GOVERNANCE FOR RESPONSIBILITY AND SUSTAINABILITY We take a coherent approach to compliance issues, led by our legal and regulatory REGULATORY COMPLIANCE departments and implemented worldwide. IN PRACTICE: PRODUCT SAFETY It encompasses the following: Whatever the material, from fragrance and cosmetic • Clear governance and guidance from ingredients to leather, textile, or jewelry components, management on company ethics. CHANEL has dedicated teams of experts around the world to monitor all existing and incoming regulations • Helplines to raise concerns and in order to secure the safety of our products. While whistleblowing protection. our finished products are fully compliant with the • Policies ensuring a supportive work various toxicology regulations, we constantly urge our environment and a zero-tolerance R&D and regulatory departments in all activities to try approach to any form of discrimination to further lower the required tolerance levels. or harassment. Wherever possible, CHANEL FRAGRANCES & BEAUTY • High employee protection in terms of forbids the use of certain substances, based on a labor practices and health and security. stricter interpretation of current regulations in this area. The FRAGRANCES & BEAUTY activity has internal • Protection of our assets, including criteria in place that define how these substances intellectual property and data privacy. are identified. The criteria covers both environmental • Anticorruption, money-laundering, and and ethical considerations, such as being on the IUCN fair-competition issues. Red List of Threatened Species, which identifies plants that are near-threatened, vulnerable, endangered, • Ensuring consumer health and safety or critically endangered, as well as substances that through enforcement of strict regulatory involve potential consumer health concerns. compliance for all our products. Over the course of 2018, we will gather and consult a As well as specific policies, compliance panel of experts and non-governmental organizations at CHANEL means constantly reevaluating (NGOs) to conduct a critical review of our criteria for and integrating new regulations, through identifying restricted substances. awareness and specific-issues training, regular compliance reviews, audits, and remedial actions. The new version of the Responsible Sourcing We also expect third parties we conduct Policy referred to earlier in this report, which business with — including suppliers, is being rolled out by all activities in 2018, is the contractors, agents, representatives, materialization of this expectation, and CHANEL distributors, and consultants — to adhere has committed to work with all suppliers to to the spirit of these standards, comply achieve these commitments. with our ethical principles, and meet all of their contractual obligations. We strive to only do business with people who share our commitment to the highest standards of integrity and responsible business conduct.