PERNOD-RICARD - URD 2020-21

____ 4. RISK MANAGEMENT RISK FACTORS

Legal and regulatory risks III. 1. Regulatory risks a. Business ethics (1)

RISK IDENTIFICATION AND DESCRIPTION

POTENTIAL IMPACTS ON THE GROUP

Pernod Ricard is a decentralised company present in 73 countries where anti-bribery laws apply with potential extraterritorial effect. Examples include the US Foreign Corrupt Practices Act, the UK Bribery Act or France’s Sapin II law. The Group is thus required to take into account and rigorously monitor the risk of corruption and influence peddling, as well as to ensure such risks are taken into account in all relevant legal systems, in all regions of the world in which it operates. Moreover, Company employees interact, even to a marginal extent, with political and administrative officials. The nature of Pernod Ricard’s activity (production of wines & spirits enjoyed during a meal or in a bar), for which the motto is “Créateurs de convivialité”, means that inappropriate invitations could be issued to people in a position of public authority as part of a lobbying effort.

Recent regulations concerning the fight against corruption, influence peddling and compliance with business ethics expose Pernod Ricard to the risk of administrative and criminal sanctions, as well as a reputational risk in the event of non-compliance. In addition, certain corrupt practices, consisting in offering undue, excessive and/or inappropriate benefits, even without deliberate intention to obtain an undue advantage, are severely punished by the anti-corruption laws of three of the main countries in which the Group operates and provide for the criminal liability of the legal entities and natural and moral persons involved, accompanied in particular by heavy financial penalties for the Company as well as for the perpetrators of such practices. Reputational damage resulting from a judicial conviction or breach of the rules could damage the Company’s overall credibility, and an illicit or reprehensible act, even on a single occasion, could negatively impact all Group employees seeking to deliver a message to public authorities. This could in turn limit the Company’s ability to legally influence laws that are harmful to its business. It could also result in regulatory developments harming the Company’s business (tax increases, marketing restrictions, etc.). As a result, these regulations could together result in a significant increase in financial expense or a reduction in the Group’s activities.

RISK CONTROL ANDMITIGATION Pernod Ricard has conducted a mapping of the specific risks linked to corruption and influence peddling in order to identify and manage corruption and influence peddling risks inherent to the Group’s activities and specific to production and distribution processes, as well as cross-functional risks. The Group is also committed to promoting a “zero tolerance” policy through a clear discourse by the Group’s Management and relayed by the local management in affiliates. Specific rules for employees and stakeholders have been put in place. These are set out in the Group’s Code of Business Conduct, which includes a mandatory online course for all employees in order to better understand the potential risks of corruption and influence peddling and the behaviours to adopt in order to prevent them. Pernod Ricard has also acquired digital tools to support its compliance initiatives: Speak Up, a global system for reporting behaviours that are contrary to the Code of Business Conduct; Gifted!, an app dedicated to the declaration and validation of gifts and invitations; Partner Up, platform for assessing the risk of corruption and influence peddling of third parties with which the Group may work. In line with the development of legislation on these subjects and the expectations of stakeholders, the Group is also working on Human Rights and environmental issues. Since 2015, Blue Source, a mandatory process for all Pernod Ricard direct procurement, has been rolled out. This aims to ensure the integrity of the Group’s partners in these areas and supports them in implementing action plans when necessary. Potential partners assessed as not meeting the standards set are not selected to support the Group in its activities. Finally, the Group’s lobbying policy is governed by the Code of Business Conduct, which contains very specific provisions to prevent any reprehensible practices, whether unintended or otherwise. In France, Pernod Ricard files a disclosure statement with the HATVP (2) , the High Authority for Transparency in Public (3) Life and is a member of Transparency International’s Forum des entreprises engagées . The Group is also a joint signatory of a best practice guide on parliamentary lobbying expenditure published by Transparency International.

Note that this risk is also covered in Section 3.4 of the Non-Financial Information Statement. (1) https://www.hatvp.fr/fiche-organisation/?organisation=582041943 (2) https://transparency-france.org/entreprise/forum-des-entreprises-engagees-2 (3)

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PERNOD RICARD UNIVERSAL REGISTRATION DOCUMENT 2020-2021