A HUMAN-DRIVEN COMPANY 1 POLICY GOVERNING THE This exercise is conducted on an ongoing SUPPLIER RELATIONSHIP basis with the procurement teams, and Our approach to working with suppliers is requires, at a minimum, tracing the value- governed by our responsible-sourcing policy. adding activity back to the last transformation Based on relevant international obligations stage. Based on our risk-assessment approach, and principles from the United Nations and we have identified where there are areas of the International Labour Organization (ILO), actual and potential risk with a small number this policy sets out our expectations and of our suppliers from a business dependency, requirements regarding issues related to CSR, and/or reputational perspective. labor and human rights, the environment, Second, to better understand supplier and anticorruption. Since 2011, we have asked management of social and environmental risks all our FRAGRANCES & BEAUTY suppliers at a more detailed level, we ask suppliers to to commit to applying our policy’s principles. assess themselves online using our standard. The policy is updated to take into account We first developed this in 2011, in line with regulatory changes and will be introduced international norms, guidelines, and principles, across all activities and regions over the course including the OECD Due Diligence Guidance of 2018. We provide guidance on applying the for Responsible Supply Chains. policy through annual supplier meetings, and through support from trained professionals on our procurement teams. 2 A GOVERNANCE AND OPERATING MODEL FOR RESPONSIBLE SOURCING PROCESSES TO ASSESS In order to continue to monitor the performance of AND REMEDIATE IMPACTS our suppliers, we have created a Responsible-Sourcing Expert Team at the corporate level. It’s their mission In recent years, we have developed a thorough to define and update our responsible-sourcing risk-assessment methodology, which determines guidelines and to ensure coherence in implementing and helps remediate social, environmental, and our responsible-sourcing strategy. Our Sustainability governance risks across our supply base. Excellence Program (SEP) audit committees at divisional and corporate levels ensure the audit results First, we assess all suppliers according to criteria are integrated in follow-up actions endorsed by top covering the state of the business relationship management, and that we monitor results. (purchasing volumes, dependency), social and environmental issues associated with the In total, we have five internal and 10 external trained value-adding activity undertaken by the supplier, and certified auditors devoted to implementing our and potential reputational risks for the brand. sourcing policy.