PERNOD-RICARD - URD 2021-22 EN

Risk management Risk factors

III.

Legal and regulatory risks

1. Risks related to changes in regulations a. Business ethics (1)

RISK IDENTIFICATION AND DESCRIPTION

POTENTIAL IMPACTS ON THE GROUP

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 would mean that the ability to lawfully influence legislation that is harmful to the Group’s business sector would be hampered. 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.

Pernod Ricard is a decentralised company, established in many countries whose anti-corruption laws may have an extraterritorial impact. 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 business, whose motto is “Créateurs de convivialité”, means that inappropriate invitations may be sent to persons with public authority.

4.

RISK CONTROL AND MITIGATION

Pernod Ricard has drawn up a mapping of specific risks related to corruption and influence peddling, updated in 2022. This tool aims 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, also updated in 2022, and 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 adopted digital tools to support its compliance initiatives: Speak Up, a global reporting system for behaviour that violates the Code of Business Conduct; Gifted!, an application dedicated to the declaration and validation of gifts and invitations; Partner Up, a platform for assessing the risk of corruption and influence peddling of third parties working with the Group. 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 Life, and is a member of Transparency International’s Forum des entreprises engagées (3) . 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 2021-2022