HUMAN RIGHTS IN OUR SUPPLY CHAIN We also submit this in-house standard to external experts regularly to ensure it covers HUMAN-RIGHTS IMPACT ASSESSMENTS all relevant issues and continues to set the In addition to our risk analysis at the corporate level, high standards we expect from our suppliers. we have commissioned independent organizations We have designed this standard to be both to conduct in-depth human-rights impact assessments all-inclusive (covering social, environmental, at the source of our raw materials when we have governance, and ethics topics) and exemplary identified actual and potential risks. For example, in — establishing high standards for the rest India and Madagascar, they visited and interviewed of the industry for supplier performance on farmers, suppliers, local stakeholders, and other these issues. rights holders to better understand the scale of the risk, its severity, remediability, and the possibility for Finally, based on the results from the first us to influence it. Our responsible sourcing teams two process steps, our internal auditors plan also assess human-rights impacts on-site before and undertake annual audits. We conducted and during the implementation of our reinforcement over 200 of these during 2017. Over the projects at the source of our key raw-materials next two years, we plan to conduct over supplies around the world. 500 audits across our diverse supply base, using an intelligent audit tool that provides We recognize we need to talk to stakeholders and guidance and the most up-to-date information experts for guidance and support in our human-rights possible. Where these audits reveal critical approach. So in early 2018, with the help of a leading noncompliance issues with our SEP standard, business and human-rights organization, we brought we put remediation plans in place, and, if they together function heads from across our business to are not implemented, we may even end our discuss and prioritize our salient human-rights issues partnership with the supplier altogether. and to formulate a plan to address them. At the same time, using a proprietary maturity model, we conducted a gap analysis of our existing human-rights due- NUMBER OF AUDITS CARRIED OUT diligence approach, using the United Nations Guiding AMONG HIGH-RISK SUPPLIERS (2017) Principles on Business and Human Rights (UNGPs). These principles set the international standard for FRAGRANCES 58 human-rights due diligence and help guide us in the & BEAUTY progressive implementation of our approach. FASHION 134 OTHER 6 0 30 60 90 120 150