alcohol content might increase, and different parameters might impact wine quality. Changes in precipitation patterns can affect the groundwater reserves on which some production sites rely. This may ultimately impact the availability and quality of water. Chronic Long-term risk: The Group and its suppliers’ facilities are exposed to the risk of natural disasters (fire, hurricanes, flooding etc.).

Supply chain & Operations

High impact: The financial implications

To face extreme variability in weather patterns, the Group uses hedging to limit the extent of seasonal volatility due to climate factors and includes environmental factors in its Responsible Procurement Policy and its Procurement Code of Ethics (see subsection 3.3.2.5). Water management is a significant component of the Group’s environmental strategy (see subsection 3.3.3.3).

of agricultural supply chain disruption could be significant. It could lead to higher prices for raw materials.

Physical risks

Supply chain & Operations

High impact: This risk could lead to the loss of a strategic industrial site. The impact could result in a significant operating loss and therefore a sharp drop or prolonged shut-down in the supply of certain products. This might prevent the Group for meeting consumer demand. Low impact: Efficiency programmes can reduce operating costs and provide the Group with a competitive advantage.

Implementation of preventive measures and physical protection devices: audit of industrial sites along with insurers; establishment

of business continuity management systems.

Resource efficiency Short-term risk: Pernod Ricard’s exposure to future

Supply chain & Operations

Climate change is an important part of one of the key pillars of the Group’s S&R roadmap. The Group will continue to roll-out energy efficiency programmes (see subsection 3.3.3.2). The lower operating costs are factored into financial planning.

energy and tax regulations are accelerating the implementation

of energy efficiency programmes at its operational sites as well as in its supply chain.

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PERNOD RICARD UNIVERSAL REGISTRATION DOCUMENT 2020-2021