2021 Universal Registration Document

2021

UNIVERSAL REGISTRATION

DOCUMENT

INCLUDING

THE ANNUAL FINANCIAL REPORT

1.1

Six generations of craftspeople

1.2

Group governance

1.3

Strategy

1.4

Simplified organization chart and Group locations

2.1

Business model

2.2

People: teams

2.3

People: savoir-faire

2.4

The planet: raw materials

109

2.5

The planet: environment

129

2.6

Communities: suppliers & partners

167

2.7

Communities: stakeholders and transparency

181

2.8

Ethics – Compliance

198

2.9

Report by one of the Statutory Auditors, appointed as an

independent third party, on the consolidated non-financial

information statement

212

2.10

Reasonable assurance report by one of the Statutory

Auditors on a selection of environmental and social

information

217

4.1

Risk factors

328

4.2

Insurance policy and risk hedging

347

4.3

Risk management, internal control and internal audit

348

5.1

Consolidated income statement

360

5.2

Consolidated statement of comprehensive income

360

5.3

Consolidated balance sheet

361

5.4

Consolidated statement of changes in equity

362

5.5

Consolidated statement of cash flows

363

5.6

Notes to the consolidated financial statements

364

5.7

Statutory Auditors’ report on the consolidated financial

statements

404

6.1

Income statement

412

6.2

Balance sheet

413

6.3

Change in equity

414

6.4

Statement of cash flows

414

6.5

Notes to the financial statements

415

6.6

Table of results over the last five years

430

6.7

Information on payment terms

431

6.8

Other information on the parent company financial

statements

432

6.9

Statutory Auditors’ report on the financial statements

433

7.3

Dividend policy

461

7.4

Stock market information

462

7.5

Shareholder information

466

3.1

The Company’s Corporate Governance Code

223

3.2

Ambitious and balanced governance

226

3.3

Administrative and management bodies

229

3.4

Organisation of the Supervisory Board

241

3.5

Functioning of the Supervisory Board

276

3.6

Specialised committees

284

3.7

Evaluation of the Supervisory Board and Committees

290

3.8

Compensation and benefits of Corporate Officers

293

3.9

Other information

315

3.10

Other information from the Executive management report

324

8.1

Agenda

472

8.2

Explanatory statements and draft resolutions

474

8.3

Supervisory Board report to the Combined General Meeting

of 20April 2022

496

8.4

Statutory Auditors’ reports

498

9.3

Consultation of regulatory information

507

9.4

Information included by reference

507

9.5

Cross reference tables

510

9.6

Glossary

527

CONTENTS

MESSAGE FROM THE EXECUTIVE

MANAGEMENT

HIGHLIGHTS 2021

PRESENTATION OF THE GROUP AND ITS

RESULTS

AFR

Key financial figures

1.5

AFR

1.6

Revenue and activity by métier

AFR

1.7

Revenue and activity by geographical area

AFR

1.8

Comments on the consolidated financial statements

AFR

1.9

Significant events since the end of the financial year

AFR

1.10

Outlook

1.11

Fondation d’entreprise

NFPS

CORPORATE SOCIAL RESPONSIBILITY

AFR

RISK FACTORS AND MANAGEMENT

327

AFR

CONSOLIDATED FINANCIAL STATEMENTS

359

AFR

PARENT COMPANY FINANCIAL STATEMENTS

411

INFORMATION ON THE COMPANY AND ITS

SHARE CAPITAL

439

Presentation of Hermès International

7.1

440

AFR

7.2

Information on share capital and shareholders

450

AFR

CORPORATE GOUVERNANCE

221

AFR

Supervisory Board corporate governance report

223

COMBINED GENERAL MEETING

OF 20 APRIL 2022

471

ADDITIONAL INFORMATION

505

AFR

9.1

Persons responsible for the universal registration document

506

AFR

Persons responsible for auditing the financial statements

9.2

507

The sections of the Annual Financial Report are identified in the contents with the pictogram.

AFR

Elements constituting the statement of non-financial performance are clearly identified in the contents with the pictogram.

NFPS

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 1

The digital version of this document is compliant with the PDF/UA (ISO 14289-1), WCAG 2.1 level AA and RGAA 4.1 accessibility standards

with the exception of the colour criteria. Its design enables people with motor disabilities to browse through this PDF using keyboard

commands. Accessible for people with visual impairments, it has been tagged in full, so that it can be transcribed vocally by screen

readers using any computer support.

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This document is a free translation into English of the “Document d’enregistrement universel”, originally prepared in French, and has no other value than an

informative one. Should there be any difference between the French and the English version, only the French language version shall be deemed authentic and

considered as expressing the exact information published by Hermès.

The French language version of this Document d’Enregistrement Universel (Universal

Registration Document) was filed on March23

,2022 with the French Financial

Markets Authority (Autorité des Marchés Financiers), as the competent authority

under Regulation (EU) 2017/1129, without prior approval in accordance with Article

9 of said Regulation.

This Document d’Enregistrement Universel (Universal Registration Document) may

be used for the purposes of a public offer of financial securities or the admission of

financial securities to trading on a regulated market only if supplemented by a

transaction note and, if applicable, a summary and all amendments to the Document

d’Enregistrement Universel (Universal Registration Document). The group of

documents then formed is approved by the French Financial Markets Authority in

accordance with Regulation (EU) 2017/1129.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL2

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 3

2021

UNIVERSAL

REGISTRATION

DOCUMENT

Including the Annual Financial Report

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL4

MESSAGE FROM THE EXECUTIVE MANAGEMENT

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

A wonderful human odyssey

2021 was marked by strong growth and exceptional results. In the

face of the pandemic, Hermès’ artisanal model has once again

demonstrated its resilience and relevance.

We owe this success to the House’s 17,600 employees who, with

their talents, know-how and human values, adapted to a new

paradigm without ever compromising their high standards or

integrity. We rewarded this universal commitment by granting an

exceptional bonus of €3,000 to every employee worldwide and a monthly pay increase of

€100 for employees in France.

In the new dynamics of a world where the physical and the digital coexist, Hermès has

consolidated

its

multi-local approach and successfully nurtured and renewed its bonds with

customers in each country. In increasingly polarised markets, its rich collections and

abundant creativity have enabled the House to offer sustainable objects adapted to individual

desires. Innovation, whether in the development of new materials, in support functions, or

in the agility of our services, has played a key role. Maintaining investments in production

capacity and training – such as through the creation of the École Hermès des Savoir-Faire –

is a sign of the House’s deep attachment to the regions and local communities in which it

operates, and of the need and willingness to act in a socially and economically accountable

way. The Group’s commitments to managing its environmental impact and contributing to

responsible growth have been welcomed by all stakeholders, as borne out by the high scores

received from non-financial rating agencies.

It is therefore with pride and gratitude that we close 2021, a year that we announced as an

odyssey

– a journey that, despite the world’s vicissitudes, reminds us of who we are.

Axel Dumas Émile Hermès SAS

EXECUTIVE CHAIRMAN EXECUTIVE CHAIRMAN

REPRESENTED BY HENRI-LOUIS BAUER

◆

Asia excluding Japan (+45% and +65% over two years) pursued its

dynamic growth, driven particularly by the sustained performance in

Greater China, Australia and Singapore, despite new restrictions in

some of the region’s countries. The Shanghai Plaza 66, Suzhou and

Ningbo stores reopened after renovation and extension, after the

Beijing China World store in spring, and new stores were inaugurated in

Macao and Shenzhen. In Australia, the Brisbane store also reopened

after being extended;

◆

Japan (+25% and +20% over two years) posted a sustained and regular

increase in sales, thanks to the loyalty of local customers, while

benefitting from the end of the health state of emergency in October. A

new store opened in February on Omotesando Avenue and the Shinjuku

Isetan store in Tokyo was renovated following extension work in

November;

◆

America (+57% and +24% over two years) achieved a strong

performance, despite the sanitary restrictions imposed in several US

cities in the fourth quarter. Two new stores opened, in Troy near Detroit

in June and in Aventura Mall near Miami in October;

◆

Europe excluding France (+37% and +10% over two years) recorded a

strong second half, with a remarkable development of the local

customer base, which partly offset the tourist traffic. Several stores

were renovated and extended, Zurich in May, Milan in July, and Istanbul

in October, and the Luxembourg store moved to a new address in

November;

◆

France (+35% and -3% over two years) confirmed its recovery, with a

fourth quarter marked by fewer tourists in the Paris stores. The stores in

Lyon and rue de Sèvres in Paris reopened in February and March after

being renovated and extended.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL6

HIGHLIGHTS 2021

In 2021, the Group’s consolidated revenue reached €8,982million, up

42% at constant exchange rates and 41% at current exchange rates

compared to 2020. Over two years, this increase was 33% at constant

exchange rates, in the first as in the second half of the year. Recurring

operating income was up 78% and amounted to €3,530million (39% of

sales). Net profit (Group share) reached €2,445million, up 77% compared

to 2020.

Axel Dumas, Executive Chairman of Hermès, said: “I thank above all the

passion and quality of our teams’ work, because together we have made

2021 an exceptional year. Abundant creativity, unique know-how and the

quality of materials have driven the growth of our sixteen métiers. Hermès

is very dedicated to its role as a committed and responsible company and

continues its commitments to job creation around the world and to regional

regeneration in France, while reinforcing its ambitious environmental

objectives.”

Sales by geographical area at the end of December

(at constant exchange rates, unless otherwise indicated)

Asia and America recorded the highest growths, compared to 2020 as well

as to 2019, and Europe returned to growth compared to 2019. Sales in the

Group’s stores increased by 44% at constant exchange rates compared to

2020 and 41% over two years. Hermès continued to selectively develop its

distribution network and online sales increased worldwide, with the rollout

of new services and sustained growth in traffic. Wholesale activities (+24%)

increased despite constraints faced by travel retail:

Sales by métier at the end of December

(at constant exchange rates, unless otherwise indicated)

At the end of December2021, all the métiers confirmed their growth, with a

noteworthy increase in Ready-to-wear and Accessories, Watches and Other

Hermès Business Lines (Jewellery and Homeware).

In the Leather Goods & Saddlery métier (+29% and +23% over two years)

sales were exceptional. After the strong acceleration in the first nine

months, sales in the 4

quarter reflected as anticipated the capacity

constraints. Demand both for new bags like Della Cavalleria and 24/24

and the Hermès classics is very sustained. The increase in production

capacities continued, with the opening of the Louviers site (Eure) in 2022,

the Sormonne site (Ardennes) in 2023 and a new one in Riom

(Puy-de-Dôme) scheduled for 2024. Hermès continued to strengthen its

local presence in France and to create jobs. In September, in line with our

commitments to knowledge transfer and education, Hermès opened the

École Hermès des Savoir-Faire (Hermès school of know-how), which is

accredited by the French education department and will award a

State-approved diploma in leatherworking expertise.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 7

The Ready-to-wear and Accessories métier (+59% and +44% over two

years) pursued its dynamic growth, thanks to the success of the

Ready-to-wear, Fashion accessories and Shoes collections. The Men’s and

Women’s Spring-Summer 2022 collection, presented respectively in July

and October, met with great success.

The Silk and Textiles métier (+49% and +15% over two years) performed

well. A new printing line was inaugurated as part of the development of the

site near Lyon to meet demand.

Perfume and Beauty (+47% and +19% over two years) benefitted from the

successful launches of the H24 perfume for men and Twilly Eau Ginger,

and the development of the Beauty line with the autumn rollout of the third

chapter in Beauty, Les Mains Hermès.

The Watches métier (+73% and +77% over two years) confirmed its strong

growth, which results from the exceptional watch-making expertise and the

success of the new men’s watch H08 alongside other classics of the

House.

Other Hermès sectors (+57% and +95% over two years) confirmed their

momentum, both in Jewellery and Homeware.

Outstanding results and free cash flow progression in 2021

Recurring operating income amounted to €3,530million, rising 78% from

€1,981million in 2020. Thanks to the collections remarkable sell-through

and an exceptional leverage effect, the recurring operating margin reached

an historical high of 39% of sales, up 8points compared to 2020 and

5points compared to 2019.

Consolidated net profit (Group share) amounted to €2,445million (27% of

sales), up 77% from €1,385 at the end of December2020.

Operating investments amounted to €532million. Thanks to the

outstanding increase in results and the favourable impact of the change in

working capital, the adjusted free cash flow reached a record-high

€2,661million, i.e. 2.7times that of 2020.

After distribution of the ordinary dividend (€476million) and inclusion of

shares redeemed (€162million for 142,131shares, excluding the liquidity

contract), the restated net cash position increased by €2,166million to

€7,070million.

A responsible and sustainable model

The Hermès Group has continued to recruit and added nearly 1,000people

to its workforce this year. At the end of December2021, the Group

employed 17,595people, including 10,969 in France. True to its

commitment as a responsible employer, in 2022 Hermès will pay an

exceptional €3,000 bonus to all the employees to reward them for their

engagement and their contribution to the results in a challenging context.

In 2021, the outstanding improvement in non-financial ratings reflected the

speeding-up of CSR commitments and the sustainable dimension of

Hermès’ craftsmanship model. MSCI published an “A” rating in its analysis

of the firm’s resilience to environmental, social and governance risks. The

Group was included in the CAC40 ESG index, after Hermès was ranked by

Vigeo-Eiris in the “Advanced” category. Sustainalytics ranked Hermès the

second best player in the Textiles and Clothing sector. Hermès’

commitment to fighting climate change was particularly recognised by the

CDP rating for which Hermès scored “A-”.

Hermès Group reasserted its commitment to fighting climate change by

reviewing its reduction targets at year end, to align with a global warming

pathway below 1.5°C. These targets were calculated scientifically and

validated by the Science Based Target initiative (SBTi). Hermès thus

committed to reducing emissions by 50.4% on scopes1 and 2 in absolute

value and by 58.1% in intensity (per €m of gross margin) on scope3, over

the 2018-2030 period.

1.1

SIX GENERATIONS OF CRAFTSPEOPLE

1.2

GROUP GOVERNANCE

1.3

STRATEGY

1.4

SIMPLIFIED ORGANIZATION CHART AND GROUP LOCATIONS

1.4.1

Summary description of the Group as at 31December 2021

1.4.2

Production sites

1.4.3

Distribution network

1.4.4

Real estate

1.5.1

Revenue by métier for 2021 (2020)

1.5.2

Revenue by geographical area for 2021 (2020)

1.5.3

Key consolidated data

1.6.1

Leather Goods & Saddlery

1.6.2

Ready-to-wear and Accessories

1.6.3

Silk and Textiles

1.6.4

Other Hermès sectors

1.6.5

Perfume and Beauty

1.6.6

Watches

1.6.7

Other products and brands

1.6.8

Group partnerships

1.7.1

Europe

1.7.2

Asia-Pacific

1.7.3

Americas

1.7.4

Digital strategy

1.8.1

Income statement

1.8.2

Cash flows and investments

1.8.3

Financial position

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 9

PRESENTATION OF THE GROUP

AND ITS RESULTS

AFR

1.5

KEY FINANCIAL FIGURES

AFR

REVENUE AND ACTIVITY BY MÉTIER

1.6

AFR

REVENUE AND ACTIVITY BY GEOGRAPHICAL AREA

1.7

AFR

COMMENTS ON THE CONSOLIDATED FINANCIAL STATEMENTS

1.8

AFR

SIGNIFICANT EVENTS SINCE THE END OF THE FINANCIAL YEAR

1.9

AFR

1.10

OUTLOOK

1.11

FONDATION D’ENTREPRISE

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL10

PRESENTATION OF THE GROUP AND ITS RESULTS

SIX GENERATIONS OF CRAFTSPEOPLE

1.1

SIX GENERATIONS OF CRAFTSPEOPLE

The Hermès adventure began in 1837 when the harness-maker Thierry

Hermès opened a workshop in rue Basse-du-Rempart in Paris. Gradually,

generation after generation, the House followed a dual thread – on the

one hand the painstaking work of the craftspeople in his workshop, and

on the other the active lifestyles of its customers. Carried by an enduring

spirit of freedom and creativity, Hermès remains highly sensitive and

attentive to the changing nature and needs of society.

ln 1880, Charles-Émile Hermès, the founder’s son, moved the workshops

to 24, rue du Faubourg Saint-Honoré, and set up an adjoining store. At

this now-emblematic address, harnesses and saddles were made to

measure. The business was already standing out for the excellence of its

creations.

AN INNOVATIVE HOUSE PASSIONATE ABOUT

ITS ERA

During the interwar period, lifestyles changed and the House broke new

ground under the management of Thierry’s grandson, Émile Hermès. He

decisively influenced the family firm’s destiny when, while travelling in

Canada, he discovered the opening and closing system of an automobile

hood. ln 1922 he obtained exclusive rights to this American “universal

fastener” – known today as the zip – which was used extensively in the

House’s luggage and other designs. Under the impetus of Émile Hermès,

the House opened up to other métiers, while retaining a close connection

with the equestrian world, drawing on its mastery of raw materials and its

artisanal culture to create its first ready-to-wear collections. ln 1937, the

famous silk scarf was born with the Jeu des omnibus et dames blanches

design, the first in a long series.

Robert Dumas – one of Émile Hermès’ sons-in-law, who took the helm of

the House in 1951 – was a regular visitor to the workshops and designed

objects whose details (buckles, fasteners, saddle nails and anchor

chains) exuded an elegance that in no way diminished their practicality.

Hermès objects stand out for their noble materials, their mastery of

savoir-faire, and their bold creativity, stimulated by the House’s keen

vision of the world. The Silk métier now invites artists to create unique

designs.

AVISIONARY HOUSE

From 1978 onwards, Robert Dumas’ son Jean-Louis gradually

revolutionised the House, diversifying it and projecting it onto the world

map. Hermès embraced new métiers founded on unique savoir-faire, with

watchmaking from 1978, along with the integration of new Houses into

the Group – the bootmaker John Lobb in 1975, Puiforcat silversmiths in

1993, and the Cristalleries Saint-Louis in 1995. Hermès has also

created its own footwear, designed by Pierre Hardy, since 1990.

ln 1987, for the House’s 150

anniversary, Parisians were treated to a

memorable firework display that launched the first theme, a tradition that

has been perpetuated annually ever since to nourish all forms of

creativity with a shared source of inspiration.

Jean-Louis Dumas also supported the development of Hermès around

the world with the opening of numerous stores, which all ingeniously

combined the identity of 24 Faubourg with local culture. Among these

stores, several Maisons Hermès were inaugurated: on Madison Avenue,

New York in 2000, in Ginza, Tokyo – in a building of glass bricks designed

by Renzo Piano – in 2001, and in Dosan Park, Seoul, in 2006.

From 2006, Patrick Thomas decentralised the strategic organisation of

the métiers and reorganised Hermès’ presence across the world into

geographical regions. He also ensured the transition to the sixth

generation of the family.

HERMÈS TODAY

ln 2005, Pierre-Alexis Dumas, son of Jean-Louis Dumas, was appointed

Artistic Director. The House expanded its range of savoir-faire,

complementing its jewellery product offer with a first haute joaillerie

collection in 2010. Creativity, combining innovation and imagination,

became ever more abundant within the different métiers. ln 2008,

Pierre-Alexis Dumas also created the Fondation d’Entreprise Hermès,

which supports artistic creation, supports artisanal savoir-faire, and

promotes the conservation of biodiversity.

Executive Chairman since 2013, Axel Dumas, nephew of Jean-Louis

Dumas, strengthened the dynamic growth of the Group with the

inauguration of the fifth Maison Hermès in Shanghai in 2014. He is

accompanying the Group’s digital roll-out, which led to the redesign of the

hermes.com website in 2018. Axel Dumas has also taken Hermès into

the new technological era, in keeping with the expectations of customers,

who are becoming more and more connected. The Apple Watch Hermès,

initiated in 2015, bears witness to a bold and innovative partnership with

Apple. ln addition, the Group is stepping up the omnichannel dynamic

within its organisation.

In 2018, Hermès International entered the CAC40 index followed, in

2021, by the Euro Stoxx 50 index. This demonstrates the Group's

remarkable industrial trajectory and stock market performance of an

independent, family-run House of artisans that distributes its objects

through a dynamic network of 303stores around the world. For over

150years, Hermès has enriched its métiers without deviating from its

strict quality standards. ln this regard, the House attaches great

importance to pursuing the development of its production in France, with

its 19 production units.

Defying the trend for industrial standardisation and globalisation, Hermès

stands out for its unique business model.

◆

Robert Dumas creates the Chaîne d’ancre bracelet.

◆

The creation of the Eau d’Hermès fragrance marks the founding of a

new métier.

◆

Jean-Louis Dumas, Robert Dumas’s son, takes the reins of the House.

◆

Creation of the La Montre Hermès watchmaking subsidiary in Bienne,

Switzerland.

◆

Jean-Louis Dumas creates the Birkin bag, named after the singer and

actress Jane Birkin.

◆

Creation of the first dinner service, Les Pivoines.

◆

A Maison Hermès opens in Ginza, Tokyo.

◆

Launch of the first e-commerce website in the United States.

◆

Patrick Thomas becomes Executive Chairman of Hermès.

◆

A Maison Hermès opens in Dosan Park, Seoul.

◆

Creation of petit h.

◆

Creation of the first haute joaillerie collection, designed by Pierre

Hardy.

◆

The first Saut Hermès at the Grand Palais takes place in Paris.

Axel Dumas, nephew of Jean-Louis Dumas and sixth generation family

member, is appointed Executive Chairman.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 11

PRESENTATION OF THE GROUP AND ITS RESULTS

SIX GENERATIONS OF CRAFTSPEOPLE

HERMÈS IN KEY DATES

1837

◆

The workshop of craftsman saddIer- and harness-maker Thierry

Hermès opens in the Grands Boulevards district in Paris.

1867

◆

Thierry Hermès receives an award at the Universal Exhibition in Paris

for the excellence of his work.

1880

◆

Thierry Hermès’ son, Charles-Émile Hermès, moves the workshops to

24, rue du Faubourg Saint-Honoré and opens a store selling bespoke

harnesses and saddles.

1900

◆

Creation of the Haut à courroies bag.

1922

◆

Émile Hermès, son of Charles-Émile Hermès, brings the American

“universal fastener”, later known as the zipper fastener, to France,

with exclusive rights for its development.

1925

◆

Creation of a golf jacket, the first ready-to-wear garment.

1927

◆

Creation of the first piece of jewellery, the Filet de selle bracelet.

1937

◆

Creation of the first silk scarf, Jeu des omnibus et dames blanches.

1945

◆

The Duc attelé, groom à l’attente design by Alfred de Dreux from the

Émile Hermès collection, representing a horse-drawn carriage,

becomes the Hermès emblem.

1949

◆

Creation of the first tie.

1951

1956

◆

The bag created by Robert Dumas in 1930 is named the Kelly in

tribute to Grace Kelly.

1967

◆

Presentation of the first women’s ready-to-wear collection.

1973

◆

Launch in Germany of the publication Die Welt von Hermès. Le Monde

d’Hermès is created two years later in France.

1978

1984

1987

◆

Hermès celebrates its 150thanniversary with a firework display on

the Pont-Neuf bridge in Paris. Ever since, an annual theme has guided

inspiration for all of the House’s métiers.

1992

◆

Leather workshops established in Pantin.

1993

◆

Flotation of Hermès International on the stock exchange.

2000

◆

A Maison Hermès opens on Madison Avenue in New York.

2001

2006

2008

◆

Creation of the Fondation d’Entreprise Hermès under the impetus of

the House’s Artistic Director Pierre-Alexis Dumas, son of Jean-Louis

Dumas.

2010

2013

◆

Hermès International enters the CAC40.

◆

Launch of the new hermes.com website in Europe and China.

◆

As at 31 December 2021, Hermès had 303 stores worldwide.

◆

The hermes.com website is the leading store, with online sales now

operating in 29 countries.

◆

Inauguration of the leather goods workshops of Montereau

(Seine-et-Marne) and Saint-Vincent-de-Paul (Gironde), the Group's

and 19

production units in France.

◆

Hermès International enters the Euro Stoxx 50.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL12

PRESENTATION OF THE GROUP AND ITS RESULTS

SIX GENERATIONS OF CRAFTSPEOPLE

2014

◆

A Maison Hermès opens in Shanghai.

2015

◆

Apple and Hermès launch the Apple Watch Hermès.

2018

2019

◆

A new market launches in Poland with the opening of a store in

Warsaw.

2020

◆

Launch of the 16

métier: Beauty.

2021

◆

to involve Senior Executives in the Group’s major issues and strategic

orientations;

◆

to promote communication, sharing and reasonable exchanges

amongst its members in their area of responsibility;

◆

to enable the Executive Committee to take certain decisions.

1.2

GROUP GOVERNANCE

The Executive Management ensures the management of Hermès

International. The role of Executive Chairman is to manage the Group and

act in its general interest, within the scope of the corporate purpose and

subject to those powers expressly granted by law or by the Articles of

Association to the Supervisory Board, to the Active partner and to

Shareholders’ General Meetings.

The Executive Chairmen’s roles are distributed as follows: Axel Dumas is

charge of strategy and operational management, and Émile Hermès

SAS, through its Executive Management Board, is responsible for vision

and strategic priority areas.

The Executive Chairmen are supported in their management of the Group

the Executive Committee. This consists of Managing Directors, each of

whom has well-defined areas of responsibility. The role of Group

Management is to oversee the Group’s strategic and operational

management. Its composition reflects the Group’s main areas of

expertise.

PRESENTATION OF THE GROUP AND ITS RESULTS

GROUP GOVERNANCE

The Operations Committee, which reports to the Executive Management,

is made up of the Executive Committee and the Senior Executives of the

main métiers and geographical areas of the Group.

Its duties are:

Detailed information on the administrative and management bodies is

provided in chapter 3 "Corporate governance", § 3.2 and § 3.3.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

The Supervisory Board exercises ongoing control over the Company’s

management. For this purpose, it has the same powers as the Statutory

Auditors and receives the same documents as they do, at the same time.

Detailed information on the composition and work of the Supervisory

Board is provided in chapter3 «Corporate governance», § 3.2 and § 3.4.

The members of the Executive Committee in the Hermès store on Avenue George-V, Paris. From left to right:Éric du Halgouët,

Catherine Fulconis, Wilfried Guerrand, Axel Dumas, Olivier Fournier, Charlotte David, Guillaume de Seynes,

Pierre-Alexis Dumas and Florian Craen

Agnès de Villers

Sharon MacBeath

Two new members

joined the Executive Committee

on 1 March 2022.

Éric de Seynes

Chairman of the Supervisory Board

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL14

PRESENTATION OF THE GROUP AND ITS RESULTS

STRATEGY

1.3

STRATEGY

Hermès is an independent company backed by family shareholders. Its

strategy is based on three pillars: creation, craftsmanship and an

exclusive distribution network.

Since 1837, the Group has remained true to its values of freedom,

demanding craftsmanship savoir-faire, quality, authenticity and

responsible growth.

CREATION AT THE CORE OF HERMÈS’ STRATEGY

Hermès creates and manufactures quality objects designed to last, to be

passed on from one generation to the next, and to be repaired. This

approach requires these issues to be taken into account at every stage,

from design to sales.

Hermès’ strategy is based on creative freedom. Each year, a theme

inspires creators and Artistic Directors. Driven by a history spanning

nearly 200years, during which the House has continued to develop with

audacity and ingenuity, Hermès paid homage to the theme of the

Odyssey in 2021. In the face of challenges and successes, the Group

has continued its journey, true to its identity and the Saddler’s Spirit.

High standards in design and manufacturing encourage the creation of

objects that aim to surprise and amaze customers. This creativity,

revolving around traditional savoir-faire, is coupled with innovative

processes to revisit timeless models and create exceptional pieces,

without departing from Hermès’ trademark humour and imaginative flair.

The unbridled creativity flourishes in each métier, as reflected in the

numerous scarf designs printed every year. It is then expressed through

over 50,000 references, developed around a unique identity and a style

blending exceptional quality, innovation, surprise, elegance and

simplicity. In 2021, it was revealed in new territories with the successful

launch of the new Beauty chapters, the H08 men’s watch and the H24

perfume.

Hermès’ mission is to create unique and original objects to elegantly

satisfy the needs and desires of its customers.

Its goal is the pursuit of excellence, in each of its métiers and services,

with craftsmanship at the heart of its model.

PERFORMANCE OF THE INTEGRATED

CRAFTSMANSHIP MODEL

Hermès leverages its craftsmanship division, the second pillar of its

strategy, with nearly 6,000 craftspeople in France. Backed by the

House's rich history shaped by six generations of craftspeople, Hermès is

resolutely turned to the future through its values, which address the

concerns of our modern societies. Hermès moves with the times, but

always respecting tradition, transmission and innovation.

The House works alongside those who master, preserve and transmit

craftsmanship savoir-faire through their knowledge of materials and their

exceptional techniques. Each new leather goods workshop is an

architectural project in its own right, enabling around 300 jobs to be

created and promoting a pleasant working environment on a human

scale.

Hermès continued its investments to expand its production capacity in

2021, to satisfy its 16 métiers.

The House ensures that it continually nurtures improvements in the

gestures and savoir-faire of its craftspeople. In 2021, true to its

commitment to education, Hermès opened an apprentice training centre,

the Centre de Formation d'Apprentis (CFA), which awards a State diploma

in leather work. The craftsmanship model is at the heart of all the métiers

of Maison Hermès, drawing on exceptional materials.

To ensure the durability of this craftsmanship model, the House takes

particular care to secure its supplies of materials. Vertical integration,

through partnerships and acquisitions, supports the development

strategy, with regards to materials as well as techniques and savoir-faire.

More than 58% of production is integrated and 78% is located in France.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 15

PRESENTATION OF THE GROUP AND ITS RESULTS

STRATEGY

The vertical integration and sustainable relationships with its partners

ensure traceability of its supply chains and reinforce the House’s

responsible development strategy with regard to materials, techniques

and savoir-faire.

THE DYNAMICS OF AN EXCLUSIVE OMNICHANNEL

DISTRIBUTION NETWORK

Hermès' in-house distribution model, with its network of stores and

e-commerce sites, proved its effectiveness during the health crisis. The

House’s tools were adapted to a transformed customer relationship in

order to respond to rapid changes in demand and maintain a special

relationship with customers.

The exclusive distribution network consists primarily of branches run by

the Group around the Hermès brand. Each of the 303 stores across the

world offers a personalised selection of objects, to exceed the specific

expectations of its customers and offer a distinct purchasing experience

in each and every store. Each store enables its customers to explore and

discover the most beautiful products, and extends the House’s lustre

worldwide.

The importance of e-commerce has increased since the start of the

Covid-19 crisis. For the past six years, Hermès has made the strategic

choice of ramping up online sales, with the successful rollout of its

proprietary platform worldwide, the attraction and retention of new

customers, and the development of services. This strategy supports the

House’s customers and accelerates the digitisation of uses. This digital

flagship is designed like any Hermès store with its spirit of fantasy,

authenticity and diversity, its windows, its products, its services and its

stories gathered in a single virtual place.

Customers are placed at the core of the omnichannel network, so as to

best meet their expectations and offer them a unique experience. Around

the world, Hermès stores are veritable “homes for Hermès objects”,

offering customers a unique experience, complementary to its website

hermes.com. This offer is backed by innovative services aimed at

welcoming and serving customers in the best possible manner at all

times. The House also hosts special occasions, revolving around events

in the world, and dynamic and animated set designs. Its unique

communication ensures that it stands out, while nurturing the link with its

customers.

Hermès, present in 45 countries, has an omnichannel network that is

geographically balanced, with measured development and a constant

search for prime locations.

AN ENTREPRENEURIAL SPIRIT

AND INDEPENDENCE

The entrepreneurial spirit has been at the heart of Hermès since its

creation. It is illustrated by its abundant creativity, a capacity for constant

innovation, new métiers, new production workshops and store openings.

This strategy offers store managers freedom of purchase, to meet the

specific needs of their customers. Two podiums are organised every year

to present the fall-winter and spring-summer collections. These bring

together all store and country managers, managers of the different

métiers, as well as designers, to present all collections to the sales

teams, who are thus responsible for compiling their own collections and

making their store unique, with a special mix of products. The

presentation of the collections adapted successfully to the health

constraints, turning to digital presentations of the collections. This

freedom means that in each country the Group’s customers are

presented with a diversified and unique mix of products resulting from

this flurry of creativity, blending emblematic products and the House’s

new references, chosen, to best meet local expectations and dedicated

to the elegance of its customers.

In order to continue this strategy, Hermès asserts its independence,

underpinned by a strong family-based shareholding structure, committed

to retaining most of its production in France and preserving its culture.

This independence, and the House’s financial strict management, allow it

to accelerate operational investments, both in production capacities and

network and cross-functional projects, and to preserve its long-term

strategy.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL16

PRESENTATION OF THE GROUP AND ITS RESULTS

STRATEGY

RESPONSIBLE GROWTH AND HUMANIST VALUES

The Group is stepping up its efforts in terms of social, societal and

environmental performance. The “All artisans of sustainable

development” strategic framework serves as a roadmap for all

Management Committees and makes it possible to systematise and

scale up actions and better measure their effects.

Hermès’ highly integrated craftsmanship model promotes the creation of

skilled jobs in France and social inclusion. Hermès is convinced that the

diversity of talents is a source of wealth, creativity and innovation. These

women and men who guarantee the quality of the objects, constitute a

heritage for the House. To affirm its commitment to education, the House

is developing its training schools for its major craftsmanship métiers.

The profit-sharing and incentive agreements, as well as the granting of

free shares, enable all employees in France to share in the Group’s

success.

As a company that respects the nature that inspires it, Hermès ensures

the preservation of its resources and its impact on natural environments

and local ecosystems, with a low carbon-emission artisanal production

model. The Group’s environmental policy is based on major commitments

related to the reduction of greenhouse gas emissions and their offset,

the use of renewable energies, the reduction of industrial water

consumption, biodiversity and defossilisation of industrial sites.

In 2021, the House notably strengthened its commitments against

climate change with new targets for a climate trajectory below 1.5°C,

validated by the Science Based Targets initiative (SBTi). The House is

continuing its concrete actions to minimise its impact on biodiversity, in

particular by conducting an exhaustive inventory of its impacts using the

GBS method, in partnership with the WWF and CDC Biodiversité, with the

aim of initiating action plans on the significant impacts identified.

Hermès places responsibility and sustainability in all its actions and

creations, such as real estate, which uses a “sustainable real estate”

approach, or IT, with the “responsible digital” approach.

Through its engagement with local authorities and communities where its

production sites are located, Hermès contributes to revitalising regions,

and provides working conditions that offer proximity and stable

employment. Thanks to the "Fondation d’entreprise Hermès", the

Company is expanding its philanthropic actions through artistic creation,

education and transmission, solidarity and the preservation of

biodiversity. The Group is an economic player that is committed to its

ecosystem and its stakeholders. Hermès is committed to support its

suppliers in meeting requirements in terms of traceability, certification,

carbon trajectory, reduction in water consumption and the use of

plastics. These supply chain briefs were published on the House’s

website.

Hermès, a family business, has been able to adapt to changes while

favouring a long-term approach. The Group, on the strength of its

craftsmanship savoir-faire, its exclusive distribution network and its

creative heritage, will continue its sustainable and responsible

development.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 17

PRESENTATION OF THE GROUP AND ITS RESULTS

SIMPLIFIED ORGANISATION CHART AND GROUP LOCATIONS

1.4

SIMPLIFIED ORGANIZATION CHART AND GROUP LOCATIONS

1.4.1

SUMMARY DESCRIPTION OF THE GROUP AS AT 31DECEMBER 2021

HERMÈS INTERNATIONAL

SUBSIDIARIES

HERMÈS

BRAND

OTHER

PRODUCTS

AND BRANDS

RETAIL

Germany

Argentina

Australia

Belgium,

Netherlands

Brazil

Canada

China,

Hong Kong,

Taïwan,

Macau

South Korea

Denmark

•

Spain

USA

France

Greece

Guam

India

Italy

Japan

Malaysia

Mexico

Norway

Poland

Portugal

Principality

of Monaco

Czech Republic

United Kingdom

Russia

Singapore

Sweden

Switzerland

Thailand

Turkey

MÉTIERS

WHOLESALE PRODUCTION AND DISTRIBUTION

OTHER PRODUCTS

WHOLESALE PRODUCTION AND DISTRIBUTION

BESPOKE DESIGN

OTHER BRANDS

RETAIL AND WHOLESALE PRODUCTION AND DISTRIBUTION

Leather goods and

equestrianism

Women’s

Ready-to-wear

Men’s Ready-to-wear Belts

Hats

Men’s silk

Gloves

Jewellery

Shoes

Furniture and

Art of Living

Women’s silk

Tableware

Beauty Watches Petit h

Perfume

Hermès

Horizons

Internet of Things

(IoT)

Tanneries and

Precious Leathers

Metal parts

(J3L)

Crystal Saint-Louis

Textiles and furnishing fabrics

Bootmaker John Lobb

Silversmith Puiforcat

The main consolidated companies as at 31December 2021 (distribution subsidiaries and holding companies of the divisions) are listed in Note16 of

the consolidated financial statements.

•

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL18

PRESENTATION OF THE GROUP AND ITS RESULTS

SIMPLIFIED ORGANIZATION CHART AND GROUP LOCATIONS

1.4.2

PRODUCTION SITES

The Hermès Group operates 66 production sites, including 52 in France. The Group also operates production sites in Switzerland, the United States,

Australia, Italy, Portugal and the United Kingdom.

Métiers

Leather Hermès Sellier (Paris Faubourg Saint-Honoré, Pantin-Pyramide, Pantin-CIA, Pierre-Bénite)

Les Maroquineries des Alpes (Aix-les-Bains, Belley, Fitilieu, Les Abrets)

Maroquinerie de Saint-Antoine (Paris)

Maroquinerie des Ardennes (Bogny-sur-Meuse, Charleville-Mézières)

Manufactures d’Auvergne (Sayat, Riom)

Manufacture de Franche-Comté (Seloncourt, Héricourt, Allenjoie)

Maroquinerie du Sud-Ouest (Nontron, Saint-Junien, Montbron)

Maroquinerie de Normandie (Val-de-Reuil, Louviers)

Maroquinerie de Guyenne (Saint-Vincent-de-Paul)

Maroquinerie de Montereau (Montereau)

Tanneries and Precious

Leathers

Tannerie de Montereau (Montereau)

Tannerie de Vivoin (Vivoin)

Tannerie d’Annonay (Annonay)

Mégisserie Jullien (Chabris)

Conceria di Cuneo (Cuneo/Italy)

Tanneries du Puy (Le Puy-en-Velay)

United States division

Australia division

Comptoir Nouveau de la Parfumerie (CNP) (Le Vaudreuil)

Métaphores (Bourgoin-Jallieu)

Société d’Impression sur Étoffes du Grand-Lemps (SIEGL) (Le Grand-Lemps)

AteliersAS (Pierre-Bénite)

Holding Textile Hermès (HTH) (Pierre-Bénite, Bourgoin-Jallieu)

Établissements Marcel Gandit (Gandit) (Bourgoin-Jallieu)

Ateliers de Tissage de Bussières et de Challes (ATBC) (Bucol, Le Crin) (Bussières, Challes)

Société Novatrice de Confection (SNC) (Nontron, Bourgoin-Jallieu)

Ateliers d’Ennoblissement d’Irigny (AEI) (Irigny)

Compagnie des Cristalleries de Saint-Louis (Saint-Louis-lès-Bitche)

Puiforcat (Pantin-CIA)

Compagnie des Arts de la Table et de l’Émail (CATE) (Nontron)

Beyrand (Saint-Just-le-Martel)

La Montre Hermès (LMH) (Bienne/Switzerland)

Les Ateliers Hermès Horloger (Noirmont/Switzerland)

Lasco (Champigny-sur-Marne)

Juléa (Champigny-sur-Marne)

Scap (Roye)

Goulard (Châtillon-le-Duc)

Polissage Brun (Bonnétage)

J3LP – Fabrico de produtos metálicos (Fundão/Portugal)

John Lobb (Paris Mogador, Northampton/United Kingdom)

Atelier HCI (Milan/Italy)

Hermès Sellier (Bobigny, Saint-Priest)

Perfume and Beauty

Textiles

Crystal Saint-Louis

Silversmith Puiforcat

Porcelain and Enamel

Watches

Metal parts (J3L)

Bootmaker / Shoes

Logistics

Company (production sites)

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 19

PRESENTATION OF THE GROUP AND ITS RESULTS

SIMPLIFIED ORGANIZATION CHART AND GROUP LOCATIONS

Roye

Bogny-sur-Meuse

Charleville-Mézières

Saint-Louis-lès-Bitche

Val-de-Reuil

Louviers

Le Vaudreuil

Bobigny

Paris

Pantin

Champigny-sur-Marne

Vivoin

Challes

Montereau

Chabris

Montbron

Saint-Junien

Saint-Just-

le-Martel

Nontron

Saint-Vincent-de-Paul

Annonay

Le-Puy-en-Velay

Sayat

Riom

Bussières

Irigny

Saint-Priest

Pierre-Bénite

Belley

Fitilieu

Les Abrets

Aix-les-Bains

Le Grand-Lemps

Bourgoin-Jallieu

Châtillon-le-Duc

Seloncourt

Héricourt

Allenjoie

Bonnétage

Leather goods workshop /

Saddlery / Glove-making

Tanneries / Tawery

Perfume and Beauty

Textiles

Metal parts (J3L)

Crystal Saint-Louis

Silversmith Puiforcat

Porcelain and Enamel

Bootmaker John Lobb

Logistics

◆

Baden-Baden

◆

Berlin KaDeWe

◆

Berlin Kudamm

◆

Cologne

◆

Düsseldorf

◆

Frankfurt

◆

Hamburg

◆

Kampen

◆

Munich

◆

Nuremberg

◆

Stuttgart

◆

Antwerp

◆

Brussels

◆

Knokke-le-Zoute

◆

Barcelona Paseo de Gracia

◆

Madrid Canalejas

◆

Madrid Ortega y Gasset

◆

Marbella

◆

Aix-en-Provence

◆

Biarritz

◆

Bordeaux

◆

Cannes

◆

Deauville

◆

Lille

◆

Lyon

◆

Marseille

◆

Paris Faubourg Saint-Honoré

◆

Paris George V

◆

Paris Sèvres

◆

Saint-Tropez

◆

Strasbourg

◆

London Bond Street

◆

London Harrods

◆

London Royal Exchange

◆

London Selfridges

◆

London Sloane Street

◆

Manchester

◆

Bologna

◆

Capri

◆

Florence

◆

Milan

◆

Naples

◆

Padua

◆

Palermo

◆

Porto Cervo

◆

Rome

◆

Turin

◆

Venice

◆

Amsterdam De Bijenkorf

◆

Amsterdam P.C. Hooftstraat

◆

Moscow Gum

◆

Moscow Stoleshnikov

◆

Moscow Vremena Goda

◆

Basel

◆

Crans

◆

Geneva

◆

Gstaad

◆

Lausanne

◆

Lugano

◆

St Moritz

◆

Zurich

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL20

PRESENTATION OF THE GROUP AND ITS RESULTS

SIMPLIFIED ORGANIZATION CHART AND GROUP LOCATIONS

1.4.3

DISTRIBUTION NETWORK

Hermès objects are available worldwide through a network of 303 exclusive stores. Hermès watches, perfumes and tableware are also sold through

networks of specialised stores. The branches are located in the following geographical areas: 73 in Europe (including 13 in France), 47 in the Americas

(including 31 in the United States), 95 in Asia (including 29 in Japan), and 6 in Oceania.

Europe

Germany: 14

11 branches:

3 concessionaires

Austria: 2

2 concessionaires

Belgium: 3

3 branches:

Denmark: 2

1 branch:

◆

Copenhagen

1 concessionaire

Spain: 4

4 branches:

France: 29

13 branches:

16 concessionaires

United Kingdom: 8

6 branches:

2 concessionaires

Greece: 1

1 branch:

◆

Athens

Ireland: 1

1 branch:

◆

Dublin

Italy: 14

11 branches:

3 concessionaires

Luxembourg: 1

1 concessionaire

Norway: 1

1 branch:

◆

Oslo

Netherlands: 3

2 branches:

1 concessionaire

Poland: 1

1 branch:

◆

Warsaw

Portugal: 1

1 branch:

◆

Lisbon

Principality of Monaco: 1

1 branch:

◆

Monte Carlo

Czech Republic: 1

1 branch:

◆

Prague

Russia: 3

3 branches:

Sweden: 1

1 branch:

◆

Stockholm

Switzerland: 10

8 branches:

2 concessionaires

◆

Istanbul Emaar

◆

Istanbul Istinye Park

◆

Istanbul Nisantasi

◆

Rio de Janeiro

◆

Sao Paulo Cidade Jardim

◆

Sao Paulo Iguatemi

◆

Calgary

◆

Montreal

◆

Toronto

◆

Vancouver

◆

Beijing China World

◆

Beijing Peninsula

◆

Beijing SKP

◆

Changsha

◆

Chengdu

◆

Chongqing

◆

Dalian

◆

Guangzhou

◆

Hangzhou Hubin

◆

Hangzhou Tower

◆

Harbin

◆

Kunming

◆

Atlanta

◆

American Dream

◆

Aventura

◆

Beverly Hills

◆

Boston

◆

Chicago

◆

Costa Mesa South Coast Plaza

◆

Dallas

◆

Denver

◆

Greenwich

◆

Hawaii Ala Moana

◆

Hawaii Waikiki

◆

Houston

◆

Las Vegas Bellagio

◆

Las Vegas Crystals

◆

Las Vegas Wynn

◆

Miami

◆

New York Madison

◆

New York Meatpacking

◆

New York Men on Madison

◆

New York Wall Street

◆

Nanjing

◆

Ningbo

◆

Qingdao

◆

Shanghai IFC

◆

Shanghai Maison

◆

Shanghai Plaza 66

◆

Shenyang

◆

Shenzhen Bay Mixc

◆

Shenzhen Mixc

◆

Suzhou

◆

Wuhan

◆

Xi’An

◆

Xiamen

◆

Orlando

◆

Palm Beach

◆

Palo Alto

◆

Philadelphia King of Prussia

◆

San Diego

◆

San Francisco

◆

Seattle

◆

Short Hills

◆

Troy

◆

Washington

◆

Cancún

◆

Guadalajara

◆

Mexico Artz

◆

Mexico Masaryk

◆

Mexico Moliere

◆

Mexico Santa Fe

◆

Monterrey

◆

Busan

◆

Daegu

◆

Seoul Dosan Park

◆

Seoul Galleria

◆

Seoul Hyundai Apkujung

◆

Seoul Hyundai Coex

◆

Seoul Lotte World Tower

◆

Seoul Shilla

◆

Seoul Shinsegae Gangnam

◆

Seoul Shinsegae Main

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 21

PRESENTATION OF THE GROUP AND ITS RESULTS

SIMPLIFIED ORGANIZATION CHART AND GROUP LOCATIONS

Turkey: 4

3 branches:

1 concessionaire

Americas

Argentina: 1

1 branch:

◆

Buenos Aires

Brazil: 3

3 branches:

Canada: 5

4 branches:

1 concessionaire

Caribbean: 1

1 branch:

◆

Saint-Barthélemy

Asia

Mainland China: 28

25 branches:

Chile: 1

1 concessionaire

United States: 38

31 branches:

3 concessionaires

7 concessionaires

Mexico: 7

7 branches:

Panama: 1

1 concessionaire

South Korea: 18

10 branches:

8 concessionaires

◆

Hong Kong Elements

◆

Hong Kong Harbour City

◆

Hong Kong International Airport

◆

Hong Kong Landmark Prince’s

◆

Hong Kong Lee Gardens

◆

Hong Kong Pacific Place

◆

Hong Kong Sogo

◆

Mumbai

◆

New Delhi

◆

Chiba Sogo

◆

Fukuoka Hakata Hankyu

◆

Fukuoka Iwataya

◆

Hiroshima Sogo

◆

Kobe Daimaru

◆

Kyoto Takashimaya

◆

Nagoya JR Takashimaya

◆

Nagoya Matsuzakaya

◆

Nagoya Mitsukoshi

◆

Okayama Takashimaya

◆

Osaka Hilton

◆

Osaka Shinsaibashi Daimaru

◆

Osaka Takashimaya

◆

Osaka Umeda Hankyu

◆

Brisbane

◆

Gold Coast Pacific Fair

◆

Sapporo Daimaru

◆

Sendai Fujisaki

◆

Tokyo Ginza

◆

Tokyo Ikebukuro Seibu

◆

Tokyo Marunouchi

◆

Tokyo Nihombashi Mitsukoshi

◆

Tokyo Nihombashi Takashimaya

◆

Tokyo Omotesando

◆

Tokyo Shibuya Tokyu

◆

Tokyo Shinjuku Isetan

◆

Tokyo Shinjuku Takashimaya

◆

Tokyo Tamagawa Takashimaya

◆

Urawa Isetan

◆

Yokohama Sogo

◆

Yokohama Takashimaya

◆

Macao Four Seasons

◆

Macau Galaxy

◆

Macao Wynn

◆

Macao Wynn Palace

◆

Kuala Lumpur Pavilion

◆

Kuala Lumpur The Gardens

◆

Melbourne Chadstone

◆

Melbourne Collins Street

◆

Sydney

◆

Singapore Changi Airport T1

◆

Singapore Changi Airport T2

◆

Singapore Changi Airport T3

◆

Singapore Liat Tower

◆

Singapore Marina Bay Sands

◆

Singapore Takashimaya

◆

Kaohsiung

◆

Taichung

◆

Taiwan

◆

Taipei Bellavita

◆

Taipei Regent

◆

Taipei Sogo Fuxing

◆

Bangkok Central Embassy

◆

Bangkok Icon Siam

◆

Bangkok Siam Paragon

◆

Phuket Floresta

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL22

PRESENTATION OF THE GROUP AND ITS RESULTS

SIMPLIFIED ORGANIZATION CHART AND GROUP LOCATIONS

Hong Kong: 7

7 branches:

India: 2

2 branches:

Indonesia: 2

2 concessionaires

Japan: 36

29 branches:

Middle East

Bahrain: 1

1 concessionaire

United Arab Emirates: 5

5 concessionaires

Oceania

Australia: 6

5 branches:

7 concessionaires

Kazakhstan: 1

1 concessionaire

Macao: 4

4 branches:

Malaysia: 3

2 branches:

1 concessionaire

Kuwait: 1

1 concessionaire

Lebanon: 1

1 concessionaire

Philippines: 1

1 concessionaire

Singapore: 6

6 branches:

Taiwan: 9

6 branches:

3 concessionaires

Thailand: 5

4 branches:

1 concessionaire

Vietnam: 2

2 concessionaires

Qatar: 2

2 concessionaires

Guam: 1

1 branch:

◆

Guam

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 23

PRESENTATION OF THE GROUP AND ITS RESULTS

SIMPLIFIED ORGANIZATION CHART AND GROUP LOCATIONS

1.4.4

REAL ESTATE

The surface areas set out below correspond to the gross floor space,

measured on plans by an architect, for all of the Group’s buildings in and

around Paris.

In Paris, the Group now occupies office space of approximately

31,400m

mainly near its historical registered office of 24, rue du

Faubourg Saint-Honoré and 19-21, rue Boissy d’Anglas, which it owns.

Staff work in office premises in rue de la Ville-l’Évêque, rue d’Anjou and

rue de Penthièvre in Paris 8

arrondissement, leased from third parties

under commercial leases. The building on rue de Penthièvre underwent

major interior work to accommodate the Hermès Perfume and Beauty

and digital teams in April2021.

In Pantin, Hermès occupies 84,500m

of manufacturing premises and

office space, most of which is owned by the Group, including the Espace

Jean-Louis Dumas, which opened in 2015, and the Cité des Métiers,

which won the Prix de l’Équerre d’Argent 2014. The Group leases an

office building located in Pré-Saint-Gervais to provide a surface of

6,200 m . In 2020, the Group also leased a building located near the

Espace Jean-Louis Dumas, for an additional surface area of 4,800m ,

which underwent major redevelopment work to accommodate the

activities of petit h and Hermès Horizons from the end of 2021.

In Bobigny, the Group owns its logistics site, with a total surface area of

approximately 32,100m2.

The Group is the owner of 61 of the 66 production sites that it operates

(see § 1.4.2).

Hermès products are sold worldwide through 303 exclusive stores

(see § 1.4.3). A total of 221 stores are operated as branches., most of

which have commercial leases intended primarily to ensure the continuity

of operations over time.

However, the Group also owns the buildings that house certain stores,

including those in Paris, Ginza in Tokyo, Dosan Park in Seoul, Beverly

Hills, Sydney and Geneva. In addition, the Group owns a commercial

building and offices in London.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL24

PRESENTATION OF THE GROUP AND ITS RESULTS

KEY FINANCIAL FIGURES

AFR

1.5

KEY FINANCIAL FIGURES

1.5.1

REVENUE BY MÉTIER FOR 2021

(2020)

Silk and Textiles

7% (7%)

Ready-to-wear

and Accessories

25% (22%)

Other Hermès

sectors

11% (10%)

Perfume

and Beauty

4% (4%)

Watches

4% (3%)

Other products

3% (4%)

Leather Goods

& Saddlery

46% (50%)

1.5.2

REVENUE BY GEOGRAPHICAL AREA

FOR 2021 (2020)

Asia-Pacific

(excl. Japan)

47% (46%)

Americas

16% (15%)

Other

2% (1%)

France

9% (10%)

Europe

(excl. France)

15% (15%)

Japan

11% (13%)

1.5.3

KEY CONSOLIDATED DATA

In millions of euros

2021 2020 2019

2018

Restated * 2017

Revenue 8,982 6,389 6,883 5,966 5,549

Growth at current exchange rates vs. n-1 41% (7)% 15% 8% 7%

Growth at constant exchange rates vs. n-1

42% (6)% 12% 10% 9%

Recurring operating income

3,530 1,981 2,339 2,075 1,922

in % of revenue 39% 31% 34% 35% 35%

Operating income 3,530 2,073 2,339 2,128 1,922

in% of revenue 39% 32% 34% 36% 35%

Net income attributable to owners of the parent 2,445 1,385 1,528 1,405 1,221

in % of revenue 27% 22% 22% 24% 22%

Operating cash flows 3,060 1,993 2,063 1,863 1,580

Operating investments 532 448 478 312 265

Adjusted free cash flow

2,661 995 1,406 1,447 1,340

Equity attributable to owners of the parent 9,400 7,380 6,568 5,470 5,039

Net cash position

6,695 4,717 4,372 3,465 2,912

Restated net cash position

7,070 4,904 4,562 3,615 3,050

Headcount (number of people) 17,595 16,600 15,417 14,284 13,483

* Including the impact of IFRS16 on leases. In accordance with IAS8, Hermès has applied the new standard on a full retrospective basis, and has restated the financial*

statements for the period ended 31December 2018.

(1) Growth at constant exchange rates is calculated by applying, for each currency, the average exchange rates of the previous period to the revenue for the period.

(2) Recurring operating income is one of the main performance indicators monitored by Group management. It corresponds to operating income excluding non-recurring

items having a significant impact that may affect understanding of the Group’s economic performance.

(3) Adjusted free cash flow is the sum of cash flows related to operating activities, less operating investments and the repayment of lease liabilities recognised in

accordance with IFRS16 (aggregates in the consolidated statement of cash flows).

(4) Net cash position includes cash and cash equivalents presented under balance sheet assets, less bank overdrafts which appear under short-term borrowings and

financial liabilities on the liabilities side. Net cash position does not include lease liabilities recognised in accordance with IFRS16.

(5) Restated net cash corresponds to net cash plus cash investments that do not meet the IFRS criteria for cash equivalents due in particular to their original maturity of

more than three months, less borrowings and financial liabilities.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 25

PRESENTATION OF THE GROUP AND ITS RESULTS

KEY FINANCIAL FIGURES

1.5.3.1

CHANGE IN CONSOLIDATED

REVENUE

In millions of euros

2017 202020192018 2021

5,549

5,966

6,883

6,389

8,982

1.5.3.2

CHANGE IN RECURRING OPERATING

INCOME

In millions of euros

2021

1,922

2,075

2,339

1,981

2017 202020192018

restated*

3,530

1.5.3.3

CHANGE IN OPERATING INVESTMENTS

In millions of euros

2017 202020192018 2021

265

312

478

448

532

1.5.3.4

CHANGE IN THE NUMBER OF HERMÈS

EXCLUSIVE STORES

212

219

223

221

2017 202020192018 2021

304

310

311

221

306

303

Concessionnaires

Branches

1.5.3.5

CHANGE IN NET INCOME ATTRIBUTABLE

TO OWNERS OF THE PARENT

In millions of euros

2017 202020192018

restated*

2021

1,221

1,405

1,528

1,385

2,445

1.5.3.6

CHANGE IN ADJUSTED FREE CASH FLOW

In millions of euros

2017 202020192018

restated*

2021

1,340

1,447

1,406

995

2,661

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL26

PRESENTATION OF THE GROUP AND ITS RESULTS

REVENUE AND ACTIVITY BY MÉTIER

AFR

1.6

REVENUE AND ACTIVITY BY MÉTIER

1.6.1

LEATHER GOODS & SADDLERY

Leather Goods & Saddlery, Hermès’ original métier, encompasses bags

for men and women, clutches, briefcases, luggage, small leather goods,

diaries and writing objects, saddles, bridles and a full range of

equestrian products and clothing.

The Leather Goods & Saddlery métier represents 46% of consolidated

sales. In 2021, it generated €4,091million in revenue.

Hermès saddlery and leather goods articles are born of an alchemy of

authentic materials, selected according to rigorous standards, and the

skilled hands of the saddler-leather workers, who apply traditional

savoir-faire passed down from generation to generation. The care taken

by the craftspeople each day patiently crafting and fashioning the raw

leather gives these unique objects a distinctive additional measure of

personality.

Today, they are made by over 4,300 saddler-leather craftspeople in 19

production units and workshops spread over Paris, Pantin and six

regions across France. To meet sustained high demand, Hermès

opened two new leather goods workshops in 2021, one in Gironde and

the other in Seine-et-Marne. Two other leather goods workshops are

under construction: one in the Eure, with opening scheduled for the end

of 2022, and the other in the Ardennes for 2023. The construction of

the new glove and leather goods building in Saint-Junien (Haute-Vienne),

which will be completed in 2023, will double the number of craftspeople

on this site. Hermès is also preparing to start work on its new production

unit in Riom (Puy-de-Dôme), which is scheduled to open in 2024. These

establishments are set up in close collaboration with the various local

stakeholders and regional administrative and economic development

bodies. In this way, Hermès reaffirms its commitment to regions with a

strong manufacturing savoir-faire, and its will to provide high-quality

jobs.

The House is also continuing to perfect the skills and savoir-faire of its

craftspeople through a range of training and professional qualification

programmes. These programmes are delivered within the École Hermès

des Savoir-Faire and through a range of partnerships with training

structures in the regions concerned.

1.6.1.1

WOMEN’S BAGS

A new style of clasps inspired by equestrian silversmithing has been

introduced in the collections of women’s bags. On the Hermès Della

Cavalleria bag, the clasp is in the shape of a boldly assertive bridle bit,

following the smooth curves of the leather perfectly, revealing an

astonishing construction and highlighting the work in the contours. In the

same vein, a bit straight from the discipline of dressage gives its

structure to a new small bag with straight lines, called the Mors de

Bride.

The Hermès Perspective Cavalière bag is a new leather shoulder bag

with a nomadic touch, available in two sizes. Its clean lines and

construction are reminiscent of the curves of a saddle, a lineage

underlined by the saddler’s rivet that serves as a closure. The collection

of everyday bags welcomes the H en Biais tote bag, which reinterprets

an emblematic design from the 1970s in an original jacquard canvas or

in a raised embroidery tufted canvas.

The Birkin continues to reinvent itself and its uses. As an ode to its

original function, the Birkin Fray Fray 35 reinterprets the large tote bag

in a light and cheerful canvas version, with its edges frayed by hand to

create coloured fringes. As for the Birkin 3 in 1, it offers a play on

deconstruction and reconstruction around its emblematic flap, allowing

several uses as a tote bag to be carried with or without its clutch bag.

The reinterpretation of the great classics is expressed through

exceptional versions, designed in an “Arts & Crafts” spirit. Like the Kelly

Padded whose embossed leather work evokes the seats of vintage cars

and illustrates the savoir-faire of the upholsterer. The Kelly and Birkin

25 In and Out bags inaugurate a new technique of detailed printing on

leather, which reveals playful designs. The Picnic story, which celebrates

the meeting of savoir-faire in basketry and leather goods, continues with

the Birkin 25 Picnic. The Birkin 35 Faubourg Tropical calls upon the

exceptional skills of Indian embroiderers to cover the bag entirely with

lush vegetation, embroidered using the point de Lunéville technique and

requiring 53 colours of thread. Two other odysseys continue, that of the

Birkin Faubourg, proposed this year in an “in the snow” version, and

that of the Birkin Shadow, an optical illusion made from embossed

leather on the size 25. The “Studio 24” evening look transposes

the

Change

2021

Revenue in

millions of euros

2021

mix in %

2020

Revenue in

millions of euros

2020

mix in %

at current

exchange

rates

at constant

exchange

rates

Leather Goods & Saddlery 4,091 46% 3,209 50% 27% 29%

Ready-to-wear and Accessories 2,219 25% 1,409 22% 58% 59%

Silk and Textiles 669 7% 452 7% 48% 49%

Other Hermès sectors 1,001 11% 643 10% 56% 57%

Perfume and Beauty 385 4% 263 4% 46% 47%

Watches 337 4% 196 3% 72% 73%

Other products 279 3% 218 4% 28% 29%

CONSOLIDATED REVENUE 8,982 100% 6,389 100% 41% 42%

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 27

PRESENTATION OF THE GROUP AND ITS RESULTS

REVENUE AND ACTIVITY BY MÉTIER

disco spirit of the 1970s to the Constance and Mosaïque au 24 bags,

whose clasps are faceted with a polished-mirror finish.

Lastly, combinations of textiles and leathers are in the spotlight and

bring a light touch to certain models. This is the case of the 24-24 in its

size 35 or the Picotin Pocket, which acquires an “adventurous”

character with its exterior pockets. A new canvas called Quadrille, in a

three-colour fabric made of 100% cotton, makes its appearance on the

Victoria tote bag, the Herbag Zip and the Kelly Sellier

1.6.1.2

MEN’S BAGS

The men’s collections have multiplied the offering in response to

contemporary uses, and revisit the identity codes of the great classics.

The emblematic Sac à Dépêches features a new 29 cm messenger

format that can be worn in different ways, including as a clutch bag,

thanks to its removable shoulder strap.

The Hermès Open 24 bag is a new sports bag made entirely of leather,

whose side handles make it easy to grab and draw an H in contrasting

materials or colours. The line also includes two models of small leather

goods, a wallet and a card holder, whose signature is found in the folds

and juxtaposition of leathers.

Among the large formats ready for travel, the Galop tote bag, created in

1992, has been revived in a tweed wool tartan version, combined with

leather.

A special place has been given to the emblematic Haut à Courroies 40

bag. First, with a “western” design, transposing an embroidery inspired

by the world of cowboys onto the leather. But also in a new Cargo

version in canvas and leather inspired by military clothing, with

multifunctional pockets on the front and back.

1.6.1.3

TRAVEL

The world of travel has shaped Hermès’ history throughout its

development. These roots in facilitating travel have spurred the creation

of the new rolling luggage, the RMS (Rolling Mobility Suitcase).

Bridging tradition and modernity, this luggage is inspired by both

traditional leather suitcases, with its reinforced corners, and the urban

and contemporary universe, with its skateboard wheels. Resolutely

innovative, it has taken several years of research to create its

particularly smooth wheeling experience and ease of use. It is available

in a wide choice of materials and colours, including printed canvas, and

offers the possibility of personally selecting the colours of the wheels

and handle.

1.6.1.4

ACCESSORIES AND SMALL LEATHER GOODS

The collections of small leather goods continue to be renewed in order

to respond to the multiplicity of uses, in a joyful and colourful spirit,

without forgetting to ensure timelessness.

The Béarn and Calvi lines welcome new formats. The Béarn Combiné

wallet offers all the functionality of a compact wallet in an even smaller

format, still closed by a leather tab slipped into a metal H buckle. Calvi

Duo retains its folding leather style and its original format, but adds a

compartment with a press-stud closure to accommodate change, as well

as the card compartment.

The In-the-Loop Wink line plays with emoticons to imagine fun small

leather goods, mini wallets, key cases or phone cases, featuring a

mouth and mischievous eyes created in contrasting leathers.

The Backpocket is a smart accessory for the Birkin. This removable

zipped pocket slips over the back handle of the bag for immediate

access to essentials. In tone on tone or a contrasting colour, it brings a

different personality to the Birkin.

The rollout of charms continues. A new miniature, the Kellydole charm is

a true concentration of savoir-faire: meticulous, precise assembly,

refined details – eyebrows, mouth, feet and hands – and technical

achievements in the realisation of functional metallic parts. The

must-have Rodeo horse becomes winged and takes on a new look in its

Pégase version. Finally, a tiny zebra with a crazy colourful mane, the

Geegee Savannah, joins the collection.

1.6.1.5

MATERIALS

Beauty and sensuality are the key words of the collection of materials.

Around the base of Heritage leathers (Box, Barénia, Vache naturelle,

etc.), in the purest tradition of excellence, some 40 leathers illustrate

this unique profusion of softness, sheen, relief and allure.

But 2021 is also a year marked by innovation.

Innovation in leather, giving pride of place to vegetable tanning, and

creating an exceptional patina. The infusion of birch and oak used for

the Volynka crocodile gives it a powerful smell of smoked tea and an

irresistible allure of weathered mahogany, while the subtlety of chestnut

gives the Galop d’Hermès leather a fragrance of waxed wood, a dense

and full hand and a firm feel without being stiff.

Innovation in textiles with the new Quadrille fabric, inspired by toile H,

with its regular and compact weave.

Remarkable innovation in new materials with Sylvania, a hybrid material

made from Fine Mycelium™. The result of an exclusive collaboration

between Hermès and MycoWorks, a California company that has

created a premium material made from their patented process to

enhance mycelium as it grows. Sylvania is neither leather nor textile. It is

a fine and supple material, with a slightly plump hand and an incredibly

soft touch. With its fine relief and amber hue, it has naturally found its

place in Hermès’ collection of exceptional materials.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL28

PRESENTATION OF THE GROUP AND ITS RESULTS

REVENUE AND ACTIVITY BY MÉTIER

1.6.1.6

EQUESTRIANISM

2021 was a landmark year for the Equestrian métier. In January, Steve

Guerdat, a Swiss show jumper, joined the House as a partner rider and,

by his own admission, fell in love with the Hermès saddle. Three-time

winner of the World Cup final and double Olympic medallist, Steve

Guerdat is a horse enthusiast respected by the entire equestrian world.

During the summer, the Hermès saddle shone at the highest sporting

level, winning three medals at the Tokyo Olympic Games: two gold for

the German dressage rider, Jessica Von Bredow-Werndl, and a bronze

for the Belgian rider, Jérôme Guery in show jumping. These accolades

were followed with great emotion by the saddler craftspeople at the

Faubourg Saint-Honoré and Normandy workshops.

These sporting performances were accompanied by a very positive

commercial dynamic in all countries. Saddle sales are growing thanks to

a renewed offering, visibility in elite sport and the business model

focused on saddle experts, who bring unique technical expertise and

customer experience.

Lastly, the universe of the Dog, which has been reinvented by drawing

inspiration from the House’s archives and savoir-faire, has made a

grand and joyous debut in stores around the world.

1.6.2

READY-TO-WEAR AND ACCESSORIES

The Ready-to-wear and Accessories métier is the Hermès Group’s

second largest sector, representing 25% of consolidated sales. In 2021,

it generated €2,219million in revenue.

1.6.2.1

WOMEN’S READY-TO-WEAR

In 2021, the summer collection offers a minimal and refined wardrobe,

built around a slender silhouette whose fluidity and sensuality are

underlined by graphic lines, supple constructions and light materials.

The collection is structured along three lines: wardrobe essentials,

articles inspired by the equestrian universe, and finally, the work of the

summer coat and suit, where the classic materials of the suit, wool or

Prince of Wales check, are revisited for enhanced freshness and

lightness. Still in this spirit of purity, suits and free-flowing articles

delicately embrace bare skin.

For winter, Nadège Vanhée-Cybulski, creator of women’s ready-to-wear,

expresses a message of optimism and a call to the great outdoors. The

fall-winter collection, dedicated to a sensual woman seeking a balance

between sophistication and comfort, is above all reassuring and

elegant. The clothes are shapely, signed and fitted. The Tattersall, a

checked fabric of equestrian origin, is omnipresent and magnified,

printed on a water-repellent cotton twill or woven in a cashmere and silk

knit. The Medor stud, one of the House’s emblematic metallic items,

dots various pieces, cotton blouses and pleated skirts, or is used as a

button closure on cashmere coats.

1.6.2.2

MEN’S READY-TO-WEAR

In this year of great upheavals, it was necessary to reinvent the way of

designing a collection while perpetuating the stylistic vision dear to

Véronique Nichanian, Artistic Director of the men’s universe.

The spring-summer collection blows a breeze of lightness, casualness

and freedom. In a play on encounters between depth and fantasy,

between innovation and heritage, the clean silhouettes create a relaxing

timelessness. The colours form contrasting harmonies, while the stripes

of the shirts are used on linings, double plackets and yokes.

The fall-winter collection is committed to reconnecting with the

movement of the world. The clothes leave their traditional frame and

become bridges between the inside and the outside. Hybrid and

practical, they invite travel from the inside to the outside, and vice

versa, in a constant quest for comfort and flexibility. As a source of

energy, they offer a range of contrasting lines and colours.

With these two collections, Véronique Nichanian instils an optimistic

spirit imbued with nonchalance.

1.6.2.3

FASHION ACCESSORIES

1.6.2.3.1 Fashion jewellery

Fashion jewellery gives pride of place to materials. The excellence of

leather savoir-faire is fully demonstrated through the different

realisations of the new Entrelacs line, whose arabesques are cut from a

single piece of leather and highlighted with saddle stitching.

The Clic All Over enamel bracelet is adorned with new prints that feature

toucans, cheetahs, equestrian motifs or an interstellar decor.

Wicker, a plant fibre already present in previous collections, comes back

to dress the Dog Collar cuff and a pair of earrings in original colours,

Naples yellow, ecru and nasturtium.

As for the lacquered wooden bracelets, they give a nod to felines by

dressing up in spots, evoking the fur of these animals, lacquered by

hand in successive layers for a particularly sleek finish.

1.6.2.3.2 Belts

The women’s belts are daring, adding a touch of fantasy to classic

models, in particular a buckle composed of juxtaposed metal bubbles,

with sparkling curves.

Fantasy is also expressed in the colours, always very much present on

the leather belts and which is also used on the boucle H with new

enamel models, in plain colours for summer or printed with a feline

pattern, echoing the jewellery accessories for winter.

In order to adapt to all uses, for the first time, the women’s collections

include an adjustable and reversible belt.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 29

PRESENTATION OF THE GROUP AND ITS RESULTS

REVENUE AND ACTIVITY BY MÉTIER

The men’s belt adds to its repertoire for the summer with

marine-inspired models whose new buckle, a masterpiece of silverware,

perfectly imitates a rope. For winter, the buckle plays with colour, with

three-colour lacquered metal or rainbow versions.

1.6.2.3.3 Hats

Various prints from the House have found their place in the hat

collections, whether on a bucket hat or a cap for women, or on a men’s

cap with a motif borrowed from men’s ready-to-wear.

In summer, straw lends itself to all kinds of play: woven for the first time

with a tartan motif, openwork for a very light look, or even infinitely

braided on a wide-brimmed maxi hat.

In winter, the collections showcase the savoir-faire of felt by combining it

for the first time with leather on a cap, or by embellishing it with a

lacquered metal jewel on a fedora, with a printed silk patch hidden on

the inside.

1.6.2.3.4 Gloves

In summer, the line of hair accessories expands with leather-wrapped

barrettes printed with graphic and coloured patterns. And the headband

is adorned with leather and braided edges.

Ready for winter, a new men’s mitten is available in a cashmere knit

with a hand-sewn deer applied. A new feminine model plays with colours

and a trompe l’œil to evoke driving gloves.

1.6.2.3.5 The Internet of Things

Hermès is continuing its collaboration with Apple and presents several

new products this year.

A result of the excellence of Hermès leather savoir-faire, the Apple

AirTag Hermès is a leather object that accommodates the AirTag,

Apple’s innovative accessory that makes it easy for iPhone users to find

their everyday objects with the Apple “Find My” app. Four accessories

were designed based on a horse token holder from the House’s

archives: key ring, bag accessory, luggage tag and address holder.

New bracelets and dials are appearing for the Apple Watch Hermès

Series 7, with a larger screen for an optimised interface, while offering

increased resistance and faster recharging. They revisit the House’s

emblematic signatures and are adorned with chain links and Chaîne

d’ancre motifs. Their colour palette is enriched by new shades, between

timelessness and radiance.

Continuing the dialogue between savoir-faire and modernity, Hermès

has designed an iPhone case compatible with the MagSafe wireless

charging system. Barénia calfskin, a full-grain leather with a silky feel, it

is highlighted with a Bolduc hot stamped design, inspired by the classic

Hermès orange box ribbon.

1.6.2.3.6 Shoes

In 2021, Pierre Hardy, Creative Director of women’s and men’s shoes,

was inspired by the theme of the Odyssey to create bridges between

Hermès’ heritage and the contemporary world, between yesterday and

tomorrow, between savoir-faire and innovation.

The summer collection of women’s shoes affirms the richness of its lines

by embellishing the leatherwork on flat sandals, laces rising up the calf

or even espadrilles. A new heel representing the Médor stud adorns a

resolutely colourful and cheerful line. A new type of shoe has emerged

with clogs, which have quickly become a must-have.

For winter, boots made of a single piece of leather and decorated with

remarkable saddle stitching, from the heel to the top, highlight the

beauty of the leather. The heel is also magnified, with, in particular, a

heel composed of spheres reminiscent of the Cristalleries Saint-Louis

vases, resulting from meticulous manufacturing work. Pierre Hardy

continues his interpretation of the annual theme by creating models for

the busy, active woman, with crepe-type soles or elegant sneakers.

The summer collection for men combines comfort and elegance through

soft materials such as calfskin or goatskin, mounted on leather or

rubber soles to further accentuate their suppleness. The offer is

illuminated by a rich palette of colours. Sporty and colourful models

continue to combine comfort and elegance in everyday life.

In winter, men also dream of nomadism and travel, with thick-soled

models that are as comfortable for walking in the city as for going on

hikes. A new square buckle stands out as a timeless signature, while the

sneaker family continues to be enriched with models with light and

supple soles.

1.6.3

SILK AND TEXTILES

Silk and Textiles represent the fourth largest sector in the Group,

accounting for 7% of consolidated sales. In 2021, this métier generated

€669million in revenue.

1.6.3.1

WOMEN’S SILK

In 2021, the scarves of the winners of the Grand Prix du Carré Hermès,

an international drawing competition launched in 2019, were

presented. Duo cosmique, winner of the first prize, pays tribute to

Japanese culture and its traditional kimono patterns, by illustrating a

philosophical concept from tantric Buddhism. The second prize, Masan

& Masan, was inspired by ancestral basketwork savoir-faire to compose

a dazzling face-to-face meeting between two masan figures, literally

“braided horse” in Thai. This is the end of this competition, a great

human adventure that has enabled the discovery of many talents, while

strengthening Hermès’ leading position in textile design.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL30

PRESENTATION OF THE GROUP AND ITS RESULTS

REVENUE AND ACTIVITY BY MÉTIER

The annual theme of the Odyssey inspired the House’s faithful

designers, who were very prolific. The L'épopée d’Hermès cashmere and

silk shawl recounts the six generations who have succeeded each other

to write the history of Hermès. In the mischievous form of a goose game,

it evokes the personalities, encounters and innovations that have

marked the House.

The Cheval de Fête scarf pays homage to the posters of the Polish

school from the 50s to the 70s, whose strong simple lines are

represented here by graphic and geometric ribbons and rosettes.

The Grand Théâtre nouveau drawing was born from a privileged visit to

the Imagerie d’Epinal archives. Inspired by old engravings, it creates an

astonishing theatre stage populated by wild animals. An assemblage of

geometric patterns recalls the characteristic work of stamp designs.

Cashmere and silk accessories also feature prominently: the giant

triangular scarf, launched during the fall-winter collection, is a new

must-have alongside shawls. Three drawings with various writings were

adapted to the triangle format for this first season: the majestic Zebra

Pegasus, the emblematic Ex-Libris and the Folklore textile design.

Finally, the transformation of unused materials gives rise to new

territories and creative gestures, in a spirit of upcycling. Thus, two

scarves cut in half and reassembled become a new scarf, like a happy

encounter. A long scarf is recreated from small sized scarves and plain

silk swatches. Figurative patches, cut from printed silk, spice up other

scarves, in an unprecedented mix of designs and colours.

1.6.3.2

MEN’S SILK

Winner of the Grand Prix du Carré Hermès for men’s silk, the MrFarrier

scarf, printed on cotton and silk in a size 140, features a farrier robot

created from the horseshoe motif, surrounded by traditional tools in a

festive and energetic composition.

The Cheval punk cashmere and silk scarf hovers between heritage and

edgy: its horse, superbly harnessed, is adorned with tattoos and a punk

mane inspired by an old brush kept in the Émile Hermès collection.

A major novelty, the rectangle for men, in fringed cashmere and silk,

stands out as a new classic alongside the square scarf. Instinctive like a

muffler, it is easy and natural to wear. Distinctive like a scarf, it is

printed with designs with a strong identity: for this first season, Hermès,

Drive me crazy and Hermès en tracé.

Within the fall-winter collection, a new creative territory is offered with

three hybrid and functional products, in wool and cashmere, intended to

accompany new uses around urban mobility: a generous muffler, lined

with a zipped pocket; a shirt front, also with a pocket, to put on under a

suit jacket; and lastly, a second muffler that hides a water-repellent

hood in technical canvas.

The tie collections have a wealth of new creative variations and new

savoir-faire, alongside the emblematic printed or woven silk models.

Thus the Double 6 tie, composed of two panels of identical width printed

with a sometimes classic, sometimes fancy pattern, can be worn with

either side facing, according to the whim of the wearer.

The cashmere and leather tie showcases exceptional materials. Made

using traditional glove-making techniques, it combines Scottish

cashmere and extremely supple lambskin.

Finally, a nod to the emblematic designs of men’s silk, a capsule of

three heavy silk ties with classic patterns, reveals three designs on the

lining featuring beasts designed in previous seasons: the Grrrrr! bear,

the Awooooo! wolf and the Aaaaargh! dinosaur.

1.6.4

OTHER HERMÈS SECTORS

The other Hermès sectors include Jewellery and the Hermès Art of Living

and Tableware. In 2021, they generated revenue of €1,001million,

representing a 57% rise at constant exchange rates and accounting for

11% of the Group’s total revenue.

1.6.4.1

JEWELLERY

In 2021, the Jewellery métier continued its exploration of form and

materials, breaking away from conventional codes.

A new communication campaign, Hermès, joaillerie cavalière, was

launched, affirming the meeting of the métier and the saddlery spirit in

objects as powerful as they are precious. This campaign evokes the

different stories of the métier, from haute joaillerie to silver jewellery,

expressing the common thread that guides its radicalism and its

positioning as a jeweller of design.

The encounter with the saddlery spirit was also celebrated in the

Kellymorphose exhibition. The event, initiated at the Faubourg

Saint-Honoré store in Paris in June, highlights the multiple

metamorphoses of the Kelly bag in jewels imagined by Pierre Hardy,

Creative Director of Jewellery. A game of miniaturization and

deconstruction down to the smallest detail, where the touret clasp, the

straps or the padlock twist, overlap and freely follow the movement of

the body.

The Faubourg store also received the sixth haute joaillerie collection,

Lignes sensibles, at the beginning of the year, before it took off to be

presented around the world.

1.6.4.2

HERMÈS ART OF LIVING AND TABLEWARE

Already experiencing strong growth in 2020, the Hermès homeware

division had a record year in 2021 with growth in porcelain, textiles and

furniture as well as in objects.

The attractiveness of these product families was confirmed by a

significant increase in the customer base, due to the recruitment of new

customers but also to their loyalty.

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PRESENTATION OF THE GROUP AND ITS RESULTS

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The year was punctuated by a presentation at the Milan Show that

attracted considerable attention from the press, architects and interior

designers as well as the general public.

The spectacular scenography, expressed, through five actual size

houses, covered with lime and painted by hand by La Scala’s

decorators, the values upheld by the collections: exploration of

craftsmanship savoir-faire, excellence in implementation, strength of

colours and graphics.

Notable novelties include the Sialk enamelled copper table

centrepieces, the Sillage armchair in cellulose fibre designed by Studio

Mumbai, the new Hippomobile porcelain tableware or the remarkable

New Haven, Fall River and Williamstown quilted white cashmere

bedcovers.

1.6.5

PERFUME AND BEAUTY

Perfume and Beauty generated revenue of €385million in 2021, i.e. 4%

of consolidated sales.

1.6.5.1

PERFUME

In the first half of the year, business was sustained by the launch of two

limited editions and a new fragrance.

The Terre d’Hermès bottle honoured this event by choosing the

emblematic H of the House as its signature, while the Charming Twilly

edition of Twilly d’Hermès tied a four-leaf clover to its silk tie, as if to

smile at the chance for renewal.

The month of February was marked by innovation, with the launch of the

new H24 fragrance for men. Hermès perfumer, Christine Nagel, invites

you to discover a hybrid exploration space, between nature and

technology. A plant-based composition woven from clary sage,

narcissus, rosewood and sclarene, with a lively, sensual and distinctive

signature, protected by an aerodynamic bottle. H24 benefits from

eco-designed development, with raw materials mainly derived from

biotechnologies, a recyclable case made of recycled fibres, and a

refillable bottle. Supported by an ambitious launch, H24 quickly won

over the profession with its boldness and attracted a young audience,

complementary to that of Terre d’Hermès.

In June, Terre d’Hermès added to its line with an unprecedented offer,

Terre d’Hermès alcohol-free spray, an accomplice to a new scented

gesture for the summer.

The second half started under the sun: the spirit of the Twilly d’Hermès

feminine perfume emerged in its most striking form with Twilly Eau

Ginger. An essence of joie de vivre, luminous and contagious, built

around peony, ginger and cedar. The latest attribute to join the Hermès

family of girls!

To support a still sensitive health context, the gentle no-rinse hand

cleansing gel was introduced in the fall, scented with refreshing notes of

Hermès Colognes.

At the end of the year, the Fêtes en Hermès box sets, perfume

celebrations of the joys of winter, were decorated with a revived and

recoloured épopée d’Hermès scarf. In addition, in the Hermessence

collection, the Agar Ébène eau de toilette was decorated with a

calligraphy poem, an ode to love adorned with gold arabesques in a rare

limited edition, dedicated to the Middle East.

1.6.5.2

BEAUTY

A year after its birth, the Hermès Beauty métier has continued its rapid

growth, supported by two limited editions of Rouge Hermès and the

development of new lines.

Fashion accessories in their own right, the seasonal limited editions of

Rouge Hermès have accompanied the vitality of fashion and brought

their colours to the women’s ready-to-wear fashion shows, successively

expressing the chromatic variations of Bauhaus under the Californian

sun in the first half of the year, then dazzling bursts of colour in the night

in the second half.

In the spring, the Rose Hermès collection, second line of Hermès

Beauty. This ritual dedicated to the sublimation of the complexion and

the lips consists of the Rose Hermès Silky Blush inspired by the

softness, lightness and sheen of silk, accompanied by Roses à lèvres

perfecteurs naturels, whose melting “candle” texture evokes the feel of

Butler calfskin. Naturally rechargeable objects, designed by Pierre

Hardy.

In the second half of the year, the third line, Les Mains Hermès,

illustrated, by its unexpected and particularly remarked upon ambition,

the singularity of this Beauty métier in a house of craftspeople. This new

ritual claims the two dimensions of skincare and colour with the same

legitimacy. It offers the House a first foray into the world of skincare,

with a Complete hand care and a Nourishing oil for nails and cuticles

certified Cosmos Natural. As for the 24 colours of nail polish, inspired by

the daring shine of enamel, they mirror the 24 permanent reds of the

Rouge Hermès collection. A fortifying and protective Enamel base coat,

a long-lasting shine Top coat and precious poplar wood nail files

complete the ritual.

The Hermès Beauty métier continued to be supported by a

comprehensive communication campaign, with particular weight given

to its most emblematic gesture, the Rouge lipstick.

For the end-of-year celebrations, two exceptional gifts enlivened this

new métier: the re-edition of the Piano Box in an extra-large format,

revealing the complete collection of 24 lipsticks, and a Poudre d'Orfèvre

cosmetic powder in a round case etched with the Ex-Libris and with a

sparkling, particularly festive finish.

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PRESENTATION OF THE GROUP AND ITS RESULTS

REVENUE AND ACTIVITY BY MÉTIER

1.6.6

WATCHES

With consolidated revenue of €337million in 2021, an increase of 73%

at constant exchange rates, the Watches division accounts for 4% of the

Group’s sales.

Established in Biel in 1978, Hermès has become a genuine watchmaker

in 43years, employing more than 300people in its manufacturing

division in Switzerland. Hermès now manufactures almost all of its

watches, movements and components in-house. Its creativity remains

Parisian in nature and affirms its unique style, which is invigorated by

the other métiers in the House. Its savoir-faire increasingly gives Hermès

a singular voice in the watch industry.

In 2021, sales growth was particularly strong in Hermès stores, thanks

to the dynamism of the Asian and American markets. Sales to external

watch retailers remained stable, despite the low level of traffic at airport

points of sale. Hermès continued to reduce the number of these

retailers this year in order to make its distribution even more selective.

In April, during the second digital edition of the Watches and Wonders

show in Geneva, held at the Bâtiment des Forces Motrices, Hermès

wanted to have a physical presence despite the still tense health

context. The métier teams were able to receive European journalists and

Swiss customers. They also organized numerous live conferences to

present the news to journalists in multiple countries and answer their

questions.

Hermès once again powerfully expressed the originality of its voice

within the restricted circle of haute horlogerie players, by affirming its

territory of expression: a unique relationship with time, full of fantasy

and emotion, a time with which we play without wanting to control it.

This message was supported by the Le Temps, un objet Hermès print

and digital advertising campaign.

The year 2021 was marked by several major product launches, which

met with strong and immediate commercial success. In April, the Salon

de Genève was an opportunity to present the new Hermès H08 men’s

line, with its resolutely contemporary sporting spirit, anchored in the

world of Véronique Nichanian. Comfortable, light, recognisable by its

unique design combining technological materials, surface effect and

atypical shapes, it is a companion object for every moment of the day. It

is available in three case variations (titanium, two-tone DLC titanium,

graphene and ceramic composite), combined with three strap materials

(titanium, technical strap and rubber) in different colours.

New versions of two Arceau complications confirmed their success in

2021. The Arceau L’heure de la Lune watch offers a quirky take on the

classic moon-phase complication, by reversing the usual relationship

between the functions of the watch and the complication. As for the

Arceau Tourbillon Répétition minutes, it shows the movement through

the dial cut into the shape of a horse’s head, a motif that can also be

found on the back of the bridges and plates.

The feminine lines have also been expanded, in particular the Faubourg

line, a true watchmaking jewel, which has seen spectacular growth. Its

new expression Faubourg Polka had a very promising launch at the

Watches and Wonders trade show. As for the Nantucket feminine line, it

has been enhanced with a metal bracelet in steel or rose gold, offering a

very feminine and elegant alternative to the traditional leather bracelet.

Sales also benefited from the strong results worldwide of the

indispensable Cape Cod and Heure H lines, whose constant renewal

attracts a growing number of enthusiasts: they have been able to

discover precious, technically innovative and occasionally bejewelled

expressions of these emblematic and imaginative lines.

Finally, the collection of exceptional pieces developed by Hermès

confirmed its great success once again this year, with watches

showcasing the House’s artistic métiers and watchmaking and jewellery

savoir-faire (i.e. Faubourg, Klikti, Arceau, Médor, etc.).

1.6.7

OTHER PRODUCTS AND BRANDS

In 2021, Other products generated revenue of €279million,

representing a 29% increase at constant exchange rates and

accounting for 3% of the Group’s total revenue.

1.6.7.1

CRISTALLERIES SAINT-LOUIS

In 2021, Saint-Louis gave centre stage to the exceptional pieces of its

portfolio and continued to expand its lighting offer.

One of the highlights was the re-release of a legendary work, the

vase-sculpture presented in 1937 at the Universal Exhibition in Paris,

signed by Jean Sala, author of numerous Art Deco pieces and whose

personality marked the production unit in the 1930s. A true technical

achievement, this vase is now kept in the collections of the National

Museum of Decorative Arts. Saint-Louis repeated the feat by reissuing it

in 18 numbered copies. More than 10 craftspeople are needed to blow

and hand carve this majestic sculpture made in four parts, entirely

covered with a network of cuts whose graphic lines capture the light.

The lighting offer is another heritage area of the crystal works, since the

first chandeliers appeared at Saint-Louis in the mid-nineteenth century,

in response to special orders from the Royal Courts. Since then, the

production unit continues to revisit its classics. Thus the Royal

collection, which offers more than 50,000 customisation possibilities

(sizes, decorations, colours), this year welcomed a new option: a large

illuminated bowl to diffuse the light in all directions.

Customers were able to discover these new products, alongside the

2021 editions of vintage paperweights, during virtual presentations

filmed in the heart of the production unit.

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As soon as the health situation allowed it, the Saint-Louis store on Rue

Royale reopened its doors, brightened up in a spirit of a cabaret to

celebrate the promise of a return to conviviality and freedom. This

atmosphere also travelled across borders, to the most emblematic

points of sale.

The House’s digital showcase is not left out: a new website was unveiled

in September, more immersive and now compatible with mobile phone

consultation to facilitate the presentation of tableware and decoration

collections, lighting and crystal gifts.

1.6.7.2

PUIFORCAT

In 2021, Puiforcat once again placed tableware at the heart of its

creative line with the launch of Monogrammes Puiforcat, a new

collection of porcelain in half-sets that allows customers to personalise

their tableware by playing with original monograms by Jean Puiforcat.

This graphic and colourful collection was first launched exclusively in

Paris, before being presented to Chinese customers at a series of

events organized during the fall in Chengdu, Shanghai and Shenzhen.

Within the workshop, activity remained strong, in particular thanks to the

demand for solid silver cutlery, but also to the continuation of the work

initiated on the continuous improvement of inventory management.

1.6.7.3

BOOTMAKER JOHN LOBB

The year 2021 was marked by the deployment of the new store concept

in Paris, at 51 Rue François 1

, and in Beverly Hills, with a brand new

space located at 9530 Brighton Way in the Rodeo Drive district. These

stores present the ready-to-wear and accessories collections in an

elegant and bright atmosphere. The concept gives an important place to

the values and services of the House with spaces dedicated to

maintenance, tailor-made and personalisation. To celebrate these

openings, the bespoke workshop in Paris offered two hand-made limited

series.

John Lobb also strengthened its presence in China through three

events. In Beijing, the store located in the China World mall was

operated for its first full year as a branch. In February, a virtual store

was created on the JD.com luxury e-commerce platform. Finally, in

September, a corner opened in the Shin Kong Place department store in

Beijing.

The other highlights of the year were related to savoir-faire: the

integration of Norwegian cushion in the Northampton ready-to-shoe

workshop gave birth to a new family of models, launched for the

Fall-Winter collection. Furthermore, the bespoke workshop on Rue de

Mogador in Paris has exclusively developed a brand new Lobb stitch.

1.6.7.4

TEXTILES

Holding Textile Hermès Groups together and coordinates under one

structure all savoir-faire relating to textile production: from creation to

sewing, encompassing weaving, engraving, printing, dyeing and

finishing.

It serves the Group’s different métiers, as well as external markets such

as clothing and interior decoration, in particular with the brands Bucol,

Métaphores, Verel de Belval and Le Crin.

The 2021 financial year was marked by a significant recovery in activity

with all customers, after a year in 2020 particularly affected by the

health crisis. To support this recovery while ensuring that savoir-faire is

maintained and passed on, new apprenticeship classes were

introduced during the year.

In addition, the Silk division’s real estate project is continuing its

progress at the Pierre-Bénite site (Rhône). This project, the cornerstone

of the sector’s modernisation, demonstrates its strong ambitions in a

creative and contemporary spirit. As a first essential step, the logistics

and industrial buildings were delivered, as planned, in 2020 and 2021.

The completion of the office building is scheduled for 2022.

1.6.7.5

TANNERIES AND PRECIOUS LEATHERS

The Tanneries division handles the purchase, tanning, finishing and sale

of precious leathers destined for the Hermès Group and for high-quality

brands and creations, mainly in the fashion, leather goods and

watch-making industries. Its activities cover calfskin and goatskin as

well as exotic leathers. The division also includes integrated crocodile

farming operations.

Its objective is to assert its position of excellence in the precious leather

market by securing its supplies, optimising its production capacities,

developing its savoir-faire, and respecting the environment and animal

welfare. It constantly works and invests in this direction, focusing on

innovation, creativity and the exemplary nature of its sectors.

Despite the health crisis, the mobilisation of teams and the continuation

of barrier measures made it possible to serve the House’s growing

needs. As a result, activity recovered quickly and reached a volume

close to that of 2019. Sales to external customers were more mixed,

with a sustained recovery from major French customers, while the Italian

market remained sluggish, and Asia returned to a level of activity

comparable to that of 2019.

The division managed to maintain its supplies throughout the year,

including in areas heavily affected by the pandemic, such as India, and

despite the difficulties encountered in maritime transport.

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PRESENTATION OF THE GROUP AND ITS RESULTS

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Efforts to continuously improve the quality of supplies continued

throughout the year in the three exotic leathers, calfskin and goatskin

sectors. Procurement, particularly in porosus, is reaping the benefits of

several years of investment and refinement of savoir-faire. In the calf

sector, joint initiatives with Hermès partners to promote the quality of

materials and animal welfare have been consolidated. Lastly, following

the acquisition of the Mégisserie Jullien in 2020, the division took direct

control of its goat leather purchasing at the beginning of the year.

The Tanneries division is committed to ensuring that it always acts

responsibly, in line with Hermès’ ethical and sustainable development

values. Hence, it only sells exotic hides where the source is perfectly

traced and audited, and refrains from dealing in certain species or

sectors, if necessary. In 2021, the division continued to implement the

unit traceability of calf hides. It has also developed a standard in the

lizard sector with experts to ensure the compliance of its supplies. In

addition, it supports external initiatives and scientific collaborations

aimed at improving the standards of each sector that is subject to

regular audits.

True to its strategy of excellence and operational control, the division

continues to adjust its offering and develop new tanning processes.

Thus, this year, the Box coloured bag, the calfskin lining and the

enhanced lizard offer have had significant success. Similarly, a range of

leathers tanned without metal, boasting new finishes, is attracting

growing interest. Finally, keen to broaden its offering and be ever more

innovative, the division worked on the industrialisation of Sylvania, an

innovative material based on the use of fungal threads.

Optimising the use of materials is also at the heart of the division’s

objectives. As in 2019 and 2020, joint teamwork with the craftsmanship

division and the Group’s various métiers continued successfully. In the

same vein, efforts to innovate and digitise the business are

progressively improving knowledge of production parameters and

facilitating the response to customer demand for finished products.

In 2021, the first phase of the renovation of the Tanneries du Puy was

completed. The renovation of the wastewater treatment plant on this

site and the second phase of the renovation of the buildings are under

study and will be carried out in the coming years.

In the United States, the division relocated its raw hide inspection

centre to Hammond, previously located in Lafayette. This provides

better synergy with farms and more efficient logistical processing of

flows between the United States and Europe.

Lastly, in Australia, construction of the new farm began in 2020 and will

continue in 2022. This investment incorporates the lessons and

savoir-faire of eight years of research and development of the best

breeding standards, with in particular the design of new tanks and an

optimised layout. This project also has a significant ambition in terms of

sustainable development, for optimization of resources and involvement

of local stakeholders.

1.6.7.6

HERMÈS HORIZONS

The creation and manufacture of exclusive bespoke objects have been

central to the Hermès story since its very beginnings. Today, this service

is performed by Hermès Horizons, which regularly explores new creative

visions, exceptional materials and savoir-faire, to bring its customers’

dreams to life.

Fantasy, technicity and wonderment are an everyday feature in the

Pantin and Faubourg Saint-Honoré workshops, where exclusive stories

in leather goods or the interior design of vintage cars or yachts are

written, but also, on occasion, unexpected objects such as jukeboxes,

bikes or paddle boards.

This burgeoning activity, which is available to customers in all Hermès

stores, builds on the creative wealth of the House and the virtuosity of

our craftspeople’s hands.

1.6.7.7

PETIT H

Petit h offers a unique design approach based on materials and objects

no longer used by other Hermès sectors. These elements, grouped

together in the same workshop, are made available to guest designers

and the House’s craftspeople, who combine their talents and

savoir-faire to offer them a new life. This is called reverse creation. This

approach resonates through its original distribution method, based on a

permanent space in a Paris store, a presence on the e-commerce site,

and pop-up sales organised in Hermès stores throughout the world.

In 2021, petit h moved temporarily to the Faubourg Saint-Honoré store

for a period of eight months. The métier is illustrated by joyful and

unique themes such as the new multi-material and multi-functional dog

families (tray holder, umbrella holder, newspaper holder, etc.), but also

creations around pommels, or the world of the hardware store.

In September, a new page was turned with the installation of petit h in

its new setting in the Hermès store on Rue de Sèvres. A unique place,

with a mischievous and modular spirit, like a theatre stage with multiple

sets, open to a large shop window, which transforms and surprises

according to the creative proposals. The materials and savoir-faire of

petit h are revealed around creations of earth or clay, crystal, leather,

porcelain or silk.

1.6.7.8

METAL PARTS (J3L)

The J3L group specialises in the development, manufacture and sale of

high-end metal parts. It supports all of the House’s business lines, from

the design phase to the production of finished parts.

The most commonly manufactured items are clasps, belt buckles,

carabiners, padlocks, bracelets, earrings, press studs and eyelets. They

are intended to be positioned on handbags, wallets, shoes, belts or

bracelets.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 35

PRESENTATION OF THE GROUP AND ITS RESULTS

REVENUE AND ACTIVITY BY GEOGRAPHICAL AREA

AFR

The manufacture of metal parts requires different savoir-faire. The

machining or stamping of the material first make it possible to obtain

raw parts. Polishing then gives them an exceptionally smooth surface,

without streaks or scratches. This surface can then be covered with a

thin layer of precious metal: white, yellow or rose gold, silver or

palladium depending on the designer’s choice. Lastly, the complex parts

and clasps are assembled and finished with a touch of brightening to

ensure the items really shine. J3L also masters other savoir-faire, such

as the lacquering of jewellery.

These techniques have made it possible to effectively develop several

new complex clasps for the Piloti, Manegio and Mors bags in 2021, as

well as to install new finishes such as anodised aluminium (black, green

and pink) on the padlocks of the Picotin bag, for example.

Fully integrated within the Hermès Group since 2020, the J3L group,

whose production quality has always been recognised as a benchmark,

is also developing business with external customers.

1.6.8

GROUP PARTNERSHIPS

1.6.8.1

PERRIN & FILS

Holding Textile Hermès has a 39.5% stake in the share capital of Perrin

& Fils. The Perrin Group specialises in weaving for a range of sectors as

diverse as lingerie, furnishing fabrics, ready-to-wear and accessories.

1.6.8.2

VAUCHER MANUFACTURE FLEURIER

La Montre Hermès holds a 25% share in the capital of Vaucher, the

traditional watchmaking production unit. Located in the heart of

traditional watchmaking territory, between Neuchâtel in Switzerland and

the French border, the Vaucher production unit perpetuates superior

savoir-faire and produces high-end and prestige watch movements.

1.6.8.3

BETTINA

Hermès holds a 40% share in the capital of Bettina, a long-time partner

of the Group. The company specialises in the production of twillaine, a

unique blend of knit and silk, and operates in the ready-to-wear sector,

as well as in silk, textiles and the art of living.

1.6.8.4

MAISON PIERRE HARDY

Hermès holds a minority stake (33%) in the capital of Maison Pierre

Hardy, a French shoe and fashion accessory design company directed

by MrPierre Hardy, its founder and Artistic Director.

1.7

REVENUE AND ACTIVITY BY GEOGRAPHICAL AREA

1.7.1

EUROPE

of Rue des Archers, and doubles the number of its openings onto the

city with 12 arched windows. All of the House’s craftsmanship is

presented in a warm and colourful atmosphere, adorned with a unique

“brocatelle” pattern evoking weaving savoir-faire. Hermès thus shows its

attachment to the city of Lyon, the cradle of its textile and printed silk

activities.

In France, the beginning of the year was marked by two store

reopenings. In Lyon, the store located on Rue du President

Édouard-Henriot reopened its doors in February after being renovated

and expanded. It now extends over more than 300m

up to the corner

2021 2020 Change

Revenue in

millions of

euros

2021

mix in %

Revenue in

millions of

euros

2020

mix in %

at current

exchange rates

at constant

exchange rates

Europe 2,140 24% 1,573 25% 36% 36%

◆

838 9% 620 10% 35% 35%

◆

Other

CONSOLIDATED REVENUE

France

Europe (excl. France) 1,303 15% 953 15% 37% 37%

Asia-Pacific 5,227 58% 3,749 59% 39% 40%

Japan 977 11% 834 13% 17% 25%

Asia-Pacific (excl. Japan) 4,251 47% 2,915 46% 46% 45%

Americas 1,458 16% 959 15% 52% 57%

156 2% 108 1% 44% 45%

8,982 100% 6,389 100% 41% 42%

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PRESENTATION OF THE GROUP AND ITS RESULTS

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In March, it was the turn of the store on Rue de Sèvres in Paris to unveil

its new interior space to the public. This listed building, opened in 2010

on the site of the old swimming pool of the Hôtel Lutetia, has been

transformed. While certain identity elements such as the three ash huts

and the monumental staircase have been preserved, the interior space

revisits the codes of Art Deco architecture over more than 1,300m

bathed in light, in a fresh and luminous colour palette that celebrates

the memory of water. The Chaîne d'encre bookstore and the tea room

have been combined on the mezzanine. Since September, a special

space has been dedicated to the collections of the petit h métier, which

has taken this over with joy. With a specific entrance and its own shop

window, this modular setting, like a theatre stage, produces new,

original stories four times a year invented by the creators of petit h.

Several significant events marked the year in mainland France. In

January and February, the haute joaillerie Lignes Sensibles collection,

unveiled to the press in September2020, was exhibited at the

Faubourg Saint-Honoré store. A film made by the artist Ange Leccia

accompanied the exhibition, transposing into images the intimate and

sensual universe of this collection designed by Pierre Hardy, like a

caress on the skin.

The ready-to-wear collections were once again able to enjoy prestigious

Parisian monuments, such as the Mobilier National, in a setting

2022 men’s collections, or Le Bourget airport for women’s fashion for

Spring-Summer 2022. The women’s Fall-Winter 2021 collection was

distinguished in March by a presentation in three filmed acts, conceived

as a live show: as prologue, a performance imagined by the American

choreographer Madeline Hollander at the Armory Show in New York,

followed by the catwalk shot without an audience at the Republican

Guard in Paris, then ending with a stage production by Chinese

choreographer Gu Jiani, filmed in Shanghai. Broadcast on the networks,

this innovative presentation really made the event stand out.

In early December, the École des beaux-arts de Paris hosted a

week-long Hermès Fit initiative, an unusual and fun gym where visitors

were invited to discover the collections of Hermès accessories by

practicing various interactive and sporting activities added with a

humorous note: yoga, weights and dumbbells, stretching, balancing

acts, etc.

In Switzerland, the store on Paradeplatz in Zurich, in the cultural and

financial heart of the city, reopened in early May. Behind the carefully

restored historic façade, the interior space has been renovated and

extended to cover an area of 500m

spread over two floors. This bright

and welcoming store is distinguished by its vast volumes, its

monumental terrazzo staircase designed to measure and its tinted glass

panels reminiscent of the stained glass windows designed by Marc

Chagall for the Fraumünster church in Zurich.

In Italy, in Milan, the store in via Montenapoleone reopened in July after

its transformation. With two additional floors, it has increased its

surface area to 950m , incorporating an interior courtyard covered by a

glass roof. All of the House’s métiers are presented, in a setting that

creates a harmonious dialogue between Hermès’ savoir-faire and the

typical architecture of Milan, design capital.

In Turkey, in October, the store in Istinye Park, a shopping centre located

in the Sariyer district of Istanbul, unveiled its renovated and expanded

space. Echoing the Marmara Sea that borders the city, the façade made

up of enamelled terracotta prisms evokes the sun shimmering on the

water. Inside, where the surface area has almost doubled, visitors can

discover all Hermès’ universes in a bright and natural atmosphere,

warmed by the colours of the Mediterranean.

Lastly, in Luxembourg, the store, established in 2005 in the heart of the

capital, Rue PhilippeII, reopened in November after a major

transformation. The new architecture, bright and contemporary,

permeates the Luxembourg identity with its limestone façade

reminiscent of the city’s fortifications, and its exclusive mosaic floor

evoking the art of tapestry. This welcoming and intimate atmosphere,

like a private house, offers a unique setting for all the House’s

collections.

Among the highlights of the year, Hermès participated in the digital

edition of the Copenhagen Fashion Summit 2021 in October.

Immediately after, the travelling Hermès in the Making event visited the

Danish Architecture Centre in Copenhagen. Through a guided tour and

numerous fun activities, the Danish public was able to discover the

House’s various métiers, meet the craftspeople, familiarise themselves

with their actions and savoir-faire, but also understand Hermès’

sustainable and responsible commitment.

In December. the Teatro Franco Parenti in Milan was transformed for

one night to become the Hotel il Faubourg, an imaginary hotel that

offered guests a surreal interactive stroll, followed by a gastronomic

dinner.

1.7.2

ASIA-PACIFIC

In China, 2021 was a busy year with no less than five inaugurations. In

April, the store in the Beijing China World mall revealed its new face.

Entirely transformed, it now extends over two levels and over 900m ,

behind a spectacular 11 meter high etched glass façade. The interior

space, vast and airy, presents the 16 métiers of the House in a setting

marked by calm and lightness, where the local artistic heritage blends

with the architectural codes of Faubourg Saint-Honoré.

In September, Hermès opened its 25

address in mainland China by

creating a second store in Shenzhen, in the Shenzhen Bay MixC

shopping centre. Located in the lively district of Nanshan, it reflects the

dynamism and modernity of this city through a facade made of wavy

metal strips and an interior that daringly combines traditional local

craftsmanship, natural materials and contemporary minimalism.

In October, the store located in the prestigious Plaza 66shopping centre

in Shanghai was given a makeover. Its imposing stone façade has been

pierced by a large bay window that bathes the first floor in natural light.

With more than 650m

spread over two levels, it welcomes visitors

through two entrances, in a spacious interior whose fluid curves, colour

palette and interplay of materials illustrate its strong architectural

character.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 37

PRESENTATION OF THE GROUP AND ITS RESULTS

REVENUE AND ACTIVITY BY GEOGRAPHICAL AREA

In November, the store located in the Suzhou Matro shopping centre

since 2010, reopened its doors after renovation. Considerably enlarged,

with an additional floor, it unveils all the collections in an intimate and

poetic atmosphere, inspired by the unique architecture of the historic

old town of Suzhou.

In December, the store established in Ningbo since 2013 was moved

and now offers an area designed with a pronounced geometry and

shimmering pearly hues, inspired by the geographical location and

verticality characteristic of this coastal city.

In Macau, a fourth store opened in the spring to deepen the ties

between Hermès and this dynamic city that has a unique face, between

tradition and modernity. Located in the prestigious Macau Galaxy, this

new space with a strong identity reflects the cultural heritage of the city

and its Portuguese influences, through its facade clad in hand-crafted

glazed ceramic tiles and its atmospheric interior space in soft, warm

tones.

At the beginning of the year, Japan saw a major event with the opening,

in February, of a new store in Tokyo, the first Hermès store outside a

shopping mall since the opening of Maison Hermès Ginza in 2001.

Located on Omotesando Avenue, in a remarkable historic building

whose façade has been preserved, this new store presents all the

collections over nearly 500m

, in a refined atmosphere with typically

Japanese colours and materials.

Also in Tokyo, the Isetan shopping centre store in the vibrant Shinjuku

district reopened in November. The interior atmosphere, full of

contrasts, reflects the balance of Japanese culture, between urban

effervescence and the serenity of nature.

In Australia, the store which has been in the centre of Brisbane since

2010, reopened in May, renovated and expanded. Its elegant ecru

façade, located at the corner of Edward Street and Elisabeth Street, has

been pierced with two new windows. Its generously sized interior is

decorated in cool tones reminiscent of the immense beaches and lush

forests of Queensland.

This year also allowed many events and activities to travel from one

country to another. Thus the haute joaillerie Lignes Sensibles collection

continued its journey, which began at the end of 2020, stopping off in

Hong Kong in March, Singapore in July and Tokyo in October.

Hermès Fit, the unusual and interactive gym that showcases the

collections of accessories through playful exercises, successfully offered

its happy events to customers of the Chengdu stores in China in May,

then to those of Tokyo in October, and finally Taiwan and Shanghai in

December.

The men’s universe stood out in Shanghai in March with the exhibition

Hors-Champ, which unveiled its Fall-Winter 2021 collection. A

scenography composed of five successive rooms offered a spectacular

plunge into the heart of the ready-to-wear and fashion accessories

collections.

The Hermès Heritage exhibition cycle also continued its rollout with the

presentation in Seoul, Korea, of its fourth instalment Once upon a bag in

May. Hosted for two weeks by the D Museum, in the heart of the artistic

effervescence of the Seongsu-dong district, the event presents the most

emblematic Hermès bags, tells the story of the House and highlights the

authenticity and excellence of its leather goods savoir-faire.

In November, petit h flew to Australia. Landing at the Trust Building store

in Sydney, it transformed it into a pop-up workshop made entirely from

recycled cardboard to display its creations for three weeks. Five films

shown as part of this production illustrated the approach and playful

spirit of this unique métier.

1.7.3

AMERICAS

In the United States, Hermès opened its first store in Michigan in June,

on the ground floor of the Sommerset Collection mall in Troy, on the

edge of the city of Detroit. To celebrate this new location, the store pays

homage to the sumptuous landscapes of the Great Lakes region by

adopting a mineral and plant-themed architecture, designed mainly

using local materials.

In September, the store established since 2007 in the Riverside mall in

Bergen, New Jersey, moved to the brand new American Dream mall,

next to the MetLife Stadium, near New York. On the way, the store that

had until then been the smallest Hermès store in the United States saw

its surface area triple to exceed 700m

, over two levels.

In early October, a fourth store was opened in Florida, confirming

Hermès’ attachment to this peninsula known as the Sunshine State.

Located in the state’s largest shopping mall, the Aventura Mall, between

Miami and Fort Lauderdale, this new store is characterised by an

undulating glass façade and soft colours that evoke the coastal

atmosphere of Miami Beach.

Various events marked the year. In particular, the fun gym, Hermès Fit,

made a stopover in New York in November. Also at the end of the year,

women’s ready-to-wear organised an evening in Los Angeles, California,

dedicated to the presentation of its Spring-Summer 2022 collection.

Baptised Grand Soir, the event was held in the former home of Frank

Sinatra. Around the swimming pool, in the form of a dream-like tale,

around 250 guests were able to discover the different creations of the

collection during the fashion show staged by the artist Miranda July.

In addition, the Group is continuing work on the new Maison Hermès in

New York, which will be located at 706 Madison Avenue. The current

store will remain open until its inauguration, scheduled for

September2022.

1.7.4

DIGITAL STRATEGY

The e-commerce hermes.com platform is now available in 29countries,

following the opening of Thailand in June2021. In 2022, it will also be

rolled out in Brazil.

E-commerce once again grew in all regions of the world this year with

very strong growth in traffic (+64%) and in sales compared to 2020.

hermes.com has become the group’s leading store in terms of both

volume of products sold and revenue.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL38

PRESENTATION OF THE GROUP AND ITS RESULTS

COMMENTS ON THE CONSOLIDATED FINANCIAL STATEMENTS

AFR

The number of new online shoppers was up by 60% in 2021 and the

time spent online by these new customers has further increased.

Accelerating the roll-out of omnichannel services provides a better

experience for visitors and customers. They can now obtain information

online about the in-store offering in 24 of the 29countries where the

e-commerce platform is present (i.e. 190stores), in order to prepare

their visit to the store. The e-reservation service, which enables them to

reserve the desired items in around 30stores, continues to be rolled

out. A new service for making appointments with an in-store sales

associate is also being launched.

The desire to give more online visibility to most of the House’s objects is

at the heart of this omnichannel strategy. hermes.com is the House’s

largest

showcase and presents all the métiers. This year, Hermès face

and hand products have been added to the online offering. Hermès

Beauty was also launched on the Chinese Tmall e-commerce site from

January2021.

The hermes.com

platform continues to evolve technically. It is gradually

moving to a cloud system for better performance and capacity.

Emphasis was placed on operations in order to improve the customer

experience, through services such as digitisation of invoices and

auto-completion of delivery addresses, new payment methods such as

Apple Pay, or lastly, partnerships with new carriers.

1.8

COMMENTS ON THE CONSOLIDATED FINANCIAL STATEMENTS

1.8.1

INCOME STATEMENT

In 2021, the Group’s consolidated revenue amounted to €8,982million,

up 42% at constant exchange rates and 41% at current exchange rates

compared to 2020. Over two years, this increase reached 33% at

constant exchange rates.

The gross margin rate was 71%, up by 2.8points compared to 2020.

This improvement stems from a leverage effect on fixed production costs,

a gradual improvement in productivity and an exceptional inventory

disposal rate.

Sales and administrative expenses, which represented €2,137million,

compared with €1,699million in 2020, included in particular

€421million in communication expenses compared with €279million in

2020, a year in which many events were postponed or cancelled due to

the health crisis.

Other income and expenses amounted to €734million, compared with

€696million in 2020. They include depreciation and amortisation of

€512million (€468million in 2020), half of which relates to property,

plant and equipment and intangible assets and the other half to

rights-of-use. The increase in depreciation and amortisation reflects

continued investments in the distribution network, production facilities,

digital technology and information systems. Other expenses also include

€122million related to free share plans.

Recurring operating income amounted to €3,530 million, up by 78%

compared to 2020. After an exceptional first half with a profitability of

41%, the second half stood at 38% following the acceleration of

recruitment and communication expenses, as well as the negative impact

of exchange rates on the second half of the year.

In millions of euros

2021 2020 2019

Revenue 8,982 6,389 6,883

Cost of sales (2,580) (2,013) (2,125)

Gross margin 6,402 4,376 4,758

Sales and administrative expenses (2,137) (1,699) (1,816)

Other income and expenses (734) (696) (604)

Recurring operating income 3,530 1,981 2,339

Other non-recurring income and expenses - 91 -

Operating income 3,530 2,073 2,339

Net financial income (96) (86) (69)

Net income before tax 3,435 1,986 2,270

Income tax (1,015) (613) (751)

Net income from associates 34 16 16

CONSOLIDATED NET INCOME 2,454 1,390 1,535

Non-controlling interests (8) (4) (7)

NET INCOME ATTRIBUTABLE TO OWNERS OF THE PARENT 2,445 1,385 1,528

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 39

PRESENTATION OF THE GROUP AND ITS RESULTS

COMMENTS ON THE CONSOLIDATED FINANCIAL STATEMENTS

◆

€220million was devoted to the renovation and expansion of its

exclusive distribution network. This amount includes the construction

of the future Madison 706 flagship in New York, the expansion of the

Milan store in Italy, the opening of the Omotesando store in Japan

and the relocation of the Beijing China World store or the expansion of

Plaza 66 in Shanghai, China;

◆

€169million was dedicated to production and métiers, mainly in

Leather Goods but also in Tanneries, Textiles as well as Perfume and

Beauty;

◆

€143million was invested in information systems and digital but also

in real estate projects to support the Group’s growth.

Thanks to remarkable collection flow rates and an exceptional leverage

effect, annual recurring operating profitability reached an all-time high of

39%, up 8 points compared to 2020 and 5 points compared to 2019.

After taking into account in 2020 a non-recurring profit of €91million

related to the deconsolidation of Shang Xia, the operating income for

2021 increased by 70%. Over two years, the increase was 51%.

Net financial income, which includes interests on lease liabilities,

financial income from cash investments and the cost of foreign exchange

hedges, represented a net expense of €96million, compared with

€86million in 2020.

The income tax rate was 29.5%, i.e. a decrease of 1.4points compared

to 2020, mainly due to the decrease in the tax rate in France.

After taking into account the net income from associates (income of

€34million) and non-controlling interests, the consolidated net income

attributable to owners of the parent amounted to €2,445million

compared with €1,385million in 2020, i.e. an increase of 77%.

1.8.2

CASH FLOWS AND INVESTMENTS

Alternative performance indicators defined and reconciled in Note2 to the consolidated financial statements.(1)

Cash flows related to operating activities amounted to €3.4billion thanks

to the strong increase in operating cash flows and a significant decrease

in working capital requirements.

The Group, which had maintained its strategic investments in 2020,

accelerated its projects in 2021. Operating investments amounted to

€532million:

After taking into account the above-mentioned operating investments and

the repayments of fixed lease liabilities recognised in accordance with

IFRS16, which are considered by the Group as items affecting operating

activities, adjusted free cash flow amounted to €2.7 billion, i.e. 2.7times

that of 2020 or 1.9times that of 2019.

After payment of an ordinary dividend of the same amount as in 2020

(€4.55 per share) and share buybacks for €162million, the Group’s

restated net cash position increased by €2.2 billion and crossed the

threshold of €7billion at the end of 2021.

1.8.3

FINANCIAL POSITION

The Hermès Group’s consolidated balance sheet at the end of 2021

totalled €13.8 billion compared with €11.1 billion at the end of 2020.

Cash accounted for nearly 50% of assets and the increase in inventories

was limited. On the liabilities side, current debts reflect the strong

recovery in activity in 2021 and equity, which amounted to €9.4 billion at

31December 2021, represented nearly 70% of the balance sheet total.

The Group has strengthened a solid financial structure that allows it to

approach the year 2022 with confidence.

In millions of euros

2021 2020 2019

Operating cash flows 3,060 1,993 2,063

Change in working capital requirements 346 (350) 24

Change in net cash position related to operating activities 3,405 1,642 2,087

Operating investments (532) (448) (478)

Repayment of lease liabilities (212) (199) (203)

Adjusted free cash flow

2,661 995 1,406

Investments in financial assets (13) (93) (13)

Dividends paid (490) (490) (487)

Treasury share buybacks net of disposals (excluding liquidity contract) (162) (122) (53)

Other movements 170 51 93

CHANGE IN RESTATED NET CASH POSITION

2,166 342 947

Restated net cash position at the end of the period 7,070 4,904 4,562

Restated net cash position at the beginning of the period 4,904 4,562 3,615

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL40

PRESENTATION OF THE GROUP AND ITS RESULTS

SIGNIFICANT EVENTS SINCE THE END OF THE FINANCIAL YEAR

AFR

1.9

SIGNIFICANT EVENTS SINCE THE END OF THE FINANCIAL YEAR

Due to the events in Europe, the Group has decided to temporarily close its stores in Russia and suspend all commercial activities from the evening of

4 March 2022. It should be noted that the Group has no activity in Ukraine and that its exposure to Russia is not material. In 2021, the Group’s

revenue in Russia represented less than 1% of consolidated revenue and the net value of the Group’s assets located in Russia was less than 0.5% of

consolidated net assets.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 41

PRESENTATION OF THE GROUP AND ITS RESULTS

OUTLOOK

AFR

1.10

OUTLOOK

In an uncertain environment, Hermès has shown its solidity and

performance, with exceptional results in 2021. Asia and America

recorded the strongest growth, both compared to 2020 and 2019, and

Europe returned to growth in the second half compared to 2019. The

loyalty of its local customers resulted in strong momentum across all

métiers.

Hermès, firmly rooted and inspired by its heritage, is supported by its

craftsmanship, its creative freedom and innovation, its attachment to

savoir-faire and entrepreneurial spirit. Firmly believing that there can be

no creation of economic value and long-term development without

creation of social and societal value and without environmental

responsibility, Hermès is committed to leaving a positive footprint on the

world.

Strengthened by the ongoing dialogue between creation and excellence

in savoir-faire, the House will continue to blossom, affirming the

uniqueness of its style. The year 2022 will be marked by the

development of new collections based on the most beautiful materials

and an abundant and innovative creativity that is constantly renewed.

Among the new products, the Perfume and Beauty métier will launch

Plein Air, its fourth sphere being applied to foundation, Hermès Maison

will present the Soleil d’Hermès tableware, and Jewellery will reveal the

seventh haute joaillerie collection. Watches will also propose a new

watch complication, Arceau, the time traveller.

The integrated and exclusive distribution network will continue to

strengthen its omnichannel offering. Hermès has been able to flexibly

support the digitisation of uses, while continuing to nurture ties with its

particularly loyal local customers, with reinvented formats. The qualitative

development of the store network will continue in 2022, with projects to

open, expand or renovate the Flagship stores at 706 Madison in New

York (United States), Barcelona (Spain), Korea, Shanghai and Wuhan

(China) and Doha (Qatar). Priority will be given to expansions and

renovations, in some 20stores around the world. The House will develop

its digital strategy, via an increasingly broad range of online products and

services, with the aim of increasing traffic and attracting new customers.

Faced with the House’s particularly strong momentum, the development

of production capacities will continue across all métiers, and in particular

in Silk, with the expansion of the Pierre-Bénite textile production site near

Lyon, in Jewellery or Home.

The high demand for Leather Goods & Saddlery will be supported by the

ramp-up of new sites as part of regional expertise hubs. With more than

4,300 leather goods craftspeople in France today, the Group will

continue its objective of opening an average of one new production unit

per year, representing around 300 new employees. Following the

inauguration of the Guyenne and Montereau production units in 2021,

three other sites are under development in Louviers (Eure), Tournes and

Cliron (Ardennes) and Riom (Puy-de-Dôme, where recruitment and

training are ongoing. Two new projects for 2025 and 2026, located in

L’Isle-d’Espagnac (Charente) and Loupes (Gironde), join the above three

sites and will become the House’s 23

and 24

leather goods

workshops. The House’s other métiers will continue to use their extensive

savoir-faire to design and create exceptional objects.

True to its commitment as a responsible employer, Hermès will

strengthen its teams in all areas in 2022, and the Group will step up its

efforts in terms of social, societal and environmental performance.

Hermès will pursue its commitment to the development of its employees,

their well-being, and the consideration of diversity in its activities. The

enhancement and transmission of savoir-faire will remain at the heart of

the priorities of the métiers, by capitalizing in particular on the internal

apprentice training centre (CFA) dedicated to leather goods workers.

The control of supply chains, guaranteeing the quality of our materials,

will be strengthened by the implementation of detailed “CSR briefs” on

social, environmental and ethics issues. Through the use of life cycle

analysis, eco-design, materials optimisation, the circular economy and

recycling of unsold items, the Group will also continue its efforts in favour

of a more careful use of resources and waste management.

More broadly, the Group will intensify its work to promote biodiversity, by

capitalizing on the results of its impact analysis using the Global

Biodiversity Score (GBS) method. Hermès will pursue its work in favour of

animal well-being, with the roll-out of a formal charter with its partners in

2021.

With ambitious carbon targets the Group will continue to develop

numerous operational projects, both within its sites (industrial

equipment, real estate) and with its partners, in line with the

recommendations of the TCFD. At the same time, Hermès will increase its

contribution to the implementation of carbon offset systems consistent

with a net zero carbon target in 2050, supported by Livelihoods’

long-term projects.

Hermès will strengthen its role as a socially responsible company

alongside its suppliers, which it will continue to support and with the

communities in which it operates, whether through site openings, job

creation, the development of vocational training centres for its

craftsmanship métiers, and contributions to the social and cultural life of

the regions. Relations with all stakeholders will be developed.

For 2022, it is still difficult to assess the impacts of the Covid-19

pandemic. The highly integrated craftsmanship model and balanced

distribution network, as well as the creativity of the collections and the

loyalty of customers allow the Group to approach the future with

confidence.

In the medium term, despite the economic, geopolitical and monetary

uncertainties around the world, the Group confirms an ambitious goal for

revenue growth at constant exchange rates.

Thanks to its unique business model, Hermès is pursuing its long-term

development strategy based on creativity, maintaining control over

savoir-faire and singular communication.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL42

PRESENTATION OF THE GROUP AND ITS RESULTS

FONDATION D’ENTREPRISE

1.11

FONDATION D’ENTREPRISE

In 2021, the Fondation d’Entreprise Hermès wanted to make its mission

in favour of the general interest part of a collective drive. A desire to act

together, therefore, whether it involves creating works, passing on

savoir-faire, protecting the environment or encouraging solidarity, the four

pillars that structure the Fondation’s action. Throughout a new year

marked by the pandemic, the Fondation continued its commitments

through its programs while remaining mobilized alongside its

beneficiaries and project leaders faced with the uncertainties of the

context.

The need to act together to combat climate change with its

ever-increasing consequences is obvious. This is why the Fondation

d’Entreprise Hermès launched Manuterra, an environmental education

program for primary to high school students. Since the start of the school

year in 2021, students have been invited to create, develop and transmit

an edible garden over 12 two-hour sessions during school hours. Under

the guidance of a professional gardener, they cultivate a plot using the

permaculture technique while addressing multiple environmental themes.

Six classes, i.e. 150students, are involved in this pilot year set up in

partnership with the Royal Saltworks of Arc-et-Senans, the Academy of

Besançon and the Compagnons du Devoir et du Tour de France. In

addition to Manuterra, the “Protect” pillar of the Fondation also added

new support for the Massane nature reserve (Pyrénées-Orientales), a

beech forest that has been growing unfettered for more than 150years

and has been classified as a Unesco World Heritage site since last

summer. This choice reinforces the Fondation’s action in favour of the

preservation of our ecosystems.

The “Transmit” pillar was a second major focus of commitments. The

Manufacto programme, for the creation of savoir-faire, continued to be

rolled out in two new academies: since the start of the school year in

2021, 61 establishments, spread across 11 academies, have

participated in this programme. Around 1,600students from primary to

high school are introduced to craftsmanship savoir-faire by making a

beautiful contemporary object under the guidance of leatherworkers,

carpenters, upholsterers or plasterers. Dedicated this year to “Glass”,

the Skills Academy was able to take place despite health constraints.

Increasingly popular, the seven mornings, initially broadcast by video,

finally gave way to public conferences to the satisfaction of all, speakers,

academics and growing numbers of listeners. Lastly, the Artists in the City

programme continued its actions to support the training of young artists.

In this delicate year, 42 scholarships were awarded to students in dance,

theatre and, for the first time, circus. The other supports of this program

were maintained, supplemented by a new partnership with the National

Centre for Dance (CND) for the Elan programme, a school for equal

opportunities in dance.

As in the previous year, the Fondation was committed to working

alongside artists who have had to adapt to the consequences of the

pandemic. As part of the “Create” pillar, the New Settings programme

dedicated to the production and distribution of new stage works enabled

the support of 16 new shows presented to the public on several

occasions between autumn and spring, in the Paris region, as well as in

Lyon. In the field of visual arts, the Foundation has scheduled 11

exhibitions in 2021 in its dedicated spaces in Brussels,

Saint-Louis-lès-Bitche, Tokyo and Seoul, allowing a wide audience to

discover high quality exhibitions of contemporary works. The Artists

Residencies celebrated a decade of activities through a triptych of

exhibitions entitled “Formes du transfert” simultaneously held in Tokyo,

Seoul and Pantin, in parallel with the launch of a new two-year cycle.

Finally, the Immersion program, a Franco-American photographic

commission, announced the name of its sixth laureate, the American

photographer Raymond Meeks, who will undertake his residency in

France in 2022. This programme is supported by a new partner

alongside the Fondation Henri Cartier-Bresson in Paris: the International

Center of Photography (ICP) in New York, which will present the winners’

exhibitions on American soil.

The H

– Heart, Head, Hand programme, which structures the

“Encourage” pillar saw the continuation and expansion of general

interest projects led by employees, while numerous solidarity actions

were carried out by the Fondation to address needs identified during this

particular year. In 2021, the Fondation d’Entreprise Hermès remained

active, assuming its responsibilities in its areas of intervention to provide

appropriate support to those whose projects were shaken by the health

crisis. Acting together, therefore, again and again since 2008, with

fairness and pragmatism to help bring about a better world.

The full report on the activities of the Fondation d’Entreprise Hermès is

available at: www.fondationdentreprisehermes.org,

in the section entitled available at: www.fondationdentreprisehermes.org, in the section entitled

“The Fondation”.

www.fondationdentreprisehermes.org,

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 43

PRESENTATION OF THE GROUP AND ITS RESULTS

FONDATION D’ENTREPRISE

2.1.1

Concrete long-term commitments

2.1.2

An ambitious and structuring CSR strategy

2.1.3

Materiality analysis

2.1.4

Analysis of non-financial risks

2.1.5

CSR Strategy

2.1.6

Governance of the CSR approach

2.2.1

Fulfilment and well-being

2.2.2

Diversity and inclusion

2.3.1

General information about employees

2.3.2

Acquisition, enrichment and transmission

2.3.3

Preservation of craftsmanship heritage

100

2.4.1

Ecodesign and circular economy

112

2.4.2

Supply chains

117

2.5.1

Environmental actions framework

132

2.5.3

Reduce the footprint and control waste and discharges

139

2.5.4

Climate change

144

2.5.5

Biodiversity

154

2.6.1

Support and control

170

2.6.2

Responsible practices with socially supported organisations

176

2.7.1

Regional responsibility in France

184

2.7.2

Socially responsible company

186

2.8.1

Promoting ethics

198

2.8.2

The fight against corruption

202

2.8.3

Personal data protection

205

2.8.4

Duty of care

206

2.9

REPORT BY ONE OF THE STATUTORY AUDITORS, APPOINTED AS AN

INDEPENDENT THIRD PARTY, ON THE CONSOLIDATED NON-FINANCIAL

INFORMATION STATEMENT

212

2.10

REASONABLE ASSURANCE REPORT BY ONE OF THE STATUTORY

AUDITORS ON A SELECTION OF ENVIRONMENTAL AND SOCIAL

INFORMATION

217

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 45

CORPORATE SOCIAL RESPONSIBILITY

NFPS

2.1

BUSINESS MODEL

PEOPLE: TEAMS

2.2

PEOPLE: SAVOIR-FAIRE

2.3

THE PLANET: RAW MATERIALS

2.4

109

THE PLANET: ENVIRONMENT

2.5

129

COMMUNITIES: SUPPLIERS & PARTNERS

2.6

167

COMMUNITIES: STAKEHOLDERS AND TRANSPARENCY

2.7

181

ETHICS – COMPLIANCE

2.8

198

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL46

CORPORATE SOCIAL RESPONSIBILITY

Through its sustainable development approaches, Hermès implements

practices that reconcile economic and social progress with preservation

of the planet’s natural equilibrium, in a long-term vision. These societal

and environmental challenges, linked to the 17 sustainable development

goals defined by the United Nations for 2030, provide the framework for

the House’s action in this area.

Hermès, a family business, has been able to adapt to changes while

favouring a long-term approach. The Group, on the strength of its

craftsmanship savoir-faire, its exclusive distribution network and its

creative heritage, will continue its sustainable growth.

The Group’s craftsmanship manufacturing model is based mainly on the

creativity and savoir-faire of men and women working in France. It draws

on the House’s four essential heritages: creation, savoir-faire,

exceptional raw materials and the retail universe. It is based on the

geographical and cultural proximity between designers and craftspeople.

Supported by a network of regional manufacturing sites, Hermès

enhances the regions with a desire to ensure the transmission of this

exceptional savoir-faire. Finally, it operates with moderation and sobriety

in the use of raw materials and with a desire for a low environmental

footprint. The promotion of these four heritages has contributed to the

sustainability of the Hermès craftsmanship model since 1837.

The Hermès Group’s ambition in terms of sustainable development is to

ensure virtuous economic and social development, not only for

employees and shareholders, but more broadly for its stakeholders, by

thinking about the future of the next generations. This objective will also

be achieved by reducing its impacts, however moderate, on the planet.

This goal is accompanied by a deep humanistic desire to give back to the

world some of what the world gives to Hermès.

The scope of this Non-Financial Performance Statement (NFPS) covers all

of the Hermès Group subsidiaries and sites, including all métiers and all

regions, the scope of which is detailed in chapter 1 “Presentation of the

Group and its results”, § 1.4.

Methodological note

This NFPS is based on the qualitative and quantitative contributions of

the métiers, subsidiaries and central departments, and the following

Group corporate departments: human resources, industrial affairs, real

estate, legal, finance and sustainable development. From the end of the

first half-year, the various contributors came together to rank the

subjects they wished to prioritise and prepare a schedule extending to

the end of the year. Given the time frames, certain annual data is

reported at end of October, in particular for the industrial affairs

department. Each department uses tools to consolidate the information

related to their activities. These main contributors rely on their respective

networks in order to summaries and highlight the most significant

progress and the work carried out on the major strategic sustainable

development challenges. This operating mode enables a fairer reflection

of operating reality, in an environment in which the activities of the House

are very diversified.

Finally, verification work is carried out by an independent third party

(PricewaterhouseCoopers), which is also one of the Company’s Statutory

Auditors, with audits carried out before publication. The issuance of a

reasonable assurance report, which is a higher level of certification than

the limited assurance provided for by law in France, covers nearly 50% of

the workforce, and therefore more than the required 20% (§ 2.9 and

§ 2.10).

As stated in chapter 3 “Corporate governance”, § 3.6.3.4, the

assignment was approved as a “service other than certification of the

financial statements” by the Audit and Risk Committee, and is compliant

with the French rules on independence.

◆

a family-run business rooted in a tradition of craftsmanship, the

foundations of an eagerness to ensure transmission of skills and

sustainability;

◆

fundamental heritages, sources of sustainability, that are

continuously reinvented: creation, savoir-faire, materials and retail;

◆

objects designed to last: rigor and responsibility that are the life force

of the House’s 16 métiers (see § 1.6 in chapter1 “Presentation of

the Group and its results”);

◆

a French House with an international reach: 78% of production is

made in France;

◆

an integrated model, from manufacturing (58% of objects are made

its in-house and exclusive workshops) to distribution throughout the

world, tailored to local situations;

◆

controlled development and solid results;

◆

a contribution to a more sustainable world through its model, through

a humanist vision of its activity, and a desire to give back to the world

some of what the world gives it.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 47

CORPORATE SOCIAL RESPONSIBILITY

BUSINESS MODEL

2.1

BUSINESS MODEL

The Hermès Group presents its value creation model using graphics (see

the following pages) in order to put the distinctive features of its French

craftsmanship manufacturing model into perspective. This approach is

designed to help explain the activities of the House, its footprint and

contribution to a more sustainable world, in their economic, social,

societal and environmental dimensions.

The Hermès Group’s model is unique in many ways:

◆

employees: jobs and basic salaries maintained for employees

worldwide, installation of protective devices at the entrance to

sites and in all living spaces, establishment of a psychological

counselling unit for eight months, payment or exceptional bonuses;

◆

partners: support and continuation of local relationships, dialogue

and economic support (payment prior to due dates);

◆

customers: spectacular development of e-commerce and

development of the customer relationship with the omnichannel

approach renewing the in-store experience and promoting remote

interactions with local and international customers;

◆

sustainable growth: continued investments despite the uncertainty,

with new production sites in France and store renovations;

◆

society: donations of hydroalcoholic gel and financial sponsorship

(donation to the Paris hospitals, AP-HP).

For readers who would like more details on all of the Group’s actions in addition to what is presented in this Non-Financial

Performance Statement, the Hermès Finance website can be accessed using this QR Code.

Covid-19 – A resilient and contributive model in a situation

of crisis

2021 marked a second year of the Covid-19 pandemic, the extent and

duration of which impacted geographical areas in different ways.

Hermès has reaffirmed its value as a safe haven for all its employees,

while reinforcing its societal commitment to stakeholders.

The Group remained very active, regularly reviewing the situation and

adapting its systems to the measures required by the medical and

public authorities.

The Group health monitoring unit, activated since 2020, provides the

best possible support in the various periods of health crisis,

depending on the country and legislation, by implementing all the

necessary measures in terms of prevention and by supporting the

various lockdowns, including as they start and end. The human

resources function, which was heavily used during this period, proved

to be solid and able to act as a true partner in the face of the crisis,

close to the teams through use of the internal social networks, with

positions regularly shared at global level between the Director of

Human Resources and the Managing Directors of the métiers and

countries.

For each aspect of its business, the House has taken steps to protect

and preserve:

During these various periods, in 2021 as in 2020, the Group

decided not to request any State aid relating to partial activity

measures. This decision has been applied in all countries where the

Group operates.

A FRENCH MODEL OF CRAFTSMANSHIP THAT IS SUSTAINABLE

AND CREATES VALUE

OUR ROOTS AND VALUES

Detail in Section 1.4.2

◆

sites in America

◆

sites in Australia

◆

sites in Europe

production sites in France

303

exclusive stores, including

◆

in France

78%

of objects made in France

58%

of objects made in its in-house

and exclusive workshops

62%

of employees in France

92%

of leather sourced in France and Europe

91%

of sales outside of France

Roye

Bogny-sur-Meuse

Charleville-Mézières

Saint-Louis-lès-Bitche

Val-de-Reuil

Louviers

Le Vaudreuil

Bobigny

Paris

Pantin

Champigny-sur-Marne

Vivoin

ChallesChalles

Montereau

Chabris

Montbron

Saint-Junien

Saint-Just-

le-Martel

NontronNontron

Saint-Vincent-de-Paul

Annonay

Le-Puy-en-Velay

Fitilieu

Les Abrets

Aix-les-Bains

Le Grand-Lemps

Annonay

Le-Puy-en-Velay

Sayat

Riom

Bussières

Irigny

Pierre-Bénite

Belley

Fitilie

Les

Le Gra

Bourgoin-Jallieu

Annonay

Fitilieu

Les Abrets

Le Grand-Lemps

Bourgoin-Jallieu

Châtillon-le-Duc

Seloncourt

Héricourt

Allenjoie

Bonnétage

Seloncourt

Allenjoie

Bonnétage

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL48

CORPORATE SOCIAL RESPONSIBILITY

BUSINESS MODEL

An independent House of creation since 1837, guided by the attributes of the craftsperson: responsibility, authenticity and acting without delay

while respecting the time to do well. An integrated model of French manufacturing. A humanist management of employees. A wide product

offering of useful and long-lasting objects. A socially responsible company that is generous with the world.

UNIQUE HERITAGE

CRAFTSMANSHIP

MANUFACTURING

MODEL

CREATIVE

HOUSE

Creative heritage

Originally a harness workshop,

Hermès has revolutionised

riding equipment. Driven by

creative freedom, the House

innovates and revisits its

timeless models.

+50,000

products

HERMÈS

RETAIL

Retail heritage

Hermès takes a unique

approach to developing its

distribution network and digital

flagships. Its artistic and poetic

spirit permeates the creativity of

stores and window displays.

Operating in

45 countries

Materials heritage

Hermès uses, respects and

preserves the most noble

materials, secures its supplies

and seeks to limit their impact

on biodiversity.

95% of skins

are by-products

from food

industry

Savoir-faire heritage

Hermès develops and protects

its often unique craftsmanship

savoir-faire. The excellence of

the craftsmanship techniques is

passed on through a proactive

internal training policy.

47% of

employees

work in

production

A FRENCH HOUSE WITH A GLOBAL REACH

EXCEPTIONAL OBJECTS DESIGNED TO LAST

End-of-life

Although the craftsmanship model is, by design, a factor that

helps streamline and optimise the use of materials, work is being

carried out to anticipate the end-of-life of objects. The métiers and

subsidiaries innovate and work on concrete projects which aim to

extend the life of products and master material waste, in particular

through donations and circular channels (reuse, recycling, etc.).

In France, from 1 January 2022, Hermès is subject to the AGEC

law (on Preventing Waste and the Circular Economy) which aims to

prohibit the destruction of unsold products in the textile, household

linens, shoes and furniture métiers.

Exclusive distribution

While its products are made in France, they are distributed

worldwide. In addition to this physical network, e-commerce has

been added since 2002. Hermès favours a qualitative development

of its network combining the enhancement of its stores and special

attention is paid to their social and ecological footprint.

Logistics

Mainly manufactured in France, the

products are sent to one of the Group’s

two logistics platforms, where they are

checked, packaged and stored before

being distributed to the store network. The

choice of a centralised logistics model

makes it possible to optimise flows, find and

implement transportation solutions in order

to control the carbon impact and reduce the

environmental footprint.

Responsible communication

and transparency

CSR communication is a major focus, with

the aim of making the strategy and actions in

this area more transparent. It takes the form

of actions to improve external understanding:

dialogue with customers and the public, the

press and influence, investors and financial

analysts. In a pro-active approach, responses

are provided to external assessors.

Development

Close cooperation between our creative minds

and developers ensures that original ideas become a

reality. This step is crucial in defining the manufacturing

processes that reconcile optimisation, quality, innovation

and aesthetics for a virtuous life cycle.

Exceptional materials

The use of materials is optimised from creation to production, with careful use of only

the essential resources encouraged in order to avoid unnecessary waste and surplus

materials and to take the end of life of objects into account. Hermès manufactures

high-quality products, mainly from renewable natural resources, the most emblematic

of which are leather, silk and cashmere.

Creative freedom

The designers sketch, innovate and revisit the

House’s models with the greatest freedom.

Around an annual theme, “the Odyssey”

in 2021, the artistic department proposes and

renews the collections and objects.

Purchasing freedom

Present worldwide, Hermès is strongly committed to

the principle of giving purchasing freedom to its retail

subsidiaries and stores. Store managers choose the

products to propose to their customers. The offer is

varied and relevant, the ecological footprint controlled

and waste reduced.

Long-lasting objects

Hermès objects are designed to withstand

the rigors of time. They develop a patina, are

looked after, repaired or renovated thanks to

the savoir-faire of our craftspeople, and are

passed on from one generation to the next.

At the same time, the métiers are working on

ways to reuse and improve the circularity of

materials and finished objects with the aim of

recycling, innovating and finding new uses.

Handcrafted production

Craftspeople take the greatest care in manufacturing the products

ordered by the stores. Emphasis is placed on in-house training,

which guarantees the transmission of exceptional savoir-faire

within the production units. The use of subcontracting is limited

and is based on long-term partnerships.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 49

CORPORATE SOCIAL RESPONSIBILITY

BUSINESS MODEL

◆ An average annual growth rate over 10 years of 12% for revenue

◆

An average annual growth rate over 10 years of 15% for net income

◆

€8,982 bn in revenue

◆

Growth of 41% at constant rates in 2021

◆

€3,530 m in recurring operating income

◆

€532 m in operating investments

◆

Stock market capitalisation of €162.15 billion as at 31 December

2021

CONTRIBUTIVE, SOLID AND SUSTAINABLE GROWTH

ECONOMIC

Design and grow

Watches

Perfumes

Other Hermès

sectors

11%

Silk

and Textiles

Other products

Leather Goods

& Saddlery

46%

Ready-to-wear

and Accessories

25%

◆

17,595 employees in 2021, of which 7,633 in production in France

◆

The workforce has increased by a factor of 2 in 10 years

◆

114 internal trainers on production sites including 90 in the leather

métier

◆

60% women in management teams

◆

9 years average seniority of employees

BREAKDOWN OF REVENUE BY MÉTIER

SOCIAL

Train and transmit

2000 2021

17,000

10,500

4,000

◆

Over the last 10 years, reduction in industrial energy intensity -48.2%

and industrial water -35.4%

◆

15.3% reduction in carbon emissions across all scopes in absolute

value between 2018 and 2021

◆

Offset of emissions equivalent to the entire scopes 1 and 2

carbon emissions and 63.6% of upstream and downstream goods

transportation emissions, i.e. more than 76% of total scopes 1 and 2

emissions and those from Transportation

◆

Contribution to the construction of sustainable supply chains

◆

161,000 products repaired in 2021

◆ 86.9% renewable electricity supply

CHANGE IN WORKFORCE

ENVIRONMENTAL

Respect and preserve

2000 2021

◆

Presence in 11 of the 13 French regions with more than 80 sites

(production units, stores, logistics sites, offices)

◆

Creation of regional divisions of excellence

◆

20-year average relationship with the 50 main direct suppliers

◆

66% of purchases made in France (Top 50 direct suppliers)

◆

78% of objects produced in France

SOCIETAL

Develop and participate

2000 2021

ENERGY INTENSITY IN MWH/M€

◆

A Sustainable Development Committee meets every two months with

three members of the Executive Committee

◆

A CSR Committee within the Supervisory Board

◆

Internal and external ethics whistleblowing systems

◆

Contribution to 14 of the United Nations’ 17 Sustainable Development

Goals (SDGs)

◆

Global Compact Advanced Level

CHANGE IN NUMBER OF PRODUCTION

SITES

GOVERNANCE

◆ CSR criteria in the variable compensation of the two Executive Chairmen

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL50

CORPORATE SOCIAL RESPONSIBILITY

BUSINESS MODEL

◆ 6 stores opened in 2021

◆

Inauguration of 2 leather goods workshops in 2021

◆

29.5% consolidated tax rate

◆

Nearly 12,000 employee shareholders or holders of rights to free

◆

4,761 new employees over the last five years

…CONTRIBUTING TO A MORE SUSTAINABLE WORLD

ECONOMIC

Sharing value

The Group strives to share value

in a balanced way between

employees, investments and

reserves, public authorities

and shareholders.

Asia-Pacifique

(excluding

Japan)

47%

Japan

11%

Other

America

16%

Europe

(excluding

France)

15%

France

◆

76,145 training actions carried out worldwide, i.e. 9% more than in 2020

◆

6,855 employees trained by the School of Leather since 10 years

◆

284 professional certifications obtained in 2021

◆

Partnership with the French Job Centre and education in the

craftsmanship professions

◆

Disability: employment rate 5.68% (2020)

◆

67% of the Operations Committee are women

◆

90/100 Gender equal pay index (France)

BREAKDOWN OF REVENUE

BY GEOGRAPHICAL AREA

SOCIAL

Transmission and inclusion

Fostering a community of

craftspeople who pass on to

future generations often exclusive

techniques and skills, and

participate in the preservation

of métiers and heritage.

◆

Reduction trajectory (2018 vs. 2030) in absolute value of 50.4%

of scopes 1 and 2 emissions and 58.1% in intensity for scope 3

validated by the SBTi

◆

95% of skins are by-products from food industry

◆

Act4Nature commitment: Global Biodiversity Score study

◆

Publication of standards on Animal Welfare and creation of a

monitoring committee since 2019

◆ 100% recycled gold and silver processed in the workshops

◆

Livelihoods: more than 132 million trees planted

◆

Distribution of the Supply Chain Brief, planning the implementation

of certification or labellisation for 32 supply chains

ENVIRONMENTAL

Manage impacts

Ethical purchasing of raw

materials is part of responsible

production. This has a positive

effect on some sectors, with

impacts extending to the

protection of endangered

species, the preservation of

ecosystems and the living

conditions of local communities.

◆

563 new direct jobs in France in 2021

◆

1 direct job created in a rural area indirectly leads to at least 1.5

other jobs

◆

89% of direct suppliers have signed commitments to social,

environmental and ethics policies

◆ €40 m allocated to the budget of Fondation d’Entreprise Hermès

over five years (April 2018/April 2023)

◆

10 Living Heritage Companies (EPV)

◆

23 Meilleurs Ouvriers de France (MOF)

◆

€3.8 m in total purchases from socially supported organisations

(EA, ESAT)

◆

More than 400 solidarity projects worldwide

SOCIETAL

Sustainable jobs and giving

back to the world

Hermès’ strategy of investment

brings long-term jobs; vitality of

the regions.

◆ Partnerships with international NGOs including WWF France

◆

Contribution to the Livelihoods Fund (1.7 million beneficiaries)

◆

Member of the Fashion Pact since 2019

◆ Responses to various external assessments and improvement in

non-financial ratings, see § 2.1.1 and § 2.7.2.2

GOVERNANCE

A sincere collaboration

with our partners

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 51

CORPORATE SOCIAL RESPONSIBILITY

BUSINESS MODEL

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL52

CORPORATE SOCIAL RESPONSIBILITY

BUSINESS MODEL

2.1.1

CONCRETE LONG-TERM COMMITMENTS

First Group

Disability

Agreement

First large-scale

donations of

unsold items

Sustainable

Development

Committee

Creation of the EHS

(Environement,

Health, Safety)

network

Fondation

d’entreprise

Hermès

Group ethics

charter

Code of business

conduct

Group

Sustainable

Development

Operations

Committee

Hermès

commitment to

the Livelihoods

Fund

Group

environmental policy

Anti-corruption

code of conduct

Global Compact

commitment,

Advanced level

Animal Welfare Policy

Supplier CSR Brief

GBS biodiversity

diagnostic

Launch of the third

Livelihood fund

Supply Chain

Committee

Circularity Committee

(unsold items)

Updated environmental

policy

Supply chain brief

Climate strategy 2030

Sustainable

development page of

the Hermès Finance

website

Signature of the

second Group

Disability Agreement

Updated Act4Nature

International

(biodiversity)

the Livelihoods

Fund

Act4Nature

commitment

(biodiversity)

Supplier

handbooks

(social,

environmental,

ethics)

SBTi validated carbon

trajectory

Updated strategic

sustainable

development

framework

H-Alert !

whistleblowing IT

system

Fashion Pact

commitment

Water footprint

assessment

●

External commitment

●

Internal formalisation

●

Governance

●

Other initiatives

2003

2008

2009

2010

2007

2002

2017

2019

2020

2021

2016

2012

2011

2018

Petit h

métier

Sustainable

development

department

First sustainable

development

seminar for

distribution

subsidiaries

Group

sustainable

2015

2014

development

strategic

framework

First Group

sustainable

development

framework

2013

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 53

CORPORATE SOCIAL RESPONSIBILITY

BUSINESS MODEL

EXAMPLES OF AWARDS RECEIVED AND RANKINGS OBTAINED IN 2021

CLIMATE CHAMPION

CHALLENGES

GRAND PRIX EMPLOI

FRANCE

HUMPACT

GRAND PRIX

DE LA TRANSPARENCE

CAC LARGE 60

NO. 1 IN DIVERSITY

LEADER RANKING

FINANCIAL TIMES

MOST RESPONSIBLE

“CLOTHING AND ACCESSORIES”

COMPANY

LE POINT

BEST EMPLOYER

IN FRANCE

GLASSDOOR

#2 « Advanced »

◆

responsibility: a handmade leather object, for example, is the work of

a single person. Following the original principle “one person, one

bag”, a single person masters all of the steps necessary for an

object’s creation, and is accordingly responsible for its final quality.

This sense of responsibility also covers the materials used, which

must not only be the most beautiful but also of indisputable origin:

they must be worthy of serving to create exceptional objects. This

accountability also extends to the product’s future life: each

craftspeople has a view that transcends beyond the production

process. This heightened awareness of responsibility nourishes the

individual and group sustainable development practices;

◆

authenticity: the craftspeople are passionate about emphasising the

“authenticity” of beautiful materials and eschew the use of imperfect

materials, even when the end result may seem acceptable. This

demanding attitude is reflected in the attention paid to all the aspects

that comprise the handmade object and its craftsmanship. The inside

is afforded just as much care and attention as the outside. Hermès

craftspeople, and all employees of the House, are nonetheless aware

of their limits and imperfections, and constantly question each stage,

so as to perpetuate the values of excellence. Sustainable

development is pursued in this spirit of sincerity, excellence and

continuous improvement. It is built on accomplishments rather than

abstract commitments, with the goal of long-term efficiency;

Climate, water, forests

Textile & Apparel

2.1.2

AN AMBITIOUS AND STRUCTURING CSR

STRATEGY

Hermès has remained true to its values since 1837 and continues to

thrive as a house where craftspeople are at the fore. By selecting the

finest materials, it produces exceptional, useful and aesthetic objects,

designed to last (thanks to their quality and desirability) and to be passed

on. Hermès now has a world-wide reputation, but the House has always

been, and remains, an independent company supported by family

shareholders, the sign of stability and longevity. Promoting French

manufacturing, its project is based on the excellence of the

craftsmanship métiers; human hands, savoir-faire and quality are the

keys.

The attention paid to people has a natural place at the heart of the

House’s craftsmanship business model, both at its sites as well as its

partners and suppliers. Hermès is attentive to working conditions,

respecting a balance in terms of diversity and stringently applying the

fundamental principles of the United Nations and OECD.

The attributes of craftsmanship have shaped the development of the

House since its founding and, at the same time, its relationship with the

world. Naturally rooted in respect and humility, these attributes, over

time, have become company values.

The presence of these values permeates all employees, suppliers and

partners. They form the platform for the House’s actions in matters of

sustainable development by appropriating the notions of individual and

group responsibility, authenticity in the search for excellence, or

acceptance of the long-term approach as a factor influencing

performance. Lived and embodied by the Senior Executives and all

employees, today they are the lifeblood of its raison d’être and represent

the founding pillars of the Corporate Social Responsibility (CSR) approach

that Hermès shares with its stakeholders:

« A »« A- »

1. European Financial Reporting Advisory Group

2. Environment, Health and Safety

◆

generalist internal stakeholders (senior management);

◆

internal stakeholders with expertise in the subject, including the

sustainable development Operations Committee, the EHS

network,

in France;

◆

internal stakeholders outside France, i.e. Sustainable development

correspondents in foreign subsidiaries (a quarter of the sample);

◆

a panel of external stakeholders identified for their knowledge of the

sector, the House and its operation (a quarter of the sample).

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◆

acting with urgency while taking the time to do things well: our

craftspeople do not like to put off until tomorrow what they can

accomplish today. Hermès’ craftspeople, and by extension the House,

see time as an ally, that enables them to work well, to integrate the

internal or external challenges of all stakeholders, in order to see

things in a balanced perspective. In the making of an object by hand,

it is impossible to skip a step to save time, everything flows in

continuity, everything is necessary. These modes of operation shape

and determine the way projects are conducted. They encourage the

implementation of responsible policies and practices, using a

participative approach, blending exacting requirements and efficiency

to obtain a high-quality end result. While considering changing and

accelerating contexts, projects take into account the necessary

rhythm for sustainable change among employees, partners and

natural ecosystems. Urgency to act and hasty execution should not be

confused.

2.1.3

MATERIALITY ANALYSIS

As every year, Hermès updated the analysis of its priority CSR issues in

2021 to guide its actions and facilitate understanding of its strategy.

For the first time, this “materiality analysis” study was conducted using

the concept of double materiality, which looks at the two dimensions of

value creation put forward by the European Union: financial value

creation, which essentially affects investors, and the creation of

environmental and social value, which has a broader effect on all the

Company’s stakeholders.

In line with EFRAG

recommendations, with the help of its stakeholders,

Hermès ranked 15 priority issues from two perspectives:

◆

the materiality of the subject for Hermès’ business model, i.e. the

importance of these issues for the Group’s economic activity

(so-called “outside-in” vision);

◆

the impact that Hermès and its value chain have on the issues at a

global level, given their materiality (direct and indirect impacts given

the Group’s image) (so-called “inside-out” vision).

Hermès aligns itself in this way EFRAG’s 2021 recommendations on the

harmonisation of the non-financial disclosure proposed by the European

Green Deal and supported by the French government.

This double materiality matrix also follows up on the work carried out for

several years by the Sustainable Development Committee and the

sustainable development department, together with the Executive

Committee, and in collaboration with the audit and risk management

department. It contributes to the risk analyses carried out at Group level.

Identification, assessment and ranking of issues

The 15 priority issues studied are the result of analyses updated

internally every year since 2015 by an analysis of the main general CSR

topics specific to the industry to which the Group belongs.

They were then ranked in the form of anonymous questionnaires allowing

considerable freedom of expression, conducted with a panel of more

than 100 respondents:

The Sustainable Development Committee reviewed and validated the

results of the consolidation of these questionnaires.

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Understanding that the notion of risk itself contains an opportunity factor, part of the CSR strategy, and described in more detail in the following

sections of the document. Hermès uses the term “issues” to qualify its CSR approach in this

Non-Financial Performance Statement. These issues are summarised as

Materiality in the world

Materiality at Hermès

Climate change

Eco-design and circular

economy

Responsible company

Diversity and inclusion

Biodiversity

••

•

Animal welfare

Sustainable raw materials

and their responsible sourcing

Ethics and Human Rights

Employee well-being

and fulfillment

Savoir-faire and corporate culture

Resource management:

energy, water, waste

Supplier support

Innovation and R&D

Institutional and non-financial

communications

◆

Employee well-being and development

◆

Diversity and inclusion

◆

Savoir-faire and corporate culture

◆

Eco-design and circular economy

◆

Sustainable raw materials and responsible sourcing thereof

◆

Animal welfare

◆

Climate change

◆

Biodiversity

◆

Ethics and Human Rights

◆

Responsible company

Employer brand:

talent recruitment

and retention

•

Comments on results

The materiality matrix highlights the Group’s ten CSR priorities (top right

quadrant of the matrix). This positioning remains relative, with all

subjects included in the analysis being by definition very important and

the subject of internal action plans. These priorities are evenly distributed

within the three pillars of the House’s strategy:

People

Planet

Communities

4.1.2 Industrial risks 4.1.2.1 Management of supplies Sustainable materials and responsible sourcing

4.1.4 Risks related to social, societal and

environmental responsibility

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The prioritisation criteria have changed since 2020, meaning that

changes from one year to another are more difficult to analyse.

Nevertheless, we can note changes in relative positioning that call for the

following comments.

The issue of biodiversity has taken on greater importance, in terms of

consideration of its impact on the Group’s business model, undoubtedly

thanks to the training courses and work undertaken on the subject

resulting in better understanding, and it confirms its priority place as a

global challenge, a perception strengthened by major initiatives

worldwide (IUCN Congress in Marseille, COP 15).

The subject of climate change is still a little behind other subjects,

reflecting the perception that the Group’s business model has a low

carbon footprint in absolute value for the planet and is less subject than

others sectors to its medium-term consequences. This vision is

supported by the formalisation of clear and ambitious carbon emission

reduction targets, validated by the SBTi.

The Group’s mobilisation around animal welfare is consistent with its

importance, underlined in this analysis, by the formalisation of a charter

this year, and the strengthening of actions in the various supply chains

concerned. As a societal issue, its communication to our stakeholders is

also an issue.

2.1.4

ANALYSIS OF NON-FINANCIAL RISKS

As indicated in chapter 4 “Risk and control”, § 4.1, the Group carried out

an overall analysis of its risks according to two axes, the magnitude of

the multi-criteria impacts and the probability of occurrence. The

materiality work carried out above made it possible to update this overall

risk analysis, which distinguishes five major risk categories, three of

which are more relevant in the non-financial field. The cross-reference

table below illustrates the link between this risk analysis and the ten

priority CSR issues identified by the materiality matrix. The non-financial

issues taken into account also include the concepts of positive

contributions and opportunities, which are more difficult to incorporate in

the risk analysis.

GROUP RISKS

Priority CSR issues

4.1.1 Risks related to strategy and operations 4.1.1.1 Image and reputation Responsible company

4.1.1.5 Management of talent and savoir-faire Employee well-being and development

Diversity and inclusion

Savoir-faire and corporate culture

4.1.4.1 Changes in major global climate and

biodiversity issues

Climate change

Biodiversity

4.1.4.2 Availability and proper use of natural

resources

Eco-design and circular economy

Animal welfare

4.1.4.3 Respect for human rights, fundamental

freedoms and ethics Ethics and human rights

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2.1.5

CSR STRATEGY

Developed in 2015 and updated in 2020, the Hermès CSR strategy

“Ambitions” is still consistent with the double materiality analysis of

2021. The underlying premise is: “We are all artisans of our sustainable

development”; it constitutes the CSR reference framework applicable to

all employees. It is based on appropriation and implementation of topics

at a collective level, a key factor in its sustainability. The Sustainable

Development Committee and the sustainable development department

assist and supervise the Group’s subsidiaries and métiers to ensure its

proper application.

The Hermès Group’s CSR strategy makes a tangible contribution to most

of the 17 Sustainable Development Goals (SDGs) for 2030, as defined

by the United Nations. Its action is also aligned with the responsible

principles of the Global Compact, to which the Group adheres and under

which its performance is recognised as "Advanced".

In practical terms, Hermès’ CSR strategy is organised around six

operational pillars, themselves subdivided into 49 topics that serve as

benchmarks for the operational actions of the House’s entities.

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STRATEGIC FRAMEWORK

FULFILMENT AND WELL-BEING

SOCIETAL ENGAGEMENTS

REGIONAL RESPONSIBILITY

IN FRANCE

CORPORATE CITIZENSHIP

COMMUNICATION

ACQUISITION, ENRICHMENT AND TRANSMISSION

PRESERVATION AND DURABILITY

RAW MATERIALS

SUPPLY CHAINS

SUPPORT AND CONTROL

RESPONSIBLE PRACTICES

RESOURCES AND WASTE MANAGEMENT

CLIMATE CHANGE

BIODIVERSITY

Stakeholders

Transparency

Teams Savoir-faire

People

SAVOIR-FAIRE

Planet

Communities

Suppliers &

Partners

Environment

Raw

materials

This strategy provides a comprehensive and specific framework for all of the Group’s actions. These are presented and detailed in the Experts'

handbook in an annex to this paragraph.

The materiality analysis makes it possible to define the priority actions in respect of this strategy, on which the Group focused in 2021. The table below

summarises the management of the approach used for these priorities, broken down into challenges, objectives and results.

People:

2021 priorities Major challenges and objectives Main concrete measures and results for 2021

Employee well-being

and development

Measure through regular comprehensive

well-being surveys

73% of employees took part in a survey over the last three years

Ensure health and safety at work 17% decrease in the severity rate of work accidents with lost time

Set up supplementary compensation in addition

to salary

€94 million distributed in 2021 for incentive schemes and profit-sharing

in France

Go beyond legal practices and implement

actions

Implementation of a maternity policy with compensation maintained,

covering 98% of female employees in the group

Foster diversity 5.68% of employees in France are people with a disability (2020)

Encourage gender parity, particularly

for management positions

Signature of a second Disability Agreement in France

60% of managers are women

25% of the Executive Committee were women at 31/12/2021

(40% from 01/03/2022)

Savoir-faire and

corporate culture

Roll out operational and managerial training 83 trainers covering the leather métiers for 22 leather goods workshops

Cultivate internal savoir-faire 423,317 hours of training provided worldwide, i.e. 8% more than

in 2020

Spreading the corporate culture 6,855 leather craftspeople trained in 10 years

Creation of an Apprentice Training Centre for leather goods

(State diploma)

23 Meilleurs Ouvriers de France (Best Craftspeople in France)

100% of employees receive training in the Hermès culture

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The planet:

2021 priorities Major challenges and objectives Main concrete measures and results for 2021

Eco-design and the

circular economy

Optimizing the use of materials 95% of hides are by-products of the food industry

Systematise circularity approaches 100% of métiers have included the circular economy in their roadmap

Extend the life of goods 100% of unsold items in France donated or recycled in 2022

More than 1 million products incorporating a circular and

eco-responsible approach developed in 2021

Nearly 21 tonnes of recycled textile materials

Development of petit h since 2010

161,000 repairs in 2021

Traceability and knowledge of supply chains Detailed mapping of 74 raw materials supply chains

Definition and sharing of social and

environmental standards within supply chains

CSR brief communicated to suppliers and partners (social and

environmental issues)

Monitoring and improvement Implementation of a process leading to certification and/or

to labelisation for 32 supply chains by 2024

Animal welfare Definition of a charter Formalisation in 2021 of a science-based Animal Welfare policy

(outcome-based principle)

Implementation of best practices within the

supply chains

100% of métiers follow the Group's Animal Welfare policy

92% of hides sourced in Europe, within a regulated ecosystem

Development of global best practices with the ostrich and crocodile

sectors

100% of exotic hides comply with the requirements set by the Group’s

Animal Welfare policy

Climate change Defining an emissions reduction policy and

targets

Update of reduction targets (2018-2030): -50.4% in absolute terms

for scopes1&2and-58.1% in intensity for scope 3

Setting a notional internal carbon price (industrial and real estate

investments, transport contracts)

Reduce emissions Validation of the 1.5°C-compatible trajectory by SBTi

Analysis of the impacts of climate on activities Update of climate risk analyses on eight scenarios

Contribute to carbon offset efforts Reduction of the Group’s emissions in absolute value on scopes 1, 2 and

3 since 2018: -15.3%

New investment in Livelihoods and carbon credits received in 2021

for 100% of scopes1&2and 63.6% of the Transportation item

(upstream and downstream)

Biodiversity Define a strategy Implementation of the Act4Nature strategy in 2021

Make an impact inventory and identify priorities Mapping of “GBS” impacts on 92% of the activity, intensity score lower

than sector averages

Undertake concrete actions Continuation of diagnostics: analysis of the goat leather sector launched

at the end of 2021

Biodiversity actions in 14 of the 19 leather goods workshops located

in France

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Communities:

2021 priorities Major challenges and objectives Main concrete measures and results for 2021

Ethics and Human

Rights

Employee training Mandatory e-learning in place since 2020. 100% of employees

concerned trained

Supplier commitment (signature of the C2

handbook)

89% of direct purchasing suppliers having signed the C2 handbook

Verifications and audits 113 audits carried out at tier 1 and tier 2 suppliers as part of the duty

of care

Ethics alert line Internal and external implementation since 2020. 53 alerts in 2021

Responsible company Develop employment and promote local jobs Nearly 1,000 jobs created, including more than 550 in France

Balanced value sharing 78% of objects made in France

Acting in favour of solidarity or the environment 530 suppliers in France listed as being social and solidarity enterprises

(ESS)

29.5% consolidated tax rate

400 social and solidarity actions in more than 40 countries

Continuation of Fondation d’entreprise programmes

(€40M over five years)

Donation of €7M to AP-HP (following €20M in 2020)

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2.1.6

GOVERNANCE OF THE CSR APPROACH

The House’s actions are steered by a Group sustainable development department and have been supervised by the Sustainable Development

Committee since 2007. They involve various corporate bodies:

EXECUTIVE COMMITTEE

SD STRATEGIC COMMITTEE

OTHER FUNCTIONAL

DIVISIONS

SUSTAINABLE DEVELOPMENT DEPARTMENT

EXECUTIVE MANAGEMENT SUPERVISORY BOARD

CAG-CSR COMMITTEE

LOCAL COMMITTEES CROSS-CUTTING PROJECT GROUPS

MÉTIER/SUBSIDIARY

SUSTAINABLE DEVELOPMENT

DEPARTMENTS

SUSTAINABLE DEVELOPMENT

OPERATIONS COMMITTEE

FONDATION

D'ENTREPRISE

Supervisory Board: its CAG-CSR Committee has the role of overseeing

sustainable development challenges. It meets with the sustainable

development department twice a year.

Executive Management and Executive Committee: Hermès Group

Management plays an active role in the implementation and rollout of the

approach. The Executive Chairman, Axel Dumas, is involved in many

subjects. Since 2019, the Supervisory Board (see chapter3 “Corporate

governance”, § 3.8.1.2.4) has approved the implementation of a variable

compensation component for the Executive Chairman of Hermès based

on three CSR criteria (environmental, human resources and societal). The

Executive Committee is informed by three of its members of the work of

the Sustainable Development Committee.

Sustainable development Strategic Committee: this committee

validates the strategy, conducts governance and oversees CSR activities.

Composed of 12members including three members of the Executive

Committee, it includes managers from the human resources, industrial

affairs and distribution departments, two métiers (Leather and Textiles),

and the communication department. Its minutes are communicated to

the Executive Committee. It met six times in 2021, the attendance rate

of members was 92% and 100% for the three members of the

Executive Committee.

Group sustainable development department: reporting to a member of

the Executive Committee, this proposes and implements the strategy and

oversees the approach taken by all operating departments and Hermès

Group subsidiaries, both in France and internationally. It monitors

accomplishments, coordinates the operation of various committees (the

Sustainable Development Committee and a Group Operations

Committee), assists local committees and manages cross-functional

projects and non-financial reporting.

Group Operations Committee: composed of 45 representatives from

the different corporate functions. It analyses and validates projects’

technical and functional aspects and facilitates information sharing

between its members. It met seven times in 2021.

Local Sustainable Development Committees: run by the main métiers

and subsidiaries, they initiate and track actions launched, and share

them during regional meetings. For the eighth consecutive year, the

heads of the Sustainable Development Committees in the Asia, Europe

and Americas regions met, remotely, for two mornings of conferences.

Environmental initiatives are driven more specifically by an “EHS

network” in France, run by the industrial affairs department.

◆

An introduction detailing the commitment made by Hermès and how this relates to the Group’s values;

◆

A summary of the key events and achievements of 2021;

◆

A selection of indicators giving key figures on Hermès’ progress on all of its commitments in 2021;

◆

A main handbook presenting in detail the policy implemented and actions carried out at all levels of the Group, as well as the achievements

and results of 2021;

◆

An “experts' handbook” providing detailed information, including figures, on Hermès' actions and results in 2021.

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These bodies may be supplemented by management and ad hoc

committees when new sustainable development projects are

implemented by subsidiaries and entities. Cross-functional committees,

led by Hermès’ head office departments, manage issues that are of

common interest and often of a medium-term nature. They focus in

particular on issues relating to recycling, materials innovation, the

circular economy, sustainable construction and logistics.

Métier/subsidiary sustainable development departments: they are

responsible for leading the approach at their level and for signing up to a

CSR roadmap each year. The Group’s main métiers and subsidiaries,

which account for more than 80% of the business, have a dedicated

sustainable development manager.

READING GUIDE

In order to present the commitments, actions and results for the six pillars of Hermès’ CSR strategy as clearly as possible, the subsequent

chapters have been organised as follows:

◆

Ensuring the wellbeing and fulfilment of employees: working

environment and conditions, health and safety, quality of life at

work, work-life balance, social protection, ethics and responsible

management.

◆

Sharing the corporate project and its values, which are the

pillars of teams’ identity and long-term cohesion.

◆

Maintaining the quality of social dialogue.

◆

Implementing ambitious value-sharing schemes and

compensation policies: salary, bonuses, profit-sharing and

employee shareholding.

◆

Facilitating the integration and recognition of talent in all its

diversity and promoting equal opportunities and inclusion:

diversity, age, social origin, disability and anti-discrimination.

◆

Engaging employees in solidarity actions, including skills

sponsorship.

◆

Promoting broad ethical standards and the application of human

rights and anti-corruption regulation.

◆

Anticipating the House’s future needs.

◆

Attracting and recruiting the best profiles for our different

metiers.

◆

Integrating new employees and passing on our unique corporate

culture to them.

◆

Developing training courses that guarantee operational

excellence and versatility, and consolidating the technical and

managerial expertise of our employees.

◆

Integrating the challenges of sustainable development into our

know-how; for example with eco-design.

◆

Developing talent: enabling long and sustainable careers,

through internal development, versatility, mobility or retraining.

◆

Promoting art and craftsmanship among the younger generation.

◆

Encouraging the transmission of operational know-how to our

partners: schools, training and apprenticeship centres.

◆

Maintaining proactive actions in training for our historical

metiers and promoting manufacturing know-how (VAE, MOF,

EPV, etc.).

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EXPERTS' HANDBOOK

This section takes an in-depth look at Hermès’ commitments and details the commitments made with regard to its CSR strategy

The Hermès CSR strategy is organised around three strategic areas broken down into six operational pillars, themselves subdivided into 49 topics that

serve as benchmarks for the operational actions of the House’s entities, as presented in the three boxes below:

TEAMS

FULFILMENT AND WELLBEING

PEOPLE

SOCIETAL ENGAGEMENTS

SAVOIR-FAIRE

ACQUISITION, ENRICHMENT AND TRANSMISSION

PRESERVATION AND DURABILITY

◆

Seeking the best quality for all the materials used, guaranteeing

the durability of the objects we create.

◆

Optimising the use of our raw materials throughout their life

cycle by integrating the principles of the circular economy:

innovation, eco-design, reuse, upcycling, recycling (production

scraps), repair, end of life including the management of unsold

items.

◆

Finding alternatives to the use of certain materials, including

plastics.

◆

Controlling the entire value chain with operational traceability

and long-term partnerships with suppliers, NGOs, etc.

◆

Contributing to the development of the most demanding

standards for responsible and sustainable management of

supply chains: ecological footprint (biodiversity, water, energy,

carbon), social (working conditions) and societal (communities).

◆

Introducing certifications schemes within our supply chains.

◆

Supporting agriculture that is more respectful of Nature.

◆

Imposing the highest standards in animal welfare and in the

ethics of our relationship with living things.

◆

Going beyond regulatory obligations in terms of the environment

by anticipating how they might evolve: innovating by using

environmentally friendly solutions.

◆

Controlling the consumption of natural resources both internally

and with suppliers: water, energy.

◆

Defossilising our energy consumption.

◆

Improving production processes by favouring the cleanest, most

economical technologies and the most environmentally friendly

substances (chemicals).

◆

Reducing our footprint and controlling waste and discharges,

reducing their production as much as possible and recovering

them whenever possible.

◆

Formalising a strategy and governance, defining targets and

monitoring indicators.

◆

Studying climate risks and acting to reduce their impacts,

analysing resilience scenarios and incorporating them into the

strategy.

◆

Reducing greenhouse gas emissions in absolute terms (Scopes

1 & 2) and in proportion to activities (Scope 3), in line with the

Paris Agreements by developing science-based target (SBT).

◆

Undertaking voluntary carbon offsetting actions with high

environmental, social and societal value, in addition to reduction

measures.

◆

Setting up trainings for employees.

◆

Working in partnership with stakeholders (including NGOs).

◆

Diagnosing our impacts on biodiversity across our entire value

chain (flora and fauna) and defining our ambitions on a

scientific basis (SBT).

◆

Implementing actions in our metiers, value chains and sites.

◆

Contributing to positive actions outside our sphere of

responsibility (Fondation d’entreprise Hermès, Livelihoods).

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RAW MATERIALS

PLANET

SUPPLY CHAINS

ENVIRONMENT

RESOURCES AND WASTE MANAGEMENT

CLIMATE CHANGE

BIODIVERSITY

◆

Supporting the development and evolution of supplier practices

to preserve key know-how and secure supply.

◆

Co-creating sustainable development action plans with our

suppliers and partners.

◆

Ensuring the application of all our social, environmental and

ethical requirements (duty of care), using a collaborative

approach and regular audits as necessary.

◆

Developing balanced partnerships, supporting our partners, and

encouraging territorial anchoring and regional development

around the basins and sites of implantation.

◆

Contributing to the improvement of operational practices

through the adoption of certifications and labels by our suppliers

and partners.

◆

Increasing partnerships with the supported sector, capitalizing

on the Group Disability Agreement (France).

◆

Pursuing a policy of manufacturing development in France by

co-developing projects with the regions in which it operates.

◆

Building harmonious relationships with local stakeholders in the

fields of the economy, employment, training, ecology and

culture: to inform, engage in dialogue and collaborate.

◆

Giving back to the world a part of what it brings us through

generous operational, financial and sponsorship actions,

undertaken by group entities including distribution subsidiaries,

or by the Fondation d’entreprise Hermès.

◆

Contributing to the forward thinking efforts of civil society or

academic research by participating in multi-stakeholder

initiatives.

◆

Taking part to advocacy initiatives for different modes of

production: craftsmanship, less intensive agriculture, local

anchoring.

◆

Making the company’s sustainable development strategy,

objectives and actions more transparent.

◆

Creating the conditions for external communication delivered by

employees.

◆

Making responses to external questionnaires and analysts more

reliable.

◆

Engaging in dialogue with the press and influence.

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SUPPLIERS AND PARTNERS

SUPPORT AND CONTROL

COMMUNITIES

RESPONSIBLE PRACTICES

STAKEHOLDERS AND TRANSPARENCY

REGIONAL RESPONSIBILITY IN FRANCE

CORPORATE CITIZENSHIP

COMMUNICATION

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PEOPLE: TEAMS

Inauguration of the Maroquinerie de Guyenne in September 2021, in the Gironde department

©Photographer: Christophe Mariot

◆

Rollout of a global maternity policy with compensation maintained.

◆

Establishment of a paternity policy in France.

◆

Signature of the second Disability Agreement in France.

◆

Global “Diversity and Inclusion” study and employee commitment study in Europe.

◆

Compensation maintained worldwide for the second year despite the Covid-19 crisis, and without recourse to State aid.

◆

Exceptional bonus of €3,000 for eligible employees Group-wide.

◆

Rankings Grand Prix Emploi (Humpact France), Financial Times (1st on Diversity and Inclusion in Europe), Glassdoor (7th best employer in

France).

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PEOPLE: TEAMS

2.2

PEOPLE: TEAMS

Hermès’ sustainable development is based on the fulfilment and well-being of its teams, as part of a corporate project that has placed people at

the heart of its values since 1837. More broadly, Hermès nurtures the richness of its human capital and contributes to major societal challenges

through proactive initiatives in the areas of ethics, diversity, equality among its employees, consideration of disability and, more generally, respect

for human rights.

Introduction

Hermès sets very high standards in terms of working conditions and these are essential to enable employees to thrive, to give meaning to their actions

and to help them constantly evolve by renewing knowledge and practices throughout their career.

Beyond the fundamental issues of health and safety at work, this also involves putting in place the best management practices and working

environments conducive to the well-being of each and every person on the sites, in the stores and offices, to “make beauty in beauty”, as Mr Jean-Louis

Dumas used to say.

Harmonious labour relations in France are based on the Group agreement on social dialogue and the exercise of union rights, renewed in 2021 and

regularly conducted at both local and central levels. They are also rolled out in all other regions with a humanist mindset that often goes beyond legal

obligations.

Hermès' economic successes are regularly shared in different forms and the contribution made by employees to the House’s development, whatever

their role, is acknowledged through various profit-sharing mechanisms in order to involve them in the corporate project over the long term.

Diversity and inclusion are also factors of the Group’s success. Given the variety of métiers, the profiles of its employees and the various geographical

locations, these subjects are embedded in Hermès' fundamentals. Nevertheless, they require daily efforts, which is why the Group’s ambition regarding

Diversity and Inclusion was redefined in 2021.

Information related to the management of the Covid-19 health crisis can be found in § 2.1 in the box "Covid-19, a resilient and contributive model in a

situation of crisis".

In 2021, the Group made progress on important societal issues, with the aim of making a long-term difference through steady improvements with

a significant impact. Among these, the selected elements below are particularly illustrative of 2021 for this section:

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PEOPLE

TEAMS

OBJECTIVES INDICATORS 2021 RESULTS

ENSURING THE WELL-BEING AND DEVELOPMENT OF EMPLOYEES

Knowing and monitoring employee

well-being through surveys

% of employees and frequency of surveys

73%

of employees took part in a survey during the

past three years

Implement teleworking for eligible employees

All eligible employees had access to

teleworking

Make work organisation more

flexible

% of the production workforce benefiting from flexible

work schedules

80%

of the production workforce benefit from

flexible work schedules

Ensure health and safety at work

Group lost-time work accident frequency rate

9.07

(stable compared to 2020)

Group lost-time work accident severity rate

0.34, down by 17% compared to 2020

Protecting the Group’s employees

% of employees who benefit from schemes in addition

to statutory health, pension and welfare plans

More than

85%

of employees worldwide benefit

from schemes in addition to statutory health, pension

and welfare plans

Implement a parenthood policy % of employees benefiting from a parenthood policy

100%

of subsidiaries have rolled out the maternity

care policy with salary maintained

98% of Group employees are covered by the Maternity

policy

62% of employees are covered by the Paternity policy

SHARING THE CORPORATE PROJECT AND ITS VALUES

Train employees in the House’s

values

% of new hires trained in the corporate culture

100% of new hires received training in corporate

culture since 2018

% of employees trained in Group ethics

100%

of employees considered to be exposed to

the risk of corruption according to the Group corruption

risk mapping are trained in anti-corruption

MAINTAINING THE QUALITY OF SOCIAL DIALOGUE

Conduct discussions with social

partners or equivalent

Number of agreements and % of employees concerned

social dialogue agreements and amendments

signed in France, i.e.

62%

of the workforce

Allow employees to express

themselves freely via an ethics

alert line

% of employees able to use the ethics alert line and

number of cases handled

The H-Alert! system is accessible to all employees.

alerts were received in 2021, all alerts were

followed up and some cases are still being examined

ENGAGE EMPLOYEES IN SOLIDARITY ACTIONS, INCLUDING SKILLS-BASED SPONSORSHIP

Develop skills-based sponsorship

at Group level

Number of “skills-based sponsorship” ambassadors

“skills-based sponsorship” ambassadors

Progress of resources implemented

Nearly

400

global operations

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OBJECTIVES INDICATORS 2021 RESULTS

ESTABLISH VALUE-SHARING MECHANISMS

Implement a minimum

compensation policy worldwide

% of employees whose compensation is above the

living wage defined locally

Considering the entire compensation system

implemented at Group level, Hermès ensures that it

pays above the living wage in all countries where it

operates.

Set up supplementary

compensation in addition to salary

Amount of incentive and profit-sharing in France

€

million in respect of 2021

Exceptional bonus paid during the year

Exceptional bonuses of €1,250 paid in 2021 for 2020

and €3,000 paid in February 2022 for 2021

% employee shareholding

At 31 December 2021, employee shareholding

represented 1.06% of the share capital, i.e. over

€1.715 billion.

Promote employee shareholding

Number of employee shareholders

Nearly 12,000

employee shareholders or

holders of rights to free shares, i.e.

68%

of the

workforce

FACILITATE THE INTEGRATION AND RECOGNITION OF TALENT IN THEIR DIVERSITY, AND PROMOTE EQUAL OPPORTUNITIES AND INCLUSION

Ratio of women present overall within the Group

67%

women in the Group

Ratio of women on the Executive Committee

25%

women on the Executive Committee

at 31/12/2021 (

40%

at 01/03/2022)

Promote the participation of

women in company management

Ratio of women on the Operations Committee

67% within the Operations Committee at

31/12/2021 (

64%

at 01/03/2022)

Ratio of women managers

60%

women managers

Ensure equal opportunities Pay equity index (France)

The weighted average global gender equal pay index

90/100

Fight against discrimination

Number of employees who completed a Diversity and

Inclusion training course

780

employees completed a D&I training course

Promote inclusion, particularly for

people with disabilities

% of the workforce affected by a “Disability” action plan

100%

of the workforce in France concerned

% of employees with disabilities in the workforce in

France

5.68%

rate of directly employed people employees

in France with a disability (2020 figures)

PROMOTE THE MAIN ETHICS PRINCIPLES AND THE APPLICATION OF REGULATIONS ON HUMAN RIGHTS AND THE FIGHT AGAINST CORRUPTION

Ensure employees adhere to

ethics and compliance principles

100% of employees informed and trained

100%

of employees receive the codes of business

conduct, ethics charter and anti-corruption code, and

100%

of employees considered to be at risk of

corruption are trained in anti-corruption

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2.2.1

FULFILMENT AND WELL-BEING

The sustainability of the House rests on the women and men who

contribute in a harmonious and positive manner to its functioning and

development. For this reason, the Group is very demanding in terms of

working conditions so that everyone can express their potential safely, in

a pleasant environment, whether on production sites, in stores or offices.

This also means supporting the transformation of working practices,

whether digital or organisational, and seeking a permanent balance

between the changing world and the goal of living well alongside one

another.

POLICY

The Group’s policy integrates health, safety and well-being challenges in

its operational strategy as a priority, in particular for its manufacturing

activities. Working time is managed by each entity in compliance with the

regulations in force, according to the particularities of its activity, and

with a view to ensuring a balance between private and professional life.

Social dialogue is a priority and is organised in each country according to

local laws and regulations. In addition, faithful to its family tradition, the

House involves its employees in long-term growth through individual and

collective compensation measures.

MEASURES IMPLEMENTED AND RESULTS

In order to contribute to the development and well-being of its teams, and

more broadly, to major societal challenges, Hermès undertakes actions in

terms of ethics, diversity, equality between its employees, consideration

of disability and, more generally, human rights. The impact of these

actions is measured regularly in order to assess their effectiveness and

adjust them if necessary.

2.2.1.1

FULFILMENT AND WELL-BEING

2.2.1.1.1 Employee well-being

Since 2018, the human resources department of the Group has

launched a health and well-being approach in France called SATIN.

This is based on taking stock of the situation every few years via an

internal survey of employees, and the introduction of action plans. The

questionnaire, designed by the INRS (National Institute for Research and

Safety, charged with occupational health and safety) and the University of

Lorraine, enables each employee to anonymously express their feelings

on various topics relating to physical and mental health, stress, the work

environment, activity and organisation.

This approach continued in 2021, despite an unfavourable context, with

its rollout to three new sites. Since its launch, nearly 8,000employees

at 41sites have taken part, i.e. 73% of employees in France. The

average response rate of 83% is a sign of the commitment of employees

and provides a strong representation of their views.

The topics selected locally are varied: time management, fatigue and

physical health, warm-up/stretching, hazard management,

musculoskeletal disorders (RSI), management of emotions,

communication, etc. More than 65 participatory workshops with

employees and employee representatives were set up at the sites on

topics identified for progress, such as “Fair and unfair – Optimising

relations at work”, “Stress management and emotional load”,

“Development and commitment”, “Workspace ergonomics and the

working environment”.

Following this diagnostic phase, the French sites set up a workplace

health and well-being observatory on each site, which coordinates the

action plan via working groups, in conjunction with the Management

Committees and the site’s Health, Safety and Working Conditions

Commission. Recurring themes that can be part of Group initiatives are

identified and dealt with collegially at the same time. This Observatory

remains a reference point in the long-term prevention and identification

of risk situations relating to health or well-being. Similar approaches to

analysing well-being at work are carried out within our Retail subsidiaries.

In Europe, a vast engagement survey was launched at the end of May

2021 for all employees in 16 countries (survey sent to 1,075 people)

with a participation rate of 88%. It recorded an increase in the

engagement level from 74% to 76%. The strengths identified by the Retail

Europe teams relate to pride in belonging and confidence in the future,

the care and sincere concern for employees, recognition and feedback

provided, and the House's CSR commitment. In Russia, for example, the

engagement rate was 86% and 96% of employees would recommend

Hermès as a good company. 93% say that Hermès takes care of its

employees. In Italy, the participation rate was 89%, with 83% saying they

were proud to work for Hermès and 85% welcoming its commitment to

CSR.

In the United States, HOP conducted its second employee engagement

survey in 2020, and continued the analysis in 2021 (2,700 comments

representing more than 250 pages analysed by local HR departments).

The survey enabled 755 employees to express their views, i.e. a very high

commitment rate of 91% (up from 83% in 2018). The most positive

response was the statement that employees are proud to work for

Hermès (98.5%) followed closely by the fact that Hermès is a socially

responsible company (96%).

The points of progress identified, on which local HR is working, generally

concern the workload, with the desire for a better work-life balance and

the development of career opportunities.

2.2.1.1.2 Working conditions and environment (EHS)

The diversity of the Group’s métiers, from production to retail, not

forgetting the support functions, involves managing different issues. The

Group’s vision of health, safety and working environment issues therefore

requires adaptation to the specificities of its activities and to local

differences.

◆

eliminate and prevent the risk of injury, preserve long-term health;

◆

protect the environment by controlling risks and reducing identified

impacts.

◆

an EHS regulatory watch organised at a frequency adapted to

changes in the regulations of the countries in which the sites are

located: in France, the watch is shared quarterly; for the rest of the

world, it is published bi-annually or annually;

◆

the elimination of hazardous situations by ensuring the proper

management of hazardous work and the control of environmental

practices through the Group’s guidelines, updated each year and

which supplement those of the real estate development department;

◆

a safety culture, assessed each year at all industrial sites in

accordance with internal standards.

◆

the introduction of electric height-adjustable workbenches;

◆

work carried out in collaboration with biomechanics and

physiotherapists to measure the biomechanical impact of each

movement performed by craftspeople on a daily basis. This innovative

protocol, using cutting-edge technologies, has made it possible to

create a hierarchy of training actions and thus reduce physical stress

in strict compliance with savoir-faire;

◆

the setting up of “ergo relays”, who are either craftspeople or

employees from support functions, and some of whose missions are

dedicated to the prevention of musculoskeletal disorders in their

workshops. This community provides concrete support to each

craftsperson in order to progress in terms of ergonomics and good

postures within each leather goods workshop. At the same time, the

ergo-motor skills module “Un Corps Pour La Vie” continued to be

rolled out, with the aim of better preparing the body and supporting

the demands inherent in the specific activities of saddlers and leather

goods craftspeople (warm-up, posture, etc.). To date, 3,000

craftspeople have been trained;

◆

the perfecting of a shoulder realignment tool, aimed at preventing

musculoskeletal disorders of the upper limb, a process supervised by

local physiotherapists.

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A common strategic framework, adaptable to the activity

The EHS (Environment, Health and Safety) policy for the Hermès Group’s

industrial sites aims to implement systems that help preserve the health

and ensure the safety of employees while protecting the environment. It

is supervised and validated by the Executive Vice-President of the

Manufacturing Division & Equity Investments, a member of the Executive

Committee.

While craftsmanship expertise is essential to the production of beautiful

products, the high level of expertise in health, safety and the environment

contributes directly to the improvement of working conditions and the

well-being of all. Thus, for Hermès, any work accidents, occupational

disease or environmental accidents are unacceptable.

Each métier, through its managers, undertakes to work relentlessly, with

commitment and determination, in order to achieve this level of control

and to pass on the environmental and health and safety issues that are

at the heart of the craftsmanship culture:

Any new Hermès industrial site, and any renovation, is designed and built

with the health and safety of the craftspeople and partners working there

in mind.

New or existing industrial practices, as well as processes and products,

are constantly analysed to minimise their risks and effects on the

environment, health and safety.

Lastly, each métier strives to train and raise awareness among all its

employees to achieve these ambitions, taking into account the unique

features of its activity.

To support this policy, the Hermès industrial department runs an EHS

programme that changes every four years. The fifth cycle of this

programme began in 2018 and consists of three components:

The industrial department audits the achievements of the industrial sites

with the support of an external firm and regularly reports on the progress

made in meeting Hermès' commitments. In 2021, 15 audits were carried

out.

To complete this programme, the industrial department has been running

an EHS network since 2003, made up of EHS managers from the

House’s various métiers. With around 20 members, this network meets

several times a year to set targets, share results and learn about best

practices in each of the métiers.

Actions implemented within the métiers: some examples

Each department regularly feeds into an action plan for the management

and continuous improvement of working conditions, particularly in terms

of ergonomics.

Leather

The Leather Goods division has the objective of making its production

units safe places, supporting tradition, excellence in savoir-faire and

innovation. The resources enabling employees to work safely, perform

their duties over the long term, and protect their health are a priority

within each site. The division’s senior management meets each quarter

to discuss health and safety issues at work. An external body conducts

regular audits on the degree to which the production units have adopted

a strong health and safety culture in accordance with Hermès’ own

guidelines. An EHS manager is appointed in each production unit. The

central coordination ensures the consistency of the progress plans,

provides them with material support, and monitors changes in

regulations and technological developments. It develops and distributes

shared training, reporting and regulatory compliance tools.

Among the Leather Goods division's priorities, the fight against RSI

(repetitive strain injury) is the subject of several types of actions:

◆

the installation of a ventilation solution for the hot-part workshop at

Crystal Saint-Louis to renew the air in this workshop while recovering

the excess heat from the furnaces. This solution made it possible to

significantly improve the working conditions in this workshop;

◆

a measurement campaign was carried out to ensure the absence of

fine particles; on the ATBC (a subsidiary of HTH) silk and cashmere

weaving site.

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Logistics

Logistics ships more than five million products to 306 stores each year.

For more than five years now, the Hermès Commercial site in Bobigny

has been constantly transforming to improve in the face of a constantly

increasing workflow. Various projects have been carried out to

mechanise certain tasks and significantly reduce the risks of RSI

(repetitive strain injury) in certain operations. Thus, the time between

receipt and shipping of a product has been reduced from 15 to 10 days,

while maintaining the level of quality control and improving working

conditions. These projects have also enabled operators to develop new

skills, flourish and feel collectively responsible for the smooth running of

the site.

Working environment

The House is very attentive, for its production units and its offices, to

providing quality workplaces. This aspect is also one of the pillars of the

“sustainable construction” framework put in place by the Group (see

§ 2.5.1.2). In 2021, for example, the following achievements can be

highlighted.

A new living space has opened its doors on rue de Penthièvre in Paris to

welcome Hermès Perfume and Beauty and the digital sales and service

department in an exceptional building with views over the whole of Paris,

bathed in light, offering a large garden and equipped with 10 terraces

(i.e. 2,000 m

of outdoor spaces out of a total of 8,000 m

). The aim is

not only to design welcoming living spaces, but also to make them stand

out by highlighting the métiers and savoir-faire.

The Maroquinerie de Guyenne benefits from new premises in an HQE

building, with energy consumption optimisation and photovoltaic panels

providing electricity for the building. Height-adjustable workbenches have

been installed within HMS and HTH, partly by retrofitting when possible.

A certain number of actions are also carried out to improve visual and

acoustic comfort (soundproofing of machines, noise mapping, light

measurement campaigns) at the Maroquinerie de Guyenne.

Air quality, lighting and acoustics

Since 2019, the Hermès Group has implemented a process aimed at

gradually ensuring that all occupied buildings have air quality in which

concentrations of the main pollutants are below the levels recommended

by the WHO.

In 2021, air quality measurements were launched on certain production

sites in France, as well as in tertiary buildings and stores.

In China, the Hermès stores in Shanghai IFC, Xiamen, Qingdao and

Harbin are the first stores to have been equipped with pollutant

measurement systems and air filtration equipment, resulting in a

reduction in the number of particles of around 90% between outdoor and

indoor air.

At our industrial sites, various improvements in terms of working

conditions and environment were made in 2021, in addition to the

Group’s ambitions, such as:

2.2.1.1.3 Work accidents

For a number of years, Hermès has been developing a policy to prevent

work accidents, occupational illnesses and repetitive strain injury, as well

as an active policy to maintain people in employment and prevent people

being unable to work, based on a number of awareness-raising

campaigns (nutrition, physical activity, etc.).

In 2021, the frequency rate of lost-time work accidents for the Group as

a whole stood at 9.07, with a severity rate of 0.34 (respectively 9.08 and

0.41 in 2020). This calculation is based on the total number of actual

hours worked. It is difficult to interpret because of the variety of métiers

in the Group, however the trend is clearly positive (falling by more than

one-third in five years). No work accidents resulted in fatalities in 2021.

In France, the frequency rate was 11.92 with a severity rate of 0.52

(respectively 12.3 and 0.67 in 2020). The industrial workforce

represented 70% of the workforce in France, and consequently affects

these rates. The rates for the main métiers concerned (leather and

crystal) are below the rates for their industries.

Looking at figures for International alone, the frequency rate was 5.11

and the severity rate was 0.09 (respectively 4.72 and 0.06 in 2020).

Group France International only

Lost time work accident severity rate 0.34 0.52* 0.09

Lost time work accident frequency rate 9.07 11.92* 5.11

* T* These higher figures should be put into perspective with the production workforce being mainly located in France (78% of manufacturing sites are located in France), a

country in which regulatory requirements control the various cases of accidents and their reporting more strictly and exhaustively than elsewhere.

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14.9%

Frequency rate

10.1%

8.4%

10%

9.08%

9.07%

201820172016 20212019 2020

0.63%

Severity rate

0.46%

0.45%

0.41%

0.34%

201820172016 20212019 2020

Change in the frequency rate of work accidents

across the entire Group

Change in the severity rate of work accidents

across the entire Group

Each accident or significant incident is the subject of an investigation

with a detailed analysis of the causes, the conclusions of which are

systematically shared with other industrial sites that may present the

same risks. Thus, a sharing of experiences and best practices is in place,

allowing health and safety at work departments to exchange their

opinions and think about common solutions to the risks identified.

2.2.1.1.4 Organisation of working hours and schedules

Given the diversity of its activities, the Group gives its subsidiaries a

great deal of freedom in the organisation of working time and flexible

working hours, in order to be able to adapt them as closely as possible

to the realities of their métier. In this context, Hermès pays particular

attention to compliance with the regulations applicable in the countries

concerned in terms of working hours, maximum working hours and

minimum breaks, depending on the activities. The Group encourages

each entity to put in place all measures likely to contribute to the

well-being of employees at work, such as flexible working hours for

French entities.

The Group human resources department and the Director of Labour

Relations, issue general contextual instructions, such as during the

health crisis, negotiate agreements and carry out arbitration on any

complaints, and intervene in the event of non-compliance with the

general rules established by the House.

Given that 84% of employees are either craftspeople or work in

stores, teleworking is less significant than in other industries. Other

than in exceptional circumstances, it is considered on a case-by-case

basis depending on the situation, particularly in France. However, the

health crisis greatly increased the use of teleworking during periods of

lockdown or tension related to the health situation, for workstations

where it is possible. In order to facilitate the temporary use of this work

organisation, various measures have been implemented such as the

provision of laptops, headsets or the payment of a fixed monthly sum

intended to offset the additional costs related to teleworking, etc. In

some countries, teleworking has been more sustained, such as in the

United Kingdom, where the Smart Working Day allows remote working on

certain days.

Globally, 95% of employees work full-time. Some 813employees worked

part-time in 2021. Various working time flexibility schemes have been

established, notably in the leather goods workshops (42% of employees

in France).

Through its philosophy and its activity with a strong craftsmanship

component, the House values the presence of the teams and attaches

particular importance to working together, which necessarily involves a

presence on sites.

In China, schedules for sales associates include eight hours’ work a day

and two days off. Annual leave has been increased from 10days to 12.

Work-life balance

With regard to work-life balance, the Group communicates internally to

share best practices and encourages subsidiaries to adapt them and

apply them locally. Managers are expected to be roles models. Each

craftsperson is responsible for distributing his or her hours over the week

and thus benefits from significant flexibility to combine his or her working

hours and personal life. Particular attention is paid to monitoring leave

and to counting hours of work or recovery. Arrangements are made at the

start of the school year, for example, or in the event of childcare

constraints. The specific cultural characteristics of each country are also

taken into account, for example to reconcile the culture of strong

commitment in Japan and the regulations on taking leave; or in the

United States, the monitoring of compensatory rest periods and even the

planning of leave well in advance. Employees are systematically

encouraged to use their annual leave.

For all sites in France, the form used in the annual appraisal that each

manager conducts with each of his or her employees has been adapted

to include a discussion on work/life balance.

Some additional initiatives have been rolled out, such as the possibility

for pregnant women to telework for one day/week when their job allows

this, access to reserved parking spaces, and parenthood interviews.

Hermès Femme encourages each manager to demonstrate flexibility in

managing their teams to combine comfort and efficiency in the work of

their employees. A survey on childcare within Hermès Perfume and

Beauty was conducted.

Internationally, the subject of parenthood has resulted in the

implementation of a new platform for employees in Italy that covers

aspects relating to family and education (enrolment in schools, purchase

of school books, specialised courses). Within HOP (United States), a

resource group of employed parents supports working parents and the

return of new parents after maternity, paternity or adoption leave. In the

United Kingdom and Ireland, hours can be concentrated to enable only

four days a week to be worked. At Hermès Japan, the reduced-time

working regime applies to mothers of children between the ages of four

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and six (beyond the legal obligation that applies up to the age of three).

The normal work schedule is 7.5 hours per day and this mechanism

allows mothers to work 5.5 hours, 6 hours or 6.5 hours.

Focus on logistics

The operations of the logistics department were reviewed as a whole,

both in terms of people and productivity. In addition to the reorganisation

of tasks, the introduction of work tools and training, a new working time

agreement has provided more flexibility for the last two years.

Since 2019, employees have benefited from variable arrival, lunch and

departure times. They have a minimum number of hours worked per

week, with the option to work more hours, and the flexibility to adjust their

daily work hours according to peaks and troughs of activity, but also to

suit their personal obligations or preferences. This change, which is rarely

so extensive within a logistics site, is a sign of trust in employees and has

required significant managerial adjustment. It has been very well

received by the teams, who experience less stress in the morning and

can adapt their schedules to their personal constraints and changes in

volumes. Clear communication on figures and activity enables managers

to anticipate peaks and to give everyone responsibility.

In addition, the Switch multi-skills programme, which began three years

ago, trains volunteer employees in a wide range of logistics savoir-faire.

The “Switchers”, numbering 40 at the end of 2021, work on similar jobs,

as well as on very different assignments, for example by alternating

quality control, preparation, shipping and e-commerce. This virtuous

principle reinforces the flexibility of the métier: by developing their skills,

these operators can also better meet the various needs in the event of a

peak in activity.

2.2.1.1.5 Harassment

Hermès does not tolerate any conduct that manifests itself in particular

through behaviour, words, acts, gestures or writings that may infringe on

a person’s personality, dignity or physical or psychological integrity,

thereby jeopardising their personal wellbeing or employment, or

adversely affecting the social climate. In France, harassment is a form of

behaviour incriminated by the Labour Code. If intentional, it may

constitute an offence, which exposes the perpetrator to criminal

conviction. Many countries have similar regulations on this subject.

The Group’s policy is that any employee who feels harassed, or witnesses

a situation of that nature must disclose it as soon as possible to his or

her superiors and/or a Human Resources manager and/or report it

through the “H-Alert!” whistleblowing system, which guarantees the

confidentiality of exchanges. Group rules provide for appropriate

investigations (such as the establishment of a joint commission of

inquiry) depending on the situation so that each case can be examined

and dealt with. Hermès attaches great importance to everyone’s

professional development and compliance with the rules of ethics. It

takes action against all abusive behaviour at any level of the hierarchy.

The prevention of and fight against harassment, whether psychological or

sexual, is one of the House’s priorities. To achieve this, pairs of Company

and SEC Officers were appointed within the French entities to deal with

harassment and sexist behaviour. The legal role of the officers was

extended to the prevention and fight against psychological harassment.

In late 2020 and early 2021, each pair of officers (Company and SEC)

took part in a training course together, introduced by the Group labour

relations department and led by an external firm. The objective of this

training was to enable the officers to understand the notions of

psychological harassment, sexual harassment and sexist acts and to

know how to classify a situation using the legal framework. This training

also makes it possible to identify at-risk behaviours, to encourage the

implementation of preventative measures and to react in the event of an

alert by knowing how to show empathy and distance. This training was

also an opportunity to remind people of the existence of the “H-Alert!”

whistleblowing system. In order to promote social dialogue, the Company

and SEC Officers have drafted a roadmap for working together as pairs

within their company.

In early 2022, all Directors of Human Resources and HR managers in

France will be trained in the fight against harassment (sexual and moral)

and sexist behaviour, using the same firm that trained the officers.

Following this training, the Directors of Human Resources will raise

awareness among the members of their entity’s Management Committee

and then the entire managerial body and employees, through the

provision of an awareness-raising kit to be rolled out in 2022.

In addition to the Group’s work to combat harassment, local initiatives

have been taken by certain entities, such as within Hermès Cuirs

Précieux, with the creation of a “Well-being at work” commission made up

of Human Resources, members of the SEC and CSSCT, as well as the

EHS manager. The Hermès Horloger division has set up an external

“trusted person” system as a network of people to report any problems

relating to harassment, discomfort or isolation within or outside the

Company. This system is in addition to feedback of employees carried out

by managers or human resources.

Furthermore, psychosocial risk (PSR) prevention training has been

proposed to managers since 2017. It is led annually by the Group

Director of Labour Relations. This training makes it possible to make

managers aware of the existence of these PSRs (stress, harassment,

violence at work, burnout, etc.); it also allows them to learn to detect

situations that may lead to these PSRs and to identify warning signals,

even weak ones. The objective is to know how to detect a difficult

situation as soon as possible and provide a rapid and appropriate

response. This training is also an opportunity to raise manager

awareness on workplace health and well-being measures, a series of

collective prevention measures designed to improve physical and

psychological health and well-being at work. Roll-out of this theme began

in France, and they will be extended internationally.

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2.2.1.1.6 Absenteeism

In France, the absenteeism rate was 4.17% (9.58% in 2020 and 4.1% in

2019). It was mainly impacted by the health crisis, with, in addition to

cases of Covid, contact cases, childcare needs and protection of

vulnerable people. These factors increase the absenteeism rate

accordingly. The Group’s absenteeism rate stood at 3.26% in 2021

(6.45% in 2020 and 2.9% in 2019). It restates the cumulative number of

hours of absence for the following reasons over a period less than or

equal to 90 consecutive days: illness or occupational illness; absence as

a result of a workplace or commuting accidents; and unjustified or

unauthorised absences. Given the exceptional situations surrounding the

Covid-19 crisis, these figures should be interpreted with caution.

Changes in absenteeism are systematically monitored and analysed by

entity in order to identify causes and propose action plans. The latter

supplement the initiatives focusing on an improvement of working

conditions, development of versatility or manager training regarding the

management of absenteeism. Measures adopted include

communication, awareness-raising and prevention actions (vaccinations,

presence of a doctor on the sites, etc.), but also control, in order to

increase the accountability of employees and managers. Moreover,

based on the demographics of certain sites, specific actions have been

implemented in order to support parenthood under the best possible

conditions.

2.2.1.2

SHARING THE CORPORATE PROJECT

AND ITS VALUES

A pillar of Hermès’ coherence and uniqueness, this desire to share

values, which strengthens the sense of belonging and enhances

understanding of the business model, is driven by three main challenges:

creating the right conditions for adherence to the corporate project and

encouraging commitment, enriching the employee experience, bringing

the values and family spirit to life. This challenge guarantees the

long-term effectiveness and cohesion of the teams and the sustainability

of the business model.

Since 2018, all new employees have taken part in Hermès corporate

culture training.

2.2.1.2.1 Facilitating employee support for the corporate

project and giving meaning

In the particular context of the ongoing health crisis, internal

communication continued to play a central role in supporting the recovery

and illustrate the strength of the business model through digital tools and

events.

Created in 2019, HermèSphère, the Group’s digital workplace,

broadcasts almost daily news on its timeline. Alerted by an email

newsletter, employees are involved in real time in the life of the Group

and its subsidiaries. On average, around 450 articles are published

per year.

In 2021, HermèSphère continued to welcome new subsidiaries to its

ecosystem. After the American subsidiary Hermès Of Paris, Hermès

Japan has been given a space dedicated to its local news and Hermès

Greater China can now translate the Group’s news into the language of

its employees.

In France and abroad, internal communication systems have been

expanded to maintain proximity with teams, share news, present

development projects and encourage dialogue.

Senior Executives and managers took active steps, either remotely or in

person, to share challenges and strategy and ensure that links with their

team were maintained.

In September 2021, for example, 200 employees from the support

functions in France met in Copenhagen along with members of the

Executive Committee. Brought together around a common purpose and

focused on the new challenges of their stakeholders, they looked ahead

ten years to reflect on the added value of their respective functions.

In November 2021, Hermès Information Systems organised the second

edition of its Innovation Day: a day of innovation and inspiration created

in 2020 that brought together 170 employees around key future digital

innovations.

Twenty-one meetings led the human resources community to focus on

priority areas of development in 2021. In June 2021, 55 Senior

Executives and Directors of Human Resources met virtually as strategic

partners to discuss human resources priorities and proactively engage in

the sharing of experiences.

2.2.1.2.2 Fostering the collective dynamic and family spirit

Whenever possible and in compliance with health protocols, Hermès has

seized on opportunities to return to working alongside one another

harmoniously.

In September 2021, Hermès Maroquinerie-Sellerie celebrated its first

establishment in the Bordeaux region by inaugurating the Maroquinerie

de Guyenne. Following speeches by Axel Dumas and regional

representatives, the traditional ribbon cutting launched the festivities

bringing together the 200 craftspeople of the site.

In November 2021, the inauguration of a first renovated space in the

Tanneries du Puy brought together around 200 employees of the site and

internal guests of Hermès Cuirs Précieux.

Varying the formats to adapt to the health constraints in force, the

entities continued approaches aimed at preserving relationships: the

Hermès Maroquinerie-Sellerie Central Services Day involved fun team

activities, the Hermès Of Paris “Behind the Orange Curtain” virtual

sessions brought together a total of 525 employees to learn more about

the House and its development, Hermès Femme continued its Friday

Free Time, with nine meetings taking place during 2021, bringing

together between 45 and 100 people around presentations on internal

and external topics.

However, as in 2020, health restrictions prevented the “Tandem”

programme, created in 2008, and the “Tilbury” programme, launched in

2018, from running.

◆

in France for example, the establishment of two cross-functional

sector bodies at HTH, bringing together the elected representatives of

the eight entities to deal with the sector’s incentive scheme and the

healthcare costs scheme;

◆

in Italy: HR Days to answer all questions or individual concerns of

employees;

◆

in the United Kingdom: the Employee Council and various committees

(SD, sponsorship, Carré On, etc.) have been set up;

◆

in Russia: with the presence of employee representatives at

managers’ meetings enabling suggestions to be shared;

◆

in Korea, where we do not have any statutory employee

representation structures: a joint management-union conference

takes place every quarter;

◆

and finally in Taiwan: quarterly meetings bringing together employee

representatives and the employer are opportunities to share opinions

and suggestions.

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Tandem

Tandem is a programme that brings together a craftsperson and a sales

associate, and invites one to put him or herself in the shoes of the other.

In practice, a craftsperson is welcomed by a sales associate in a store,

and a few weeks later, the craftsperson welcomes the sales associate in

his or her workshop (or vice versa). In turn, they each discover the other’s

métier. This programme is carried out in a spirit of generous sharing,

curiosity, reciprocity and commitment. Nearly 550 employees have taken

part in this initiative since its creation.

Tilbury

In the same vein as Tandem, Tilbury is a programme that exchanges

experiences and shares practices between a store manager and a

production Site Manager, launched in 2018. For five days, they each put

themselves in the shoes of the other by participating in the daily life of

their host (meetings, discussions with teams) and experiencing the

business on the ground, with the store manager spending time with

craftspeople in the workshop, and the Site Manager spending time with

sales associates and customers in the store.

2.2.1.3

MAINTAINING THE QUALITY OF SOCIAL

DIALOGUE

It is Hermès’ policy to constantly ensure that it implements and

guarantees both high quality social dialogue and freedom of expression

for all its employees. This involves both collective bargaining and daily

participation by employee representatives in various projects. It is

essential to the functioning of the Hermès Group’s various companies.

In France (62% of employees), social dialogue is organised on a

company-by-company basis, through representative bodies and

agreements signed each year. In other countries, dialogue takes

various forms, depending on local customs and regulations. The Hermès

Group’s ethics charter confirms Hermès’ commitment to the conventions

of the International Labour Organization (ILO), especially with regard to

freedom of association. In all the countries concerned, the policy is to

ensure that the principles of freedom of association and collective

bargaining are implemented, in compliance with local regulations.

Hermès does not interfere with, and encourages, the free exercise of

fundamental rights for workers.

For example, following a change in collective agreement and given a

change in the workforce, a Committee for Prevention and Protection at

Work was set up in Belgium in early 2021. In the same way, and at the

request of employees this time, an employee representative body was

set up in Germany in the Munich store. In general, in the international

distribution activities, the quality of social dialogue depends on respect

for freedom of expression and anonymous satisfaction surveys that are

regularly conducted by the Directors of Human Resources of the area (or

country, depending on the size of local markets). The survey carried out

at in 16 European countries in 2018 made it possible to ask employees

about their level of resources, pay equity, the link with performance and

the balance between professional and personal life. These are all

subjects that contribute to quality social dialogue.

In France, a Social Dialogue Monitoring Committee (France) was set up

pursuant to the agreement on social dialogue and the exercise of union

rights within Hermès Group companies and signed in 2008 by all the

representative trade unions.

In order to strengthen social dialogue, this agreement was renegotiated

in 2021 and a new Group agreement on the renewal of social dialogue

was signed on 25November. It includes a number of measures designed

to encourage and promote social dialogue through better knowledge and

greater interaction of its players, as well as through better definition of

the mandate and professional activity and the development of skills.

This agreement provides, for a second annual meeting of the Social

Dialogue Monitoring Committee, the strengthening of the role of the

Group coordinators, organisation of an inter-union discussion day with all

the representative trade unions within the Group, and the participation of

employee representatives in a training session on labour law, also open

to managers.

In the various French companies, social dialogue involves the permanent

operation of these employee representative bodies and a robust and

active collective bargaining process. Collective agreements have been

concluded in all companies that have union representatives or with the

Social and Economic Committees authorised to negotiate certain

agreements. In 2021, 73agreements and amendments were signed

in France on subjects as varied as salary increases, incentive and

profit-sharing schemes, working hours and equality between women and

men.

Some initiatives illustrate what is being implemented locally:

IMPLEMENTING VALUE-SHARING MECHANISMS

2.2.1.4

THROUGH AMBITIOUS COMPENSATION

POLICIES

Hermès pays constant attention to the compensation conditions and

development of all its employees, in order to offer them comprehensive

compensation packages and recognise their contribution to the House’s

development.

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◆

in the short term, fixed salaries, individual and collective bonuses,

paid holidays, and various profit-sharing schemes;

◆

in the medium and long term – employee shareholding plans awarded

to all employees worldwide;

◆

post-employment benefits through end-of-career bonuses and

supplemental pension plans that are set up for the vast majority of

employees and in accordance with local legislation and market

practices.

◆

lastly, social protection schemes enrich the employer offering with

additional health and personal protection guarantees.

◆

for the second year in a row, in the context of the Covid-19 health

crisis, basic salaries were maintained for all employees during

periods of lockdown and store closures, without resorting to state

aid in all countries where the Group is present;

◆

in a spirit of recognition and generosity, an exceptional bonus of

€1,250 was paid in 2021 to all employees

for their commitment and

contribution to the good results of 2020;

◆

the resilience, commitment and strength of the contribution of each

employee to the success of the collective project in 2021 were also

recognised by the allocation of an exceptional bonus of €3,000 that

the Group will pay to each employee (on permanent and fixed-term

contracts)

in February 2022.

1. Subject to eligibility conditions.

2. Adjusted data for 2020, for continuity of calculation methodology

This ambitious policy includes a wide range of individual and collective

measures in terms of salary components and benefits:

The Group’s policy, in France and internationally, is that all of its

employees should receive overall compensation that competitively

meets best market practices, complies strictly with applicable

standards and regulations, and is higher than the minimum legal or

locally-defined salaries. This attitude is illustrated, for example, by the

granting, on several occasions in recent years, of rights to Hermès

International free shares to all its employees worldwide (see § 2.2.1.4.2

below). For the fourth year in a row, Hermès is paying all employees

worldwide an exceptional additional bonus in respect of 2021 of €3,000

in recognition of their commitment and contribution to the Group's

performance.

In terms of social protection, the Group also implements a

comprehensive and ambitious policy to ensure that employees are

protected against the major risks of everyday life. Benefits cover the risks

of mortality (accidental and all other reasons) and long-term illness, but

also medical and maternity care, and retirement. Thus, the House’s

desire is to offer all its employees, in all countries where the Group

operates, an overall compensation that provides a protective framework

in the short, medium and long term, not only for employees but also for

their families.

The compensation paid to Corporate Officers is shown in chapter 3

“Corporate governance” of this document.

2.2.1.4.1 Compensation

The compensation of Hermès' employees complies fully with the ILO

conventions and the laws of all the countries in which the House

operates. Regulations on working hours and minimum wages, the

systematic issuance of a payslip on a regular basis, explaining all legal

deductions, the prohibition of the payment of recruitment fees paid by

employees regardless of their location in the world, and more generally

the fight against forced labour, are principles applied naturally and

strictly by Hermès entities, the vast majority of whose employees work in

OECD countries.

The annual change in compensation in all subsidiaries is made in

accordance with the budget guidelines sent by the Group, which take into

account both inflation and trends in local compensation markets.

Particular vigilance with regard to compliance with the principle of gender

equality and possible discrepancies with markets (internal and external)

is systematically recommended for the performance of salary reviews.

Specific budgets are granted if adjustments are necessary. The

monitoring of equal pay indicators and the measures to remedy the

situation if necessary are overwhelmingly included in the agreements

signed by the House’s subsidiaries.

Hermès is committed to rewarding employee performance at both the

collective and individual levels, and the development of variable

compensation at both levels in recent years reflects this commitment,

whose objectives and assessment criteria are clearly shared with

employees in the interests of transparency and motivation.

In addition to the changes in fixed salaries from which all employees

benefited, additional and exceptional measures were also decided by the

House throughout the year:

The Group’s payroll (excluding profit-sharing and incentive schemes) was and scope impacts) reflect increases in both workforce and salaries in all

geographical

areas.€881 million in 2021, compared with €842 million in 2020, plus €281

million

in social security charges. Payroll costs (excluding exchange rate

In millions of euros

2019 2020 2021

Total payroll 777 842

881

◆

to show the confidence of the House in the long-term commitment of

its employees and unite them around the Hermès Group strategy;

◆

to acknowledge the contribution made by all employees, whatever

their role, to the development of the House, by providing a single

compensation component to share the benefits of our growth,

enabling employees to identify more closely with the long-term

Hermès growth decisions;

◆

to consolidate the strong links between employees and the House.

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2.2.1.4.2 Employee shareholding plans

Faithful to its family tradition and wanting to involve all employees

worldwide in the Group’s medium- and long-term growth, Hermès has set

itself apart in recent years by the implementation of employee

shareholding plans, and notably free share plans in 2007, 2010, 2012,

2016 and 2019.

The desire to recognise the commitment of employees, who are key to

the success and outreach of the House, led Executive Management to

decide to set up a fifth free share allocation plan on 1 July 2019. Under

this collective plan, each eligible employee worldwide (i.e. more than

13,000 employees in all of the House’s entities in the various countries

in 2019) thus received rights to free shares, i.e. a total of 500,544

shares. At 31 December 2021, employee shareholding represented

1.06% of the share capital, i.e. over €1.7 billion.

All of these employee shareholding plans serve three purposes:

In order to promote, on the one hand, the loyalty of employees over the

medium and long-term, and on the other, collective performance, these

plans are accompanied by vesting periods of at least four years,

conditions of presence and, lastly, performance conditions (for a portion

of the grants).

The Group’s ambition is to continue to involve all its employees in its

corporate project in a single way by strengthening employee

shareholding. The vast majority of employees who become shareholders

through these employee shareholding plans keep their shares well

beyond the mandatory vesting and holding periods (in France, where

applicable). At the end of 2021, 68% of employees held rights that were

vesting and accordingly, continue to be involved in the Hermès Group’s

governance and operations over the long-term, in a spirit of mutual trust

with the House.

2.2.1.4.3 Incentive and profit-sharing schemes (France)

Since 2012, a special profit-sharing agreement signed with all of the

representative unions has enabled all employees of the companies in

France to share in the profits of the Hermès Group in a harmonised

manner.

Incentive scheme agreements are in place at all Group companies in

France. These agreements, concluded for a period of one to three years,

aim to involve employees in the development of locally-determined

indicators that are relevant with regard to the activity and environment of

each of these entities, notably quality, safety (for example, work accident

rate at Hermès Sellier), productivity and sustainable development

objectives (for example, water consumption in the Textile division).

Employees of international entities (38% of all Group employees in 2021)

also benefit from a range of regular additional compensation initiatives in

line with performance and local customs.

In France, €94 million in incentives and profit-sharing and €4 million in

employee support activities were distributed, compared with €114 million

and €4 million respectively in 2020 (the changes are linked to the

difficult economic context in 2020 due to the Covid crisis). These

amounts have a significant positive impact on the overall compensation

(short, medium and long-term) of the House’s employees and reflect its

desire to share the fruits of growth with everyone.

In millions of euros

Incentive schemes Profit-sharing Total (France)

2019 34 53 87

2020 40 74 114

2021 32 62 94

◆

ensuring equity in terms of compensation before and after maternity,

paternity, adoption or education leave;

◆

adjusting on a full-time basis, the payment by the employer of

pension contributions on a full-time basis for employees who have

chosen to work part time, and allowing parents to benefit from a

leave of absence in the event of the serious illness of a child (up to

10 hours per week, to be adjusted in agreement with their manager);

◆

offering employees the opportunity to donate their days off (up to

five days per year and on an anonymous basis) for the benefit of

their colleagues whose children are seriously ill.

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2.2.1.4.4 Other social benefits and social protection schemes

In addition to the fixed and variable compensation paid to employees,

the Hermès Group provides health insurance and welfare benefits not

only in France but also in other countries where it operates. In terms of

social protection, the House’s policy is to encourage the implementation

of voluntary coverage that supplements the required legal schemes,

based on local market practices. For the vast majority of employees

around the world, these schemes are mainly funded by the subsidiaries.

Since 2019, the global maternity policy has been rolled out in all

subsidiaries worldwide, including basic compensation fully

maintained for a minimum of 16 weeks of leave and full coverage of

maternity healthcare costs. The rollout of this policy continued in all

subsidiaries in 2021 and its effective implementation is monitored as

part of Group procedures.

The House remains very attentive to offering its employees favourable

working conditions and work-life balance when they welcome a new

child. In France, agreements or action plans relating to professional

equality were renewed in order to reaffirm the guarantee of a balanced

salary positioning between men and women, as well as respect for

equal treatment in the allocation of salary increases, including during

maternity leave. These agreements define progress targets for paternity

leave, for example, in order to promote the role of fathers in the exercise

of family responsibility, and to enable women to carry out a professional

activity corresponding to their wishes. Paternity leave is also available to

employees of foreign entities, the duration and conditions of which are

adapted to local practices in accordance with local culture.

In order to support this ambition through even more concrete Group

initiatives, the House decided to introduce, in effect as of 1 January

2022 and for all its entities in France (i.e. 62% of the Group

workforce), the full maintenance of salaries for fathers absent when

taking paternity leave of 28 days. This full maintenance covers the

entire legal duration of the leave and benefits everyone without any

seniority condition.

With a desire to provide positive support for parents and in the same

spirit as the protection applicable to pregnant women, new fathers

benefit from protection against dismissal during the four weeks following

the birth of their child and, to support the use of voluntary part-time

contracts and ensure parents making this choice are not penalised,

pension contributions are paid by the employer on a full-time basis

Furthermore, several years ago, Hermès set up a supplementary

defined-contribution pension plan under a collective agreement for

all employees in France. This plan, for which most of the contributions

are paid by the Group, allows them to build up individual savings for

retirement. In 2021, this plan represented total contributions of €7.4

million, of which over 90% were financed by the employer.

For all entities, the Group’s total commitment in terms of pensions and

similar was €331 million in 2021.

Outside France, in line with local practices, the Group participates in

whole or in part in the financing of these defined-contribution

supplemental pension plans provided for by law or by agreements. The

management of these systems is entrusted to specialist external

partners (insurer, bank or other). Thus, in the same mindset, and in

contrast to customary market practices, Hermès took the innovative

decision to set up a supplementary pension plan for all of the House’s

employees in China as of the second quarter of 2022.

Thanks to these proactive social protection policies, nearly 75% of

employees worldwide benefit from schemes in addition to statutory

health, pension and welfare plans.

Inclusion and work-life balance are priority objectives whose concrete

achievement is ensured by professional equality agreements and action

plans in place for several years and within numerous entities. Their

principle is to set precise and relevant indicators and to ensure their

annual assessment and monitoring with the aim of continuous

improvement, even when prior diagnostics have not revealed any major

imbalance between the situations of women and men. Thus, several

companies in France (across all business divisions) have signed

agreements with social partners that include measures aimed at:

In a desire to give free rein to this commitment and the development of

its employees, the House also allows international solidarity leave,

business creation leave or, more traditionally, sabbatical leave.

2.2.2

DIVERSITY AND INCLUSION

Through our métiers, our creations, our savoir-faire, our distribution

network and our customers, diversity is deeply embedded in our House.

Our uniqueness is based on our ongoing commitment to recruit and

integrate employees from all backgrounds, whose visible and invisible

differences enrich us individually and collectively.

These measures apply in the vast majority of entities in France, according to the provisions of the collective agreements in force.1.

◆

strict compliance with the principle of non-discrimination;

◆

strengthening of gender diversity and equality;

◆

better consideration of disability on a daily basis.

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Our humanist values help to create an inclusive working environment in

which everyone finds their place through the meaning of their

contribution and thrives while respecting others. This strong sense of

belonging and collective working together is an invitation to join our

House to share a unique collective adventure.

POLICY

The responsible employer policy implemented in the Group consists of

establishing conditions that provide equal opportunity in terms of

recruitment and employment, under its various components, and

fighting all forms of discrimination. It covers aspects related to diversity

and difference.

Attaining these two interlinked and complementary objectives involves a

range of initiatives to promote responsible integration and responsible

management. Drawing on the conviction that diverse talents are a

source of wealth, creativity and innovation, Hermès strives to facilitate

the integration of employees in all their diversity by developing practical

actions in favour in particular of people with disabilities or the long-term

unemployed, senior workers, and people from visible minorities or

disadvantaged neighbourhoods and areas.

MEASURES IMPLEMENTED AND RESULTS

A global diversity and inclusion diagnostic launched in 2021 to

review inclusion practices has enabled the Group to ensure that no-one

in the Group is treated less favourably than another person due to a

non-relevant factor such as their origin, gender, gender identity, marital

status, health, sexual orientation, religious beliefs or under any other

pretext.

With the help of this exhaustive questionnaire, completed by more than

100 Managing Directors and Directors of Human Resources from all

countries, and 30 qualitative interviews conducted with all Managing

Directors and Directors of Human Resources around the world, the

Group’s ambition in terms of diversity and inclusion was clarified and

our commitments better structured. A Group approach has been

formalised, based on the implementation of actions common to all

countries and the construction of local action plans that meet the more

specific challenges of each country.

In terms of joint actions, all countries where Hermès operates are

required to commit to an action programme based on three areas:

In order to initiate this approach in early 2022 and give visibility to the

action plans defined locally, each métier and/or each country must

appoint a Diversity & Inclusion (D&I) Officer, set objectives, a timetable

for actions and monitoring indicators. The Group labour relations

department will provide input to this network of D&I Officers several

times a year.

This momentum is supplemented in France by the entry into force in

2021 of the second Group Disability Agreement, the continued

communication of the gender equality at work index and the rollout of a

maternity policy for all employees, with a minimum of 16weeks’ leave

and the payment of salaries, supplemented by the extension of paid

paternity leave in France to 28days, as mentioned above.

2.2.2.1

FACILITATE THE INTEGRATION

AND RECOGNITION OF TALENTS IN THEIR

DIVERSITY, AND PROMOTE EQUAL

OPPORTUNITIES AND INCLUSION

Respect for differences is formalised and presented to employees in the

ethics charter implemented since 2009 and updated in 2019. This

foundation document guarantees objectivity, equal opportunities and

the promotion of diversity without discrimination in recruitment,

career development and day-to-day management.

You are reminded that, under French law, this means avoiding any

situation in which, on the basis of origin, gender, family situation,

pregnancy, physical appearance, particular vulnerability resulting from a

person’s economic situation, apparent or known, name, place of

residence or bank domiciliation, state of health, loss of autonomy,

disability, genetic characteristics, morals, sexual orientation, gender

identity, age, political opinions, trade union or mutualist activities,

exercise of a local elective mandate, ability to express themselves in a

language other than French, membership or non-membership, real or

supposed, of a particular ethnic group, nation, race or religion, a person

is treated less favourably than another is, has been or will be treated in

a comparable situation. These elements are adapted in the subsidiaries

in accordance with local culture and applicable laws.

2.2.2.1.1 Responsible management, inclusion

To develop responsible management, the “Alterego” training

programme on inclusion highlights the wealth of diversity for the

Company and thus reinforces fair management in access to employment

and career management. This programme, which began in 2017,

continued with five sessions in 2021, bringing to 800 the number of

executive and local managers who took part in this programme in

France. The aim is to share the Hermès culture as a responsible

employer and an actor and to pass on the ambition of inclusion,

particularly with regard to disability, religion, gender equality and

intergenerational management.

As mentioned at the start of this chapter, Hermès was ranked in first

place in the Financial Times’ European Diversity Leaders 2022 rankings

(https://www.ft.com/content/33d5efd6-0f1b-4d0d-b5eb-34aab642ad7e).

This ranking, based on a survey of 100,000employees in 16 European

countries, highlights their perception and experience of their company’s

practices in terms of diversity and inclusion. Five criteria were assessed:

gender, ethnicity, disability, age and respect for sexual orientation.

Hermès stood out in particular thanks to the sense of belonging, as well

as the perceived diversity of its different origins, testifying to the

confidence of its employees in the House’s values.

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United States

In 2021, HOP clarified its diversity mission and included the wording “an

equal opportunity employer” on job sites and on all job postings for

recruitment initiatives. HOP’s policy is to recruit, select and hire

candidates on the basis of individual merit and ability in relation to the

positions to be filled and the potential for promotion or transfer that may

develop. Candidates are recruited, selected and hired with the absence

of any discrimination, in accordance with applicable law. In addition,

personnel procedures and practices relating to training, promotion,

transfer, compensation, demotion, dismissal or termination of

employment must be conducted taking into account professional

performance, experience and qualifications, as well as without any

discrimination, in accordance with applicable law. HOP also provides

reasonable adjustments to accommodate people with disabilities, in

accordance with applicable laws.

Within HOP, eight employee resource groups were created (five regional

action committees for racial equality, one parents group, one LGBTQIA+

group and one women’s group). A total of 214employees participate in

one or more groups.

Japan

Diversity and inclusion were considered one of the priority projects.

Seminars on “unconscious bias” were organised for employees and

management. Gender parity in the management team has been

identified as one of the most important issues in terms of diversity.

Within Hermès GB, diversity and inclusion are practiced on a daily basis

with the subsidiary comprising 38 nationalities, illustrating the richness

of the teams.

2.2.2.1.2 Social diversity

In terms of recruitment, at all levels, Hermès’ policy is not to give

disproportionate weight to education, but conversely, to open up the

spectrum by paying particular attention to the candidate’s experience,

as well as their human qualities and personality, in order to give people

of any social or geographical origin, whatever their background, the

opportunity to join the Group.

In order to promote equal opportunities in career guidance, HMS has

developed a partnership with the local secondary school in Pantin for

work experience for 15-year old students. Another way to demonstrate

its local integration.

2.2.2.1.3 Gender equality

The Group’s policy is to promote gender equality. Gender equality is

particularly taken into account within our House, with the Operations

Committee comprising 67% women, while 60% of managers are women.

Special attention is paid to equality, particularly in the awarding of equal

pay for equal work and ensuring equal opportunities at all levels of

employment. The gender equal pay index implemented in France is

90/100. Hermès GB, which conducts a specific annual gender review,

also published a score measuring the gender compensation gap, with a

result of between 96.5% and 98% depending on the criteria.

Training is provided to management and the subject is specifically

addressed in the framework of human resources department meetings.

Women in management and responsibility positions in production sites

benefit from programmes designed to encourage women in leadership

in the form of personalised coaching.

2.2.2.1.4 Disability

The Group has always been concerned with the integration and

retention of people with disabilities, operating a proactive policy.

Following the signing of the first Group Disability Agreement in 2017,

numerous initiatives and commitments, relayed in particular by the

Disability Officers, enabled the Group to make considerable progress,

bringing the direct employment rate at 5.68% at the end of 2020.

The number of people with disabilities has doubled in four years,

exceeding 560employees recognised by the end of 2020.

The commitment and the remarkable results of the Disability policy

conducted in France were welcomed by the visit of the delegated

Minister in charge of Integration to our premises in Pantin in November

2021 on the occasion of the European Week for the employment of

people with disabilities (SEEPH), during which the House initiated more

than 90 Duodays throughout France.

These results are based on numerous partnerships with specialised

institutes (for example the INJS – National Institute for Young Deaf

People), associations (Cabat, AspiJob, APF, etc.) or schools (Sciences Po

Paris’ Accessible programme) and demonstrate the care that the House

pays to employees facing a disability and which make inclusion a reality.

The second Group Disability Agreement signed on 22July 2020 with

all union coordinators entered into force for 2021-2022-2023. It pursues

the Group’s ambitions in terms of inclusion, while adapting commitments

to new legislative and regulatory directives, and responding to the

following challenges:

◆

promoting the employment and integration of people with disabilities;

In view of the Disability reform in France, the data for 2021 will be published at the end of the first half of 2022.1.

In %

2019 2020 2021

Direct employment rate of people with disabilities 4.89 5.68 To be published in June 2022

◆

structuring a genuine job retention policy;

◆

strengthening indirect employment through collaboration with the

sheltered and adapted sector and self-employed disabled workers;

◆

strengthening the fight against decision-making biases caused by

stereotypes or prejudices in terms of disability and changing views

within the Company through information and communication;

◆

anticipating the scheduled end of the approved collective agreements

as a means of managing the Group Disability Agreement, in order to

continue initiatives in 2021-2022-2023 and allow all those affected

by this situation to continue their activity under the best possible

conditions.

◆

in Canada, a rigorous accessibility policy is in place and sales

associates are trained in accessibility;

◆

in Taiwan, Hermès supports drawing classes for students with autism

disorders to enable them to express their talents;

◆

in Russia, relationships have been developed with disability

integration associations, for inclusive workshops in Saint Petersburg

with adults with disabilities. The second partner organises

environmental projects with volunteers, with inclusive projects

involving some of the employees in their projects;

◆

in China, on the occasion of Family Day, catering services are

provided by a structure in which more than 70% of workers have

disabilities.

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In 2021, Hermès reaffirmed its efforts and its commitment to disability

issues by allocating a matching contribution in excess of €0.15million

per year to enable the Hermès Group Disability Agreement team to

continue its work over the three years of the agreement with the same

budget.

This Group Agreement is implemented by a network of 14Disability

Officers, present in each métier (Textile, Leather, Crystal, Perfume, Home,

Women,

Hermès Group Services, Hermès International, Hermès

Commercial, Hermès Distribution France) to help all sites make progress

in integrating and retaining those who are temporarily or permanently

disabled in employment.

The network of Disability Officers meets on a regular basis to share best

practices, visit sheltered work establishments (ESATs) and promote skills

development. In 2021, more than 35French employees took their first

steps to recognise their disability. In this way, they demonstrate the trust

they have in Hermès and will benefit from dedicated support in their

position and their job retention. Under the partnership with the

SciencesPo Accessible programme, seven managers mentored Sciences

Po students with disabilities for several months.

More than 50% of the Disability Agreement budget was devoted to

adapting workspaces or financing individual equipment.

Despite the particular health situation, the Group’s Disability Agreement

team took part in sixjob forums dedicated to disability in 2021, mainly in

virtual mode. Since the first agreement, 95 recruitment and human

resources players were trained in this type of recruitment to help them

feel more comfortable in recruiting people with disabilities.

The OMEGA agreement signed with the French Army Wounded Aid Unit

(CABAT) to promote the reclassification of wounded soldiers, made it

possible to present them with various opportunities and to recruit one of

them. Other positions are being studied. By supporting these soldiers,

the Group contributes to the national defence effort. On 2 March 2021,

by signing this OMEGA charter with the Gouverneur Militaire de la place

de Paris at Les Invalides, Hermès committed to promoting the

reintegration of French military personnel injured in combat, mainly

suffering from post-traumatic stress disorder. By helping them build a

retraining project by transposing their skills acquired on the ground, they

can thus rebuild themselves in civilian life. As such, one of the wounded

soldiers recruited stated that his hiring had enabled him to move forward

and turn the page. He stressed how much he appreciated the welcome,

the attention paid to him and the working environment, having found

similarities with his military experience such as rigor, team spirit and

fellowship. He confirmed that he felt at ease in the leather goods

workshop and regained a taste for civilian life.

The Fitilieu site, a production site and training school for leather goods in

the Alps, is pursuing a particularly active policy of inclusion with an

adapted recruitment process and constantly updated teaching methods

to adapt to different types of disability.

On the occasion of World Disability Day in early December, the

Handi’Cap 2021 forum, an annual highlight organised exceptionally in

virtual form, brought together nearly 200 committed internal

stakeholders

, essential levers for the effective implementation of the

Disability policy. This forum was an opportunity to celebrate the launch of

the new network of ambassadors, made up of more than 110 disability

ambassadors, who volunteered at the sites to support and increase the

ambition of inclusion.

The Group participated strongly in the Duodays 2021 operation by

welcoming 90 duos in the various production units, as well as in stores

such as Lille. This involves changing attitudes by welcoming people with

disabilities who are looking for work or who come from ESAT-type support

structures and over the course of a day showing them the work of

employees so that they may take a look behind the scenes of the

production or support function métiers

. Coming from various support

structures such as Cap Emploi, ESATs or student associations, everyone

was able to discover a métier or an environment to help define an

academic orientation, a training path or a professional project following

retraining, all in a warm and caring environment.

Internationally, a number of countries are carrying out specific actions for

people with disabilities:

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2.2.2.2

ENGAGE EMPLOYEES IN SOLIDARITY ACTIONS

INCLUDING SKILLS-BASED SPONSORSHIP

2.2.2.2.1 Ambition

In order to embody its commitment as a socially responsible employer

and to “Give back to the world what it gives us”, Hermès encourages its

employees to be involved in the social and solidarity economy, with the

aim of strengthening its local integration in the areas where it operates,

according to the public interest needs expressed locally.

To achieve this, skills-based sponsorship with partner associations in the

field of sustainable development, the Fondation d’Entreprise Hermès and

the Group Disability Agreement team, as well as with local structures in

the context of long-term partnerships, is regularly proposed to employees,

in addition to the Fondation d’Entreprise Hermès H3 programme.

This approach enables the Group to nurture its values by supporting

projects related to its identity, to strengthen pride in belonging, but also

to leave employees free to choose the cause in which they wish to get

involved. It also addresses an increasingly expressed desire to contribute

to the common good. The projects supported must naturally be aligned

with the values and priorities defined by Hermès, which relate to

education, solidarity, support for craftsmanship, environmental protection

and cultural development. They are generally long-term. Employees

involved in these projects, in areas of activity that are often little known,

show real personal satisfaction, motivation and increased skills.

Operations carried out by several people also reinforce cohesion within

the teams and unite the group.

An active network of more than 80 skills sponsorship ambassadors

facilitates the rollout of this approach as closely as possible to the

teams in France. Thanks to this volunteer programme, which has been

formalised in a Group methodology since 2017, employees in France

can benefit from five paid working days to support the development

of charitable associations. In Switzerland and Spain, each employee is

allocated one paid day per year to carry out charitable actions.

2.2.2.2.2 Organisation

Since 2020, under the leadership of the Fondation d’entreprise Hermès

and the Hermès International solidarity and social action department, all

sponsorship policies have been structured and formalised, including

skills-based sponsorship.

Each sponsorship operation is subject to a transparent selection

process, which includes the necessary prior checks to ensure that the

operation complies with local laws and regulations. A sponsorship

selection document is drawn up for each project. The associations

supported are verified in terms of governance, ethics and human rights,

transparency, etc.

Sponsorship operations in which an Hermès Group employee has,

directly or indirectly, a personal and/or financial interest must comply

with the available conflict of interest prevention procedure and be

reported to the Hermès International legal compliance department for

validation. Sponsorship initiatives are the subject of signed letters of

commitment. For long-term commitments and partnerships, or those

presenting a certain complexity, the terms of the agreement must be

contractualised in order to clearly identify the commitments of each of

the parties. Sponsorship operations are subject to regular control and

monitoring of the successful completion of the operation.

In this context, each division has set up a sponsorship monitoring

system, including a Sponsorship Committee in charge of selecting and

approving the entity’s sponsorship activities. This committee is made up

of the division’s or métier’s Management Committee. All decisions taken

by this committee are recorded in a formal report kept for a period of five

years.

Within the framework of a dedicated budget allocated annually by the

subsidiary, each division defines its priorities according to its activity and

location, as well as the eligibility criteria (reputation, soundness of the

project, history of the beneficiary, strategy of the entity, prevention of

potential conflicts of interest, etc.) and control of sponsorship projects

supported.

Most of the actions are subject to a confidentiality clause that prohibits

their disclosure in this document.

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2.2.2.3

PROMOTING THE MAIN ETHICS PRINCIPLES AND THE APPLICATION OF REGULATIONS ON HUMAN RIGHTS

AND THE FIGHT AGAINST CORRUPTION

Major international ethics principles Examples of implementation Internal framework

Ethics charter

Aims to promote respect and ensure

proper application of major

international ethics principles.

Code of business conduct

Aims to raise awareness of certain

risks and give employees appropriate

behavioural reflexes.

Anti-corruption code

Aims to promote an ethics culture

in which breaches of probity have

no place.

Handbooks C1 and C2 for

supplier commitment

Seeks the adhesion of all suppliers on

matters of confidentiality, fair trading

(C1) and social, environmental and

ethics policy (C2).

UK modern slavery act

California transparency supply

chain act

Modern slavery act Australia

◆

the Group ethics charter aims to promote compliance and to ensure

the proper application of laws, regulations and key principles. It also

deals with Hermès’ relations with employees, suppliers, customers,

shareholders and society, as well as the high standards of Hermès

objects;

◆

it is an instrument of progress and dialogue: any employee of the

Group who encounters difficulties in understanding or applying it must

inform his or her manager;

◆

the Hermès Group’s ethics charter, the code of business conduct, the

anti-corruption code of conduct, available at https://finance.hermes.

com/fr/ethique-droits-humains-et-diversite, and the whistleblowing

system form the framework for employees to follow.

The Universal Declaration of Human

Rights

The Charter of fundamental rights of

the European Union

The Charter of fundamental principles

and rights of the International Labour

Organization

The OECD Guidelines for Multinational

Enterprises

The Global Compact under the aegis

of the United Nations

Ethics Committee

The committee collects and processes

alerts, as well as providing advice and

recommendations on the Group’s

ethics culture.

H-Alert! system

Employees are encouraged to report

grave and serious incidents through

several information channels.

Supplier brief

Suppliers integrate the Group’s

human rights expectations.

Métier/subsidiary EHS policies

Policies include good working

conditions for employees.

The Group’s policy is to adhere to the main universally recognised ethical

principles, particularly those concerning human rights and the fight

against corruption, and to ensure that they are implemented in its

operations. This policy is formalised by several more charters and codes

that fall within the framework of fundamental principles such as the

Universal Declaration of Human Rights, the rules of the ILO, the OECD

and the Global Compact governing sustainable development:

In addition, an Ethics Committee has been set up to receive and process

alerts, and to provide advice and recommendations on the Group’s ethics

culture.

The ambitions of the Ethics Committee and the principles of the ethics

charter are described in § 2.8.

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EXPERTS' HANDBOOK

This section provides an in-depth look at Hermès’ actions and results in terms of the “Teams” pillar.

CONTRIBUTION TO THE UN'S SUSTAINABLE DEVELOPMENT GOALS (SDGS)

People are at the heart of the Group’s sustainable development project and the Group initiatives that contribute to the UN’s sustainable development

goals (SDGs).

◆

3.8 “Achieve universal health coverage, including financial risk

protection, access to quality essential health-care services and

access to safe, effective, quality and affordable essential

medicines and vaccines for all”

◆

3.b “Support the research and development of vaccines and

medicines for the communicable and non-communicable

diseases that primarily affect developing countries, provide

access to affordable essential medicines and vaccines, in

accordance with the Doha Declaration on the TRIPS Agreement

and Public Health, which affirms the right of developing

countries to use to the full the provisions in the Agreement on

Trade-Related Aspects of Intellectual Property Rights regarding

flexibilities to protect public health, and, in particular, provide

access to medicines for all”

No.3: Good health and well-being

◆

3.4 “By 2030, reduce by one third premature mortality from

non-communicable diseases through prevention and treatment

and promote mental health and well-being”

◆

4.5 “By 2030, eliminate gender disparities in education and

◆

5.1 “End all forms of discrimination against all women and girls

◆

everywhere”

5.5 “Ensure women’s full and effective participation and equal

opportunities for leadership at all levels of decision-making in

political, economic and public life”

◆

5.a “Undertake reforms to give women equal rights to economic

resources, as well as access to ownership and control over land

and other forms of property, financial services, inheritance and

natural resources, in accordance with national laws”

◆

5.c “Adopt and strengthen sound policies and enforceable

legislation for the promotion of gender equality and the

empowerment of all women and girls at all levels”

No.4: Quality Education

No.5: Gender equality

ensure equal access to all levels of education and vocational

training for the vulnerable, including persons with disabilities,

indigenous peoples and children in vulnerable situations”

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◆

8.2 “Achieve higher levels of economic productivity through

diversification, technological upgrading and innovation,

including through a focus on high-value added and

labour-intensive sectors"

◆

8.5 “By 2030, achieve full and productive employment and

decent work for all women and men, including for young people

and persons with disabilities, and equal pay for work of equal

value”

◆

8.6 “By 2020, substantially reduce the proportion of youth not

in employment, education or training”

◆

8.7 “Take immediate and effective measures to eradicate

forced labour, end modern slavery and human trafficking and

secure the prohibition and elimination of the worst forms of

child labour, including recruitment and use of child soldiers, and

by 2025 end child labour in all its forms”

◆

8.8 “Protect labour rights and promote safe and secure working

environments for all workers, including migrant workers, in

particular women migrants, and those in precarious

employment”

No.8: Decent work and economic growth

◆

8.1 “Sustain per capita economic growth in accordance with

national circumstances and, in particular, at least 7 per cent

gross domestic product growth per annum in the least

developed countries”

◆

17.17 “Encourage and promote effective public, public-private

and civil society partnerships, building on the experience and

resourcing strategies of partnerships"

No.16: Peace, justice and strong institutions

No.17: Partnerships for the goals

No.10: Reduced inequalities

10.3 “Ensure equal opportunity and reduce inequalities of

outcome, including by eliminating discriminatory laws, policies

and practices and promoting appropriate legislation, policies

and action in this regard”

◆

10.4 “Adopt policies, especially fiscal, wage and social

protection policies, and progressively achieve greater equality"

◆

16.5 “Substantially reduce corruption and bribery in all their

forms”

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CHANGE IN THE GROUP'S GLOBAL WORKFORCE

2020 2021

9,081

10,118

11,037

11,718

12,244

12,834

13,483

14,284

15,417

20122011 2013 20162015 2017 20182014 2019

16,600

17,595

GENDER BREAKDOWN BY CATEGORY (MANAGERS/NON-MANAGERS)

Manager Overall totalNon-manager

40%

30%

33%

67%

Woman

Man

GENDER BREAKDOWN BY SECTOR

Production SalesSupport

32%

65%

35%

32%

68%

Woman

Man

AGE PYRAMID BY GENDER

Woman

Man

10%

12%

15%

18%

13%

55 to 60 years of age

50 to 55 years of age

45 to 50 years of age

40 to 45 years of age

35 to 40 years of age

30 to 35 years of age

25 to 30 years of age

60 and over

11%

13%

14%

16%

18%

11%

25 and under

60%

70%

68%

©Photographer: Maxime Verret

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Application of enamel by a craftsperson, in Venice

◆

Creation of an integrated leather goods apprentice training centre (École Hermès des Savoir-Faire).

◆

Creation of an École des Artisans de la Vente training centre (France).

◆

More than 420,000 hours of training.

◆

Provision of e-learning training on sustainable development.

◆

Formalisation under the Hermès framework of the sustainable development strategy of 49 Group entities.

◆

Partnership with Paris School of Economics (PSE) and ENSAM.

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2.3

PEOPLE: SAVOIR-FAIRE

Hermès’ sustainable development involves acquiring, enriching and passing on the savoir-faire of its employees, which is one of its key assets.

More broadly, Hermès contributes to preserving and perpetuating multiple types of craftsmanship savoir-faire, particularly in the manufacturing

sector, which is conducive to a more responsible and sustainable economic development.

Introduction

The advantage and appeal of the Hermès model is its ability to expand

it's wealth of internal talents to complement the needs of the different

types of jobs with very diversified activities within the House. Its ability to

recruit, and then train its employees using an internal method of

transmission of savoir-faire, guarantees the sustainability of its business

model. To continue to develop its model, its culture and its unique

savoir-faire, the House continually invests in training initiatives that

enable employees to acquire new skills.

This commitment to employee training is reflected in all métiers and in a

multimodal approach with the creation of digital pathways. For production

and distribution activities, training programmes are tailor-made and

rolled out locally or by the Group in Paris. This can be seen, in particular,

in the acquisition of savoir-faire in an employee’s first job as a leather

worker, in the engineering incubator within the École du Cuir and the

École du Textile, and the qualifications gained through certification or

diplomas.

In 2021, where possible, training was adapted and provided remotely,

particularly for distribution, to ensure continuity in employee support. A

new shared training assessment tool was gradually implemented during

2021 to enable the main training courses to be assessed. The objective

is to monitor the effectiveness of training programmes and to follow-up

with employees on the results.

Hermès also contributes to the preservation and sustainability of

craftsmanship savoir-faire outside its direct sphere of action through its

relationships with professional training centres throughout France (whose

expertise is used by other economic players) as well as by promoting the

value of its métiers externally and among younger generations. By

bringing the wealth and excellence of craftsmanship to the attention of

these populations, and by expressing future needs, particularly in the

manufacturing sector, Hermès is helping to create rewarding careers and

professional prospects.

Information related to the management of the Covid-19 health crisis is

detailed in the focus box in paragraph 2.1.

In 2021, the Group made progress on the main issues relating to transmission, with the aim of making a long-term difference through steady

improvements with a significant impact. Among these, the selected elements below are particularly illustrative of 2021 for this section:

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SAVOIR-FAIRE

OBJECTIVES INDICATORS 2021 RESULTS

ANTICIPATE THE HOUSE’S FUTURE NEEDS

Number of HR committees and meetings about

talent planning management

More than

HR committees and meetings held in 2021

Implementation of workforce

planning management

% of employees affected by the rollout of the

plan

Launch of the “

strategic workforce

planning

” project, which will be rolled out in 2022

ATTRACT AND RECRUIT THE BEST PROFILES FOR OUR VARIOUS MÉTIERS

Number of job offers published on the career

website and number of applications submitted

An average of

605

online job offers each month on the career

website in 2021 and

1,452

applications submitted

on the site.

Develop tools and use

relevant channels to recruit

talent

Number of annual social media posts

2.5

publications per week on average on LinkedIn, i.e. an increase

of 31% in 2021 compared to 2020

Number of actions in partnership or in

conjunction with educational establishments

(conferences, forums, exhibitions, etc.)

educational establishments with which Hermès worked in 2021

Rollout of “Employer Brand” campaigns

Rollout of the “Hermès Employer” campaign with five different visuals

available on different media: posters, press and social networks

Ensure the recruitment of

suitable profiles for all our

métiers worldwide

Number of new employees worldwide

4,761

new employees in the last five years

More than two new hires per day in 2021

Number of new employees in the production

sector

467

additional jobs created in the production sector

Number of new employees in the sales sector

430

additional jobs created in the sales sector

ON-BOARDING NEW EMPLOYEES AND PASSING ON A UNIQUE CORPORATE CULTURE TO THEM

Train employees in the

House’s values

% of new hires trained in the corporate culture

100%

of new hires followed an induction programme

Number of employees reached by induction

actions

More than

1,000

employees benefited from induction actions

in 2021

PROMOTE ART AND CRAFTSMANSHIP MÉTIERS AMONG YOUNG GENERATIONS

Continue to recruit young

people under the age of 30

Number of employees under the age of 30

17%

employees under the age of 30

Promote our métiers through

partnerships with educational

establishments

Number of students reached by school actions

presentations carried out in different educational

establishments, reaching more than 1,500 students in France

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OBJECTIVES INDICATORS 2021 RESULTS

DEVELOP TRAINING THAT GUARANTEES OPERATIONAL EXCELLENCE AND VERSATILITY AND CONSOLIDATE THE SAVOIR-FAIRE OF OUR EMPLOYEES,

BOTH TECHNICAL AND MANAGERIAL

Ensure access to employee

training

Number of training actions carried out

76,145

training actions carried out worldwide, i.e. 9% more

than in 2020

Number of training hours delivered worldwide

423,317

hours of training delivered worldwide, i.e.

more than in 2020

Number of craftspeople trained in internal

training centres

6,855

craftspeople trained in ten years at the École du Cuir

and 575 craftspeople trained in five years at the École du Textile

Develop tailor-made training

programmes for employees

Number of training courses leading to

certification

284

professional certifications obtained

Number of internal trainers to pass on

savoir-faire

114 internal trainers on production sites including 90

in the leather métier

INTEGRATING SUSTAINABLE DEVELOPMENT ISSUES INTO SAVOIR-FAIRE

Develop training on

sustainable development

topics for all métiers

Training courses in the Group catalogue on SD

issues

“The fundamentals of SD”

e-learning

accessible to all. A CSR section in all Group general training courses

Number of employees having followed SD

training

2,962

employees followed “The fundamentals of sustainable

development” course, including 241 craftspeople

Create and lead a network of

ambassadors to generate a

trickle down effect to ensure

cascading to the local level

Number of employees responsible for SD within

the Group

employees responsible for SD within the Group

Number of SD ambassadors around the world

351

SD ambassadors around the world

Ensure that employees are

properly informed about the

Group’s sustainable

development strategy and

actions

Number of HermèSphère publications dedicated

to sustainable development and on the Yammer

collaborative tool (internal social network)

One publication on SD topics per week on average in HermèSphère

(Group intranet) and 63 publications on Yammer in 2021

DEVELOP TALENT: LONG AND SUSTAINABLE CAREERS

Set up long-term career

development programmes

within the Group

Average number of years of seniority in the

Group

years average seniority of employees (worldwide)

Total number of internal transfers

More than

1,000

internal transfers Group-wide

CONTINUE VOLUNTARY ACTIONS RELATING TO TRAINING FOR OUR HISTORICAL MÉTIERS AND DEVELOP THE MANUFACTURING SAVOIR-FAIRE

Promote craftsmanship businesses

Entreprises du Patrimoine Vivant (Living Heritage Company ‒

EPV)

Continue voluntary actions

relating to training for our

historical métiers and develop

the manufacturing savoir-faire

Demonstrate the excellence of our savoir-faire

Meilleurs Ouvriers de France (Best craftspeople in France –

MOF)

PROMOTE THE TRANSMISSION OF OPERATIONAL SAVOIR-FAIRE TO OUR PARTNERS: EDUCATIONAL ESTABLISHMENTS AND CFA

Develop partnerships with

training organisations to

certify the training received

and the savoir-faire acquired

partnerships with Écoles de Maroquineries in France and

internal Apprentice Training Centre

Number of partnerships with educational

establishments for training and internal CFA

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2.3.1

GENERAL INFORMATION ABOUT

EMPLOYEES

The Hermès Group is continuing to recruit and has increased its

workforce by 995people.

At the end of 2021, the Group employed 17,595people, including

10,969 in France . The production sector saw the most growth in its

workforce with 467 new "jobs", followed by the Retail sector, with 430

new jobs. Over the past five years, the workforce has increased by

4,761people.

Hermès’ policy is to ensure job security by recruiting almost 94% of

its employees on permanent contracts. Concerning employee turnover,

the total number of dismissals represented 1.38% of the Group’s

average global headcount.

The last 10years have not required the Hermès Group to undertake any

restructuring efforts for economic reasons that had any consequences

with regard to jobs. During development operations (site construction),

any transfers were on a voluntary basis.

BREAKDOWN OF EMPLOYEES BY GEOGRAPHICAL AREA

France

62%

Japan

Americas

Asia-Pacific

(excl. Japan)

15%

Europe

(excl. France)

11%

BREAKDOWN OF EMPLOYEES BY SECTOR

Support

16%

Sales

36%

Production

48%

◆

create freely;

◆

reinvent our métiers;

◆

construct tailor-made pathways;

◆

share a collective adventure;

◆

become involved in a responsible company.

Including Monaco.1.

Craftspeople represent a workforce of 6,188people in France and

6,238 worldwide. 17% of employees are under the age of 30.

2.3.2

ACQUISITION, ENRICHMENT

AND TRANSMISSION

In a context of medium-term business growth and to develop its

integrated craftsmanship model, Hermès must strengthen its teams in all

professions: craftspeople, sales associates, producers, experts in

transverse functions. To this end, Hermès pays particular attention to its

relations with schools and its recruitment initiatives in its employment

areas.

POLICY

Recruitment is managed by each métier and subsidiary to ensure the

perfect match with the local context. The policy for recruitment and

relations with partners is defined by the Group. In France, the Group also

manages relationships with educational establishments, as well as

communication of the employer brand, and pools recruitment. In this way,

the Hermès Group hopes to make applicants more aware of the métiers

and the uniqueness of the House, attract candidates who believe in the

business model and its values, and will then be able to select the best

profiles, capable of feeling at home within teams for a long time.

2.3.2.1

IMPLEMENT SYSTEMS TO RECRUIT THE BEST

PROFILES FOR THE VARIOUS MÉTIERS

The Hermès employer promise reflects the reality of Hermès as a

responsible high-quality employer

2.3.2.1.1 Employer brand

Since 2020, Hermès has been rolling out the visual identity of its

employer brand “Tous artisans” created in 2019. The challenge is to

attract talented people who want to join the House, motivated above all

by a collective project, a requirement for quality and a long-term vision.

Once the technical skills have been secured, the recruitment criteria are

based on personality elements to ensure that candidates are compatible

with Hermès culture and values, to ensure smooth integration and

success within Hermès Group.

The new Hermès employer brand identity reflects the House’s values and

embodies its employer promise:

Hermès continued to roll out its communication, using a concept that

incorporates the visual principle created in 2019, consisting of rhythm

and colours, and in a warm and authentic tone.

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To make the employee experience even more explicit and provide a

concrete illustration of its unique corporate culture, in 2021 Hermès

gave the floor to six employees from different métiers, in entities located

in France, China and the United States, so that they could share their

realities and their experiences in the House through video testimonials.

An exclusive photo report illustrating each pillar of the employer promise

has also given a twist to this new employer brand identity, alongside four

videos, to which others will be added in 2022.

Promoting the employer brand

Essential to support recruitment challenges, a communication strategy

dedicated to the employer brand was launched at the end of 2021. Its

objectives are to make the Company culture and the diversity of the

House’s activities and savoir-faire visible and understandable in order to

reveal its uniqueness and support its attractiveness.

First communicated internally via the HermèsSphère intranet, the

employer brand communication campaign was rolled out in France at the

end of November2021 in the national and regional press, on billboards

and on LinkedIn.

The Hermès LinkedIn account, launched in 2014, brought together a

community of over 900,000 subscribers in December2021, an

increase of around 30% compared to 2020. The account presents in

particular news of the employer brand through dedicated video and photo

content.

In China, the Hermès account on Wechat has 1.78 million subscribers

and on Weibo, the number of subscribers to the Hermès account is more

than 750,000.

2.3.2.1.2 Significant recruitment challenges

Internal mobility is the primary source of recruitment for Hermès, which is

committed to developing the skills of its employees to enable them to

complete a long-term career within the House. The internal job sharing

platform Myway in Hermès is the showcase of all these opportunities,

offered to employees as a priority.

Job offers are then published on the external career website

https://talents.hermes.com, which features the employer brand and is

the second largest source of recruitment, as well as on the Hermès

LinkedIn page, which remains a powerful attraction and recruitment

lever.

In 2021, a total of 7,260 job offers (compared to 4,267 in 2020) were

published on the careers website

https://talents.hermes.com. The new

communication tools relating to the employer brand were all used to

improve or create corporate pages on essential recruitment sites such as

Glassdoor, Jobteaser and Indeed, or on digital platforms such as

Seekube. Job adverts are posted there, as well as on fashionjob,

regionjob, apec, etc. in France, and WeChat outside France. In addition,

for the recruitment of interns and work-study students, Hermès uses the

sites of higher education institutions and specialised sites such as

JobTeaser and Welcome to the Jungle.

Certain specific recruitment operations or those targeting large numbers

(security guards, logistics employees, etc.) also rely on the use of

Facebook.

For all of the House’s métiers, the recruitment of new talent is a constant

challenge, particularly at Hermès Maroquinerie-Sellerie, which has to

recruit around 100 craftspeople into each of its divisions every year. The

métier is therefore striving to broaden its employment pools, to make

itself better known to a wider audience, to create a pool of candidates for

training in the two craftsmanship métiers of saddler and leather goods

and cutter/preparer, and finally to carefully select the candidates able to

demonstrate the soft skills and motivation required. The hiring of saddler

and leather goods craftspeople and logistics operators is carried out in

partnership with Pôle Emploi for the communication of job offers, the

provision of collective information and the performance of skills tests.

In addition, within this division, recruitment is carried out in partnership

with the local branches of the National Employment Agency, with the

implementation of a system that makes it possible to recruit the best

talents, from all origins, training and experience, using an analysis of

their manual skills. The success of this known as MRS (simulation-based

recruitment method) approach, conducted to support psycho-technical

tests, manual aptitude tests, and interviews, developed with the National

Employment Agency, is demonstrated by the fact that the vast majority of

the craftspeople selected using this system successfully complete their

initial cycle of 18 months of training.

The Tanneries division (Hermès Cuirs précieux) is faced with the

challenge of attracting people to the tanning professions, due to the low

mobility of candidates and preconceived ideas about gender diversity in

the industry’s métiers. To address this, a recruitment day for the Young

Tanners Programme (HCP graduate programme) took place in October,

with a visit to the Montereau Tannery followed by individual (interviews,

managerial role plays, colour tests, materials tests, etc.) and collective

(team challenge) workshops with preselected candidates.

The other métiers must support strong growth in volume, maintaining the

high standards and quality of the profiles recruited despite the pressure

of the need for new skills. The recruitment of very solid profiles and

potential future talents, is a challenge, affecting the integration of experts

in the Beauty métier (make-up and skincare) to support the launch of this

new métier, and the search for Responsible Purchasing, Quality, Product

Manager, Supply Chain, IT & Project Management profiles, in a

competitive labour market.

The Retail market is experiencing a context of heightened competition,

with a booming luxury goods industry and tense markets in all countries,

creating a veritable “talent war” and real difficulties in recruiting local

candidates, particularly in Canada and Great Britain. Some markets such

as Russia or Latin America also require the recruitment of

English-speaking candidates. These tensions are also reflected in the

support functions in finance and Retail merchandising (product offering).

Furthermore, the lack of mobility due to the health crisis has added to the

structural changes affecting these métiers: the need for security and a

long term vision, the search for a hybrid work place, profound changes in

expectations, staff more willing to change, etc.

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The Retail métiers, present in all regions of the world, are seeking to

recruit talented people compatible with the high standards of the House

and the specific nature of the local culture. This involves finding, often

quickly and sometimes from outside the luxury goods industry, among a

less knowledgeable public, candidates with expertise in hospitality, sales

and consulting in an omnichannel environment.

Lastly, the complexity of the managerial role and the human values

required by the Group increase the need to make extensive efforts to

identify potential managers.

The use of an assessment to clarify and objectify external recruitment or

internal mobility decisions is growing and will increase in the coming

years. Various events are also organized to attract, win over and detect

new talent, particularly in France (in Lyon, Aix-en-Provence/Marseille and

Paris as targeted cities) and internationally, with, for example, an Open

Day in Shanghai, participation in a career day in Germany bringing

together more than 1,000students and an employment forum at the

University of Bocconi (Italy).

For the support functions, the main challenge is to highlight and promote

the attractiveness of Hermès for the recruitment of engineering, finance

and IT profiles, as well as digital technicians/developers in a competitive

environment. Work flexibility was introduced specifically in these teams

because it is a key lever for enhancing attraction.

Hermès is also faced with other recruitment challenges such as, for

example, locations in French regions considered less attractive by

managers, a scarcity of profiles of experts with specific skills such as

bespoke shoes, the textile métiers of engraving and printing, or even

shortages of multilingual profiles.

Numerous initiatives have been undertaken, such as the organization of

collective information meetings with local branches of the National

Employment Agency (Pôle Emploi) in all regions where Hermès has

production units; a partnership with the CABAT (French Army Wounded

Aid Unit) to recruit former military personnel with disabilities and

participation in local communication operations: the Carat-Angouleme

recruitment forum, job-dating on the Nontron site, signature of the

Fabrique des compétences (Skills factory) charter with the Normandy

region, etc.

2.3.2.2

ENSURE THE SUSTAINABILITY

AND DEVELOPMENT OF SAVOIR-FAIRE

Hermès bases its growth model on a culture of continuous improvement.

This is how the House ensures the sustainability and enrichment of its

often-exclusive savoir-faire, and the acquisition and transmission to all

employees regardless of their function (craftspeople, sales associates,

support personnel, etc.). This involves accompanying the development of

employees throughout their career, supporting the excellence and

effectiveness of their savoir-faire and preserving their employability. This

commitment is reflected in appropriate training in all métiers, in all

functions, both at Group level and locally (regional divisions,

subsidiaries). In 2021, 76,145 training actions were thus carried out

worldwide, i.e. an increase of 9% from 2020.

In 2021, the Hermès Group devoted more than 423,317 hours to

training, including over 299,562 in France (excluding apprenticeships

and professionalisation contracts). Nearly 76,145 training sessions took

place (this figure corresponds to the total number of training sessions

followed; any one employee may have followed several training sessions

during the year), i.e. an average of 5.6 hours per training activity. Training

costs in France (invoicing in 2021 of external and intragroup training)

amounted to €7,282thousand. This figure does not reflect the entire

training effort, since it does not include métier training dispensed directly

in the workspace.

On-boarding new employees and passing on a unique

corporate culture to them

So that those who join Hermès can take part in its corporate project

under the best possible conditions, the House devotes care, attention

and time to their integration. This involves passing on the fundamentals

of the House’s culture, as well as the keys to understanding its

organisation to guide them and direct them in their first decisive steps in

their contribution and sense of belonging to Hermès. In most

subsidiaries, the assignment of a mentor and the implementation of

induction programmes are planned.

An ambitious and scaled-up development and training offer

In 2021, Hermès continued to scale up and internationalise the Group’s

development and training offering, Hermès Campus, to best support

subsidiaries and complement their local offering. This approach is

structured around four areas: in-house culture, management, expertise

and personal development.

An internal audit confirmed the quality of the organisation of the training

and the diversity of the proposed offer. Communication with managers

and employees to promote the value of training remains a significant

challenge, and efforts will be stepped up in 2022.

At the same time, and with a view to the long-term, in 2021 the training

community redefined its mission in terms of this ambition: “To ensure the

sustainability of the House’s values and unique culture and to respond to

the strategic challenges of today and tomorrow, to support the

development and professional fulfilment of employees and the Group, we

offer adapted, multimodal, scalable and accessible pathways, we help to

make employees a player in their own development, and take care to

advise and guide each person according to their needs. Co-constructing

with employees, managers, HR, Management Committees and partners,

using expertise and reliable and efficient tools, adopting a clear

communication policy, demonstrating creativity, boldness and

anticipation, taking pleasure in working together”.

At Hermès, savoir-faire is inseparable from savoir-être. The House

therefore also offers programmes mainly dedicated to developing

behaviours in situations involving public speaking, conducting meetings

or project management, with priority placed on the quality of the

relationship between individuals and collective harmony.

◆

the myCampus digital training portal is now available to all Group

employees. It includes new training and development tools: a

catalogue of the internal training offer, the addition of new e-learning

modules, conferences, serious games, and access to the general

culture platform Culturiosité in partnership with Artips;

◆

the digital Retail training portal Hermès Métiers training, available in

five languages (French, English, Chinese, Korean and Japanese),

containing the essentials of each of the 16 métiers and intended for

all sales associates, was enhanced with the integration of training

materials for the seasonal collections and the development of

gamification of learning;

◆

a new virtual reality offering allows each employee to immerse

themselves in four of the House’s emblematic locations, including the

Faubourg Saint-Honoré store.

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EXAMPLES OF "CAMPUS HERMÈS" GROUP TRAINING

Digitisation for skills development

In 2021, digital tools arrived to amplify the provision and support of a

unique and multimodal learning experience throughout employees’ time

at Hermès:

Internal trainers, a key network of learning opportunities

In order to support and develop training providers, Campus Hermès leads

the community of métier and market trainers in charge of product training

for sales associates. Two remote Train The Trainer sessions were

devoted to the seasonal collections to enable the 25 métiers trainers to

pass on their knowledge and expertise to the market trainers who, in

turn, will train the store teams.

In addition, a new Passeurs programme for all training providers was

created in 2021. It is part of a desire to professionalise the community

with training, workshops and conferences, particularly on digital learning

and a brand new training course for “culture storytellers”, who share

Hermès’ culture within the House.

Lastly, the InterHactions programme continued in 2021. This is designed

to maintain and develop links within the French-speaking community

through a monthly newsletter sent to more than 1,500 French-speaking

employees, along with invitations to themed conferences.

423,317

hours of training

in 2021

2.3.2.2.1 The House culture, the foundation for learning

A wide range of training courses (Group and local) is dedicated to the

integration of employees. The aim of these programmes is to facilitate

the assimilation of the corporate culture while giving them the keys to

understanding that are essential for their professional integration. In

total, these induction programmes reached more than 1,000employees

Group-wide.

Employees who have been with the Company for longer can benefit from

more in-depth training, giving them deeper knowledge of Hermès’ history.

Lastly, a section dedicated to understanding the Group’s overall strategy

and adapted to the different profiles of employees is also provided to

members of the Management Committees.

Domain Sub-domain Training example

Culture

Onboarding

◆

Knowledge of the House

◆

General culture

◆

“Mosaïque”

Happy Culture

“Culturiosité”

Management

Specialisation Managing by communicating

Fundamentals Foundations of management at Hermès

Expertise

Art of selling Customer data collection

Office skills Essentials of office skills

Legal compliance Data protection

Product knowledge

Hermès H08 (Watches)

Sustainable development Fundamentals of sustainable development

Métier expertise Textiles from A to Z

Occupational Safety & Health Rescuer first aiders at work (SST)

Personal development

Communication Communicating with ease

Effectiveness at work Writing, summaries and reports

Self-development Time workshop

◆

“Mosaïque”, the two-day induction programme for all new employees

in France on permanent employment contracts, has been scaled up.

518employees were able to effectively assimilate the Company

culture through visits, testimonials and presentations giving a broad

and well-illustrated vision of Hermès. This year, one session was

organised remotely;

◆

the “Happy Culture” programme, aimed at employees with more than

three years of service, enabled 96employees to deepen their

understanding of Hermès culture, to better understand the new

dimensions of the House and to discover behind the scenes. The

programme was also rolled out this year in China;

◆

the “IFH” programme, dedicated to members of the Management

Committees of the sites or subsidiaries, invited 34employees to

share the vision and strategy of the Group and the métiers;

◆

“H Immersion”, the induction programme for new employees of the

Retail subsidiaries, was delivered in a local format lasting one to four

days to all new employees in sales, i.e. 430participants. Given the

health situation, the sessions were conducted either in person or

remotely;

◆

for the distribution subsidiaries, Hermès Group Campus designed,

developed and rolled out several training programmes for sales

employees. The Sales & Service Ambassadors programme, which

aims to train people in customer service that matches the quality of

the objects, is being rolled out around the world, but with a local twist.

The Sales & Service Leader programme, launched in 2017 to give

store managers the means to be true entrepreneurial owners of their

local project, continued its rollout in the various regions. The Retail

Developer programme, also introduced in 2017 and linked to the

Sales & Service Leader programme, was also maintained. In 2021,

the Hermès Culture Client training was launched for all retail

employees. This training, which will take place in each region in 2022,

aims to reinforce the uniqueness of the in-store customer experience;

◆

in many subsidiaries, the local induction programme was run: Tous

en Selle! in central services and for managers of divisions and

production sites (workshop managers, management control, site

management, EHS managers, etc.) within Hermès

Maroquinerie-Sellerie for 61 employees, Au fil d’HTH for the Textile

sector, with 43 employees, Premiers regards at Hermès Femme for

24 employees, Bienvenue à la maison for 54 Hermès Maison

employees, or the continued implementation at Hermès Parfum et

Beauté for 64 employees of the Premiers Pas programme for all new

employees with permanent employment contracts and Découvrons

Hermès Parfum et Beauté for the 88 people on fixed-term

employment contracts, work/study students and interns. In 2021, the

Hermès Group Services subsidiary created its integration module, Au

cœur du service, for 88 employees.

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Among these courses:

2.3.2.2.2 Management at the heart of the Group’s ambition

Since 2020, the House has proposed a new individualised and ambitious

development path to all managers, in order to strengthen their skills and

thus contribute to the smooth and efficient functioning of the teams over

time.

All managers are required to attend training courses enabling them to

acquire the fundamentals essential to the practice of management that

is caring, firm and encourages growth for the Company, individuals and

the teams. These management foundations can be subsequently

reinforced by specialised training in collaborative working, recruitment, or

diversity management.

In 2021, Hermès developed this individual development plan for all

French-speaking managers. It has also begun to roll this out

internationally.

The aim of the H Keys programme is to welcome all new managers for

three days to give them the keys to understanding the House, help them

adopt a managerial stance in line with its values and create links

between managers in various entities. Some 51 managers followed this

programme.

The Hermès Manager programme provides a common foundation on the

fundamentals of management techniques. This programme is now being

run remotely for international subsidiaries. A total of 131managers have

followed it.

Locally, new management training courses have been introduced for local

challenges. Hermès Maroquinerie-Sellerie offered 464 managers the

Artisan Manager – Manager d’Artisan course, a set of modules aimed at

deepening various aspects such as budget construction and

management, personnel administration and applicable labour rules.

Hermès Europe created the Emotional intelligence training for 21store

managers to develop their own emotional awareness and learn to adjust

it according to the situation and the employee. Travel Retail Asia supports

its new managers with the First step to leaders training. In the United

States, Hermès Of Paris developed the Situational leadership training for

30 managers.

2.3.2.2.3 The high expectations of savoir-faire

The House’s policy is to consolidate and develop individual expertise,

increase each employee’s versatility, ensure that savoir-faire is shared

within teams and that this is passed on from generation to generation,

retain talents and create appropriate development pathways.

With this in mind, training courses have been developed enabling

employees to train or specialise in legal, IT or workplace safety issues.

1. CQP: vocational qualification certificate. [attention, note barrée dans fichier client]

2. VAE: validation of acquired experience. [attention, note barrée dans fichier client]

3. CAP: vocational aptitude certificate. [attention, note barrée dans fichier client]

◆

for the appropriation of internal IT tools, with the M3 management

programme followed by 377employees, in-person or remote training

via e-learning on the new MyClickH HRIS, accessible to all employees,

and the Digital citizenship programme on new digital tools for HTH,

Ordin@cteur to facilitate the increase in digital skills of craftspeople,

or Digital workshops for Hermès Parfum et Beauté;

◆

to develop a course on good purchasing practices at Hermès with the

Purchasing fundamentals training and the Adopt EHS reflexes during

supplier visits programme;

◆

a development programme for the human resources community,

including modules on expertise (recruitment, training, labour law),

inspirational conferences, a partnership with the LAbRH and

co-development workshops.

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In addition to these cross-functional training courses, Hermès is

developing in-house training schools for its major craftsmanship

métiers – Leather, Textile and Tanneries – enabling this savoir-faire

to be perpetuated and handed on. This can be seen, in particular, in the

acquisition of savoir-faire in an employee’s first job as a leather goods

and saddlery worker, in an engineering incubator within the École des

Tanneurs and the École du Textile, and the recognition of the

qualifications gained through on-the-job training

, experience validation

or diplomas (CAP

, etc.). Within Hermès Maroquinerie-Sellerie, 93

trainers from the table, cutting and stitching sectors took part in

meetings to share experience, and receive regular training in areas such

as communication, personal development and training, to increase their

professionalisation.

In 2021, the Hermès Maroquinerie-Sellerie craftsmanship division

created the École Hermès des Savoir-Faire through its apprenticeship

training centre (CFA) dedicated to leather goods métiers. The growth of

the activity makes it possible to recruit and train more than 600

craftspeople per year and the prospects for the future are even stronger.

This new system will enable Hermès to be more autonomous in its

training in the leather goods métier. For the past 10years, the École du

Cuir has been responsible for the transmission of savoir-faire with a

community of more than 90 in-house trainers, along with partner schools

and further education establishments. Thanks to these many years of

experience, Hermès felt it had the skills to develop its own training

organisation. This creation of the École Hermès des Savoir-Faire is

supported by the launch of its dedicated website, a real shop window

onto our métiers and our training offer. Connected to the Hermès career

website, it should stimulate vocations and help to promote the House’s

employer brand far and wide.

In total, 12École du Cuir programmes in 2021 made it possible to train

740employees (a total of nearly 6,855 since 2011) and helped to obtain

277diplomas or certifications: 185CAP vocational qualifications in

leather work, 79 Sellier-Maroquinier d’Art (saddler and leather worker)

diplomas, 11 CQP Cutting diplomas and 2 Brevets Métier d’Art (Arts

métier diplomas).

The Cristalleries Saint-Louis continued internal training actions on

hot-part métier savoir-faire for 36 craftspeople, and prepared the 2022

launch of a study designed to structure an organisation dedicated to

internal training for finishing workshops.

In 2021, all Retail subsidiaries continued to develop product training

and distance selling techniques using new tools to create interactive and

participatory learning experiences. The Retail France subsidiary created

the École des Artisans de la vente, which offers a progressive

multimodal development programme for sales associates and managers,

starting from their integration, with a progressive pathway. This

programme will be rolled out in 2022. The Retail subsidiaries also

developed new programmes to enhance the customer experience:

Customer Experience training in Thailand for 58 sales associates,

Remote sales selling in Taiwan for 136 sales associates, Luxury Attitude

in Korea for nine managers, and Customer service for 12 sales

associates at HAOP. At the same time, remote and face-to-face product

training sessions were held on the new collections (67 sessions at HOP

for 2,828employees trained).

Lastly, in 2021 new expertise programmes were rolled out:

CFA

In 2021, Hermès created its École Hermès des Savoir-Faire and its

associated CFA (apprentice training centre). Its purpose is to

advance the craftsmanship métiers and promote apprenticeships

through work/study programmes in métiers of excellence. It uses

teaching teams comprising internal trainers and national education

trainers in each of our training schools based on our nine regional

centres.

In July 2021, Hermès obtained all approvals from the public

authorities to train its future saddler-leather goods workers

in-house, assess their skills and issue the state vocational

qualification (CAP) in leather goods in collaboration with the French

Ministry of Education. This national accreditation is recognition of

the House’s historical, technical and educational expertise in the

transmission of its savoir-faire of excellence. Becoming a training

organisation also confirms Hermès’ role as a social player and

responsible employer committed to the education of able-bodied

people or people with disabilities, with initial experience in a manual

métier or in professional retraining.

The École Hermès des Savoir-Faire is open to all those who wish to

become craftspeople and make good use of their manual talents. It

trains work/study students, who have the opportunity to learn a

métier of excellence. Once they have obtained their state diploma,

they will be able to join, amongst other jobs, one of the Group’s

leather goods workshops.

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2.3.2.3

INTEGRATING SUSTAINABLE DEVELOPMENT

ISSUES INTO SAVOIR-FAIRE

Integrating sustainable development into the savoir-faire of all métiers

and all employees is a strategic challenge.

The sustainable development strategy implemented by the sustainable

development department at Group level is based on raising awareness,

empowering and increasing the skills of employees, who are the agents

of change.

Given the great diversity of the métiers, the sustainable development

department operates on a decentralised basis and relies on a network of

more than 500 employee relays worldwide. This network includes

sustainable development managers in several entities, the EHS network

officers (28 people), ambassadors in stores and production sites (a total

of more than 350 people).

In addition, the métiers and subsidiaries lead Sustainable Development

Committees specific to their scope and continue to strengthen in all

sectors.

In 2021, the sustainable development strategy update was the

opportunity for discussions with around 50 entities of the House,

distribution, production and support, in order to ascertain their roadmaps

and commitments for the next three years. This work gives concrete

expression to the understanding and practical application of the

challenges at local level, while remaining consistent with the Group

strategy.

In addition, the introduction of the MyCampus tool has enabled the

launch of a training module dedicated to the fundamentals of sustainable

development, which is regularly expanded with the addition of further

modules, such as one on biodiversity. This first general model was made

available in five languages. The Group’s ambition is to train all

employees. As at 31December 2021, 2,962employees had been

trained. Face-to-face pilots for craftspeople and sales associates will be

rolled out on a larger scale from the beginning of 2022 in order to

gradually integrate functions that do not have direct individual access to

a computer. In addition, the sustainable development training

programme was supplemented by three additional modules: biodiversity,

climate change and animal well-being.

2.3.2.4

INCLUDE CAREER PATHS IN A LONG-TERM

VISION

Employee loyalty is a value that contributes to the stability and

sustainability of Hermès’ model. The House therefore provides

employees with the necessary conditions for the development of their

professional projects and promotes long careers.

The average length of service, which includes a wide range, is nine

years. Given the strong growth in recent years, 44% of the Group’s total

workforce has worked for the Company for less than five years.

However, more than one-third of the workforce has been with the House

for more than 10years (i.e. around 6,000 people), illustrating the loyalty

and opportunities for career development within the House (as a

reminder, 10 years ago the workforce comprised 9,081 people). In

France, 25% of employees have more than 15years of service.

2.3.2.4.1 Retain long-term employees

Hermès activates a number of motivation levers that help to anchor

attachment and develop a strong sense of belonging: training throughout

the career, internal communication, particularly with the HermèSphère

digital platform, and dedicated and targeted content focused on the

Company’s fundamentals, its savoir-faire, its métiers, markets,

organisation, not to mention seniority bonuses, as well as the quality of

the workspaces, the systems dedicated to well-being and the convivial

meetings that create strong links between the employees. The

empathetic management style, which is conducive to close proximity, and

the numerous actions aimed at encouraging discussions with employees

and stimulating a collective mindset, also serve to foster loyalty and

recognition. In terms of work organisation, versatility and multi-skills are

preferred. The creation of participative cross-functional groups promoting

innovation, as well as initiatives in terms of temporary secondments and

internal mobility, complete the systems.

HR development

In order to bring out the Senior Executives and managers of tomorrow,

the Group intends to facilitate the construction of rich internal

professional and personal careers path for the men and women who

make up the current teams. Whether in the fields of management or

expertise (IT, digital, supply chain, purchasing, finance, HR, audit, legal,

etc.), Hermès intends to pursue its long-term project, built over time by

promoting employee loyalty. In a context marked by increasingly

entrenched aspirations to live life in harmony with one’s values, the

collective culture is growing in importance and the speed of skill changes

must be taken into account. In addition, Hermès has to face the

development of its activities, the corresponding increase in its workforce,

and the changing geographies, with Asia and in particular China

becoming increasingly important. These various factors have led the

Group to give an increasingly “transformational” role to its human

resources management.

Evaluate employees to help them in their development

Each employee has an annual performance appraisal. The Managing

Directors of the subsidiaries and their Directors of Human Resources

oversee the annual performance reviews, which are based on annual

interviews that provide an opportunity to take stock of the past year and

build the objectives for the coming year, in terms of training. The Human

Resources teams collect all of the roadmaps and use them to put the

training plan in place. In France, this update on employee skills and

professional development takes place in the form of a professional

interview, which by law must take place every two years. Hermès has

chosen to conduct this every year and to discuss the subjects reviewed

during the professional interview at the annual interview. The human

resources department oversees the implementation of these two

interviews, which provide an opportunity to assess performance, analyse

skills, set objectives for the following year and discuss medium-term

prospects with the employee (professional assessment, career plan,

skills development plan, training).

◆

the Entre-temps programme is aimed at the Managing Directors of

subsidiaries and aims to give them time to step back four times a

year and look at topics such as freedom, courage and trust, values

dear to the Hermès leadership model. This formula, which favours

co-development, allows them to fine-tune their strategic vision, enrich

themselves with other perspectives and break the loneliness of the

leader, to find solutions to problems encountered on a daily basis and

to think in a more forward-looking manner;

◆

a series of Hafterworks, in the form of remote conferences aimed at

deciphering the changes underway through the contribution of an

expert, is offered to all Senior Executives (Managing Directors and

members of Management Committees) on a bimonthly basis;

◆

in 2021, the Leading with art programme benefited 20 senior talents.

Through two sessions of several days, it aims to make them leaders

who know each other well and are ready to have a positive impact on

those around them and on the world. Thus, a community of strong

and supportive leaders is gradually being created;

◆

in 2021, the Cavaliers programme enabled 12 young talents to spend

seven months exploring a strategic challenge assigned by the

Executive Committee. This enables them to put their teamwork skills

into practice and deepen their understanding of the Hermès model

through a subject on which they make concrete proposals.

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In subsidiaries abroad, annual interviews are opportunities for

discussion, formalised by a document detailing: the achievement of

targets, performance, the managerial relationship, work-life balance,

ethics and compliance, training requirements and the targets set for the

upcoming year. Some subsidiaries (United States, Japan, etc.) adapt

Group formats in keeping with cultural requirements or due to legal

constraints. The support given to employees throughout their career is

informed by these annual interviews. Once a year, the subsidiaries also

organise a Careers Committee, in which the Management Committees

share individual situations and stimulate in-house mobility, which is the

first lever for employee development. Annual “Talent Reviews” are also a

way of learning more about employees and following their trajectories

closely. This enables individual Executive development to be followed

closely.

Talent identification, a key challenge for long-term continuity

An annual talent review process is steered by the Group human

resources department and aims to identify leadership talents – called

upon for senior managerial positions – and expert talents, who are

valuable in preserving and developing the savoir-faire that makes up the

richness and specificity of the métiers. This involves recognising and

valuing experts, securing critical skills for the Group and developing

expert talent.

A greater number of assessment procedures were put in place to allow

leadership talents to get to know each other better and the organisation

to make good use of their qualities in appropriate roles.

Various internal programmes are in place to develop managers identified

as being able to take on Senior Executive positions within the Group in

the short or longer term:

In addition to this offering of internal programmes, talents also take part

in external programmes. Thus, in 2021, several programmes originally

developped by Danone were attended: the programmes Eve, Octave and

Noé dedicated to leadership, and in particular leadership by women,

ongoing change and sustainable innovation benefited more than 70

managers who wanted to open themselves up to the world and other

universes and have a personal development experience that could

increase their impact in everyday actions.

The Colbert Labo programme gave seven young talents the opportunity to

work together on a collective project with employees of companies that

are members of the Comité Colbert. A chance to broaden their horizons

to the luxury goods industry as a whole, on the theme “Digital, how far for

the luxury?”. Lastly, with the One young world programme, for the first

time, three young talents were able to be part of the experience

conducted in Munich with more than 2,000 young people from all

continents, invited to look at societal issues such as the new economy,

the Covid-19 pandemic, the environment, education, the issue of rights

and freedoms. Overall, more than 150employees benefited from specific

talent development programmes.

This attention paid to talent is exercised in the subsidiaries, notably

through the establishment of a Talent Management Committee, the

definition and monitoring of individual development plans for talents,

career interviews and individual coaching, contributions to

cross-functional projects or temporary assignments to expose talents to

various situations and challenges and thus enrich their experience and

expertise. Human resources managers are trained in the assessment

tool in order to internalise the approach, and constant attention is paid to

internal mobility, the first lever of talent development, in particular

through the distribution of internal newsletters in addition to the My way

in Hermès platform. Lastly, Vis ma vie (“Live my life”) sessions and

mentoring initiatives facilitate internet mobility and accelerate the

process of taking up job openings.

Strategic Workforce Planning projects were initiated in several

subsidiaries (Hermès Perfume and Beauty, Hermès Maison, Hermès

China, etc.) in order to apply a strategic approach to anticipating future

business developments and talent needs in the face of rapid growth. This

involves clarifying the future organisation in order to better prepare

talents for their new roles, anticipate recruitment and support the

necessary changes in terms of organisation, recruitment and

management to meet the transformation challenges provided by growth.

This approach will become more widespread around the Group in the

coming years.

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2.3.2.4.2 Offering varied career paths

In addition to the Career Committee led by the Group human resources

department, several initiatives are common to all subsidiaries to promote

and prepare for internal mobility, with the distribution of offers via

internal channels, the establishment of job fairs within the sectors and

temporary secondments to other sites in the industrial sector, the

métiers or the Retail subsidiaries. The active coordination of human

resources teams within Internal Mobility Committees facilitates, among

other things, the rollout of the Vis ma vie programmes, in which

participants put themselves in the shoes of another employee for a

period of between one week and six months, and networking operations

to showcase the sites through divisional projects and exchanges between

stores. Individual interviews for people on the move in order to narrow

their project and determine an appropriate action plan, the rollout of

various assessment tools and the review of compensation levels aimed

at retaining talent internally are also available to teams to reinforce the

versatility and multi-skills of employees.

Offering development and recognition opportunities to enable

participation in the Hermès adventure

Numerous actions aim to enhance the value of employees, identify

opportunities and offer them constructive development and diversified

career paths and above all, individualised support. These initiatives are

supported by internal communication to share the vision, give meaning,

motivate and embark on the corporate project and relay the vision of the

Executive Committee. The financial dimension is an integral part of

recognition, with, for example, the increase in the long-service bonus in

entities in France. The review of compensation on the basis of external

benchmark surveys to ensure a level that is always higher than the

market. The positive and engaging work environment, constantly

improved with the introduction of adapted and ergonomic equipment and

moments of celebration, also contribute to employee loyalty.

2.3.3

PRESERVATION OF CRAFTSMANSHIP

HERITAGE

Hermès contributes to the maintenance and development of

craftsmanship and manufacturing savoir-faire, in a context where this

savoir-faire, and not only that of craftspeople, is in danger of

disappearing.

Within a sector of excellence such as that of Hermès, these technical

métiers represent fundamental assets and heritage. The singularity of all

this savoir-faire is expressed not only through the quality of the objects

made but also through our ability to craft them in a way that respects

both the craftspeople and the environment. There is therefore a major

challenge in attracting and retaining talent, consolidating, developing and

perpetuating individual expertise, improving versatility and strengthening

transmission from generation to generation.

POLICY

Hermès is developing in-house training schools for its major

craftsmanship métiers – Leather, Textile and Tanneries – enabling this

savoir-faire to be perpetuated and handed on. The human resources

department conducts a systematic training policy for new hires, with a

dedicated training programme, mainly carried out internally and

supplemented by external training. Keen to provide the world with a

better understanding of these métiers, the House works upstream to

promote art métiers and crafts to younger generations, through local

initiatives such as open houses and exchanges with educational

establishments, or through the Fondation d’Entreprise Hermès and in

particular the Manufacto programme. Allowing secondary school pupils to

discover and become involved in a manual métier is essential; these

métiers are often misunderstood and yet offer excellent prospects.

2.3.3.1

PROMOTING AND VALUING THE TRANSFER

OF SAVOIR-FAIRE EXTERNALLY

A responsible company through strong relationships with educational

establishments

Hermès pursues an active policy of close relations with leading

educational establishments in the fields of art, design, craftsmanship,

engineering and commerce, both to make students aware of its values

and to share its project. These relationships are coordinated with the

subsidiaries that support these activities, and taking into account the

rapid development of certain métiers. In the current context of the health

and economic crisis, Hermès believes that it is more necessary than ever

to prepare for the future by supporting students seeking work/study

programmes and internships. The House also wants to take an active

part in education in different forms and in various fields: welcoming

students to its premises through presentations and discussions, and

going to meet them throughout France during forums to offer internship

and work/study opportunities, providing real-life case studies, etc.

For the most part, these actions took place in new talk and

video-conference formats. Hermès was able to reach an audience of

more than 1,500students in 2021, during 30 different presentations

in France.

◆

supporting the activities of schools and giving a societal dimension to

these relationships, as a socially responsible company;

◆

conveying the humanist and craftsmanship approach of the Hermès

corporate culture;

◆

conducting discussions with students in a changing era;

◆

diversifying the Company’s presence and targeting new schools to

seek out talent throughout the country;

◆

to be visible in creation, craftsmanship, engineering and management

schools in France in order to showcase the reality of a quality

employer, share Hermès’ long-term and humanist project and create

high-quality links with students;

◆

bringing the reality of Hermès to life through concrete experiences:

entrusting practical cases, study missions, offering internship and

work/study opportunities;

◆

maintain privileged relationships with young people to capture the

changes of our era.

◆

initiatives to participate in public debate.

Since November2020, Hermès has sponsored the European Chair in

“Sustainable Development and Climate Transition” at Sciences Po

Paris, which focuses on complementary and inseparable areas of

sustainable development: climate transition, economic development

and social inclusion, through an approach that brings together a

variety of players and expertise and is based on collective

intelligence.

Together with the Paris School of Economics (PSE), Hermès funds the

“Ouvrir la Science Économique” research chair, whose aim is to

establish strong connections with other human and social sciences

(history, sociology, demography, social psychology, political sciences,

philosophy). The PSE Chair’s interdisciplinary approach is in perfect

harmony with the House’s determination to contribute to the

collective interest, the creation of social value, and the enhancement

and protection of natural environments, by supporting the scientific

expertise that makes it possible to advance academic research;

◆

initiatives to participate in school life and talent acquisition.

In 2021, personalities from the House were able to interact with

students, in particular within the framework of the forums organised

by the partner schools Sciences Po Paris and ENSAM.

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Educational establishments with which Hermès was particularly involved in 2021:

Hermès, a player committed to education

Coming from a line of craftspeople, Hermès pays particular attention to

the transfer of its exceptional savoir-faire, but also to its continuous

improvement. It is therefore increasingly involved upstream in the

sustainability of its métiers and the excellence of craftsmanship skills. It

acts to promote education, through training in unique savoir-faire.

Hermès, a responsible employer, is committed to transmission and

education and works to maintain close relations with the world of

students. The challenges include:

Actions in this sphere are structured at three levels:

◆

transformational initiatives for the community through support for

equal opportunities.

In 2021, Hermès became a founding member of the Des territoires

aux Grandes écoles (DTGE) Foundation, notably providing financial

support. Created by former students of the French grandes écoles,

this non-profit organisation seeks to make the competitive entrance

examinations of these schools accessible to diverse profiles. Noting

that the lack of information, self-censure, geographical distance and

economic difficulties are powerful obstacles to the diversification of

recruitment, this organisation works with 32 departmental

intermediaries to cover the whole of mainland France.

In the same vein, grants for students with disabilities are awarded as

part of the disability agreement with SKEMA and the IFM Foundation.

Hermès also participates in the “one young person, one solution”

programme, which aims to train and facilitate the move into

professional life of all young people in all regions. Finally, several

partnerships have been formed with Sciences Po Paris to participate

in school forums and for the mentoring of students with disabilities;

Schools of art and design, fashion and textiles Engineering schools Business and management schools and universities

◆

École Camondo (Decorative Arts)

◆

ENSAAMA Olivier de Serres

IFM Institut Français de la Mode

HEAD

◆

École CentraleSupélec de Paris

Polytech

ENSAM

INSA Lyon

ITECH Lyon

Polytech Angers

◆

IAE Sorbonne, University of Lugano

(Switzerland) in partnership with the

Sorbonne, Paris Dauphine University, IAE

Gustave Eiffel

◆

Sciences Po Paris

ESSEC

GEM Grenoble School of Management

IESEG

EM Lyon

HEC Paris

Tunon

CELSA

ESSCAA

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In addition to its financial contribution, Hermès contributes through its

skills in métiers to ENSAM’s industrial management expertise by

collaborating in the development of the expertise educational module

under the responsibility of ENSAM, proposing the priority study

subjects for the first semester, providing presentations in certain

face-to-face teaching modules and finally, by participating in the

assessment of study projects during students’ defences of their work.

Under its partnership with Sciences Po Paris, Hermès entrusted a

group of first-year students on the International Management &

Sustainability Masters with a topic on the challenges of Retail in the

luxury goods industry (Capstone project). The House will support

students in their thinking, in order to help them meet the strategic

and international challenges of the topic by giving them the

opportunity to immerse themselves in Hermès’ culture and become

aware of the House’s sustainable ambition.

Sciences Po Sustainable Development Chair

In November 2020, the School of Public Affairs and the School of

International Affairs (PSIA) of Sciences Po launched the European

Sustainable Development and Climate Transition Chair. This aims to

shed new light on how to advance sustainable development along

the three axes of climate transition, local economic development

and social inclusion. Hermès participates in this chair alongside

other sponsors such as HSBC and the EIB (European Investment

Bank).

In 2021, the chair organised a number of events, such as a round

table with Columbia University in April (“Political Economy of

Implementing Socially Inclusive Zero Carbon Goal”), a conference at

Sciences Po in November on the interrelationships between

biodiversity and development (“Achieving trade-offs to conserve

biodiversity and advance development equity”). In addition, four

research papers were prepared during the year for final publication

in the first half of 2022: on territorial inclusion (“Challenges of

territorial inclusion in France” by Madeleine Peron); on the action of

governments (“Role of local governments in climate action in

France” by Nicolas Bauquet), and on climate-based solutions

(“Institutional challenges in nature-based climate solutions” and

“Digital Atlas of nature-based climate solution efforts” by Dr

Someshwar & Alejandra Guraieb).

This partnership complements other joint initiatives with Sciences

Po in the field of education. This choice resonates perfectly with the

House’s craftsmanship model, which is based on regional

involvement and a strong social commitment, and the desire to

extend the discussion beyond the House’s direct sphere of

influence.

At the same time, students in the first year of CentraleSupelec shared

their visions of practical cases given by alumni working at Hermès, while

students and graduates of IFM were able to discuss their professional

experiences during the Meet & Match Forum. Hermès takes part in

internship recruitment events organised by schools, notably at CELSA,

EM Lyon, Sorbonne University, INSA, etc. As part of the CSR Challenge

offered by the IESEG School of Management, Hermès invited students to

consider the challenges related to the House’s sustainable development

pillars.

Lastly, Hermès is supporting the construction project for the Crafts and

Design Métiers Campus. This initiative is part of the Investment in the

Future Plan (Innovation Territories) and intends to take initiatives around

a network of training institutions and business partners with the aim of

creating, on an economic sector scale, a cluster to promote synergies

relating to employment and training. This inter-ministerial project involves

Education, Employment and the General Secretariat for Investment. It is

supported by the Comité Colbert and the ENSAMAA Olivier de Serres, the

leading institution of the Campus. In particular, Hermès will contribute to

the creation of a materials library, training in its métiers (colour,

savoir-faire, etc.), inter-company e-learning modules, or advancement

and promotion initiatives such as the European Day of art métiers, with a

demonstrations of certain savoir-faire.

Privileged partnerships with craftsmanship schools

Craftsmanship employs more than 6,200people at Hermès. It is the

foundation of the House’s vocation as a creator of high-quality

sustainable objects. To continue recruiting in all métiers and to support

the growth momentum of the leather goods segment, Hermès has forged

long-term local partnerships with high schools and further education

establishments, which are committed to understanding its specificities,

culture and development.

Hermès Maroquinerie-Sellerie was thus able to start a CAP vocational

qualification in leather work with the Lycée professionnel Flora Tristan

vocational school in Montereau. The Hermès Maroquinerie-Sellerie

division, which is expanding at a particularly dynamic pace, continued its

partnerships with the École Boudard (Franche-Comté), the Thiviers

training centre (Nouvelle-Aquitaine), the Lycée professionnel Jean

Rostand vocational school in Angoulême (Nouvelle-Aquitaine), Les

Compagnons du devoir, the Lycée Jean Monet in Juvisy-sur-Orge (Paris

Val de Seine), the GRETA de l’Eure and the Lycée Boismard in Brionne

(Normandy), the Lycée Charles Dupuy in Eysines (Nouvelle-Aquitaine) and

the Maison familiale rurale in Isère. The partnership with the Lycée

professionnel des Huisselets (vocational school in Franche-Comté) was

strengthened with the integration of trainees from the first year of

professional baccalaureate in leather goods. Steps have been taken to

strengthen the partnership with Le Haras du Pins (Normandy). Pupils

from La Fabrique’s professional baccalaureate have been recruited by

the Paris Val-de-Seine division.

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12 PARTNERSHIPS WITH ÉCOLES DU CUIR IN FRANCE

Paris-Val-de-Seine division

Lycée Jean Monet

JUVISY SUR ORGE

CAP vocational qualification

in leather work

Lycée Turquetil

PARIS

CAP vocational qualification

in leather work

Lycée Flora Tristan

MONTEREAU

CAP vocational qualification

in leather work

Ardennes (Planned for 2022)

Lycée Charles de Gonzague

CAP Maroquinerie 2022

Les Ateliers de Pantin

Maroquinerie

de Saint-Antoine

Maroquinerie

de Montereau

Auvergne-

Rhône-Alpes

Lycée Danielle

Casanova

GIVORS

CAP vocational

qualification in

leather work

Lycée Desaix

ST-ELOY-LES-MINES

CAP vocational

qualification in

leather work

Nouvelle-Aquitaine

Lycée Jean Rostand

ANGOULÊME

VAE

Lycée Charles Péguy

EYSINES

CFA Le Vigean

EYSINES

CAP Maroquinerie

VAE

Normandy

Lycée Augustin Boismard

BRIONNE

CAP vocational

Les Haras du Pin

LE PIN-AU-HARAS

Cap vocational qualification in

saddlery-harness-making

Normandy

division

Ardennes

division

Paris-Val-de-Seine Division

South West

division

Franche-Comté

division

Maroquinerie

de Guyenne

Auvergne

division

Alps

division

Franche-Comté

École Boudard

MONTBÉLIARD

Art saddler and leather

worker diploma and CQP

cutting diploma

Lycée Professionnel

des Huisselets

MONTBÉLIARD

CAP vocational

qualification

in leather work

Pierre-Bénite

production

unit

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MAINTAINING HERMÈS’ LEADING POSITION

2.3.3.2

IN TRAINING FOR ITS TRADITIONAL MÉTIERS

AND PROMOTING ITS MANUFACTURING

SAVOIR-FAIRE

Prix de l’Adresse Award

In the second half of 2021, the Parcours de l’Adresse were able to

resume, allowing 82employees from all our production sites in France,

Switzerland and Italy, to set off for five days, in groups of 10people, to

discover the métiers of leather, crystal, silk, perfume, porcelain and

ready-to-wear.

The Prix de l’Adresse, an internal competition that enables little or no

longer used savoir-faire to be proudly revived, is a true invitation for

volunteer craftspeople to go the extra mile. In teams, supervised by

technical advisors and Human Resources employees, participants have

several months to manufacture an exceptional item from the Hermès

Conservatoire des collections or to create an original item. In 2021, the

fifth edition of the Prix de l’Adresse was launched. This edition is already

a great success, with 184 craftspeople taking part in the adventure,

i.e. 40 teams. The most loyal participants are once again represented in

the event, with around 30 teams from Hermès Maroquinerie-Sellerie,

Cristalleries Saint-Louis, Men’s Ready-to-wear, Hermès Horloger and

John Lobb.

For the first time, Hermès Shoes Italy and J3L have joined the

competition, and the Home division has created a cross-functional team

combining the in-house savoir-faire of craftspeople from Beyrand, CATE

and Puiforcat, united by a common project. The fifth Prix de l’Adresse will

end in March2022, when the Hermès Masterpiece Awards will be

presented to the winning teams.

To celebrate the tremendous work of the teams that have already

competed in previous Prix de l’Adresse, the traveling exhibition La

Caravane du Prix de l’Adresse, featuring the winning pieces of the first

four editions, continued its journey in 2021 to the leather goods

workshops in the Alps, the south-west and Paris Val-de-Seine. It then

headed to the Cristalleries Saint-Louis, and the two Hermès Horloger

sites, followed by HCI in Italy. This journey of almost two years finally

ended at Hermès Commercial in Bobigny.

This initiative is a concrete and high-visibility way to involve our

employees internally in the preservation and development of

craftsmanship savoir-faire.

Meilleurs Ouvriers de France (MOF)

This prestigious title is awarded only in France by category of

craftsmanship métiers, as part of a competition between professionals. It

takes place every three years. The goal is to reward excellence and

savoir-faire, which are the required criteria for the awarding of the title.

The House is proud to count some of the Meilleurs Ouvriers de France

among its craftspeople. They guarantee the excellence of the savoir-faire

in addition to arousing the interest of younger generations. Hermès

supports those who wish to obtain this prestigious title by financing their

registration to the competition, providing them with the materials

necessary for the creation of their final piece and by granting them

extensive access to the various production sites.

The House has 23MOF, distributed as follows: three at the bootmaker

John Lobb, 10 at HTH (drawing-engraving, sabre velvet, weaving, printing

and finishing), seven at Cristalleries Saint-Louis (crystal cutters,

glassmaker by hand and using a blowtorch, as well as four Best

craftspeople of France, glassmaker by hand and cutter), and three

saddler-leather workers at HMS.

Entreprise du Patrimoine Vivant (EPV)

The Hermès Group is proud to have had ten companies recognised by

the Entreprise du Patrimoine Vivant (living heritage company – EPV)

label in 2021, namely Hermès Sellier, Holding Textile Hermès (Bucol),

Établissements Marcel Gandit, AteliersA.S, Siegl, Ateliers de Tissage de

Bussières et de Challes, Beyrand, Cristalleries Saint-Louis, Puiforcat and,

John Lobb (http://www.patrimoine-vivant.com/).

These distinctions bear witness to Hermès’ commitment to the

safeguarding, preserving and promoting heritage savoir-faire.

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PEOPLE: SAVOIR-FAIRE

EXPERTS' HANDBOOK

This section provides an in-depth look at Hermès’ actions and results in terms of the “savoir-faire” pillar.

CONTRIBUTION TO THE UN'S SUSTAINABLE DEVELOPMENT GOALS (SDGS)

The Hermès Group’s accomplishments in relation to savoir-faire contribute to the UN’s sustainable development goals (SDGs).

◆

4.4 “By 2030, substantially increase the number of youth and

adults who have relevant skills, including technical and

vocational skills, for employment, decent jobs and

entrepreneurship”

◆

No.4: Quality Education

◆

4.3 “By 2030, ensure equal access for all women and men to

affordable and quality technical, vocational and tertiary

education, including university”

4.7 “By 2030, ensure that all learners acquire the knowledge

and skills needed to promote sustainable development,

including, among others, through education for sustainable

development and sustainable lifestyles, human rights, gender

equality, promotion of a culture of peace and non-violence,

global citizenship and appreciation of cultural diversity and of

culture’s contribution to sustainable development”

◆

8.b "By 2020, develop and operationalize a global strategy for

youth employment and implement the Global Jobs Pact of the

International Labour Organization"

◆

8.3 "Promote development-oriented policies that support

productive activities, decent job creation, entrepreneurship,

creativity and innovation, and encourage the formalization and

growth of micro-, small- and medium-sized enterprises, including

through access to financial services"

◆

8.6 "By 2020, substantially reduce the proportion of youth not

in employment, education or training"

◆

8.9 "By 2030, devise and implement policies to promote

sustainable tourism that creates jobs and promotes local

culture and products"

◆

10.3 "Ensure equal opportunity and reduce inequalities of

outcome, including by eliminating discriminatory laws, policies

and practices and promoting appropriate legislation, policies

and action in this regard"

◆

11.4 “Strengthen efforts to protect and safeguard the world’s

cultural and natural heritage”

◆

12.b "Develop and implement tools to monitor sustainable

◆

development impacts for sustainable tourism that creates jobs

and promotes local culture and products"

12.8 "By 2030, ensure that people everywhere have the

relevant information and awareness for sustainable

development and lifestyles in harmony with nature"

No. 16: Peace, justice and strong institutions

◆

16.7 "Ensure responsive, inclusive, participatory and

representative decision-making at all levels"

No. 8: Decent work and economic growth

No. 10: Reduced inequalities

No.11: Sustainable Cities and Communities

No. 12: Responsible consumption and production

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PEOPLE: SAVOIR-FAIRE

2.3.4 GENERAL INFORMATION ON THE WORKFORCE

WORKFORCE BY REGION AND GEOGRAPHICAL AREA

2.3.4.1 INCLUDING PROFESSIONAL CAREER PATHS AS PART OF A LONG-TERM VISION

SENIORITY PYRAMID

12%

23%

15%

18%

11%

Over 20 years

15 to 20 years

10 to 15 years

5 to 10 years

3 to 5 years

1 to 3 years

1 year and less

Production Retail Support Total

31/12/2021 % 31/12/2020 31/12/2021 % 31/12/2020 31/12/2021 % 31/12/2020 31/12/2021 % 31/12/2020

France 7,633 1,37690% 7,162 1,96022% 1,356 10,96970% 1,865 62% 10,383

Asia-Pacific (excl. Japan) 74 1% 83 2,287 36% 1,977 314 11% 315 2,675 15% 2,375

Europe (excl. France) 711 8% 699 995 16% 978 254 9% 261 1,960 11% 1,938

Americas 68 1% 76 868 14% 802 213 8% 199 1,149 7% 1,077

Japan 0 0% 0 766 12% 748 76 3% 79 842 5% 827

TOTAL 8,486 10 0% 8,020 6,292 100% 5,861 2,817 100% 2,719 17,595 100% 16,600

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PEOPLE: SAVOIR-FAIRE

(1) CAP: vocational aptitude certificate

(2) CQP: vocational qualification certificate

2.3.4.2 PROMOTING AND VALUING THE TRANSMISSION OF SAVOIR-FAIRE

CERTIFICATIONS OBTAINED FROM THE ÉCOLE DU CUIR

Training 2020 2021

École du Cuir

CAP

vocational qualifications in leather work 208 185

Sellier-Maroquinier d’Art (saddler and leather

worker) diploma 31 79

CQP

Cutting diploma 19 11

Brevets Métier d’Art (Arts métier diploma) 2 2

Total certifications 260 277

Total trainers 83 93

Reading a hide at the Maroquinerie de la Tardoire, in Charente

©Photographer: Chris Payne

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THE PLANET: RAW MATERIALS

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THE PLANET: RAW MATERIALS

2.4

THE PLANET: RAW MATERIALS

Sustainable development at Hermès is based on exceptional raw materials, from renewable natural sources, which enable it to create long-lasting

objects. The materials are obtained with a determination to control their footprint and used with respect by optimising their usage.

More broadly, Hermès is committed to sustainably developing its supply chains, by going beyond compliance with environmental, ethical and

social regulations, and contributing to the future availability of these resources.

Introduction

Hermès’ flagship materials – leather, silk, cashmere and wood – are all natural, renewable and obtained in such a way as to minimise their

footprint. The model and values of craftsmanship guiding the House have always promoted the careful and respectful use of these rare and precious

materials. Craftspeople take great care not to waste resources, to use only what they need and to optimise the use of materials (such as the use of

so-called associated cutting techniques in leather goods workshops). In all métiers, channels are also identified to recover and recycle manufacturing

offcuts, in addition to the emblematic activities of petit h.

The materials are selected and supplied in each of our métiers within the framework of a rigorous process set out in the “supply chain brief” and

detailed in technical specifications, complying with regulations, respecting biodiversity and best practices, in the constant quest for the highest quality

and ethical integrity. These supply chain briefs are intended for all suppliers and manufacturers involved in supplying Hermès métiers. They are also

accessible on the Group’s corporate website. Naturally, the Hermès Group does not use materials or species that are threatened with extinction or are

sold illegally. For decades, the House’s approach has been to learn more about its supply chains, to share its requirements with its suppliers (often

long-standing partners) and to develop them to achieve the highest quality and thus prepare for future growth. Over time, the search for new materials,

the rediscovery of savoir-faire, the emergence of new standards and regulations, the development of new products and the growth in volumes, were all

opportunities to enhance dialogue and improve practices.

MAIN COMMITMENTS OF THE PLANET PILLAR: RAW MATERIALS

2022 2024 2030

100% recycled gold

and silver in all our

products

100% of unsold items

recycled (France)

100% of suppliers

aligned with the CSR

brief and the supply

chain brief

◆

Formalisation of 50 new supply chain briefs and establishment of the Supply Chain Committee;

◆

Implementation of the LCA approach in the métiers;

◆

Victoria bags in “Fine Mycelium” using biotechnology (fungal threads);

◆

Operational action plan “zero destruction” of unsold goods in France (Agec law);

◆

Publication of an Animal Welfare Policy;

◆

RJC “Chain of Custody” certification (RJC COC);

◆

Classification A- at CDP Forest.

100% of single-use

plastics eliminated

100% recycled gold

100% of unsold items

100% of suppliers 1

•••

•

In 2021, the Group made progress the main issues relating to materials, with the aim of making a long-term difference through steady

improvements with a significant impact. Among these, the selected elements below are particularly illustrative of 2021 for this section:

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THE PLANET: RAW MATERIALS

PLANET

MATERIALS

OBJECTIVES INDICATORS 2021 RESULTS

SEEK THE BEST QUALITY FOR ALL MATERIALS USED, GUARANTEEING THE DURABILITY OF THE OBJECTS

Strengthen vertical integration to

ensure mastery of savoir faire and

the quality of materials and

develop long-term relationships

with producers

Length of relationship with suppliers

20years

on average (top 50 direct purchases)

Silk :

more than 25 years

(Brazilian

supplier)

Proportion of farms audited and/or certified

100% of the hides come from certified integrated

farms and 99% of the raw hides purchased by HCP

come from audited and/or certified farms

Have the highest quality materials

and those best adapted to the

functionalities and uses of the

products

Number of different leathers used by the House

different leathers used by the House

Number of raw materials identified

raw materials identified

OPTIMISE THE USE OF OUR RAW MATERIALS OVER THE ENTIRE LIFE CYCLE BY INTEGRATING THE PRINCIPLES OF THE CIRCULAR ECONOMY

Identify eco-design levers and

courses of action for all products

%of métiers having implemented an LCA approach on

their emblematic products

63%

of the métiers carried out at least one LCA

on their emblematic products

Establish a circular economy

roadmap in all métiers

Proportion of métiers that have formalised a Circular

Economy roadmap

100% of métiers have included a section

dedicated to the circular economy in their roadmap

Engage in a process of recycling

co-products from other industries

Proportion of leathers from hides recycled from

agri-food channels

95%

of hides used by Hermès come from agri-food

channels

Favour the use of recycled

materials when relevant

100% recycled gold and silver for Jewellery

100%

recycled gold and silver used in the

workshops

Quantity of recycled materials

tonnes of textile materials recycled in 2021

Develop upcycling, recycling and

donation processes to improve

and manage product end-of-life

Length of partnership with the leading charitable

association for donations in kind

Since 2016

, Hermès has partnered with

charitable associations to provide donations in kind

Implementation of processes to achieve the target

of 0 destruction of unsold items from 2022 in France

System in place and operational in France at the end

of 2021 and rollout planned abroad

Incorporate a circular and

eco-responsible approach into

creation

Number of products put on sale that incorporate a

circular and eco-responsible approach

More than 1 million

products

incorporating a circular and eco-responsible approach

developed in 2021

Carry out product repairs Number of products repaired

161,000

products repaired in 2021 (123,000

in 2020)

FIND ALTERNATIVES TO THE USE OF CERTAIN MATERIALS, INCLUDING PLASTICS

Improve the impact of all

packaging, from production to

customers to transportation

100% of packaging (customers and intermediaries)

made from renewable, recyclable and/or recycled

materials

100%

of orange boxes and bags are made from

renewable, recyclable and/or recycled materials

Eliminate single-use plastics 0% single-use virgin plastic by 2025

-92%

in consumption of single-use plastic for

packaging using the new wrapping technology for

shipping from logistics platforms. Launch of a working

group dedicated to plastics as part of the Fashion Pact.

Consolidating the use of natural

materials

Naturalness indicator (perfumes and cosmetics)

64%

of the raw materials used by Hermès Perfume

and Beauty are classified as natural or of natural origin

(ISO 16128)

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OBJECTIVES INDICATORS 2021 RESULTS

CONTROL THE ENTIRE VALUE CHAIN WITH OPERATIONAL TRACEABILITY AND PARTNERSHIPS

Analyse all purchasing categories

and supply chains

% of purchasing categories where risks have

been mapped and number of supply chains

subject to in-depth analysis

93%

of purchasing categories where risks have been mapped

and 74 supply chains analysed, representing 90% of the Group’s

supply chains

100% traceability of raw materials to the

country of origin

supply chains with traceability from to the country of origin

Guarantee full traceability of

materials

% of calf hides traced to the livestock farm

In 2021, 30% of the calf hides tanned in the two calf hide

tanneries of the HCP division were marked to ensure their

traceability

% of exotic hides traced to the farm

100%

of crocodilian and

100%

of ostrich hides are traced

back to the livestock farm

Use leathers from geographical

areas with low social and

environmental risks

% of materials sourced in Europe for leather

92%

of hides sourced in Europe

IMPLEMENT CERTIFICATIONS WITHIN OUR SUPPLY CHAINS

Obtain and maintain supply chain

certifications

Number of certifcations targeted

(target for 2024)

Distribution of the

Supply Chain Brief

planning the

implementation of certification or the award of label status for

32 sectors

Number of supply chains certified

and renewed

luxury house to receive

RJC COP

Certification in 2019,

renewed in 2021

55%

of tanners working for HMS are LWG certified

SUPPORTING AGRICULTURE THAT IS MORE RESPECTFUL OF NATURE

Contribute to research and field

initiatives

Supported projects

Livelihoods: more than 20 agricultural projects supported and more

than

57,000 hectares

planted or preserved

Cambridge studies on biodiversity in the raw materials supply

chains: Silk study in 2020 and Goat Leather study launched in

2021

Increase the share of supplies

certified according to criteria

guaranteeing sustainable

agriculture

Implementation of certification schemes by

sector

Work conducted by HTH on GOTS certification

CONTRIBUTE TO THE DEVELOPMENT OF THE MOST DEMANDING STANDARDS ON ENVIRONMENTAL, SOCIAL AND ETHICAL MANAGEMENT OF SUPPLY

CHAINS, NOTABLY IN TERMS OF ANIMAL WELFARE

Participation in

ICFA

(International Crocodilian Farmers

Association) since its creation in 2016,

SARCA

(South East

Asian Reptile Conservation Alliance) since 2016,

SAOBC

(South African Ostrich Business) since 2016

Commitment within the

Leather Working Group

(LWG, leather goods)

100% of métiers comply with the Group's Animal Welfare policy

supply chains covered representing 100% of purchases in

animal sectors

Contribute to the creation of

certifications and standards with

exacting requirements

Implement an animal welfare policy

by promoting the highest criteria

Contribution to industry or sector working

groups

% of Group métiers with an Animal Welfare

roadmap

Number of animal sectors covered

by the Animal Welfare policy

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2.4.1

ECODESIGN AND CIRCULAR ECONOMY

Each métier and each production unit is committed not only to applying

the principles of eco-design to use materials wisely, but also to reduce

waste and promote recycling to move towards a circular economy.

POLICY

The Group’s policy is to go even further in terms of the eco-design of its

products, by using “non-renewable resources as little as possible,

preferring the use of renewable resources, and which are used while

respecting their renewal rate, as well as being combined with waste

recovery processes that promote reuse, repair and recycling.”

This

preventive and innovative approach makes it possible to minimise the

environmental footprint of products over their entire life cycle, without

compromising their quality of use.

The House’s ambition is to offer sustainable, eco-designed products that

respect nature, and which retain their technical characteristics over time.

The House’s creative excellence, and the often timeless nature of the

collections also allow Hermès objects to remain desirable over the

long term, thus extending their period of use.

MEASURES IMPLEMENTED AND RESULTS

The quality of the raw materials used is the first guarantee of the

durability of Hermès objects. For this reason their selection is subject to

a rigorous process. By their very nature, Hermès’ fundamentals include

eco-design principles in its product designs and have done so since long

before the term became popular.

“A luxury product is one that can be repaired”, said Robert Dumas:

making sustainable objects is the best way to adhere to the

principles of sustainable development. Hermès objects are designed to

last because their technical design and manufacturing methods favour

robustness, in the tradition of saddler craftspeople. The famous “saddle

stitch”, still used in leather goods workshops, was born out of the need

for seams to resist the pressure from the harness. This design also

allows objects to be repaired. From saddles to silk to watches, all owners

of Hermès objects can request their repair. With 161,000repairs carried

out in 2021, this commitment is a working reality, worldwide.

Furthermore, the materials used come from natural, renewable sources,

taken while respecting their potential for regeneration, such as in the

case of hides from farmed animals, or for the main textile materials (silk,

cashmere and wool). The House’s historical preference for natural fibres

avoids the use of non-renewable resources based on petroleum

chemistry. The métiers have always focused on minimising production

waste. The Group is committed to a trajectory leading to the recycling or

reuse of all its unsold products in France by 2022.

ADEME definition.1.

In addition, the Group has launched a number of actions to strengthen its

circular economy approach, with the creation in 2020 of a Circularity

Committee to enable the exchange of best practices and technical

solutions between the métiers, and develop new upcycling opportunities

more quickly through pooling, such as for silk and cashmere. Its work and

initial results inspire the House’s creative thinking, thus helping to

strengthen product eco-design initiatives. With a view to continuous

improvement and eco-design, the métiers now conduct life cycle

analyses on their most emblematic products. Some 63% of the

métiers did this in 2021 and this figure is expected to increase over

the coming years.

2.4.1.1

MATERIALS RESPONSIBLE MANAGEMENT

The Group uses only the highest quality materials, optimises their use

through its production methods and develops the reuse, or recycling, of

all production offcuts. Purchases are adjusted as closely as possible to

needs in order to limit waste. The integrated artisanal approach is an

advantage in this respect, ensuring close proximity between buyers and

craftspeople. Each métier works to constantly improve the use of these

rare and precious materials, consuming only what is necessary.

2.4.1.1.1 Leather

Leather tanning

Leather is an animal product, specially tanned and made imputrescible,

either in a tannery for lamb, sheep and goatskin or in traditional

tanneries for hides from cattle or reptiles. Hides used in leather goods

are by-products of livestock farming for food. People sometimes refer to

hides as the “5thquarter”, which suggests we can consider tanning to

be the oldest recycling industry in the world. Hermès uses only

“full-grain” leather, the top part of the hide, without altering it in order to

improve its appearance. The leathers used by Hermès are thus rare and

of exceptional quality. The hides come from our own tanneries or from

long-standing partners.

Management of crocodile breeding on the alligator mississippiensis and

crocodylus porosus farms, close and constant relations with suppliers of

exotic raw hides, and the control of all processing operations (river,

tanning, dyeing and finishing) enable the division to control as accurately

as possible its purchases and use of materials in manufacturing

processes. Several projects are being rolled out in farms and tanneries to

improve quality control and optimise the use of raw materials. For

example, digital systems for taking images of hides at the start of the

tannery process are already in use or are being rolled out. They allow the

identification of defects, facilitate sorting and thus maximise the use of

hides while reducing waste.

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Leather work

The frugal use of leathers has always been a key concern of the

production units: thus, cutter craftspeople are trained, from the moment

they join the House, in how to cut leathers as sparingly as possible.

Coordination among production units is managed on a daily basis to

optimise the use of hides and offcuts: the analysis of the rate of use of

hides is a management indicator used in the workshops.

This coordination was strengthened in 2021 thanks to the launch of the

waste inventory digitisation project. The purpose of this project is to

promote visibility and opportunities for exchanges and therefore to

preserve materials on each site. Seven pilot sites have already started up

in 2021 and full rollout will take place in 2022.

In addition, a guide to best cutting practices exists on each site. This

guide, which is based on self-assessment, is gradually updated with new

practices that have been successfully tested by cutter craftspeople and

shared with all sites. Each site is regularly assessed by the central team

(Hermès Leather Goods & Saddlery production department) and 38%

were assessed in 2021.

In order to develop the culture of materials optimisation, new production

managers and cutting workshop managers are now systematically trained

in the calculation of materials consumption and the analysis tool

introduced in 2020 to enable them to ensure optimal management of

this consumption, and to acquire notions of best practices more quickly.

2.4.1.1.2 Silk and cashmere

The level of integration of the Textile division through all processing

operations (weaving, printing, finishing and manufacture) ensures that

the raw materials supplied are used as frugally as possible. All production

units carry out monitoring and actions to minimise scraps and waste,

which form part of the quality approach.

At the weaving stage, a working group made it possible, following analysis

and technical tests, to identify and launch new ways to reduce cashmere

waste by resizing the widths of the material to improve the ratio of

printed surface to the area of the material and segregating flows by

material to recycle the non-reduced fraction. Partial lengths have been

optimised to reduce material waste.

At the printing stage, the widths of silk are selected according to their

specifications in order to adapt the material to the printing techniques

and products being made. This approach makes it possible to increase

the rate of use of the widths and avoid rejection of non-compliant widths.

For the Silk métier, the management of “lean” planning has made it

possible to dramatically reduce production waste since 2018. Some silk

accessories are made from very wide pieces, which reduces the amount

of cutting waste and limits energy and water requirements throughout the

process. In the same way, the lengthening of printing tables at AteliersAS

enabled substantial savings in dye and textiles, thereby reducing offcuts.

A working group of representatives from each Holding Textile Hermès

(HTH) division unit launched in 2019 to optimise cashmere

use,continued its work in 2021.

In its Circular Economy approach, HTH has intensified its reuse or

upcycling actions aimed at optimising the rate of use of raw materials.

The development of new ways of using obsolete materials and

components made it possible in 2021 to reintegrate 48% of obsolete silk

textile components, i.e. 39,000metres, for internal and external projects

in the development, for example, of ready-to-wear items from designers

committed to upcycling.

Together with various service providers and partners in France and

abroad, solutions for the reuse and recycling of silk and cashmere waste

and offcuts from production are being jointly developed.

The production of recycled silk thread for the manufacture of new

products, such as protective covers for products or felt for leather goods

from manufacturing offcuts, are examples of projects under development

for the recycling of materials. All the operations implemented aim to come

as close as possible to achieving the specifications of a new material and

thus create a true materials loop in order to reduce the use of natural

resources as well as chemical inputs.

Several tonnes of materials were also used in tests to create acoustic

panels or clothing. These initiatives are designed to lead to industrial

processes aimed at recycling most of the textile production scraps.

Since 2020, analyses and technical tests have ensured the validation

and implementation of ways to reduce wastage of materials, including

reduction by directing small lengths of cashmere that are unsuitable for

use in production to a dedicated workshop. A total of 21 tonnes of textile

materials were recycled in 2021.

2.4.1.1.3 Other materials

A working group initiated in 2020 brings together around 30 internal

stakeholders, with representatives from all métiers, logistics, purchasing,

sustainable development and industrial affairs With the help of experts, it

is working on possibilities for substitution and circularity of plastic

(bioplastics, recycled plastics, recyclable plastics, etc.). Representatives

of the House participate in the discussions of the Fashion Pact, which

has also initiated a wide-ranging project on the subject.

A new material has been developed by the US start-up MycoWorks using

the Fine Mycelium biotech production process, which is based on the

use of fungal threads. Biodegradable and strong, the sheets of this

material are then treated and finished by Hermès tanners in France to

further refine their resistance and durability. They were then used by our

craftspeople to create the Victoria bag unveiled in March2021.

Cotton

Among the wide diversity of natural materials used within Hermès, cotton

occupies a smaller place. This textile fibre is found in all Fashion métiers,

as well as the herringbone covers in Packaging. Anchored in a global

market of which Hermès represents less than one hundred thousandth,

the Group is no less demanding in this sector, both in terms of the quality

sought for the fibres and in the prevention of the environmental and

social risks borne by this sector.

◆

train teams in the challenges and scientific rationale of LCA, as part

of a move towards eco-design;

◆

understand the key impacts of the products, prioritised according to

their sales or strategic impacts;

◆

anticipate future regulatory changes in terms of environmental rating

of consumer products.

◆

equivalent;

◆

water consumption;

◆

pollution of aquatic environments;

◆

air pollution;

◆

impact on soil;

◆

waste production.

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THE PLANET: RAW MATERIALS

These risks were the subject of an in-depth analysis, (mapping of current

uses and supply areas, risk analysis by country and stage of the supply

chain, from cultivation to fibre processing and dyeing, and analysis of

partners). A trajectory for 2024 was drawn up, with two complementary

components, as set out in § 2.4.2.3.4.

Metals and stones

The “zero waste” principle is intrinsic to the manufacture of precious

metal jewellery. Historically, it is the cost of these metals that has led

industry players to develop strategies for saving materials, maximising

their use and recovery of all offcuts, down to the smallest dust particles.

Today, this expertise in collection and reprocessing contributes

significantly to limiting the impact of the sector.

J3L, the Group’s metal parts manufacturer, contributes for example to

the recycling circuit of its lead-free brass waste through one of its two

suppliers for approximately 15 to 20% of its own consumption.

Perfumed compounds and cosmetic materials

Hermès Perfume and Beauty uses natural materials or materials of

natural origin whenever possible (olfactory quality, accessibility to the

material and sustainability of the source). To promote this approach, a

naturalness indicator based on the ISO16128standard was rolled out

in 2021. In perfumery, 60% of the raw materials used by Hermès are

qualified as “natural” according to this standard and 8% are qualified as

of “natural origin” under this standard. In cosmetics, 46% of cosmetics

raw materials are “natural” and 13% are of “natural origin”. Overall, out

of more than 300 raw materials, 64% of the portfolio is natural and/or

of natural origin.

2.4.1.2

LIFE CYCLE ANALYSIS

Ambition

Hermès teams have always worked on the design of aesthetic,

high-quality objects that have very long lives. The Life Cycle Analysis (LCA)

method supports this responsible design approach through standardised

and quantified calculations, and provides a complementary scientific

perspective. For the leather goods workshop, for example, the calculation

includes farming, tanning, extraction of metals used, product

manufacture, and all transportation until their arrival in stores and

packaging elements (orange boxes, herringbone covers, ribbons, and

shopping bags), etc. For livestock, the data are taken from the

Agribalyse

database and PEF (environmental score) assumptions. For

tanning, the actual emission factors of the Group’s tanneries were used.

The process began in 2020 with a small number of emblematic

high-volume products, with the help of an external firm.

In 2021, Hermès’ métiers launched more than 50 LCAs, on a very

diverse range of emblematic products, in order to obtain their first

environmental “identity card”.

This project has three complementary perspectives:

Scope and governance

The project was carried out in collaboration with the leather goods,

Women’s and Men’s Ready-to-Wear, Footwear, Fashion Accessories, IoT

(Internet of Things), Silk and Textiles métiers and Hermès Maison. Each

métier presented between one and 10 references of emblematic

products, such as the Birkin bag, the women’s cashmere coat, porcelain

tableware or a piece of furniture.

Six indicators were selected:

The various stages of these LCA were carried out by several dozen

employees over a period of six months, grouping the studies by major

categories of objects: textiles, multi-material products, complex products,

etc. Each of the three LCA campaigns lasted between six and eight

weeks, from data collection to results.

Results and lessons learned

The main conclusion of this LCA campaign is that the durability of Hermès

objects gives more favourable results than the average market

benchmarks.

They are often made up of a certain amount of raw materials of natural

origin (animal, vegetable or mineral), the production of which can have

environmental impacts that differ widely. These noble materials of the

highest possible quality require careful sourcing in order to maintain their

level of quality and excellence. They also contribute to the long lifespan of

products, which underpins the environmental impacts.

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A second finding concerns product transportation: although most Hermès

objects are still delivered to stores using air transportation, for reasons of

safety and time, it appears that, for the vast majority of products studied,

this freight only represents a small part of the carbon impact (less than

5%). Significant work is underway, including pilot projects, to transfer

transportation practices to responsible freight.

However, due to the very high number of hours of craftsmanship required

to produce Hermès objects, commuting between home and work by

employees can sometimes account for a significant proportion of a

product’s carbon footprint. This is one of the important lessons from this

campaign; each of the production sites (production units, tanneries,

workshops, etc.) will consequently work in conjunction with local

authorities and each region to propose solutions.

Given the craftsmanship manufacturing model, the footprint of these

sites remains limited. Nevertheless, work on LCA has strengthened

priorities in terms of energy efficiency, reducing water consumption and

increasing the use of renewable energies. Improvement levers have been

identified for each product studied, ranging from the integration of

materials of responsible origin, either certified or recycled, with a lower

environmental impact, to the substitution or reduction of materials,

including the transition to renewable energies in manufacturing.

Outlook

This LCA campaign gave rise to illustrated feedback passed to the

management of each of the métiers that took part, which put action plans

in place on the subject. Additional life cycle analyses for other key

products or other métiers have been initiated. The methodology was also

exported upstream of the product development phase in one of the

métiers, the Home universe. These practices and demands of the

collections are helping to anchor LCA in the development cycles.

The métiers are involved in national and European experiments on

environmental labelling, for which LCA is the scientific basis. They are

also working on the development of additional indicators, in particular

within the FHCM (Fédération de la Mode et de la Haute Couture), both as

part of the work of ADEME in France but also of the PEF (Product

environmental footprint) at European level, on social and economic

grounds in order to have the most holistic possible vision of the impacts

of objects.

2.4.1.3

CIRCULARITY

Thanks to its craftsmanship dimension, the Group has always followed

the principles of the circular economy, in particular with its expertise in

repairs and after-sales. Today, the aim is to continue along this path as

much as possible by leading recycling and upcycling projects, as well as

by working on packaging.

2.4.1.3.1 After-sales: repair to extend the life of objects

With more than 1,000 service lines, Hermès unusually offers its

customers a tailor-made after-sales service, with no time limit, across all

its métiers and throughout the world. The House makes a point of

ensuring the maintenance and restoration of its objects, made by

craftspeople, in order to prolong their life as much as possible. This

activity illustrates the durability of the objects and the House’s desire to

help extend their lifespan. A strategic focus of the House, it involves

more than 50people, who contributed to handling 161,000 requests

in 2021.

The main aims of this expert service are: management of maintenance

requests sent by stores, management of interventions in workshops and

supplier relations, support for the métiers on quality and reparability

issues, store support for customers.

In 2021, more 56,000 products were handled centrally. These

interventions are also opportunities, thanks to customised support for

in-store teams, to strengthen the customer experience with more unique

services (adding a sparkle to jewellery and jewellery accessories and

returning them in their original condition), services offered (resizing and

polishing of rings, repairing of Clic H bracelets, supply of links and cords,

etc.).

In order to offer a local service to customers and reduce the carbon

footprint associated with product returns, the after-sales department also

develops and coordinates local repairs around the world. It carries out

the selection, testing, auditing and approval of a number of workshops,

notably in the watchmaking/jewellery sector in various countries such as

Japan, Russia, China and Hong Kong, as well as the monitoring and

support of subsidiaries.

Thus, in 2021, more than 105,000 repairs were carried out locally, of

which 24% on leather goods, by 33 craftspeople expatriated to

subsidiaries. Before departing, these craftspeople undergo a dedicated

seven-month training course in order to enhance their savoir-faire and

expertise specific to the maintenance and restoration of objects.

2.4.1.3.2 Innovation for a circular economy

The circular approach, inherent in the House, starts with the design of

the object, by minimising its impact on the environment through

optimised use of resources: reuse of spare materials, integrating

recycled materials and refillable parts, etc.

Without waiting for the publication of the French AGEC law (Anti-Waste

and the Circular Economy), the métiers have accelerated their initiatives

through numerous working groups, which have designed solutions that

create a second life for objects and recycle objects, and which are now in

widespread use.

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The actions are coordinated by a Circularity Committee created in

2020, which bring together all of the House’s experts around

cross-functional circular projects. In 2021, this Committee will continue

its mission by facilitating the provision of unused materials for each

métier, for the benefit of the Group’s other métiers.

Pilot projects have been launched for all product categories (8,000 units)

and métiers subject to the AGEC 2022 deadline. At Hermès Femme, for

example, in 2021 more than 50,000 pieces incorporated a circular

approach.

An exhibition entitled Creation & Circularity succeeded in raising the

awareness of 1,100employees during European Sustainable

Development Week in October 2021.

OIKOS LAB: an eco-design and circular initiative

In order to preserve natural resources and reduce carbon emissions

related to construction, renovation or refurbishing activities, the Group

real estate department has initiated an approach for reusing materials

not used by the various métiers (leather, silk, porcelain, textiles, decor,

etc.) in the design of Hermès’ living spaces (leather goods workshops,

stores and offices). This circularity approach has been systematised with

our long-standing partner in interior design for all store projects.

Against this background, a laboratory, the OÏKOS Lab, was created,

aiming to stimulate the design and singularity of living spaces while

reducing the environmental footprint.

The materials are thus recovered either for reuse within interior fittings

(screens, wall cladding and furniture) or in the creation of objects (desk

mats, POS), or through transformation to create new construction

materials (tiles, insulation, cork, medium, etc.). The Oïkos Lab

participates actively in the House’s circular economy, having recovered

10% of dormant and downgraded leather inventories and through the

recycling of all porcelain production waste from one métier in 2021.

2.4.1.3.3 Petit h and internal reuse of materials

Petit h is above all, a unique creative approach: inventing objects, using

materials that Hermès has not used in the production of the House’s

collections, intertwining the excellence of the House’s savoir-faire and the

creativity of the artists and designers. The métier starts from available

materials rather than from a preconceived idea. These reverse creations

make it possible to develop a new typology of objects that are quirky,

funny and useful. All of the Group’s métiers are involved, and with

creative freedom. Ends of collections, accessories, obsolete items (such

as a whole collection of pommels from the 1960’s), leather scraps,

fabrics, silk, etc., all these materials which, put to a new use, ennobled

and sometimes relieved of a tiny initial defect, are reborn thanks to

unique savoir-faire and talented artists. It is in this respect for materials

and savoir-faire, this spirit of common sense, that petit h naturally

participates in the preservation of exceptional materials. Some creations,

around 200 pieces per year, are manufactured as unique pieces, at the

whim of existing materials. Several hundred other items are also

produced in limited and controlled production runs. This creative and

unique approach is based on original and inventive distribution beyond

the traditional paths, with pop-up sales abroad that are real

“happenings” once or twice a year and a permanent spot in Paris, at the

Sèvres store, which was renovated and extended this year.

Petit h is also a laboratory that encourages the métiers to identify original

upcycling solutions, which are then marketed in larger production runs.

2.4.1.3.4 Management of unsold stock

The Hermès business model, based on the stores’ freedom to purchase

and the desirability of the House’s products, means unsold stock

volumes are naturally very low. Orders are made directly and freely by

each manager, who is responsible for choosing the right assortment for

his or her local customers. In addition, to optimise sales at regional level,

the subsidiaries arrange inter-store transfers. Exceptional sales to the

public are organised by the distribution subsidiaries to allow the sale of

products that have not been sold in stores. Regular sales to staff are an

additional channel used to avoid waste. In addition, for several years

now, donations of de-branded products have been made to different

partner associations.

Hermès has set itself the objective by 2022 of not destroying new

products intended for sale, particularly for clothing (under the AGEC

law) in France. Existing partnerships with specialised associations (some

of which date from 2016) have been strengthened, in order to reconcile

their actual needs with the reality on the ground and the House’s

constraints. In addition, the Circularity Committee has set up

partnerships with educational establishments, specialised players and

industries, in a collaborative approach and in a context where the

reprocessing channels are themselves being created and rolled out.

2.4.1.3.5 Packaging

Packaging is used at different levels throughout the life cycle of a

product: during its manufacturing phase (packaging of materials,

inter-site packaging) and during its sale in stores.

The emblematic orange boxes and bags, made respectively of 100% and

40% recycled materials, are fully recyclable because they are made of

paper or cardboard, printed with natural inks. The boxes often have a

long lifespan, as customers tend to keep them beyond the time of

purchase.

Single-use plastic packaging

In stores, 100% of orange bags are FSC-certified. The comprehensive

inventory of plastics throughout the production chain continued and will

be completed in 2022.

Hermès continued its work aimed at reducing its packaging plastics, with

notably the objective of stopping the use of single-use plastics by

2025.

Single-use plastic packaging used by Hermès is either the result of

external purchases (packaging for articles or materials received), or used

in internal processes such as Minigrip (polybag-type packaging), to

transport articles between the various sites and to the stores.

◆

commit to a genuine process of in-depth knowledge and management

of all the House’s raw materials supply chains;

◆

meet risk management commitments, particularly with regard to

human rights and fundamental freedoms, health and safety of people

and the environment, but also capture opportunities to create value

for the House, local authorities and the environment;

◆

develop more virtuous supply chains in which CSR issues are a

priority, guaranteeing that 100% of raw materials used in the

manufacture of products come from sustainable and responsible

channels.

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Working groups are in place in the House’s various métiers, including

logistics and retail activities. Representatives of the House contribute to

the Fashion Pact’s work on the subject, in order to accelerate the

development of alternative solutions.

Hermès Commercial, which manages central logistics, undertook a major

project to eliminate the plastic heat-shrink wrapping of orange boxes

and, at the same time, improve the working conditions of the teams. The

project has already been successful on small formats. Thanks to a new

mechanisation system, this film has been replaced by a paper strip

personalised on the inside with a message highlighting its recyclability.

This represents a saving of more than two tonnes of plastic per year. The

objective for 2022 is to continue this implementation for larger formats,

in the warehouse and at logistics partners.

In 2021, the HTH division launched two studies to optimise the

environmental impact of packaging. The first concerns the shuttles used

to transport finished products between the HTH depot and the Bobigny

central depot. The study identified products with a lower impact,

particularly in terms of materials and the carbon footprint. The other

study, which aims to replace part of the plastic packaging of finished

products is being finalised and should lead to the use of recycled or

bio-sourced materials for all or part of the packaging in January2023.

Pending an alternative material that meets all the environmental

challenges, many new virgin plastic articles are gradually being replaced.

For example, the structure of jewellery boxes is now made of recycled

plastic or PEFC wood.

Cosmetics packaging

For more than 10years, Hermès Perfume and Beauty has launched

refillable perfumes: Voyage d’Hermès, Jour d’Hermès, Galop d’Hermès

and this year, H24.

For the launch of the Beauty line, the métier used the same approach:

offering products whose purpose is to last over time. Thus, by changing

only the part containing the formula, the refillable lipstick reduces the

environmental impact by 47% compared to the purchase of two lipsticks.

Similarly, the Blush powder compacts are designed to be kept and

contain a removable cup. The purchase of a refill limits the environmental

impact by 39% compared to the purchase of two compacts.

Hermès Perfume and Beauty has worked particularly hard on reducing

plastic wedges. A first step was the replacement of the plastic sleeves of

promotional campaigns by cardboard sleeves, with cut-outs. As a result,

the use of 22 tonnes of PET was avoided. Some 80% of the virgin plastic

spacers were replaced by recycled plastic, allowing the reincorporation of

39 tonnes of recycled materials. Regenerated plastic (PMMA) is also

used for POS instead of new PMMA. Hermès Perfume and Beauty is part

of a global and collaborative approach together with the profession by

participating in the Spice initiative (Sustainable Packaging Initiative for

Cosmetics), whose objective is to align the perfume-cosmetics sector with

the definitions and principles of eco-design, including in terms of

environmental claims.

2.4.2

SUPPLY CHAINS

The sustainability of Hermès’ activities depends on the availability of the

high-quality raw materials used. Hermès is committed to sustainably

developing supply chains, by going beyond compliance with

environmental, ethical and social regulations, and contributing to the

future availability of these resources.

POLICY

The Group’s strategy is to better understand its supply chains,

strengthen them with high expectations to ensure their quality, ethics,

environmental and societal sensitivity, and develop them to anticipate

future growth.

This approach is based firstly on compliance with the regulations

concerning the various materials. This notably means legislative

provisions: ensuring compliance with the Washington Convention (CITES),

an agreement between States for the worldwide protection of species of

flora and fauna threatened with extinction. This can have an impact on

the materials used in the leather goods workshops, certain tanneries, or

certain ingredients in perfumes. We must also comply with health

regulations (hides from cattle and sheep that were raised for meat) and

regulations on animal welfare.

The policies used to implement this strategy are, on the one hand, the

establishment of supply chain briefs to control the entire value chain

and co-construct sustainable development action plans and, on the other

hand, an animal welfare policy formalised in 2021 and available on the

Group’s website.

2.4.2.1

MANAGEMENT OF SUPPLY CHAINS

Hermès has long initiated a management approach for its raw materials

sectors. Since 2019, the direct purchasing department has accelerated

the process with the following ambitions:

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Thus, with the support of an independent expert firm, since the end of

2019, Hermès has set up a systematic approach to analysing its supply

chains, to map each supply chain, take stock of traceability, assess

inherent and specific risks, avail of opportunities and define insurance

and certification procedures, and accordingly implement ambitious action

plans managed by the métiers. Over the past two years, 74 raw material

supply chains have been analysed in detail, starting with the main ones

used by Hermès (calfskin, cowhide, cotton, cashmere, etc.) not forgetting

those used in smaller quantities (straw, wicker, mother-of-pearl, etc.) for

the sake of completeness.

In addition, in 2021, supply chain governance was put in place with, in

particular, the creation of a Supply Chain Committee, which, twice a

year, brings together the direct purchasing department, industrial affairs

department and sustainable development department, together with the

Executive Management of all métiers. This body makes it possible to

obtain an overview of the management of the supply chains and the

progress of the action plans and, if necessary, arbitrate on certain points.

To support this Supply Chain Committee, purchasing networks and supply

chains specific to certain sectors have been set up, managed by the

direct purchasing department, to share with the buyers of the métiers

concerned the challenges common to these sectors, in particular in terms

of CSR and traceability.

HERMÈS SUPPLY CHAIN GOVERNANCE

Industrial affairs department, direct purchasing department, sustainable development department,

Métier departments Overall vision: progress of action plans, arbitrage

WORKING GROUPS -

As needed

Direct purchasing department and métiers departments heavily involved

in a supply chain

Deepening of a specific supply chain, implementation of action plans.

Cott

on working group, pearl/mother-of-pearl working group, etc.

STEERING AND MANAGEMENT OF SUPPLY CHAINS

- Monthly

Each métier – Implementation and monitoring of action plans

SUPPLY CHAIN COMMITTEE –

twice a year

PURCHASING NETWORKS AND SUPPLY CHAINS -

Quarterly

Direct purchasing department and mét

ier purchasers

Collaborative sharing of common purchasing and supply chain issues: supplier news,

purchasing volume

s, quality, costs, timeframes, capacity, developments, savoir-faire,

innovation, CSR, safety, traceability, monitoring, etc.

Metal parts network, Leather network, Textile network, Cashmere Committee, etc.

◆

map the sector, listing each link in the supply chain and the

stakeholders;

◆

identify the risks related to this sector, by assessing the risks with

respect to human rights and fundamental freedoms, the health and

safety of people, and the environment (carbon, water, deforestation,

biodiversity), as well as the risk of corruption;

◆

capture value creation opportunities for the House, local authorities

and/or the environment;

◆

define action plans to sustainably improve the sector and make it

more ethical and responsible.

GENERAL PURCHASING NETWORK -

Quarterly

Direct purchasing department and mét

ier purchasers

Sharing of Group purchasing policy and procedures,

métier purchasing st

rategies, purchasing risk

mapping by métier, etc.

2.4.2.1.1 Supply chain brief and tools

Since 2019, buyers have had a “supply chain toolbox” to use in

structuring their supply chain analyses, provide a methodology and

ensure a cross-functional Group approach. It makes it possible to:

Of the more than 80 supply chains now identified, 74 had been analysed

in detail by the end of 2021. The objective is to complete all the detailed

analyses in 2022.

◆

transparency: knowledge of its supply chains through its network of

manufacturers and partners, is at the heart of Hermès’ concerns. It

aims to guarantee the highest level of quality, the best traceability

and the careful use of raw materials. Hermès wants to have a

transparent vision of each link in the supply chains of its métiers, in

collaboration with the players in each sector;

◆

high standards: Hermès rigorously selects materials, in compliance

with regulations and best practices, according to the following

fundamentals:

•

promote exceptional sectors, built locally as close as possible to

the raw materials: breeders, farms, cooperatives, etc. Hermès

listens to the players involved in the field, to develop partnerships,

improve operating conditions and generate long-term improvement

projects,

•

respect human rights and fundamental freedoms: in addition to

compliance with benchmark conventions, the House’s vigilance

plan includes respect for human rights, fundamental freedoms and

employment conditions for both its suppliers and their own

suppliers and subcontractors,

•

ensure animal welfare: anchored in a multi-stakeholder

collaboration and continuous improvement approach, Hermès’

policy ensures compliance with the fundamental principles of

animal welfare (five fundamental freedoms of the World

Organisation for Animal Health – OIE). Hermès favours observation

of animals to demonstrate results and improve animal welfare in

pragmatic ways and based on science,

•

respect and protect biodiversity: materials from species

threatened with extinction or whose trade is illegal are strictly

prohibited. Risks related to natural materials of animal origin are

already controlled through internal audits and/or audits by

independent third parties and are the subject of targeted action

plans,

•

protect the environment: managing the environmental impact of its

entire value chain is a core preoccupation for Hermès. Respecting

natural resources, promoting regenerative agriculture and forestry,

controlling energy resources, favouring the cleanest technologies

in its production processes and limiting waste are all pillars of

Hermès’ environmental policy,

•

in addition to these fundamentals, Hermès is committed to taking

advantage of the best available standards and working to improve

them, while always integrating respect for people, animals and the

environment;

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These analyses of supply chains gave rise to a supply chain brief

co-constructed by the métiers, the sustainable development department

and the direct purchasing department, with the support of a firm of

independent experts. The first version, including around 10 supply

chains, was published at the end of 2020. In December2021, version 5

was released; it now includes 50 supply chains.

The supply chain brief is intended for all suppliers involved in the supply

of raw materials used in the manufacture of the House’s products. It

allows Hermès to share with them its ethics and sustainable

requirements and those relating to the protection of people, animals and

the environment.

It provides a reminder of the principles of Hermès’ responsible

purchasing policy:

◆

goodwill: through their informative purpose, these guidelines are part

of the Hermès métiers’ desire to provide long-term support to their

partners and co-construct responsible sectors. This also means

promoting the virtuous initiatives already undertaken.

This supply chain brief then presents, for each sector, the short-term

objectives and the trajectory for 2024, the points requiring particular

attention and those that are prohibitive. In particular, it includes

certification objectives for most of the sectors according to the best

existing standards.

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◆

adoption of the “One Welfare” concept. This holistic approach

recognises the links between animal welfare, human well-being and

the environment, and promotes interdisciplinary collaboration;

◆

a multi-stakeholder collaboration to ensure that the results obtained

on animal welfare correspond to the expectations and analyses of a

wide range of stakeholders, including many international and national

associations (NGOs) involved in the Group’s issues;

◆

a formal governance framework: in 2019 the House created an

Animal Welfare Committee. An independent welfare expert is a

member of this Committee which meets at least every six months to

update the policy and standards, measure progresses and ensure

that resources are in place;

◆

implementation of strict standards detailing best practices, specific to

each supply chain, representing local community expectations and

covering a broad range of areas such as farming and slaughtering

practices, transportation, traceability, employee working conditions,

the environmental performance of farms and their safety, the

promotion of biodiversity, conservation of species and assistance to

communities and populations;

◆

a monitoring system adapted to each sector allowing progression of

best practices by conducting regular internal, or external, controls and

audits in the supply chains.

MAIN SUPPLY CHAIN CERTIFICATION COMMITMENTS

2.4.2.1.2 Analysis of the main supply chains

The objectives and recommendations concerning Hermès’ supply chains

are presented in the supply chain briefs. For example, the work carried

out in 2020 and 2021 covered the following sectors in particular:

cashmere, cotton, linen, viscose, sheep and merino, feathers and goose

and duck down. The results for cashmere are presented as an example in

the Experts' Handbook in this section.

Focus on water in supply chains

Water is an issue at supply chain level and has been the subject of a

specific analysis with the main suppliers, through the use of the Water

Risk Filter in partnership with WWF.

The main supply chains, for exotic hides (crocodile and alligator), calf

hide, cashmere and wood, are also reviewed by the WWF, including

environmental aspects.

2.4.2.2

ANIMAL WELFARE

2.4.2.2.1 Hermès animal welfare policy

The Group has set up a very strict policy in terms of animal welfare for

all the animal supply chains concerned, both within its direct sphere of

responsibility and for its external partners. Formalised in 2021, this

policy, and all the concrete objectives it sets, have been shared with

Hermès’ suppliers and partners. It is published on the Hermès website.

This policy is part of a process of continuous improvement of practices.

It is based on the following principles:

◆

a commitment to fundamental principles of animal welfare (“the five

freedoms” defined by the FAWC ), based on the most recent

information supported by the best scientists and universities in the

world. In order to ensure proper animal welfare, Hermès’ approach

FAWC: Farm Animal Welfare Council1.

focuses on the observation of animals and their behaviour. This

therefore means an obligation of results ("outcome based") to be

compared with more traditional approaches, which are limited to a

material analysis of resources, i.e. only an obligation of means;

An animal welfare roadmap has been drawn up for each species

concerned by the sale of products, in all of the Group’s métiers.

Types of certification and/or specific procedures

Supply chain covered

by the Animal Welfare Policy

ANIMAL SUPPLY CHAINS

Wool and fur RWS/RAS/RMS certifications Yes

Feather/Down RDS certification/PFC certification Yes

Leather LWG certification Yes

Precious leather IFCA certification for crocodile farms

SAOBCS certification for ostrich farms

LPPS certification for lizard farms

Yes

PLANT SUPPLY CHAINS

Cotton GOTS certification NA

Linen Master of Linen certification NA

Cellulosic fibres Sources of FSC fibres NA

Wood FSC or PEFC certification NA

MINERAL SECTORS

Stones RJC and/or IRMA certification NA

Gold/Silver RJC certification and use of recycled materials NA

https://finance.hermes.com/en/animal-welfare

◆

the creation of a standard with all stakeholders (breeders,

processors, scientists, government regulators, non-governmental

organisations specialising in animal protection, and customers);

◆

financing and participation in the training of farmers and processors;

◆

a certification process conducted by an independent body since early

2020.

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2.4.2.2.2 Implementation

Ostrich

In partnership with the South African Ostrich Business Chamber (SAOBC),

Hermès contributed to positive changes in the Ostrich sector (animals

mainly raised for their meat and feathers, and used in the production of

leather goods), through:

Since the end of 2021, all Hermès ostrich hides have been sourced from

certified sites.

Crocodilians

Hermès also continued to support the International Crocodilian Farmers

Association (ICFA) initiative to draw up and introduce an international

certification framework for crocodilian welfare and the use of sustainable

farming practices at farms (see below).

At the end of 2021, 90% of Hermès’ supply of crocodile hides came from

certified sites. By adding third-party audits according to an internal

standard, 98.6% of the crocodile hides purchased by Hermès come

from audited and/or certified farms (ICFA).

2.4.2.3

RESPONSIBLE SUPPLY CHAINS

2.4.2.3.1 Leather

Leather reflects the animal’s life. It bears traces of injuries, health

issues, like parasites. Beautiful hides come from animals that have been

well-treated and cared for. Hence, the Hermès Group’s demand for high

quality hides helps to improve the industry by encouraging livestock

farming methods that respect the animals.

All leathers used for manufacturing are directly purchased from

tanneries, with no intermediaries. The vast majority of the needs are

covered by the French, Italian, German and Spanish tanneries, all of

which must adhere to European standards, which are some of the

highest in the world for the industry.

Hermès uses more than 35 different types of leather to make its goods,

most of which come from calves raised in France (including our flagship

“Box” leather, made using an English tanning technique), but also natural

cowhide in our saddlery leather products line and “exotic” leathers such

as crocodile, lizard and ostrich.

The leathers used are 95% (by weight) food by-products and 92%

sourced in Europe, in compliance with strict and demanding regulations.

Environment, Health and Safety1.

80% of subcontractors carrying out operations on leather have been

audited or have been subject to EHS

NBP inspections over the last five

years.

Since October2020, Hermès has been a member of the LWG’s (Leather

Working Group) Animal Welfare Group. LWG is a multi-stakeholder group

that promotes sustainable environmental practices in the leather

industry. It has developed rigorous audit standards and protocols

comparable to industry best practices. These protocols have been

reviewed by several NGOs, including Greenpeace, NWF, WWF (United

States), sustainability organisations and academic institutions. LWG

verifies compliance through independent audits conducted by approved

third parties. Its approach is holistic, both on environmental aspects, the

search for best practices and by defining guidelines for continuous

improvement.

Since February2020, all Hermès Leather Goods & Saddlery tannery

suppliers have been encouraged to undergo assessment using the LWG

audit protocol, with the objective of reaching 100% by 2024. At the end

of 2021, 55% of the sites were already certified.

The Tanneries division has also defined an LWG audit programme for its

sites. The Conceria di Cuneo tannery (Italy) was audited in 2020.

Calfskin

The House is part of a working group, Interbev (the French

inter-professional organisation for meat and livestock), that brings

together several luxury French brands as well as all players in the sector.

The aim is to define and implement a responsible calfskin sector, by

installing full traceability of hides, defining strict standards in terms of

animal welfare and ensuring the application of these standards through

audits and certifications carried out by independent third parties.

In addition, Hermès is involved in the association FECNA (Filière

d’Excellence des Cuirs de Nouvelle-Aquitaine), which brings together

several luxury French brands, the region, abattoirs, tanners and

independent breeders of “suckling calves”. The approach adopted is

based on the fact that the quality of the livestock directly impacts the

improvement in the quality of the hides.

In practical terms, raising awareness among farmers of best practices

and training for farmers is currently being rolled out. The next step will be

to implement health treatments (against ringworm and lice). Lastly, the

project also includes an approach that will ensure “end-to-end”

traceability.

In the firm belief that the traceability of the hides is vital to improving

breeding practices and the quality of the hides themselves, the House

continued with the laser marking of the raw hides received by the

Tanneries d’Annonay and Tanneries du Puy. Developed in partnership

with the Centre technique du cuir (CTC – Leather Technical Centre), it

ensures the traceability of hides from the farm to the finished leather. In

2021, 30% of the calfskins tanned in the division’s two tanneries were

marked. Rolling this equipment out to our suppliers’ raw hide sorting lines

will be a key challenge over the coming years, as will be the performance

of the automatic hide reading devices in the tanneries.

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The target for 2022 has been set at 50% within the division. In addition,

the project has now been extended to external tanneries and the aim is

to achieve 30% unit traceability for all supplies by 2020.

Exotic hides

Virtually all of the exotic hides the House uses come from farms in the

United States, Africa and Australia. All Hermès partner farms must comply

scrupulously with the rules drawn up under the aegis of the UN for the

Washington Convention, which defines protection for endangered

species. Hermès requires that its partners meet the highest standards

for the ethical treatment of alligators and crocodile, in accordance with

recommendations by expert veterinarians and local authorities such as

the Fish and Wildlife Service in the United States, a federal nature

protection agency, or the departments of environment and natural

resources in Australia (Northern Territory and Queensland) and

Zimbabwe. In addition to strict compliance with the Washington

Convention, in 2016 Hermès initiated a study with WWF France to assess

respect for animal welfare and measure the environmental footprint of

alligator hides in the United States. The progress plan drawn up at the

end of this study continued to be actioned in 2021.

All the crocodile farming sites the House deals with, including of

course those operated by the House, have signed a best animal

husbandry practices charter. The charter was introduced in 2009 (an

innovation for the profession at the time) and was updated in 2016.

These best practices encompass in particular CITES regulations, animal

welfare, the farms’ environmental management, employee labour

conditions, safety at work and safety of infrastructures. All have

undergone one or more internal audits in the last three years.

Since 2018, the Tanneries division has outsourced these audits of the

breeding farms and the meat processing and hide inspection sites to

secure its relations through independent reviews. These audits, carried

out by local Bureau Veritas auditors trained in the specificities of

crocodile farming, are part of a broader process of “Bureau Veritas Group

Recognition” of sites. The audit protocol associated with this best farming

practices charter was also reviewed by this organisation, using its

expertise in the assessment of farming conditions in other animal

sectors. In 2021, 97.4% (+1.5% compared to 2020) of raw crocodile

hides purchased by the Tanneries division came from farms that had

undergone an initial external audit, or a follow-up audit. The two farms

that could not be audited in 2021, due to travel constraints imposed by

the Covid-19 pandemic, will be audited in 2022. The progress plans

drawn up with the farms are monitored annually with the local specialist

auditors and the division’s purchasing teams.

In addition to these efforts, which have been ongoing for nearly 15years,

the Hermès Group contributes to the improvement of professional

standards. Since 2016, Hermès has participated in the ICFA

(International Crocodilian Farmers Association) alongside the main

players in the industry (farmers, tanners, manufacturers and brands).

This association aims to develop and improve sustainable crocodile

breeding practices in farms by combining the experience of its members

and a scientific community specialised in crocodiles, which has gathered

together all practices and existing scientific studies. In 2018, the ICFA

accordingly defined a standard aligned with international best practices

in the field. A panel of scientists, veterinarians, farmers, brands and

specialists in the area of regulations or in ISO compliance participated in

the approval of this standard. This was then reviewed and amended by

the CSG (Crocodile Specialist Group), a NGO member of the IUCN’s

Species Survival Commission and working under the aegis of the UN. The

Group is continuing to work with the ICFA to support scientific research

and the ongoing improvement of crocodile farming systems.

The practices thus defined are backed by scientific studies. The founding

principle is to evaluate animal welfare throughout the breeding process in

a manner that is both objective and measurable. A certification process

for the livestock of its founding members was introduced in 2019, with

the help of the independent certifying body BSI. All farms that join the

ICFA adopt its standard and are audited. As such, all farms in the division

have already been audited and certified by ICFA. In addition to animal

welfare, as defined by the FAWC (Farm Animal Welfare Council) and the

Five Freedoms for animals, these audits cover environmental and

societal aspects of livestock farming.

In addition, special attention is paid to biosecurity rules on farms, in

order to protect livestock from the introduction of infectious agents. This

includes compliance with strict requirements when transferring animals

on farms or between farms, the implementation of disinfection

instructions and pest control or animal vaccination programmes. These

different protocols were established in collaboration with veterinarians

specialising in the species concerned.

In collaboration with experts in animal welfare (also a member of the

World Organisation for Animal Health) and in standardisation, a standard

was created for the “lizard” sector (varanus salvator in Malaysia). The

purpose of this standard is to ensure compliance with current regulations

and best practices throughout the supply chain. It covers the following

topics: management of animal welfare (from capture to slaughter,

including transport), compliance with permits and authorisations,

environmental management, employee social conditions, and safe

working conditions and infrastructure as well as CITES regulations and

unit traceability of hides.

Due to travel constraints imposed by the Covid-19 epidemic, the year

2021 was used to select an independent audit body to certify this supply

chain. This work, carried out jointly by the Leather Goods and Tanneries

divisions and Hermès’ partner, will continue in 2022 with the roll-out of

certification in the supply chain.

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Focus on porosus

The Australian farms in the Farms division are a strategic link in the crocodylus porosus hide supply chain. After several years of significant

investment in animal breeding facilities and the improvement of savoir-faire, the quality of supplies has continued to improve.

These farms are all ICFA certified by the independent control body BSI and are also audited annually by Bureau Veritas, in the same way as the

meat processing sites, as part of a “Bureau Veritas Group Recognition” process. These different audits cover various topics such as best

practices in farming, transportation and slaughter, compliance with Cites requirements, personal safety, compliance with social criteria,

environmental management and site safety.

In addition, research projects are conducted in the division in partnership with scientists to study the behaviour of animals on farms.

2.4.2.3.2 Silk

Silk is an essential resource for Hermès, and its production reflects the

House’s values of sustainability and ethics. This material is renewable

and biodegradable. Its production uses less water, chemicals and energy

than the production of most other fibres, including cotton and synthetics.

For decades, Hermès has sourced silk through a local partnership with

smallholders in the state of Paraná, in the Brazilian Atlantic Forest region,

a hotspot for global biodiversity. This partner aims to work in harmony

with nature through a production system based on low-intensity,

regenerative and circular agriculture. The ecosystem thus maintained

generates income for small local farms and more than 2,300 families.

There is a dedicated annual budget to develop knowledge, qualitative

techniques, and the sustainability of the activities and supply chains of

these farms. According to a recent study by Intersoie (Union of Silk

Producers), the carbon footprint of Brazilian silk is 30% lower than that of

Chinese silk.

In 2020, Hermès began working with the Institute for Sustainability

Leadership (CISL) at Cambridge University, a leader in the field of

biodiversity, to undertake a study to confirm the environmental value of

this local partner’s approach and to identify actions that could further

enhance the benefits of this system. This study states:

The growth of the worms involves a diet based exclusively on mulberry

leaves. Mulberry plantations sequester carbon, prevent erosion and

contribute to soil regeneration. Mulberry cultivation uses far fewer

agrochemicals than those in the surrounding agricultural land where they

grow soybeans and sugar cane. Hermès’ partner supports research into

the rational use of pesticides and is positively engaged in a local dialogue

to reduce their use in other more intensely managed neighbouring crops,

as they are harmful to silkworms. The reduction of agrochemicals in the

environment is potentially beneficial to the silk industry, but also to local

biodiversity, in particular pollinators and soil fauna.

Much of the waste from mulberry growing and silkworm farming is

recycled locally. Each part of the cocoon as well as the other co-products

of the industry have multiple uses, from fish food to fabric. Such

circularity reduces the demand for raw materials, which leaves more

uncultivated spaces conducive to biodiversity.

The Hermès silk supply contributes to the development of materials with

a low environmental impact. More broadly, it is part of its global strategy

for biodiversity, formalised with Act4Nature International.

2.4.2.3.3 Cashmere

Cashmere comes from the Capra Hircus Laniger goat, known as the

Cashmere goat, which lives in High Asia. Particularly well adapted to

harsh climates, at the beginning of winter, the Cashmere goat develops

an extremely fine and dense down beneath its permanent coat of hair,

which allows it to effectively insulate itself from the cold. When

temperatures rise again, this down is shed naturally during the spring

moulting season. It is this extremely fine and soft down harvested by

breeders that is commonly called cashmere.

For weaving, Hermès selects the most beautiful fibres. At the same time

fine, long and extremely white, and boasting unrivalled softness, they

come from the very best farms. The House’s historic yarn manufacturer

has built strong, long-standing relationships of trust with raw material

suppliers, thereby ensuring supplies of an exceptional quality. Most of

Hermès’ supplies come from Inner Mongolia, in the People’s Republic of

China, where farming practices are strictly controlled by the authorities in

order to preserve the resources.

The Holding Textile Hermès division has direct control over all the

processing operations such as weaving, printing, finishing and

manufacturing. This integrated process ensures the use of exactly the

right amount of raw materials, the streamlining of containers and

packaging, facilitating the transport of products, and optimisation of

transport.

A programme aiming for the sustainable development of the sector has

been ongoing for several years with the support of NGOs present in the

breeding areas in question. In 2019, an audit of practices was

conducted notably with the support of WWF France. The conclusions,

positive on the local practices implemented, led to an action plan and

improvements, for example on the traceability of livestock farming

practices, and optimisation of water use on hide processing sites. The

monitoring of these actions continued in 2021.

“We believe that Hermès silk production in Brazil can be celebrated for

its positive environmental benefits.”

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The objective is ultimately also to monitor and support breeders’

agro-pastoral practices aimed at preserving the resource and the

biotope.

Hermès, together with the CCMI (Cashmere and Camel Hair

Manufacturers Institute), supports the development and implementation

of a code of practice for the accreditation of animal welfare and the

environmental sustainability of cashmere production in China led by the

ICCAW (International Cooperation Committee of Animal Welfare).

From 2021 onwards, 25% of Holding Textile Hermès’ supplies met this

new standard. This proportion will continue to increase in the coming

years, until it gradually reaches 100% as breeders are trained and

adhere to this new standard.

2.4.2.3.4 Other materials

Cotton

Hermès uses a very small volume of cotton in its collections. As for all

materials, the cotton supply policy is guided by the search for the best

quality and the guarantee of traceability. The cotton supply chain, based

on long-standing partnerships, favours low-risk sources: more than 60%

of the cotton fibres used in Hermès products come from Europe or the

United States.

Hermès has implemented a control approach to ensure respect for

human rights throughout the supply chain, from production to dyeing and

spinning.

In 2020, the commitment within the Fashion Pact resulted in work with

the main suppliers in order to switch all cotton supplies to organic cotton

or GOTS (Global Organic Textile Standard) for packaging. These

improvements will take place gradually from 2021 to 2024 on the

herringbone covers and wrapping ribbons, which will significantly reduce

the corresponding water consumption. This certification also includes a

mandatory criterion for the ethical treatment of workers.

In 2021, the HTH Textile division also committed to a voluntary GOTS

certification process for its sites. Thus, the ATBC Bussières weaving site

and the HTH central entity obtained GOTS 6.0 certification for certain

product lines in the second quarter of 2021. The SIEGL printing and AEI

finishing sites also aim to gain this certification in early 2022. These

initiatives have already led to concrete progress: in 2021, 10% of the

cotton used by the HTH division was GOTS certified.

Wood

The woods used for Hermès objects are mostly certified (FSC certification

for oak, SVLK for mahogany). Some partners, in addition to sourcing

certified timber, have ensured their entire value chain is FSC-certified,

guaranteeing Hermès supplies that are 100% certified.

The House collects information on how best to manage this natural

resource. For the purposes of supply chain traceability, countries of

origin, species used, forest type (plantation or natural forest) and

supplier certificates are monitored and recorded. The risk assessment

checks for corruption in the country and the species appearing on the

UICN (International Union for Conservation of Nature) and CITES red lists.

To demonstrate its commitment, Hermès took part in the CDP Forest

disclosures in 2019, 2020 and 2021, obtaining an A- rating in 2021.

The objective is to ensure FSC certification of all timber supplies

(excluding fruit and Indonesian timber, subject to other certifications) by

2025.

Metals and stones

The precious materials used by the Watches division, Hermès Bijouterie

and the Leather Goods division are mainly gold, palladium and diamonds.

Hermès has implemented very strict procurement practices that make it

one of the leaders in the sector.

The Hermès Group has had Responsible Jewellery Council (RJC)

certification since 2013. The RJC is an international benchmark body

for the profession. The audit for the renewal of this certification (Code of

Practices – COP) took place in 2019 and was validated in 2020. Initially

covering only gold, platinum and diamonds, the new certification rules

now include silver and certain precious stones (rubies, emeralds and

sapphires). Hermès has become the first luxury house to be certified

across the whole of this scope and according to the strengthened

criteria of the new COP standard.

The management of supply chains takes OECD recommendations into

account. To this end, the House promises its partners that it will promote

responsibility principles. This does not mean simply taking action with

first tier suppliers but also going further along the chain, as far as mining,

for stones, and recycling or refining for metals. Significant transparency

and audit work is already bearing fruit, especially in gold and diamonds.

79% of the workshops with which Hermès works are certified members of

the RJC, while 16% have already been audited and are awaiting the

formalisation of their status. 100% of diamond dealers are certified.

Most of the jewellery is made from gold and silver, using pellets or primed

materials such as plates or wires. This gold and silver comes from the

European metal recycling sector, from the jewellery sector itself or from

other industries such as electronics. Hermès does not therefore use

gold from mines in its jewellery. The analysis of the origin of the metal

of the components (chains, clasps) and gold salts used for the

electroplating, initiated in 2020, confirmed that they came from similar

recycling channels.

Refiners in the gold supply chain are certified by the RJC to the “Chain of

Custody” or COC standard, which ensures monitoring of the sector and

distinguishes between the different categories of recycling. Industrial

waste and old gold are classified in one category, with investment gold

refined before 2012 in another. In efforts to extend and formalise this

chain of trust, more and more manufacturing workshops are also using

this certification.

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The House’s diamond sector abides by the Kimberley Process and its

corollary, the World Diamond Council (WDC) System of Warranties. The

Kimberley Process, which came into force in 2003 and has been adopted

by 81countries including France, has prevented the arrival on the legal

market of “conflict diamond”, the sale of which funded guerrillas in

unstable countries. The World Diamond Council’s system of warranties

incorporates broader issues, including working conditions and the fight

against corruption.

All diamonds used by the House are natural and selected in accordance

with the Hermès Group criteria. At the time of purchase in stores of an

object containing diamonds, a certificate attesting to this commitment is

given to the customer. Compliance with the aforementioned principles

concerns the diamond trade, from mining to the cutting of the 57 facets,

but also the trading of polished stones, as well as the setting of watches,

their quality control, delivery and sale in store.

The gems or “coloured stones” market is the most complex, with a huge

diversity of materials, origins and players. Since 2019, the RJC

certification, extended to rubies, emeralds and sapphires, can be

promoted in the coloured stones sector. Monitoring of these sectors

continues despite delays due to health restrictions limiting travel. This

constraint was partially offset by more stringent requirements and

greater formalisation in the collection of information on origins. Hermès

Bijouterie has created its own risk analysis grid to guarantee that social

and environmental responsibility is as important a purchasing criterion as

quality, even when this can sometimes lead to certain stones being

rejected for lack of information.

Hermès Horloger, which uses 100% recycled gold for its watch cases,

has also set itself the objective of improving its knowledge of high-risk

sectors by 2022, initially working on the supply of hard stones and

mother-of-pearl.

With regard to hard stones, a geographic mapping of the various

suppliers of ornamental stones used in the manufacture of the dials was

carried out. Today, all top-tier suppliers are European, and the division

continues to analyse the supply chains to ensure full transparency

throughout the supply chain.

At the request of Hermès Horloger and other watchmaking houses, the

historical supplier of natural mother-of-pearl has simplified its supply

chain and set up a new supply channel directly with the reseller fishing

ports. This approach ensures better control of the supply chain and

makes it possible to work with the supplier to respect ethical working

conditions.

Finally, the market for ornamental stones and marbles is also a complex

sector, with the presence of intermediary players and wide geographical

diversity linked to the various mineral materials desired. In 2021 Hermès

Maison and Puiforcat carried out an in-depth audit and study of the

supply chains, identifying and tracing the stones in the collections,

supplemented by points of attention. The analysis of the 13stones

present in the Hermès Maison collections makes it possible to guarantee

Hermès’ level of social and environmental commitment. In its new

developments, Hermès Maison favours the use of stones extracted,

machined and worked in Europe.

100%

recycled gold and

silver processed

in the workshops

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EXPERTS' HANDBOOK

This section takes a closer look at Hermès’ actions and results on the “Materials” pillar.

CONTRIBUTION TO THE UN'S SUSTAINABLE DEVELOPMENT GOALS (SDGS)

Raw materials constitute one of the main challenges of the sustainable development strategy, and measures taken by the Hermès Group contribute to

the UN’s sustainable development goals (SDGs).

No.8: Decent work and economic growth

◆

8.3 “Promote development-oriented policies that support

productive activities, decent job creation, entrepreneurship,

creativity and innovation, and encourage the formalization and

growth of micro-, small- and medium-sized enterprises, including

through access to financial services”

◆

8.4 “Improve progressively, through 2030, global resource

efficiency in consumption and production and endeavour to

decouple economic growth from environmental degradation, in

accordance with the 10-year framework of programmes on

sustainable consumption and production, with developed

countries taking the lead”

No.12: Responsible Consumption and Production

◆

12.2 “By 2030, achieve the sustainable management and

efficient use of natural resources”

◆

12.5 “By 2030, substantially reduce waste generation through

prevention, reduction, recycling and reuse”

◆

15.1 “By 2020, ensure the conservation, restoration and

sustainable use of terrestrial and inland freshwater ecosystems

and their services, in particular forests, wetlands, mountains

and drylands, in line with obligations under international

agreements”

◆

15.7 “Take urgent action to end poaching and trafficking of

protected species of flora and fauna and address both demand

and supply of illegal wildlife products”

◆

15.c “Enhance global support for efforts to combat poaching

and trafficking of protected species, including by increasing the

capacity of local communities to pursue sustainable livelihood

opportunities”

No.15: Life on Land

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SUPPLY CHAIN ANALYSIS

The supply chain brief, the result of the analysis of the supply chains, is available on the Hermès website.

An example of such an analysis is presented below for cashmere.

Industry Description of risk

Standards adopted

by Hermès 2021 action plan 2024 trajectory

Cashmere Living conditions of

farmers, animal

welfare,

overgrazing in

China, rural exodus

in Mongolia, impact

of climate change

on fibre quality,

water pollution

during fibre

processing.

SFA / ICCAW

standard (under

test).

Continue to identify all

stakeholders down to

farming level, with

information on the source

(country and region).

Engage supply chains in a sustainable development approach

by relying on local partnerships, in connection with government

projects, initiatives by sustainable development associations

or NGOs, and international sustainable investment fund

programmes. These sustainable development initiatives aim to

define:

◆

Identify breaches of human rights, fundamental freedoms and

health and safety conditions at work and ban suppliers in the

event of serious infringements of human rights and

fundamental freedoms.

Identify the risks related to animal welfare and ban suppliers

that do not comply with the OIE animal welfare principles and

Hermès’ animal welfare policy.

Ban suppliers that authorise genetic cloning or physiological

modification of the animal (use of endocrine disruptors).

Identify farming practices with adverse effects on the

environment, particularly related to poor soil management.

sustainable supply chain management accreditation,

auditable by an external third party;

a traceability system at every stage;

a best practice code and associated sustainability criteria

concerning: goat farming, pasture management, fibre

collection and processing.

https://assets-finance.hermes.com/s3fs-public/node/pdf_file/2021-12/1640609564/hermes_brieffilieres_decembre2021.pdf

Compagnie des arts de la table et de l’émail, in Nouvelle-Aquitaine

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THE PLANET: ENVIRONMENT

©Photographer: François Coquerel

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THE PLANET: ENVIRONMENT

2.5

THE PLANET: ENVIRONMENT

The Group’s sustainable development involves knowing, controlling and reducing its environmental impacts, as part of a responsible approach to

its operations. More broadly, Hermès contributes, through its commitments and actions, to the fight against climate change and the preservation

of biodiversity for a responsible and sustainable development.

Introduction

Respect for nature, the source of its exceptional raw materials and the

living environment surrounding its sites, is one of the Group’s strong and

unwavering values. In 2002, the Group drafted an environmental policy,

revised in 2020, aimed at limiting the impact of its activity across all

areas. Pragmatic but ambitious solutions to preserve the environment in

the long-term are systematically sought, trying to go further than

regulatory requirements wherever possible. The priority is to control the

impacts across the entire value chain, from upstream agricultural

production to distribution, and from purchases to internal operations.

The main commitments of the Planet pillar: Environment

Water and energy consumption in 2020 were obviously impacted by the

context of the pandemic, which means that the comparison of data

between 2020 and 2021 is not necessarily indicative of the progress

made. Rather, it is a question of considering an overall progress

trajectory over a longer period of time.

This mindset in favour of the environment requires the involvement of

everyone, from investment decisions to everyday eco-actions, together

with a robust environmental, health and safety (EHS) culture on all sites.

It is structured around policies, procedures, tools and major

commitments:

20252023 2030 2050

100% of employees

trained on biodiversity

•

100% renewable

electricity in our own

operations

•

Reduce water

consumption by 5%

per year in intensity

(between 2018

and 2023)

••

•

Carbon targets

Trajectory 1.5 °C/SBTi,

-50.4% on scopes 1 & 2

and -58.1% in intensity

on scope 3

100% renewable

energy

in our own

operations (unless

technically impossible)

Monitor the Group’s

biodiversity footprint

on its main value chains

and implement action

plans

◆

Update of 2030 carbon reduction targets and validation of trajectories by the SBTi. A- ranking by CDP Climat;

◆

Confirmation of decrease in carbon emissions in absolute value (all scopes): -15.3% since 2018;

◆

Setting a notional internal carbon price at €40;

◆

New investment in Livelihoods (Carbon Offset) and offset in 2021 for 100% of scopes 1 & 2 and 63% of transportation;

◆

Final report on “GBS” biodiversity footprint analysis, internal biodiversity e-learning;

◆

ZDHC (Chemicals) initiative for the Tanneries division;

◆

“Responsible and Sustainable Real Estate” standard.

Zero net CO

emissions,

reduction in gross

emissions vs. 2018

and offset of 100%

of residual emissions

•

In 2021, the Group made progress on the main environmental issues, with the aim of making a long-term difference through steady improvements

with a significant impact. Among these, the selected elements below are particularly illustrative of 2021 for this section:

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PLANET

ENVIRONMENT

OBJECTIVES INDICATORS 2021 RESULTS

CONTROL THE CONSUMPTION OF NATURAL RESOURCES INTERNALLY AND WITH SUPPLIERS: WATER, ENERGY

Reduce the intensity of industrial

water consumption by 5% per year

Change in industrial water consumption

-35.4%

in water consumption intensity over

10 years and -23% compared to 2020

Reduce the intensity of energy

consumption

Change in energy consumption by type and by

geographical area

-48.2%

industrial energy intensity over 10 years

and 18% decrease in stores' electricity consumption

since 2018

DEFOSSILISE OUR ENERGY CONSUMPTION

Implement renewable energy

programmes

Achieve 100% renewable electricity by 2025 and 100%

renewable energy by 2030

100%

renewable electricity in France and 86.9%

worldwide

46.7%

renewable energy worldwide

In-house renewable energy

production

Total self-generated renewable energy at production

sites

Self-generated renewable energy equivalent to the

consumption of

leather goods workshops

REDUCE GREENHOUSE GAS EMISSIONS IN ABSOLUTE VALUE (SCOPES 1 & 2) AND IN PROPORTION TO ACTIVITIES (SCOPE 3), IN LINE WITH

THE PARIS AGREEMENT

Reduce greenhouse gas

emissions in absolute value

(scopes 1 and 2)

% decrease in emissions in absolute value for scopes 1

and 2

-14.5%

reduction in scope 1 and 2 GHG

emissions since 2018 (absolute value)

Reduce intensity of greenhouse

gas emissions (scope 3)

% reduction in emissions intensity for scope 3

-44.8%

scope 3 carbon intensity since 2018

ENHANCE PRODUCTION PROCESSES BY CHOOSING THE CLEANEST, MOST ENERGY EFFICIENT TECHNOLOGIES AND THE MOST

ENVIRONMENTALLY-FRIENDLY MATERIALS AVAILABLE

Implement energy sub-metering solutions at sites and

stores

sites equipped with sub-metering and energy

management solutions

Use energy-saving equipment

REDUCE THE FOOTPRINT AND CONTROL WASTE AND EMISSIONS, REDUCING THEIR PRODUCTION AS MUCH AS POSSIBLE AND RECOVERING THEM

WHENEVER POSSIBLE

Use water treatment equipment to

control waste

Develop the recycling of

production, transportation and

sales waste

Number of tanneries having installed specific

purification equipment

% of waste that is recycled

100%

of the HCP division’s tanneries have their

own water treatment plants

44%

of industrial waste recycled

STUDY CLIMATE RISKS, ACT TO REDUCE THEIR IMPACTS, ANALYSE ADAPTATION SCENARIOS AND INTEGRATE THEM INTO THE STRATEGY

Ad hoc study on physical risks and adaptation to

climate change for Hermès (2020 and 2021).

Participation in the IRIS project launched at the end of

2021 (2060 risks)

Anticipate the risks related to

climate change

Studies of physical risks and climate transition and of

the evolution of systems

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THE PLANET: ENVIRONMENT

OBJECTIVES INDICATORS RÉSULTATS 2021

FORMALISE A CLIMATE CHANGE STRATEGY AND GOVERNANCE, DEFINE OBJECTIVES AND MONITOR INDICATORS

Validation of our carbon trajectory by the SBTi:

reduction of 50.4% in scopes 1 and 2 in 2021

(absolute value) and 58.1% in scope 3 (intensity)

between 2018 and 2030

Science-based Target initiative validation of scopes 1, 2

and 3 emission reduction targets

Align with global initiatives to

reduce greenhouse gases

Compliance with the carbon trajectory validated by the

SBTi

-15.3%

absolute reduction in emissions across

all scopes since 2018

Define an internal carbon price

Notional price set at €40 per tCO

eq (industrial and real

estate investments, transportation)

ASSESS OUR IMPACTS ON BIODIVERSITY ACROSS OUR ENTIRE VALUE CHAIN (FAUNA AND FLORA) AND DEFINE OUR AMBITIONS ON A SCIENTIFIC

BASIS (SBT)

Measure our biodiversity impacts

at production site level

Number of production sites on which a Biodiversity

assessment has been carried out

production sites on which a Biodiversity

assessment was carried out

Measuring our biodiversity

impacts across the entire value

chain

Assessment and monitoring of the impact on

biodiversity by 2025 (Act4Nature)

92%

of activities assessed according to a GBS

(Global Biodiversity Score) study in 2021

Conduct dedicated Biodiversity

studies in certain supply chains

Number of supply chains studied

Silk sector in 2020 and launch in 2021 of the goat

leather supply chain by the CISL

CONTRIBUTE TO POSITIVE ACTIONS, INCLUDING OUTSIDE OUR SPHERE OF RESPONSIBILITY (FONDATION, LIVELIHOODS)

Forge partnerships around

biodiversity

Number and duration of programmes supported in

connection with biodiversity

Through the Foundation: Africa-TWIX (WWF) since 2016,

Vigie-Nature École (National Museum of Natural History)

since 2019, Étude sur les Caïmans (CNRS) since 2019

Continue to develop our

participation in the Livelihoods

project

Number of projects supported through Livelihoods

17 extensive projects with concrete social and

environmental results

Number of hectares restored and number of trees

planted

More than 57,000 hectares restored and more than

132 million trees planted by Livelihoods

UNDERTAKE HIGH VALUE-ADDED VOLUNTARY CARBON OFFSET ACTIONS

Offset emissions corresponding to

significant emission items

% of offset for scopes 1 and 2 and transportation

100%

scopes 1 and 2 GHG offset and

63.6%

for transportation GHG thanks to the Livelihoods

programme

IMPLEMENT BIODIVERSITY TRAINING ACTIONS FOR ALL EMPLOYEES

Develop training to raise

employee awareness

Number of employees trained

100+

people trained in 2020 via Biodiversity

conference

WORK IN PARTNERSHIP WITH STAKEHOLDERS WHO ARE EXPERTS IN BIODIVERSITY

Establish partnerships with

leading expert organisations on

the subject of biodiversity

Quality and duration of partnerships

- WWF France since 2016

- CDC Biodiversité since 2020

- CISL (University of Cambridge Institute for Sustainability

Leadership) since 2020

IMPLEMENT BIODIVERSITY ACTIONS IN OUR MÉTIERS, SUPPLY CHAINS AND SITES ACCORDING TO THE IMPACTS

Distribution of a CSR brief to our suppliers with a

biodiversity component

Objectives during the construction or renovation of

production sites

Online publication and dissemination of the CSR brief

in 2021

phytosanitary treatments on the green spaces

of the 14 production sites studied

Involve our value chain in actions

to promote biodiversity

Act at our production sites

◆

comply with workplace Environmental Health and Safety (EHS)

regulations and to prepare for changes in these regulations whenever

possible. The industrial affairs department coordinates a network of

EHS Officers at the manufacturing sites;

◆

respect natural resources and favour the cleanest, most economical

technologies and the most environmentally-friendly substances:

•

manage water responsibly and sustainably. Reduce volumes

abstracted, recycle and improve the quality of discharges in

relation to ecosystems. Engage alongside stakeholders in the

watersheds to preserve this shared resource,

•

manage energy resources by reducing energy consumption and

favouring the use of renewable energies,

•

respect and safeguard biodiversity, implement scientifically-based

objectives in the direct and extended sphere of responsibility.

Voluntarily engage beyond the sphere of influence. Train,

collaborate, evaluate and act;

◆

minimise waste production and recycle it as much as possible;

◆

resolutely commit to a low-carbon world, implement

scientifically-based objectives and actions compatible with a

trajectory limiting global warming to 1.5°C by 2050, across the entire

value chain and beyond Hermès’ sphere of influence;

◆

increase the resilience of the Hermès model in the face of

environmental changes. Study their effects, inform and collaborate

with our partners and suppliers to adapt the entire value chain.

◆

carbon footprint;

◆

air quality;

◆

biodiversity;

◆

local sourcing;

◆

environmental health.

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THE PLANET: ENVIRONMENT

2.5.1

ENVIRONMENTAL ACTIONS FRAMEWORK

2.5.1.1

ENVIRONMENTAL POLICY

Hermès’ environmental policy is based on several principles:

2.5.1.2

ENVIRONMENTAL GOVERNANCE

Environmental topics are supervised by a member of the Executive

Committee in charge of the Manufacturing division & Equity Investments,

who is supported by a Deputy Managing Director, in charge of the House’s

industrial affairs department, and by the Group real estate department.

These subjects are clearly at the core of the Group Sustainable

Development Committee's discussions. An annual analysis is conducted by

the main métiers of the House when the strategic plans are being prepared

to identify issues in terms of environmental protection. These various

challenges go hand-in-hand with practical objectives shared with the

Executive Committee. From a regulatory perspective, the Hermès Group’s

policy is to establish action plans that are adapted to the various métiers, in

order to understand and comply with regulations (primarily adapted to a

very rigorous European legal contest) but also to monitor progress made.

Each métier is responsible for monitoring and implementing the applicable

regulations. The industrial affairs and Group real estate department are

responsible for alerts, oversight and control in this area.

Industrial affairs department

The industrial affairs department, together with the métiers and all

players in the production entities, is pursuing an environmental policy

formally approved by the Executive Committee and, with the support of

the commercial and group real estate departments, coordinates the

House’s energy programmes (construction, transport).

Responsible real estate

Prior to 2016, the Group real estate development department tested

various certifications such as HQE, LEED and BREAM for its construction

projects. None of these certifications covered all Hermès typologies:

production sites, logistics centres, stores, offices, which made an overall

assessment of the environmental performance impossible.

Since then, in response to this issue, it has drawn up its own guidelines

by associating the highest environmental standards with the House’s

values. This new construction standard only concerns construction or

development projects.

This standard is significantly more demanding than the market standards

(LEED, BREEAM, HQE), and covers 30% more criteria. In the coming

years, it must give rise to certification work to confirm its robustness.

Responsible real estate standard

In 2021, Sustainable Construction becomes Responsible Real

Estate to meet environmental commitments and deliver

high-performance and sustainable buildings to the Group. This is

reflected in the application of the criteria of the standard across the

entire real estate value chain: from the choice of site to operation,

including the design and works phases.

Today, Responsible Real Estate has a management tool through a

web platform that measures the environmental performance of

projects by taking into account the five new objectives:

This web platform was launched in the second half of 2021 to

manage and measure all the Group’s real estate projects.

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THE PLANET: ENVIRONMENT

2.5.1.3

METHODOLOGY: TOOLS, ANALYSIS

AND MONITORING

Since 2012, in order to monitor environmental data from its industrial

sites, Hermès has used reporting software accessible as a web resource

to collect data about consumption at each site. The software also

provides access to documentation explaining how the performance

indicators are organised and defined. A consistency check is carried out

automatically when the figures are entered, and again when the global

consolidation is performed by the industrial affairs department, as well as

for audits carried out by the Statutory Auditors. Since 2018, all industrial

environmental indicators are reported for a period running from

November through October. For methodological reasons, some of the

activity data used in the scope3 carbon emissions calculation cover a

calendar year.

Moreover, consumption figures for certain leased sites, for which no data

are available, are not taken into account as they are not significant.

For internal sites, oversight of environmental actions occurs in different

ways. The industrial affairs department and its EHS Officers exert a first

level of control within the context of a “water, energy, carbon, waste” plan

that is updated each year. In the context of this effort, the audit and risk

management department conducts audits on the critical topics included

in the Group’s risk map (§ 4.1 in chapter4 “Risk factors and

management”). Lastly, external controls are performed on the Hermès

Group’s suppliers to ensure coverage of all entities. The industrial affairs

department consolidates the results of these audits as part of an ongoing

process of improvement.

For external suppliers (§ 2.6.1), the Purchasing Committee reviews the

results presented by the industrial affairs department several times a

year. It monitors the number of audits conducted per year as well as the

quality of the results. The industrial affairs department (IAD), under the

control of the audit and risk management department (A&RMD), craft

action plans with the relevant métiers and monitors their progress.

The scope of environmental reporting of stores has been extended and in

2021 enabled the collection of consumption data for 10 out of the 33

concessionaires and an estimate (consumption in kWh and tCO

eq) for

assets for which we did not have data, in three categories: branches,

concessions, travel retail. The consumption of all our stores is taken into

account in this reporting.

The methodology adopted consisted in applying to the surface areas of

these stores an average consumption per square metre, calculated by

country on the basis of the consumption reported and the associated

surface areas, and then converting this into CO

according to the

country’s energy mix. Electricity consumption concerns an actual 73%

and an estimated 27% of Hermès branches worldwide as well as the

branches of John Lobb, and those of Cristalleries Saint-Louis and

Puiforcat.

In France, data for 100% of stores are included in the reporting. The

same applies to all French branches of John Lobb, Cristalleries

Saint-Louis and Puiforcat.

In Europe (excluding France), almost 100% of stores are covered. In Asia,

89% of stores in Greater China (Mainland China, Hong Kong and Macau)

and 71% of stores in Thailand, Malaysia and Australia are covered. In

Japan, the four main stores are also included. In the Americas, 63% of

stores are covered.

2.5.1.4

COMPLIANCE, ENVIRONMENTAL PROVISIONS

AND FINANCIAL GUARANTEES

In 2021, the DREAL approved the fire water retention compliance works

at the Cristalleries Saint-Louis (formal notice received in 2020). In 2021,

no other industrial site was subject to a formal notice. The Group did not

receive any environmental fines.

The amount of provisions for environmental liabilities is made up of

provisions for the cost of asbestos removal work on the roofs of an

industrial building and remediation work on a manufacturing site for a

total of €8million.

In accordance with ArticleR.516-1 of the French Environmental Code,

the Annonay and Le Puy tanneries, the only tanneries within the scope of

the system, have provided financial guarantees.

2.5.2

RESOURCE MANAGEMENT

The control of water and energy consumption, inseparable from

ecological and economic responsibility with respect to the major global

challenges facing us today, is a goal shared by all the House’s divisions.

Thanks to its craftsmanship model, Hermès is distinguished by a low

energy and water footprint as well as generating only small amounts of

waste in absolute terms. Its footprint is even lower in relative terms (the

Group has one of the lowest carbon intensities of CAC40 companies).

The métiers are working to limit their respective consumptions through

actions described in more detail below and thus contribute to the energy

transition.

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THE PLANET: ENVIRONMENT

◆

continue the decoupling of industrial water consumption from

business growth;

◆

reduce water consumption by 5% per year in intensity (m

per

million euros of revenue, constant scope) over the period from

2018 to 2023;

◆

implement a multi-stakeholder approach and co-construct with

external stakeholders (regional departments, municipalities or

professional associations approaches to optimise management

of water and discharges).

2.5.2.1

CONTROL CONSUMPTION OF NATURAL

RESOURCES: WATER, ENERGY

2.5.2.1.1 Water

Objectives:

Industrial water

Water for industrial use is mainly (87.5%) used for industrial consumption

in the two métiers, tanneries and textile units: 627,491m /year at

global level.

BREAKDOWN OF INDUSTRIAL WATER CONSUMPTION BY MÉTIER IN 2021

(EXCLUDING FARMS)

Textile

31.3%

Leather

5.3%

Metal

2.1%

Other*

5.1%

Tannery

56.2%

Over the past 10years, the Hermès Group has maintained its aim of

decoupling, with industrial water consumption changing by a factor

of 1.7 while activity grew 2.6-fold.

Over 10years, water consumption intensity has fallen by 35.4%.

In 2021, overall water consumption for industrial use increased (+8.1%

compared to 2020, a year impacted by site closures during the first

lockdown in France. In comparison with 2019, consumption continued its

decline (-6.1%), despite including in the results the consumption of the

J3L group over a full year. This is the result of continued reduction efforts

on all the Group’s industrial sites.

In 2021, Hermès obtained an A- score on the CDP Water Security

questionnaire (A/A- Leadership: implementation of current best

practices).

As mentioned in § 2.5.4.1, a water risk assessment was conducted

alongside WWF in 2019 using the Water Risk Filter and Aqueduct tools,

the latter being developed by the WRI (World Resources Institute). The

findings are gradually being incorporated into the sites’ action plans.

-28%

Intensity

of industrial

water consumption,

compared to 2019

INDUSTRIAL WATER

INTENSITY

WATER CONSUMPTION - GROUP

2019 2020 2021

Intensity m /Revenue €M 97 91 70

Water consumption control is based on monthly monitoring of

consumption, preventive maintenance programmes for facilities, regular

verification and calibration of meters, installation of new individual

meters, and programmes to raise employee awareness. Significant

discrepancies unrelated to production differences are analysed and

verified in order to locate and repair any possible leaks.

The métiers work on a daily basis to minimise water consumption, find

innovative solutions to increase the proportion of recycling (rainwater

recovery, wastewater treatment, innovative efficient water and energy

systems, implementation of valves that adjust the water flow, etc.).

Tanneries / 2.7% increase in consumption in 2021 (decrease of 13.5%

compared to 2019)

Hermès operates six tanneries, including five in France (Annonay, Le

Puy-en-Velay, Vivoin, Montereau and Jullien Tannnery in Chabris) and one

in Italy. The RTL site in the United States has not been tanning since the

end of 2020 and is now dedicated exclusively to the inspection of raw

alligator mississippiensis hides from American farms.

INDUSTRIAL WATER CONSUMPTION

2019 2020 2021

in megalitres 668 580 627

* C* Crystal, Logistics, Perfume, Watch division, Beyrand, Bootmaker, Porcelain,

Silversmith

◆

consumption of new sites commissioned in 2021, representing half of

the difference;

◆

the resumption of activity of company restaurants that had been shut

down in 2020 at the height of the Covid-19 health crisis;

◆

a water leak at a leather goods workshop that was not detected

immediately. Meters and an automatic alert system with consumption

management have since been put in place at all leather goods

workshops.

◆

put in place actions compatible with the global warming

trajectory of 1.5 degrees and, in particular, continue the

decoupling between industrial energy consumption and

business growth;

◆

implement a policy of 100% renewable electricity within its own

operations by 2025 and renewable energies by 2030;

◆

no longer use gas or any other fossil fuels as an energy source

for all new industrial investments, unless this is proven

technically impossible. Dubbed “defossilisation of industrial

sites”, this programme reaffirms Hermès’ desire to actively

participate in the energy transition necessary to limit global

warming;

◆

equip all stores with 100%-LED lighting by 2023, unless this is

technically impossible.

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THE PLANET: ENVIRONMENT

Water consumption and effluent treatment are major challenges for the

Hermès Group’s tanneries. Historically located close to rivers, they use

this water for the purposes of tanning, dyeing and finishing hides. A total

of 63% of the water for the division’s six tanneries comes from

watercourses or boreholes. The rest comes from municipal sources.

The water consumption ratios of the tanneries remain consistent with the

levels observed over the last three years.

Textile / +19.3% increase in consumption in 2021 (decrease of 1%

compared to 2019)

Water is a fundamental and precious element for the fabric printing and

finishing stages. 95% of water requirements are covered by borehole

water, significantly limiting the use of drinking water for industrial

processes. The Textile division is implementing an ambitious water cycle

policy: for example, the AEI site (16% of the division’s consumption) has

included the ratio of quantity of water used per kilogram of fabric

produced in the calculation of the incentive scheme, in order to motivate

each employee to achieve the objectives,

Efforts are now focused on recycling wastewater. They have resulted in

projects for the modernisation of wastewater treatment facilities (STEP)

on three sites representing more than 90% of water discharges. These

high-performance STEP projects include recycling of water in production

processes, with efficiency targets, reaching up to 70% recycling of water

in production process by 2023 (i.e. potentially 50,000m

of borehole

water saved).

Leather / 26.3% increase in consumption in 2021 (increase of 14.8%

compared to 2019)

Leather goods workshops have a low “water” environmental impact since

no volume of water is used for the process. The consumption of our

leather goods workshops can therefore be assimilated to that of a tertiary

activity with most of the water use being for washrooms.

However, the water impact is taken into account in the design of new

production units with the implementation, from the start of operation, of

best practices. In addition, the latest leather goods workshops benefit

from a rainwater recovery and treatment system to supply washrooms.

Water consumption, in absolute value, increased by 6,883m

in 2021

compared to that of 2020. There are three reasons for this:

J3L

2021 is the first full reporting year for J3L. No comparisons are therefore

available. The water at the Portugal site comes from rainwater recovery

and municipal water. The use of wastewater treatment plants by

evapo-concentration at the surface treatment sites allows, thanks to

recycling, a major saving on the water used in the processes.

Agricultural water

Farms/7% increase in consumption in 2021, (6.6% increase

compared to 2019)

The Farms divisions are respectively composed of one alligator farm

(alligator mississippiensis) and a hide inspection centre in the United

States, four crocodile farms (crocodylus porosus) and two hide

processing and hide inspection facilities in Australia. These figures

include the new farm, under construction in Australia, which will reach full

production capacity in 2024. Water abstraction by farms for the year

2021 amounted to 4,810 ML, slightly higher than in 2020 (+7%) due to

the construction of the new Australian farm. Water consumption control

relies on the monthly monitoring of the farms’ consumption and the water

quality of the tanks and effluents (in accordance with applicable

standards).

The water used in the sites of the Australian division comes mainly from

boreholes (68%), while the use of municipal sources is limited (12%). The

remainder (20%) comes from a sugar cane production plant located near

one of the farms, thanks to an innovative industrial circularity operation,

in which the hot production water is exchanged for the farm’s effluents to

irrigate the fields. The American farm exclusively uses well water from hot

springs, which also allows it to significantly limit its energy requirements.

2.5.2.1.2 Energy: electricity, gas

Objectives:

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THE PLANET: ENVIRONMENT

Energy consumption (electricity, gas) was 214,808MWh/year at Group

level, excluding farms. This is distributed as follows, in a context in which

the Group manufactures 58% of its objects in Hermès exclusive in-house

workshops.

The Group electricity consumption, excluding farms, represents 53.7%

of the total, i.e. 115,402 MWh/year.

The energy consumption (electricity, gas) of farms, consolidated

separately, is 5,120 MWh/year of energy, including 4,113 MWh/year of

electricity.

BREAKDOWN OF INDUSTRIAL ENERGY CONSUMPTION (GAS, ELECTRICITY) BY MÉTIER

IN 2021 (EXCLUDING FARMS)

Textile

22.2%

Leather

15.0%

Other*

13.6%

Crystal

26.0%

Tannery

23.2%

Over the last decade, the Hermès Group has maintained its ambition

of decoupling consumption from growth with a 1.34-fold increase in

industrial energy consumption compared with a 2.6-fold rise in

activity volumes. This result testifies to the improved management of

consumption.

Industrial energy consumption intensity fell 48.2% over the same

period. In 2021, overall energy consumption increased (+9.6%)

compared to 2020, a year impacted by site closures during the first

lockdown in France. In comparison with 2019, consumption only

increased very slightly (+2.5%), thanks to the solutions implemented by

the industrial sites.

In order to monitor and manage energy consumption more closely,

sub-metering solutions are being rolled out across all Group sites. To

date, for example, 32 production sites and 16 stores are equipped with

such systems.

The voluntary energy audit campaign initiated in 2019 on the French

sites, enriches the action plans for reducing energy consumption with a

view to reducing greenhouse gas emissions.

-21.4%

intensity

of industrial

energy consumption,

compared to 2019

INDUSTRIAL ENERGY

Crystal manufacturing / 4.1% increase in consumption in 2021

(increase of 2.5% compared to 2019)

The processes using the most energy at the production unit are melting

the material and working with it while hot. During each investment

project, research is carried out to ascertain the best available technology

in terms of energy efficiency and production volumes, which is then

implemented. The last two furnaces renovated (pot furnace and gas

melting furnace) as well as the reorganisation of the hot-part workshop

are good examples of this. The study carried out on the renovation of the

gas melting furnace, planned for 2022, forecasts a 30% reduction in the

gas consumption of this tool, thereby reducing GHG emissions by the

same amount. The replacement of two openings in 2022 and the

recovery of waste heat are part of this approach to optimise the site’s

energy efficiency.

In 2021, a study was carried out to replace the boiler room in this

building.

Tanneries / 4% increase in consumption in 2021 (decrease of 8.9%

compared to 2019)

The tanneries continued their work to improve energy efficiency, both on

existing facilities and during renovations and the construction of new

premises. Particular attention is paid to the following points: supervision

of equipment by centralised technical management (GTC), replacement

of production equipment with alternative equipment that has improved

energy performance, thermal insulation, insulation of pipes or

replacement of lighting with LED bulbs.

All the division’s tanneries underwent an energy audit as part of the

programme initiated by the Group in 2019. The tannery located in Italy

and the Jullien tannery were audited in 2021.

GROUP BREAKDOWN

Industry Stores Services Total

2021 in % 75.5% 6.6% 17.9% 100%

GROUP ENERGY INTENSITY

2019 2021

2020

Intensity in MWh/Revenue €M 31 24

INDUSTRIAL ENERGY

CONSUMPTION

2019 2020 2021

In GWh 158 148 162

INDUSTRIAL ENERGY INTENSITY

2019 2020 2021

Intensity in MWh/Revenue €M 23.0 23.2 18.1

* L* Logistics, Beyrand, Perfume, Porcelain, Watch division, Metal, Bootmaker,

Silversmith

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THE PLANET: ENVIRONMENT

The energy consumption ratios of the tanneries remain consistent with

the levels observed over the last three years. As a reminder, 2020 was

marked by a decline in activity caused by the temporary closure of sites,

as a result of the Covid-19 pandemic.

Textile / 16.2% increase in consumption in 2021 (increase of 1.9%

compared to 2019)

Energy consumption (gas and electricity) can be attributed mainly to

equipment that produces high-temperature steam, as well as heating and

lighting (workshops and offices). Each site continued the actions already

started in previous years to optimise consumption and move towards

more energy efficient equipment.

Efforts to manage consumption during production stoppages (weekends

and public holidays) and investment in renewable technologies

(geothermal energy) during the industrial phase of the Passerelles project

have helped to mitigate the consequences of the commissioning of new

facilities and the new printing line.

In 2021, AteliersAS carried out its project to optimise the use of steam

boilers, as well as the instrumentation of the boiler room in order to

continuously monitor the energy performance index.

In October2021, the ATBC horsehair weaving site in Challes replaced its

fuel oil boiler with a biomass boiler (wood pellets). This change will

reduce GHG emissions from heating by 96%.

J3L

Electricity is the most widely used energy within J3L. As part of the

programme initiated by Hermès, at the end of 2020, J3L launched a

voluntary energy audit campaign at its sites to identify the main levers for

reducing energy consumption and opportunities for replacing fossil fuels

with other sources of energy that emit less greenhouse gas. In this

context, the replacement of a fuel oil boiler is being studied, with the

second one already using compressed wood pellets.

More than half of the electricity consumed is used for surface treatment

sites, which use the process of wet deposition of precious metals,

electroplating, which involves applying a precise current for a given time

depending on the desired surface area and thickness of deposit. The

equipment maintenance strategy and the ability to produce “right the first

time” are levers for optimising electricity consumption.

Stores / 4% increase in consumption in 2021

The branch stores consumed 38,451MWh of electricity in 2021 (of

which 31,463MWh reported by subsidiaries), i.e. an increase of 4%

compared to 2020. These figures are correlated to a large extent by a

balance between sales surface areas, mainly in Asia and the United

States, and store closures and openings.

In 2021, the consumption of Concession and Travel Retail stores was

estimated at 3,860 MWh.

The downward trend in the ratio of energy consumed by unit of sales

surface (KWh/m2), especially in France and Asia, is attributable chiefly to

the increase in LED lighting, together with improved management of

energy consumption, which both continued.

Offices and ancillary premises consumed 14,209MWh in 2021, of which

10,818MWh at the Paris and Pantin sites.

For the stores, the improvement levers are the optimisation of lighting

and air conditioning. At the end of 2021, 84% of Hermès Group stores

were equipped with LED lighting, with an average reduction in energy

consumption of around 20%. By 2023, all stores will be fully equipped

with LED lighting. In addition, window and store lighting schedules are in

use across the entire Hermès distribution network in order to reduce

energy consumption.

Lower electricity consumption, coupled with the fact that LED lighting

generates far less heat than traditional lighting, has enabled us to

consider downsizing in-store air conditioning units.

This programme continued for all new projects and store renovations

throughout 2021.

Particular attention is paid to the insulation of store facades from the

outside.

In 2021, other initiatives (installation of individual electricity consumption

meters and motion detector systems in fitting rooms, washrooms and

back offices) were continued in all new store projects.

2.5.2.2

INNOVATE AND IMPROVE PRODUCTION

PROCESSES BY CHOOSING THE CLEANEST,

MOST ENERGY EFFICIENT TECHNOLOGIES

AND THE MOST ENVIRONMENTALLY-FRIENDLY

MATERIALS AVAILABLE

2.5.2.2.1 Contributing to the energy transition

Since 1November 2015, Hermès has decided to participate actively in

the energy transition process. All French sites (production, services,

and stores) are now 100% supplied with green electricity (hydro, solar

or wind) produced in France. Distribution subsidiaries are gradually

following this momentum. In 2021, 86.9% of the Group’s global

electricity supply came from renewable sources (82.4% in 2020), i.e.

100,336 MWh/year. The Group has committed to lead its companies

towards actions that are compatible with the less than 1.5 degrees

global warming trajectory, through a “fair-transition” to achieve net zero

emissions in 2050, through its SBTi commitment.

◆

wood: to heat the Manufactures de Belley, des Abrets and Nontron;

◆

solar: several leather goods workshops (Allan, Manufacture de Haute

Maroquinerie, Guyenne, Montereau) are equipped with photovoltaic

systems that can cover up to 40% of the sites’ energy needs.

◆

energy consumption: this parameter constitutes one of the main

challenges of the new leather goods workshop technical programmes.

As soon as a project is launched, various solutions are envisaged and

thermal simulations are carried out by specialists from design firms

commissioned for the project. The most suitable solution is selected

from the results. For example, the building of the Allan production

unit, commissioned at the end of 2017, was carried out in

accordance with the stringent requirements of the High environmental

quality label, and exceeds the objectives of the 2012 French Thermal

Regulation standard by 30%;

◆

energy management tools: as soon as a new leather goods workshop

is put into operation, meters are positioned and dedicated software is

set up to control energy consumption and the identification of

possible drifts as accurately as possible;

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2.5.2.2.2 Renewable energies

Working together with the Group real estate development department, in

particular, the House has a policy of using renewable energies, through

the installation of geothermal heating or cooling, photovoltaic panels, the

supply of green electricity for sites in France, connection to district

heating and cooling networks and the use of wood-fired boilers on some

sites.

Hermès wants to use energy from renewable sources (photovoltaic

panels, wood-fired boilers, geothermal energy, biomass, etc.) wherever

possible, and has committed to implementing a policy of 100%

renewable electricity in its own operations by 2025. No new industrial

investment running on fossil fuels is authorised, except where this is not

technically possible.

In addition, the Group is developing pilot initiatives, designed to be

expanded as and when new investment projects, available technologies

and regulations in force permit.

As part of its renewable energy policy, Hermès sites (production, farms,

logistics) produce electricity directly through the installation of

photovoltaic panels. In 2021, renewable electricity production was

1,894MWh, which represents the equivalent of the annual electricity

consumption of three leather goods workshops.

For example, the two renewable energies used in the Leather Goods

division are:

In 2020, a photovoltaic solar system was installed on the roof of the new

Maroquinerie de Guyenne in St-Vincent-de-Paul (Bordeaux), generating

169 kWhpe/m /year of electricity. An integrated Microgrid system

(balancing between photovoltaic panels, storage batteries and

consumption sources), allows the management of electrical energy. This

system covers 40% of the site’s energy needs and the site consumes

80% of the electricity it produces. Charging sockets for electric vehicles

have been installed in car parks. The required level has been almost

reached for a BEPOS E3 level of the E+C- label. This new building was

classified Gold in the Hermès sustainable construction standard with an

Excellent performance level for its energy consumption efficiency.

Hermès is building the first positive energy leather goods workshop

in Louviers (Normandy). This project rehabilitates a brownfield site near

the city centre and serves as a proof of concept for the Hermès Group’s

future leather goods workshops. The objective of the project is to

eliminate the electricity consumption of the leather goods workshop and

reduce associated CO

emissions. This 20th leather goods workshop will

not use fossil energy for its operation and will generate at least as much

energy as it consumes. The Maroquinerie de Louviers is thus aiming for

this positive energy target and also wishes to obtain the E4C2 label

(energy performance and greenhouse gas reduction). This 6,400 m

bioclimatic construction is designed to make the most of its location and

environment. It consists of three rows of north-facing sheds that provide

natural and stable light, reducing energy requirements. The analysis of

natural flows (wind, rain and sun) enabled the architect to considerably

reduce heating and cooling requirements. A compact building whose

load-bearing walls are made of brick (the 511,000 bricks of the building

were manufactured by a local company) and whose frame is timber, it

optimises thermal inertia and uses sensor-driven geothermal energy.

For the Hermès Leather Goods & Saddlery craftsmanship division, the

renewable energy generated by the production units accounted for 4.5%

of energy consumption in 2021. In the Farms division, the installation of

photovoltaic panels on all sites provided a quarter of the electricity

consumed by the Australia division in 2021.

Within the textile division, a wood-fired boiler was installed on the ATBC

site in Challes at the end of the year, and there are solar panels on its

ITH site (16 MWh).

The Cuneo site (Tannery division, Italy) has installed photovoltaic panels

and a gas cogeneration system, making it possible to cover a significant

portion of the site’s consumption.

In the United States, the Dayton logistics centre in New Jersey has been

equipped with photovoltaic panels on the roof since 2017, in order to

produce the electrical energy required by the site. This centre received

LEED Gold certification in 2018.

Total renewable energy consumption was 100,336 MWh/year, i.e.

46.7% of the Group’s energy.

2.5.2.2.3 Innovations in energy efficiency

In the conception phase of new leather goods workshops, a special

attention is paid to environmental impacts and more specifically, to

energy consumption. New production units are built with future energy

efficiency in mind. This proactive work focuses on four priority areas:

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◆

implementation of renewable energy production solutions: the new

Maroquinerie de Guyenne benefits from a photovoltaic plant installed

on the roof and an integrated Microgrid system;

◆

lowering machinery consumption: the energy impact of machinery was

introduced as one of the decision-making criteria in the context of the

machinery investment strategy for the Leather métier. As such, new

equipment introduced in both new and existing leather goods

workshops is more energy efficient. This approach is carried out in

partnership with suppliers.

◆

environmental: reduction of direct and indirect footprint;

◆

human: improving working conditions and securing data

management (privacy);

◆

societal: stakeholder involvement and generous actions.

All of the Group’s other métiers benefit from feedback from this work

carried out for leather goods workshops.

Responsible digital

In 2021, Hermès, through its Hermès information systems

department, undertook a “Responsible Digital” approach enabling

the entire Group’s digital ecosystem to contribute to the sustainable

development strategy on the three pillars:

These actions are managed according to two categories, those with

an environmental impact and those directly related to individuals.

The main environmental actions concern the life cycle of materials

(responsible purchasing, extension of life, reuse, recycling with the

help of an adapted company) and frugality (eco-design of

applications, sobriety of infrastructures), not forgetting IT4Green,

i.e. the contribution of information technologies to reduce the

Group’s consumption (energy metering).

In addition to ethics and personal data protection, societal projects

focus on the accessibility of applications so that everyone can use

them.

The group is also involved within the FHCM (Fédération de la Haute

Couture et de la Mode) in work to examine and analyse the

ecological footprint of the Paris fashion shows, of which the digital

component is important.

2.5.3

REDUCE THE FOOTPRINT AND CONTROL

WASTE AND DISCHARGES

A major aspect of environmental protection and societal responsibility,

waste and discharge management means that each of the House’s

various métiers does all it can to reduce the production of waste and

discharges and to recycle or recover them.

BREAKDOWN OF WASTE VOLUME BY MÉTIER IN 2021

Textile

10%

Leather

Crystal

Perfume

Other*

Tannery

55%

(1) Ordinary Industrial Waste

(2) Hazardous Industrial Waste

CHANGE IN VOLUME OF WASTE (EXCLUDING FARMS) OVER THE LAST THREE YEARS

WASTE

2019 2020 2021

OIW

(t) 7,082 6,012 10,043

HIW

(t) 6,361 5,189 2,787

TOTAL (T) 13,443 11,201 12,830

In 2021, in order to align with European legislation on waste

classification, sludge from the treatment of effluents from the Tanneries

division is reported in the OIW category; they were previously reported in

the HIW category).

14.5% increase in Group waste (excluding farms), down 4.6%

compared to 2019.

44%

of industrial waste

is recycled

(excluding energy recovery

and farms)

2.5.3.1

WASTE MANAGEMENT

The wide range of métiers prevents an overall waste management policy,

other than the general principle of avoiding its production and working to

improve its reuse and recovery. Waste management is therefore

entrusted specifically to each manufacturing division by means of a dual

policy of waste reduction and recycling wherever possible. The main

contributors are the tanneries, textile, crystal manufacturing, leather,

perfumes and real estate divisions.

* LLogistics, Metal, Porcelain, Beyrand, Watch division, Bootmaker, Silversmith

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Tanneries / +3.4% increase in waste production in 2021, (down

21.9% compared to 2019)

The raw material used in the tanneries is the entire hide, referred to as

“raw” hide, a putrescible organic product. Tanning involves processing

the hide into a durable product, a finished leather, using successive

operations that eliminate matter and generate effluent. The reduction of

tannery waste naturally starts with the improvement of the quality of the

raw hides. Tanning generates unavoidable waste, associated with

trimming the edges of the hides (“trimming”) or preparing the internal

surface of the hide (“fleshing”). Processing hides in successive baths

also generates effluents, which are processed at site treatment plants

and result in the production of sludge. The management of this sludge is

of course highly regulated in all the geographical areas where the Group

operates (European Union) and complies with the regulations in force.

The tanneries are constantly seeking new reuse channels for this waste

and are active participants in the think tanks that are brought together at

Hermès to discuss leather waste, and in the work done by the Centre

Technique du Cuir (CTC), the French expertise centre on leather.

In 2021, overall waste production in the division increased by 3.4%

compared to 2020, a year that was marked by a decline in activity

caused by the temporary closure of sites, as a result of the Covid-19

pandemic. OIW represents more than 90% of waste generated by

tanneries, with sludge from on-site effluent treatment alone accounting

for more than half of this OIW.

In general, the production of hazardous and non-hazardous industrial

waste in exotic leather, calfskin and goat hide tanneries is relatively

constant from one year to the next, even if the continuous improvement

of effluent treatment systems can lead to an increase in waste

production, particularly through the extraction of sludge. 100% of the

waste produced is evacuated to approved channels, and the at-source

sorting of waste streams is in place at the French and Italian sites.

On-site waste storage is optimised to prevent any pollution risk (sheltered

storage areas, retention basins, etc.) and regular awareness-raising

initiatives focusing on sorting and the layout of work areas are carried out

among employees.

Leather / +37.3% increase in waste in 2021 (increase of 32.5%

compared to 2019)

The proportion of recycled and energy-recovered waste out of the total

tonnage generated by the Leather Goods division was 86% in 2021.

The division’s Leather Goods activity generates little HIW. The share of

these in the total annual tonnage in 2021 was low, representing only 5%.

Leather scraps, parts not used in the “cutting” activity of production

units, are sold to specialised channels, sorted and reused. These

by-products from activity are not included as “waste” in this report.

The division also takes part, in the context of the recovery of production

waste, in working groups on the reuse, recycling and recovery of its waste

within Hermès, as well as in the work carried out by the Centre technique

du cuir (CTC – Leather Technical Centre) on this subject.

Leather goods workshops present limited sources of wastewater

discharge thanks to primarily manual production processes that do not

require water. The only wastewater discharge concerns water used for

washrooms, which does not require on-site treatment and in most cases

is directed to public wastewater collection networks.

Textile/ +7.3% increase in waste in 2021 (decrease of 4.7%

compared to 2019)

The complex evolution of the waste market and the saturation of local

outlets (landfills and incinerators in the region where it is located) require

careful management. Through monthly meetings involving the sites as

well as the service provider, the sector ensures that recycling and

recovery solutions are systematically favoured, and that each new stream

is validated.

In 2021, just 3% of the sector’s waste was processed by elimination. All

dye waste, which accounted for 47% of the sector’s total waste (all

streams included), was used to manufacture alternative fuel. The

summary of non-hazardous waste was also positive: 44% was sorted and

recycled by the service provider and 54% recovered as energy.

Following an in-depth feasibility study, the SIEGL site succeeded in

modifying the printing process for the double-sided scarf to eliminate the

adhesive plastic film previously attached to each of the scarf rolls before

printing. In July2021, the first articles were successfully produced

without using this plastic film. In October, nearly 20% of double-sided

scarves were printed in this way. In January2022, this process will cover

all printing, which will avoid the scrapping of 100,000metres of adhesive

film.

Real estate

Since 2019, scrupulous management of demolition or dismantling waste

from a site due to be renovated and construction site waste management

have been systematically implemented for all construction projects in

France and worldwide.

2.5.3.2

EFFECTIVE SOLUTIONS FOR WASTE

MANAGEMENT

Hermès is committed to going beyond current regulations to reduce the

use of hazardous substances. Accordingly, the House’s internal

requirements, for its own operations and for supplier specifications,

sometimes impose stricter limits.

Tanneries

The quality of effluent discharges is central to sites’ environmental

concerns. Each tannery is equipped with an effluent treatment station

and verifies that its industrial emissions comply with the applicable

standards. Regulatory inspection reports are submitted to the local

authorities on a regular basis. As a reminder, the tanneries are solely

located in France (5) and Italy (1), and their stringent regulations are

subject to frequent controls.

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Currently, following in-house treatment, almost all tannery effluents (92%)

are discharged into the municipal network and treated further by

municipalities.

The division’s tanneries continually work on improving the performance of

effluent treatment. Numerous optimisation projects for tannery waste

management facilities are carried out annually. The amount of this work

represented an investment of €1.25million in 2021.

The Montereau site, after having carried out several pilot tests on its

effluents in recent years, has set up an evapo-concentration unit in a new

building that also houses the current treatment plant. The operational

commissioning of this equipment required adjustments during 2021 and

will make it possible to consider recycling part of the waste treated in the

production processes in addition to rainwater. The additional treatment

set up at the end of 2019 at the Vivoin site, consisting of a biological

effluent treatment unit coupled with ultrafiltration and activated carbon

filtration, achieves performance levels well above the thresholds imposed

on sites.

Following extensive work on the treatment plants of the Le Puy and

Annonay Tanneries carried out over the last three years in order to

increase the reliability of their operation, two detailed studies were

carried out in 2021 on these two sites. The purpose of these studies was

to define guidelines for improving their treatment performance and

ultimately to consider recycling effluents. These studies will continue in

2022. The Le Puy Tanneries treatment plant will at the same time

undergo major modernisation work from 2022 (until late 2023), thus

constituting the first step before the installation of additional equipment

for the recycling of effluents.

Similar studies will be carried out in the division’s other tanneries, in

particular the exotic tanneries, in accordance with the strategy of

reducing water abstraction by the Group and the Tanneries division.

Air emissions at the Tanneries and Precious Leathers division tanneries

result primarily from the operation of the boilers, the dry degreasing

activity and the finishing booths. Verifications of such equipment, as

identified in the prefectural orders or site permits, are performed in

accordance with the applicable regulations. Finally, in accordance with

regulations, the French sites prepared a solvent management plan.

Textile

The AEI, AteliersAS and SIEGL sites, which account for 98.2% of water

discharges, are subject to daily self-monitoring of effluents. All deviations

are analysed and a corrective action plan is launched. To ensure the

reliability of these fundamental monitoring data, audit and calibration

plans are regularly implemented.

At the SIEGL site, the pilot study launched in 2017 resulted in the

creation of an additional facility for the activated charcoal treatment of

effluents following the membrane microfiltration process. This facility has

helped to improve depollution results and has been used as a test to

model the future purification plant. This new facility became operational

at the end of 2021.

AteliersAS have continued their efforts to reduce pollution at source. As a

result, stripping products, a source of hydrocarbons, have been

recovered more thoroughly. This was accomplished by first setting up pits

for the recovery of stripping products from the frames in the printing

workshop washing booths, then by the recovery of the products used to

wash the Atelier PEPS printing tables (prototypes, small series samples).

A project to pre-treat aqueous effluents before sending them to a

wastewater treatment plant is currently being studied. In this context, a

pilot plant was installed in 2020 to treat 25% of the overall flow; the

results were convincing and the pre-treated water is below the

specifications of the discharge agreement. This pilot phase, supported by

the Rhône Méditerranée water agency, is expected to result in a final

installation by 2022.

Crystal manufacturing

Called “Les Jardins de Saint-Louis”, the water treatment plant of the

Production unit, installed in 2015, is composed of plant and mineral

filters, harmoniously integrated into a wetland area. Requiring no energy

or chemical inputs, this system ensures optimal water purification and its

performance is superior to that of a traditional physico-chemical

installation.

Industrial wastewater, pre-separated in the respective workshops and

collected at a single point, is purified by this phyto-treatment facility.

“Filter gardens” ensure natural remediation of the site’s wastewater,

combining environmental efficiency, landscape quality and a contribution

to biodiversity. An awareness programme for users of water resources is

ongoing with the aim in particular of sustaining performance at treatment

facilities. To further improve the quality of water discharges, extensive

research and optimisation at source have significantly reduced and

stabilised the flows emitted and enabled compliance with the new

prefectural decree that came into force in the summer of 2021, in which

thresholds were significantly lowered.

Regular campaigns to measure water discharges confirm the good

performance of purification plants (in particular the compliance of the

new neutralisation workshop), with discharges well below regulatory

thresholds.

Moreover, measurements of air emissions were carried out in the third

and fourth quarters of 2021. The results obtained confirm the proper

functioning of the facilities in this area.

Farms

Much of the waste from livestock farming is reused through irrigation

projects. Thus, since September2018, in collaboration with the Hermès

Perfume and Beauty division, 10hectares of sandalwood planted on the

property of one of the Australian farms reuse part of the waste (16.5% of

the effluent volume of the farm in 2021). This system was recently

supplemented by an irrigation system for grass plots on the farm to

produce fodder for local livestock farmers. This project, on a smaller

scale than the previous one, made it possible to reuse 3% of the farm’s

effluents. In addition, since July2019, part of the effluent (7%) from the

farm in Queensland has been reused to irrigate sugar cane plantations

on neighbouring farms in an industrial ecology scheme.

◆

Hermès assumes all its responsibilities as a company that places

goods on markets, to ensure the regulatory compliance of all products

sold, in all countries where it operates. Two main activities make it

possible to respect this commitment, monitoring and validation of

products:

•

regulatory monitoring is carried out through a large number of

actions with stakeholders and is coordinated by the industrial

affairs department;

•

coordination of the Colbert Committee’s “Regulations” working

group;

•

participation in the “Regulations” working group of Francéclat

(Porcelain and Silversmith), the BJOP (Jewellery, Silversmith);

•

regulatory update at least once a year with the CTC (Leather), IFTH

(Textiles), FPPP (Porcelain), BJOP (Jewellery, Silversmith), the

Fédération du Verre et du Cristal, the Fédération Horlogère;

•

taking into account the monitoring prepared by a specialised

service provider (Bureau Veritas) on certain products;

◆

update twice a year (during the podiums), with all the House’s

subsidiaries, on the regulatory changes relating to products in each

country. All possible incidents are dealt with in these meetings.

•

product validation from a regulatory point of view, which is carried

out at two levels:

•

the annual update of product specifications (CDC), which takes

into account all the results of regulatory monitoring. These CDCs

include compliance with the most stringent product regulations in

the world (all countries to which Hermès exports products). It is

generally the European regulations that are the most demanding,

although this is not always the case,

•

all products are tested (internally and/or externally), in qualified

laboratories, on the technical criteria and in accordance with the

standards described in the product specifications.

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Leather

Leather goods workshops present limited sources of wastewater

discharge thanks to primarily manual production processes that do not

require water. The only wastewater discharge concerns water used for

washrooms, which does not require on-site treatment and in most cases

is directed to public wastewater collection networks.

2.5.3.3

CHEMICALS MANAGEMENT

2.5.3.3.1 Compliance of controlled substances

General principles

List of controlled substances

There is a single Restricted Substance List Hermès Group (RSL), which

includes all substances that are or could be used in products. For each

substance, the most stringent regulations in the world are systematically

adopted. The aim is to produce products that comply with regulations,

regardless of the country in which they are sold.

The RSL is shared within the Colbert Committee working group. This list of

substances is not distributed as such. Such distribution would not be of

great interest, since this list contains only public information, being a

collation of national or federal regulations. For each substance, the name

of the substance, its CAS number, the most stringent limit in the world

and the laboratory control standard for the substance appear.

Use of controlled substances

The Group’s list of substances, the permitted limits as well as the control

standards, are common to the production units and apply to the

suppliers. More specifically, product specifications (including this

substance regulation) are shared with suppliers. The approval of

products manufactured by suppliers follows exactly the same pattern as

products manufactured by the Group. A good example is that of the

tanneries: the Leather métier purchases hides from the Group’s

tanneries, but also some of its needs from external tanneries, with

identical specifications regardless of the source.

Hermès has put in place preventive processes to restrict or prohibit

certain substances, in particular by discussing and signing product

specifications with suppliers, which contains all the regulations and

technical requirements, as well as the corresponding control methods.

Control of materials and products

For its raw materials, Hermès adapts the frequency and type of controls

according to the volumes concerned. For very limited volumes, control

may be at the unit level, but it is carried out on a statistical basis for

larger volumes. Depending on the nature of the materials, which can be

technically very different (leathers, textiles, perfume essences, etc.), the

volumes and the history of the quality results, a sampling and testing

frequency is chosen by the quality department to ensure a maximum

confidence level in the quality of incoming materials. In the event of a

negative result, the goods are blocked and sampling and controls

increased.

With regard to products (whether manufactured in-house or by suppliers),

the Group procedure is exactly the same: the aim is to verify, with a

maximum level of confidence, that the entity placing the goods on the

market has fulfilled its responsibilities. Some of the House’s products are

subject to checks on every unit for certain characteristics that are

considered critical. Others are checked on a regular basis and some are

checked on a random basis. The great diversity of products (leather

goods, textiles, porcelain, crystal, silverware, jewellery, watches,

ready-to-wear, perfumes, etc.) means that an appropriate control scheme

and the proper frequency must be defined for each product.

Hermès uses the services of both in-house and external laboratories for

these checks. This decision is made according to the workload of the

in-house laboratories as well as the nature of the measurements to be

carried out.

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In summary, the Group’s generic procedure (SOP) is that no raw material

or product is supplied without a specification being defined and accepted

by the supplier, and without the raw material or the finished product

having been tested according to these specifications.

Supply chain compliance

All raw materials purchased, like any products purchased, are subject, on

the one hand, to specifications that are discussed and formally approved

by the supplier and include all the regulations corresponding to the

materials and/or products, and on the other hand, to technical validation

including laboratory measurements. All deliveries (raw materials or

products) are subject to appropriate quality control. Certain supplies

(materials or products) are accompanied by an inspection certificate, the

tests having been carried out by the supplier, when this provision is

stipulated in the specifications. Tier1 suppliers undertake to develop the

same approach (formal specifications, control procedures, etc.) with their

own suppliers (tier2).

In the event of non-compliance with the specifications for raw materials

or products, the goods are blocked and, generally, a second verification

check is launched. Hermès does not use non-compliant goods in its

production. They are therefore returned for new manufacture or repair

when technically possible.

2.5.3.3.2 Risk management related to the use of chemical

products

General principles

The Hermès craftsmanship model means that 58% of its objects are

produced in-house, in exclusive workshops, 78% of which are located in

France. The remaining 42% come from suppliers, the vast majority of

which are located in France and Europe. Thus, of the top 50 direct

suppliers (materials or products), 60% are located in France and 34%

elsewhere in Europe.

For all sites located in France and Europe, labour legislation requires a

chemical risk analysis and the implementation of measures to protect

workers. In owned units, as well as those of suppliers, regular audits are

carried out to verify that the analyses are properly carried out, and the

means of protection are in place and used.

For all sites in France and Europe, the national regulator imposes a limit

on the chemical substances released into the air, effluents and soil. In

the House’s own units, as well as those of suppliers, regular audits verify

that each entity is fully aware of the regulations to which it is subject, that

the necessary means to comply with them are in place, and that regular

checks make it possible to ensure that these methods are working.

For the small number of suppliers further afield, for the majority of

materials suppliers, regular audits are used to verify regulatory

compliance, in terms of health and safety, as well as the environment. In

the event that local legislation does not exist or is insufficient, Hermès

helps its suppliers to adopt and comply with European standards.

Implementation

The chemical risk management approach is based on legislation which, in

France and in Europe, is generally hazard-based.

The regular and in-depth audits carried out by Hermès in all entities, as

well as the appropriate frequency of product checks, ensure that any use

of chemical substances banned by Reach-type regulations, for example

in a French or European tannery, is immediately revealed.

The main chemical risk management tool is the product specification. An

accurate and exhaustive reflection of the most demanding regulations

worldwide, it lists all the requirements in terms of substances, the limits

set, and the corresponding laboratory control methods. The procedure

begins with the sharing of this document with the supplier (in-house or

external), then follows a formal agreement from the supplier, and it is

completed by an approval check of the first products delivered. During

the “series life”, checks are carried out at an appropriate frequency.

The choice of chemical reduction and/or elimination projects is mainly

based on an analysis of future regulatory changes. It is in this spirit that

the Group conducts a very strict regulatory watch, both in France and

abroad.

When a probable change in regulations is identified for a substance or a

family of substances, an estimated decision schedule is drawn up in

order to set out the work to be carried out and the timetable.

Hermès Cuirs précieux joined the ZDHC (Zero Discharge of Hazardous

Chemicals) initiative in August2021. The ZDHC Roadmap to Zero

Programme aims to implement best practices in terms of the use of

hazardous substances and the quality of wastewater discharges in

tanneries. The implementation of the ZDHC protocol in the division’s

tanneries began in 2021 and will continue in 2022.

Hermès has set up a third-party certification target for each of its

purchasing sectors (around 60), which also includes aspects related to

the use of chemical products (see 2.4.2).

◆

a reduction in absolute value of 50.4% for scopes1 and 2

emissions over the period 2018 to 2030;

◆

a reduction in relative value of 58.1% for scope3 emissions

over the period 2018 to 2030; this objective means involving

the supply chain in the process, as well as suppliers and

partners;

◆

a 50% reduction in the carbon footprint per m

of real estate

space built or renovated by 2030;

◆

implement a policy of 100% renewable electricity within its own

operations by 2025 and 100% renewable energies by 2030;

◆

defossilisation of industrial sites.

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2.5.4

CLIMATE CHANGE

Hermès has stepped up its actions to combat climate change since

2020. The Executive Committee thus updated and validated the

Group’s strategy with ambitious objectives founded in science, through

the Science-Based Targets initiative (SBTi) in order to achieve zero

net emissions by 2050:

Objectives:

The validation of the scopes1, 2 and 3 emission reduction targets by

the Science-based targets initiative at the end of 2021 is recognition

of Hermès’ commitment to the fight against climate change.

In addition, Hermès demonstrates its commitment, the strengthening of

its transparency and the consistency of its policy with that of the sector

by presenting its actions in accordance with the framework

recommended by the TCFD (Taskforce on Climate-related Financial

Disclosures) and by completing the Climate CDP questionnaires; as well

as by participating in the market initiatives: Fashion Pact and UNFCCC

(United Nations Fashion Industry Charter for Climate Action).

These commitments enable the Group to follow a path of reducing its

direct and indirect emissions, thereby helping to limit global warming to

1.5°C by 2050.

This policy is being introduced as a priority on the most significant issues,

and in a context where the Group is one of the lowest carbon emitters of

the CAC40, thanks to its craftsmanship model and its manufacturing in

France.

Hermès is gradually taking practical measures to substitute fossil fuels

used, and reduce its energy consumption and carbon footprint across all

scopes. The control of greenhouse gas (GHG) emissions is achieved

through direct reduction actions throughout the value chain, as well as

outside Hermès’ sphere of influence through financing of projects with

positive impacts, including for the fight against global warming.

POLICY

The Group’s policy is to make a resolute commitment to a low-carbon

world with quantified targets set out in a timetable. It is broken down into

several areas such as measuring the impacts of its activities on all

Scopes1, 2 and 3, taking priority actions to reduce emissions in the

various categories where the Group can act, and then implementing

offsetting initiatives.

It also incorporates a forward-looking vision through an analysis of risks

related to climate change that bear on its operations and business model

(physical and transition risks).

As indicated above, the strategy approved by the Executive Committee

steers the Group’s actions. The greenhouse gas policy is overseen by the

Sustainable Development Committee, on which two members of the

Executive Committee sit, as well as the Deputy Managing Director in

charge of Industrial Affairs and the Managing Directors directly in charge

of the Group’s major emitters (métiers, real estate and logistics).

MEASURES IMPLEMENTED AND RESULTS

As illustrated above (§ 2.5.2), the House has taken various measures to

reduce the use of energy in its various activities, and to use renewable

energies as much as possible, as in the “defossilisation of industrial

sites” programme.

However, these actions, which necessitate technical and organisational

changes, do not have an immediate effect on changes in energy

consumption: the objective is to take the time to implement effective,

in-depth solutions that are sustainable over time. All métiers are working

on plans to reduce their consumption and change their energy mix, with

these analyses serving as a basis for the construction of SBTi

trajectories.

As part of the operational implementation of the defossilisation strategy,

the Group has decided to set up an internal carbon price mechanism to

strengthen decisions favourable to the energy transition. This price was

calculated on the basis of internal simulations and compared to a CDP

sector benchmark. It will be used in notional form for the calculations of

industrial investments (scopes 1 and 2), real estate investments (scopes

1, 2 and 3), as well as for new transportation contracts (scope 3). In

2021, this price was set at €40 per tonne of CO

equivalent. It may

change depending on economic conditions.

Climate risk mapping has been set up and is updated every year in line

with developments in science in the field. Its results are used to guide the

House’s action and feed its policy of adaptation to the consequences of

climate change.

A detailed study of the sensitivity to risks related to climate change

(physical and transition risks) of several of the Group’s value chains was

launched in 2020 in order to inform the resilience plans of the activities

affected by these risks.

◆

the physical consequences of climate change (extreme climate

events, increase in temperatures, increased or decreased rainfall,

etc.);

◆

the impacts of measures taken for the transition towards a

low-carbon world, in particular the fastest measures (transition risks:

carbon tax, regulatory changes, client behaviour, etc.).

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As part of the CDP reporting (hAs part of the CDP reporting (https://www.cdp.net/), Hermès was

assessed with a score of A- for this third financial year on the data for

2020 (CDP Climate Change 2021 questionnaire: Leadership A-: best

practices on climate issues). The details of its actions and commitments

are disclosed to the public.

2.5.4.1

STUDYING THE RISKS AND TAKING ACTION

TO REDUCE THEIR IMPACT

Hermès is striving to reduce the impact of its activities on the climate,

and the House is examining potential adaptations to its value chain

(internal, external) in order to reduce its exposure to the effects of

climate change.

Depending on the regions and métiers concerned, the effects of climate

change will have different impacts on Hermès’ activity, through:

The impacts will depend on the extent and severity of these changes, in

the same way as the various factors such as location, sensitivity of the

upstream supply chain, the quality and capacity of local infrastructures

and, more generally, the behaviour of the other players in the Hermès

Group’s ecosystem.

Hermès has based its approach to adapting to climate change on the

identification of risks and the assessment of their relevance in order to

define action plans within each métier, with the assistance of a

consulting firm and the use of authoritative tools.

This project, coordinated by the industrial affairs department, from 2020

involves around 20 high-level executives from the Company, in order to

have both a precise vision of the issues at stake, and facilitate the

subsequent implementation of measures that could result from these

analyses.

The exposure to transition risk is studied both by the audit and risk

management department in its vertical analysis of the House’s main

activities (production métiers, retail subsidiaries), by the industrial affairs

and sustainable development departments and by the Sustainable

Development Committee, with a more cross-cutting vision that covers the

main challenges (water, climate, etc.).

In its responses to the CDP Climate Change questionnaire, Hermès

details several examples of identified risks and opportunities related to

climate change. The analyses are conducted along three time horizons

(within three years, within five years, and within 25years).

This analysis of the physical risks related to climate change was carried

out on two emblematic value chains of the House: leather and textiles.

Eight scenarios were selected to test the resilience of these value chains.

These scenarios were developed taking macroeconomic studies into

account as well as industry analyses:

EXPOSURE

(IMPACTS AND CONSEQUENCES)

CLIMATE RISKS

CLIMATE

PROJECTIONS

AGGRAVATING

CIRCUMSTANCES

LOCALISATION

OF ACTIVITIES

VULNERABILITY

SENSITIVITY

OF POTENTIAL

IMPACTS

CAPACITY

TO ADAPT

RESILIENCE

SPECIFICITIY

OF ACTIVITIES

SCENARIOS ANALYSIS METHODOLOGY

(PHYSICAL RISKS)

◆

six direct impact scenarios were developed for the supply of raw

materials for the sectors studied: exotic leathers, cowhide, cashmere

and silk. They combine various predictable impacts on the supply of

raw materials and on the production of products: droughts, rising

temperatures, heat waves, rain and hurricanes. They make it possible

to identify existing capacities for adaptation and those that Hermès

could strengthen, region by region: South America (silk); Louisiana,

Australia, Africa (precious leathers); Mongolia (cashmere); Europe

(manufacturing sites);

◆

two systemic scenarios of direct and indirect impacts on Hermès’

global business were examined, modelling a succession of extreme

events in France or modelling a global health and food crisis to test

the resilience of the upstream and downstream logistics chains,

production and product distribution. They are built on the basis of

systemic failures of support functions and/or external service

providers outside Hermès’ business lines. They combine original

hazards that are difficult to predict but have a major and systemic

impact on entire regions, such as the “black swan”. These scenarios

make it possible to identify potential weaknesses in Hermès’ value

chain and enable stakeholders to be included in the consideration of

the impacts of climate change. For example: implementation of

operational business continuity plans, monitoring of certain signals to

be put in place to anticipate these hazards and deal with them when

planning ahead is not possible.

(https://www.cdp.net/),

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In each of these pessimistic scenarios, the risks likely to materialise are

taken from the study of global IPCC projection data (for a period of 10 to

15years) or regional data, for example from the European Environment

Agency (20 to 30year horizon). Each scenario describes the potential

impacts of major importance for Hermès, the triggering risks and their

evolution in the short, medium or long term depending on the

geographical area studied. Materiality grids, classifying impacts

according to their likelihood and potential impacts, make it possible to

rank the issues identified. The conclusions of these risk studies are then

taken into account and integrated into the métiers’ action plans.

In 2021, Hermès continued to roll out risk assessment, integrating it into

the management of the sectors in order to extend the approach to all of

its value chains.

The identification of the physical risks linked to global warming was

carried out for water with WWF France using tools such as the WRI

Aqueduct, Water Risk Filter. These analyses concern water stress, the

risk of drought, water quality, the risk of floods and the health of the

ecosystem, for each of the geographical sites where the House has an

industrial activity. The results were discussed with Group Management

and the main challenges will gradually be integrated into the action plans

of sites in order to adapt the contributions of all participants as best as

possible to the “Water” risk in their respective water catchment areas.

Other physical risks are being assessed, in particular to estimate the

resilience of each supply chain with respect to the various climate

scenarios, with the assistance of a consultancy and tools such as Mycris,

Sea level rise by Alex Tingle, and the projection maps from the IPCC

report “Global warming of 1.5°C”.

A partnership has been created with WWF to carry out in-depth audits on

exotic hides, cashmere and the timber supply chain. Each audit also

enabled us to better understand the risks and to create a specific action

plan. Hermès is ready to help its suppliers if they need to adapt to

physical risks (technical, material and financial support, as needed).

2.5.4.2

REDUCING ABSOLUTE GREENHOUSE GAS

EMISSIONS

Since 2013, the Group has been equipped with the tools needed to carry

out an annual update of the overall assessment of greenhouse gas

emissions from its production and distribution sites. This work is carried

out with the help of an independent external specialist firm, using

the Bilan Carbone

method and the GHG Protocol. In compliance with

the requirements of the applicable regulations (Article75 of law

2010-788 of 12July 2010), since December2015 Hermès has

published its Bilan Carbone

(Carbon Assessment) in accordance with

the method and scope indicated by the legislation in France (direct

emissions generated by fixed and mobile sources, and indirect emissions

associated with the consumption of electricity, heat or steam).

Hermès details its Scopes1, 2 and 3 greenhouse gas emissions in this

report and on its Hermès Finance website for the scope required by law

(ArticleL.229-25 of the French Environmental Code).

Raw materials

Upstream freight

Other purchases

Sources controlled by

the legal entity

Downstream logistics

Work-related travel

Other

Other indirect sources*

(Scope 3)

Energy-related indirect sources

(Scope 2)

Direct sources

(Scope 1)

Other indirect sources*

(Scope 3)

Electricity, heat, etc.

Upstream Downstream

Source: French Ministry of the Environment

* S Sources of emissions unaffected by regulatory requirements

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2.5.4.2.1 Summary of greenhouse gas emissions

The Group expanded and structured its climate action in 2021, with the

following choices, approved by the Executive Committee.

Carbon reporting is fully aligned with the data detailed in the CDP

(Carbon Disclosure Project), for which quantitative and qualitative

information is public. This allows the reader of this URD to find more

information, and avoids presenting partial data that is harmful to the

analysis.

Hermès has decided to report on all scope3 categories, even if this

requires working on the basis of estimates for certain items (certain

stores, for example), considering that the quest for completeness

contributes to the transparency of the analysis. For certain categories of

the GHG Protocol, calculations or estimates led to non-material amounts

(threshold below 0.5% of the total). They do not give rise to any specific

monitoring and are listed below as “not significant”.

The results will be analysed according to the long-term objectives (target

for 2030), compared to the baseline situation adopted by the Group for

2018 (first year of contribution to the CDP, published in 2019). This

choice makes it possible to check that the course is maintained, beyond

the irregular short-term developments, which are inevitable given the

SUMMARY OF GREENHOUSE GAS EMISSIONS

changes to be implemented, which are not all linear and may require

time.

Concerning scopes1 and 2 (which represent 7.1% of the total), Hermès

uses the so-called market-based approach, which consists of calculating

the carbon footprint directly related to its energy purchases in each

country considered, rather than using the average mix of countries.

The Group has decided to continue its actions in terms of carbon

offsetting, beyond its targets of 100% coverage of scopes1 and 2,

through long-term investments in the Livelihoods fund.

In the following tables, the data is presented according to these

principles. The figures for scopes1 and 2 have been restated according

to the market-based approach, to allow a fair comparison (see

footnote

As part of the work carried out with the SBTi teams to validate the

Group’s trajectory up to 2030, and during the review of the Group’s

emissions summary by these experts, certain emission items were

distributed differently between scopes 1, 2 and 3. These reclassifications

were therefore made for the entire published period, from 2018 to 2021.

This improvement in the quality of the analysis has a negligible impact on

the data published to date (less than 4% for all 2020 emissions).

In 2021, the Hermès Group’s GHG emissions were around 527k tonnes

CO eq, up 5.3% from the previous year. With a drop of -15.3% in

absolute value compared to 2018, emissions are in line with the

Group’s targets for 2030.

In 2021, the Hermès Group’s GHG emissions were around 527k tonnes

CO eq, up 5.3% from the previous year. With a drop of -15.3% in

absolute value compared to 2018, emissions are in line with the

Group’s targets for 2030.

The GHG emissions break down as follows:

objects are made in Hermès' in-house workshops, so it is

representative of a very large part of production (which is rarely the

case in the Fashion & Apparel industry, where production is generally

subcontracted and therefore falls within scope 3). This figure is in line

with Hermès' objectives validated by the SBTi. With a reduction of

-14.5% in three years, the Group is making progress towards its 2030

target, and is continuing the necessary transformation effort for its

industrial facilities, which will take several years to achieve. In 2021,

scopes 1 and 2 of the GHG assessment were the subject of

improvement work on the scope with the SBTi, as mentioned above.

37.4 k tonnes of CO eq for scopes 1 and 2, i.e. direct and indirect

emissions related to energy consumed by production sites, offices,

logistics centres and stores. In understanding this figure, it should be

recalled that the Company has a business model in which most

◆

The GHG emissions break down as follows:

Location- based scopes 1 and 2: 49.7 (2018), 48.5 (2019), 49.3 (2020), 56.2 (2021) in KT CO EQ.1.

InktCO eq

2018 2019 2020 2021 Change/2020 Change/2018 Target 2030

Scope1 22.1 20.9 19.9 21.3 - - -

Scope2 market-based 21.7 20.5 18.7 16.1 - - -

Total scopes1 and 2 43.7 41.4 38.5 37.4 -3% -14.5% -50,4%

Scope3 578.7 483.6 462.5 490.1 +6% -15.3% -

TOTAL GROUP 622.4 524.9 501.0 527.4 +5.3% -15.3% -

INTENSITY

IntCO eq per €M Gross Margin

2018 2019 2020 2021 Change/2020 Change/2018 Target 2030

Scopes1 and 2 10.5 8.7 8.8 5.8 - - -

Scope3 138.6 101.8 105.7 76.5 -27.6% -44.8% -58.1%

TOTAL GROUP 149.1 110.6 114.5 82.4 -28% -44.8%

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◆

490.1 k tonnes of CO2eq for scope 3, which essentially takes into

account the carbon footprint of raw materials (62% of scope 3) as

well as all purchases, fixed assets, waste, subcontracting, packaging,

transport of products and employee travel. Upstream and

downstream transport (categories 4 and 9) represent 14% of the total

scope 3. In 2021, scope 3 of the GHG assessment underwent work

on improving the scope with the SBTi, input data and an update of

emission factors using internationally recognised baselines and

increasingly accurate calculations. The changes in scope 3 reflect the

strong upturn in activity. With a reduction of -44.8% in three years,

the Group is in line with its reduction targets for 2030.

These figures confirm the merits of a low-environmental-footprint

French craftsmanship model: with a carbon intensity of 82.4 (all

scopes), Hermès is ranked as one of the least carbon-intensive

companies of the CAC40, based on a full scope3. The decoupling

between business growth and the Group’s footprint is -44.8% in three

years.

Category 7:

Employee

commuting

20,267 tCO

Category 6:

Business

travel

1,332 tCO

Category 4:

Upstream transport

and delivery

10,873 tCO

Category 5:

Waste generated

in operations

6,201 tCO

Category 8:

Upstream leased

assets

Not significant

Category 3:

Fuel and

energy-related

activities not included

in scope 1 or 2

3,006 tCO

SCOPE 2

Indirect emissions

from the use of

electricity, heat

or steam supplied

by others

16,124 tCO

SCOPE 3

Other indirect emissions:

Other emissions indirectly

produced by the

organisation’s activities

which are not accounted for

in scope 2 but are linked to

the entire value chain,

such as the purchase of

raw materials, services or

other products, employee

travel, upstream and

downstream transportation

of goods, management of

waste generated by the

organisation’s activities,

usage and end-of-life

of products and services

sold, capitalisation

of production goods

and equipment.

490,055 tCO

Category 10:

Treatment of

products sold

Not significant

Category 9:

Downstream

transport and

delivery

57,700 tCO

Category 2:

Capital goods

24,594 tCO

Category 11:

Use of sold

product

Not significant

Category 12:

End-of-life treatment

of sold products

1,870 tCO

HERMÈS

SCOPE 1

Direct greenhouse gas

emissions by the

reporting company itself

(eg. fuel, combustion,

industrial process)

21,257 tCO

Category 14:

Emissions from

franchises

Not significant

Category 14bis:

Downstream

deductible

2,367 tCO

Category 13:

Downstream leased assets

Not significant

Category 15:

Investments

Not significant

Category 1:

Purchased goods

and services

361,847 tCO

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Analysis of the main carbon footprint items

The diversity of the Hermès Group’s activities means that the areas

responsible for the highest scopes1 and 2 emissions vary widely from

one activity to another. Each métier has drawn up a plan addressing its

own challenges. The energy consumption figures provide a picture of the

main contributing métiers. Special attention is paid to the energy

consumption of stores, which account for 18% of total consumption (and

31% of market-based scopes1 and 2). Consumption reduction measures

are presented above.

(scopes 1 et 2)

-14.5%

carbon intensity

at production

sites, logistics

centres and stores

◆

raw materials used: all leathers, silks, cashmeres, other textiles,

metals and precious stones, perfume ingredients (category [1]);

◆

wrapping and packaging products (category [1]);

◆

purchasing and subcontracting (category [1]);

◆

transport of goods and products upstream of production units,

inter-site transport and downstream transport of products to the

stores (categories [4] and [9]);

◆

employee travel: commuting to and from work for craftspeople,

domestic and international business travel (categories [6] and [7]);

◆

upstream energy consumed (category [3]);

◆

fixed assets (category [2]);

◆

waste generated in operations (category [5]).

The Greenhouse Gas Protocol (GHG Protocol) proposes determining the

greenhouse gas emissions of scope3 from 15 categories. Using the

significant categories of the Hermès Group’s activity as described in

§ 2.1 “Business model”, the calculation of the scope3 emissions is

carried out each year with the help of a specialised consultant. It takes

into account the most recent emission factors and technical definitions

that are best adapted to the Hermès Group’s specific needs. This

approach is refined as progress is made in this area.

For Hermès, the main categories are as follows:

Within scope3, in addition to materials, transportation represents a

significant share of emissions, this being the trade-off for French

production and global distribution.

*BBase 2018, scope 2 market-based

As explained below, this transport is analysed in detail and subject to

operational actions to lessen the impact.

The scope3 changes observed stem from the reduction of emissions in

some categories, the improved measurement of other categories

(estimates replaced by more precise calculations) and the update of the

emissions factors.

2.5.4.2.2 Focus on the métiers

Real estate

Since 2020, Hermès International and the Group real estate department

have committed to reducing the carbon footprint/m

of built or

redeveloped surface areas by 50% by 2030.

In order to measure and control the carbon footprint of buildings with

regard to the objectives to be achieved, the Group real estate

department systematically conducts a Life Cycle Assessment (LCA) of the

construction materials chosen for each real estate project.

Thus, improvement of Bilan Carbone® (Carbon Assessment) of new

stores and new buildings involves special attention being paid to the

choice of building materials, reduction in their weight, efforts to source

supplies locally, and modes of transportation with low carbon emissions.

The Hermès Group’s sustainable construction standard addresses

carbon challenges and targets stemming from the Group’s commitments

related to new construction, renovation and dismantling projects.

The first assessments made in 2019 enabled, on the one hand,

assessment of the environmental impact of the constructions and, on the

other hand, adjustment of the standard layout and construction

benchmark to guide the CO

emission reduction ambitions on future

projects through the Hermès sustainable construction standard.

In 2020, bio-sourced materials were selected for the construction of the

new Guyenne leather goods workshop in St Vincent de Paul (Bordeaux);

with the installation of a wooden structure. The LCA of the materials used

gives a result of 428kg CO

. Furthermore, the mixed-use structure of

the new Montereau leather goods building consists mainly of wooden

posts and metal beams. The LCA of the materials used gives a result of

698kg CO

. For comparison, industry best practice is to aim for a

footprint of less than 1,000 kg of CO

/m2.

Transportation

The commercial department is working on projects to improve the

Hermès Group’s logistics footprint. The main projects concern local

transport services, giving priority to the use of carbon-neutral modes of

transport, longer-distance transport, where air transport is being

replaced by sea, road or rail whenever possible, and choosing alternative

fuels with lower emissions; and the optimisation of volumes transported.

For local transport, i.e. deliveries from local warehouses to city centres,

electric or hybrid vehicles are used whenever possible. For example, the

Parisian sites are delivered from the two French logistics centres using

electric vehicles (from the Bobigny site), or hybrid vehicles (from the

Saran site).

the implementation of a climate strategy consistent with the

Paris Agreement, i.e. enabling the reduction of emissions, and

combined with a commitment to sufficient and verified resources.

Hermès calculates its carbon emissions and ensures their audit by an

independent third party, has formalised its reduction strategy since

2019, and had its SBTi trajectory validated in 2021;

participation, through its activity, in decarbonising its suppliers

upstream and its customers downstream, through the adoption of

low-carbon consumption methods. Since 2021, in particular

through CSR Briefs for its suppliers, Hermès has been committed to

reducing emissions in its supply chain. Craftsmanship production in a

logic of quality and sustainability, and not volume or rapid renewal, is

a powerful vector of low-carbon consumption;

contribution to the financing of third party reduction, avoidance

and sequestration projects to accelerate the ecological transition

and contribute to the increase of carbon sinks, according to the

principle of carbon offset. This is the purpose of the Group’s

investment in the Livelihoods project since 2012.

◆

Rule no. 1: Undertake and publish an assessment of GHG emissions,

reductions and offsets, in particular through this URD, but also with

the public reporting of the CDP (assessment A- for the climate change

part).

◆

Rule no. 2: Choose certified offset projects: all projects carried by

Livelihoods are audited and certified by Verra (formerly VCS) or Gold

Standard.

◆

Rule no. 3: Favour projects with a “sustainable development”

approach, i.e. long-term projects with positive impacts on populations

and biodiversity, which are the hallmarks of the projects carried out

by Livelihoods.

◆

Rule no. 4: Define the right combination of projects supported both

nationally and internationally: while the first projects led by

Livelihoods were international, inspired by the Clean Development

Mechanisms, in 2021 Livelihoods launched its first project in Brittany

(France) on a pilot basis and Hermès is also studying the possibility of

other similar projects in France.

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For more distant transport (Asia, America, Oceania), maritime

transport is preferred when the nature, volume and quantity of the items

to be shipped permit it. To date, this mainly concerns publications (for

example, the biannual review Le Monde d’Hermès), items related to

communication events, store fittings, sales associate uniforms,

packaging and store consumables. Tests are also conducted for sea

transportation (to Asia and the United States), rail transportation (to

China) or a rail/sea combination (to Japan) for other categories of items,

in particular furniture, as well as more seasonal items such as shoes and

ready-to-wear.

Tenders for freight transport systematically include a criterion linked to

the improvement of the carbon footprint: the use of NGV and bio-NGV for

road transportation, SAF (sustainable aviation fuel) for air transportation

and SMF (sustainable maritime fuel) for maritime transportation, are

gradually requested from the selected service providers.

Actions have also been taken to transport raw hides from farms to the

division’s tanneries. The Supply Chain teams have worked in this way

since 2020 to increase the share of maritime transportation between

Australia and France. In 2021, this share increased significantly, with a

third of Porosus hides shipped by boat, which corresponds to a 30%

decrease in transport-related CO

emissions compared to 2020 (for an

equivalent number of hides transported).

The optimisation of volumes transported will drive the improvement

in our logistics footprint. In 2019, 2020 and 2021, we modernised our

order preparation tools: automated pre-packing, optimisation of order

preparation circuits and automated adaptation of the height of transport

crate contents before closing, all contribute to reduce the volumes

transported, for an equivalent number of items.

Lastly, at employee level, Hermès continued to promote low-impact

mobility. On the one hand, through a proactive policy of replacing internal

combustion vehicles with electric vehicles or plug-in hybrids (34% of the

current fleet in France), both for company vehicles and service vehicles.

On the other hand, through the proposal of a long-term rental solution for

electric bicycles with a small contribution from Hermès Sellier and

Hermès International employees; the Group pays 70% of the rental.

2.5.4.3

UNDERTAKE VOLUNTARY CARBON OFFSET

ACTIONS

2.5.4.3.1 Carbon neutrality approach

As specified by ADEME (French Environment and Energy Management

Agency), carbon neutrality aims to offset, on a global scale, any

greenhouse gas emissions resulting from human activity by sequestering

equivalent quantities of CO , i.e. keeping them out of the atmosphere

over the long-term. This means sequestering carbon to stabilise its

concentration in the atmosphere and limit the effects of climate change

on the planet. This objective of neutrality has a scientific reality only at a

global level, and involves the coordination of the States by the Paris

Agreement. However it also requires the mobilisation of all stakeholders,

from citizens to companies.

To achieve carbon neutrality, two levers are necessary: drastically reduce

GHG emissions as quickly as possible, and, at the same time, invest in

biological or technological sinks to sequester residual CO

emissions.

For ADEME, this commitment by stakeholders to carbon neutrality must

include the following three stages, which are applied by Hermès:

Hermès wishes to contribute in a pro-active way to this collective

neutrality by 2050, by putting its offset efforts into perspective in relation

to the level of its emissions. However, the Group does not claim

individually to be carbon neutral.

ADEME thus supports the principle of voluntary carbon offset if the

company complies with five rules to which Hermès subscribes:

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◆

a reduction in emissions, which requires organisational and

technological changes both internally and with suppliers;

◆

offsetting, which is based in particular on natural capture

mechanisms (e.g. planting) and the implementation of large-scale

projects, which take time to be set up sustainably.

◆

on the one hand, so that the priority remains the allocation of human

and financial resources to reducing emissions;

◆

on the other hand, to build offset projects with local communities, in

compliance with our quality and ethics requirements, which takes

time.

◆

Rule no. 5: Communicate responsibly. Hermès does not claim in any

way to be carbon neutral, acknowledging that the Group’s activities

have a carbon impact, even though it is one of the most moderate in

the CAC40. However, its actions are committed to the long-term, with

the aim of achieving a “net zero” trajectory by 2050, compatible with

the 1.5° scenarios of the Paris Agreement.

Offset strategy:

The Group’s ambition to achieve a “net zero” target by 2050 is based on

two complementary approaches:

This carbon offset strategy is therefore gradual for two main reasons:

Hermès’ strategy is to follow a trajectory that will enable it to i) neutralise

a growing part of its residual carbon emissions by 2030, calculated on

the basis of emission reduction projections (as taken into account in the

SBTi analyses), and ii) achieve expected volumes of voluntary carbon

offsets (forecasts of carbon credits deliveries from the Livelihoods

business plans). Hermès is continuing its analyses to achieve its 2050

goal of net zero.

In 2021, Hermès increased the reliability of its emissions forecasts and,

by confirming its commitment to the third Livelihoods fund, has secured

this 2030 trajectory with projects that have maturities of 20years, and

deliveries of these credits, which will accelerate in the coming years.

CARBON CREDITS RECEIVED AND CANCELLED

2020 2030 2040 2050

GHG emissions

GHG emissions Removals

2018 2019 2020 2021

Carbon credits received

in k tonnes CO

36 44 46 81

HERMÈS' VOLUNTARY CARBON OFFSET TRAJECTORY

◆

reduction first: the carbon credits generated by Livelihoods projects

serve to complement internal reduction efforts, and are one of the

parameters for achieving carbon neutrality by 2050;

◆

principle of additionality: the projects supported by Livelihoods

would not have existed without its investments, which require

in-depth studies in complex social and economic contexts. These are

not off-the-shelf or standardised projects, as is sometimes the case

for certain renewable energy carbon projects. The aim is to help

disadvantaged and sometimes marginalised communities to break

out of poverty, as formalised in the Livelihoods charter;

◆

carbon credits certified to the highest standards, Gold Standard

and Verra (formerly VCS), which validate the carbon effectively

removed (and not carbon reduction estimates or future projections).

Each project also results in a follow-up and calculations of impacts

according to the United Nations’ SDGs;

◆

an entrepreneurial risk to finance projects in the beginning:

Livelihoods does not buy credits “on the market” from projects

that have already been started, accepting to pay a margin to an

intermediary. It helps disadvantaged communities by investing for

them right from the beginning, by taking a risk of between

€2million and €6million on each project, with no absolute

guarantee of any return. The communities concerned do not have

the means to carry out their projects without this risk-taking. Project

financing occurs during the first years, with the results seen, for

example, when the trees grow. This can sometimes be five years after

the main investments have been made;

◆

a coalition of companies driven by the same spirit: all investors in

Livelihoods pool their commitment and therefore receive credits from

a portfolio of projects that have been developed and discussed

together;

◆

a long-term approach: companies and project sponsors, as well as

communities, are committed to projects lasting between 10years

(energy projects) and 20years (farming projects). During this period,

the fund will help communities, monitor projects and receive credits

after a few years. Commitments of this length are rare for company

coalitions;

◆

local communities that benefit directly from projects: thanks to the

NGOs that coordinate projects at local level, communities benefit

directly from the advances provided by the projects: increases in soil

fertility, regenerative farming, efficient agro-ecological practices,

restoration of ecosystems, generation of farming, forestry and fishing

income and the improvement of living conditions. This is actually one

of the key success factors of the projects: the communities mobilise

themselves because they find that there is a direct advantage to the

project.

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2.5.4.3.2 Livelihoods Carbon Fund

In June2012, Hermès joined the Livelihoods carbon funds (LCF), a

coalition of companies financing carbon offset projects with high

social and environmental value. Livelihoods initiatives are described

below as well as in the section covering relations with stakeholders (see

§ 2.7.2.1.4), notably explaining that more than 132million trees have

already been planted, benefitting more than 1.7million people.

The operation of this system is based on seven structuring principles,

the foundations of the Livelihoods charter, which contribute to its value:

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The Livelihoods fund is organised by a system of successive

compartments. The first LCF1 compartment (Livelihoods carbon fund 1,

€45million), was opened in 2011, and until 2020 was the only one to

issue carbon credits. Hermès has also been a shareholder since 2017 in

a second sub-fund, LCF2 (€65million), whose first deliveries took place

this year. Numerous projects have already been launched by this fund, in

India, Indonesia, Kenya, Rwanda and Malawi, on agroforestry, mangrove

and energy projects.

Capitalising on a decade of experience with private investors, at the end

of 2019 Livelihoods announced the launch of a third Carbon Fund to help

companies, financial investors and cities accelerate climate action and

generate large-scale social impact. This third Livelihoods Carbon Fund

(LCF3), which was closed in June2021, aims to invest €150million to

improve the lives of 2.5million beneficiaries in developing countries.

More than €250million have been collected to fight against climate

change through the three Livelihoods funds.

Hermès has thus confirmed its commitment to the climate, communities

and biodiversity through an investment in this third LCF3 compartment.

With each of these funds having a lifespan of 20years, the Group is

demonstrating its long-term philosophy, and its ability to assume long

maturities (2030) and continue its commitment to reducing the impact of

climate change.

Livelihoods projects produce positive impacts that go beyond the sequestration or reduction of carbon emissions, as illustrated by the following

diagram:

Guatemala

France

Mexico

Senegal

India

(Araku 1 & 2)

Kenya

(Embu)

India

(Sundarbans)

Indonesia

Kenya

(Hifadhi)

Kenya

(Mount Elgon)

Burkina-Faso

Rwanda

Peru

Malawi

India

(Pradan)

LCF1 Fund

LCF2 Fund

LCF1 Fund LCF1 Fund

LCF2 FundLCF2 Fund

Agroforestry

Mangrove restoration

Rural energy

LIVELIHOODS CARBON FUND #1 AND #2

17 extensive projects with concrete social and environmental results

21 million

tonnes of CO

sequestered

over 20 years

current projects

(Asia, Africa,

Latin America)

More than

1.7 million

project

beneficiaries

More than

132 million

trees

being planted

More than

240,000

households being

equipped with

efficient cookstoves

More than

57,000

hectares planted

or preserved

1. Royal Society for the Prevention of Cruelty to Animals.

2. Intergovernmental science policy Platform on Biodiversity and Ecosystem Services.

◆

Train: this involves increasing internal biodiversity awareness-raising

initiatives and providing training on biodiversity issues and strategy.

Objectives: train CEOs, experts and Sustainable Development

Committees in 2021, extend to Management Committees, site and

sector employees in 2023, and then to all employees by 2025.

◆

Collaborate: the Group wishes to deepen the already existing

partnership with WWF France for responsible sourcing, as well as with

other specialist NGOs. This approach is decisive in the development

of responsible breeding practices, especially for exotic leathers where

more specific partnerships, such as the support of the ICFA, the

SAOBC and the RSPCA

(UK) are useful to deepen new scientific

research and support responsible breeding. More generally, it also

wishes to extend its collaboration with stakeholders who are experts

in these subjects.

Objectives: continue work with these recognised organisations by

2023.

◆

Assess: Hermès wants to build a robust impact analysis matrix based

on value chain mapping. The result will be the measurement of the

Group’s biodiversity footprint according to the five pressures of the

IPBES .

Objectives: measure the biodiversity footprint, particularly of the main

supply chains (leather, silk, cashmere, wood, cotton) by 2025 with

WWF France and CDC Biodiversité using the GBS. Integration of the

issues identified in the reporting tools by 2025.

◆

Act: action plans proportional to the level of impact on all sites and

raw materials sectors must be implemented and support the

development of Science Based Targets. At the same time, the Group

is committed to continuing its positive actions beyond its area of

direct responsibility.

Objectives: certify 100% of the ostrich sector by 2022. Establish

action plans for 100% of “lowest impact” sites by 2023, those with

“high impact” and its main supply chains by 2025. In addition,

reinvest in the Livelihoods fund and on biodiversity projects via the

Corporate Foundation (four dedicated projects by 2023).

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The carbon deliveries expand as the trees grow (the projects span a

period of 20years). They were made in 2021 after verification by

specialised auditors (according to the Gold Standard and Verra-VCS

standards), and Hermès cancelled all the credits granted to it.

The Covid-19 crisis unsurprisingly created difficulties and delays in

projects, whether in their implementation or verification. Nevertheless,

the funds were able to distribute credits for amounts greater than the

budget forecast.

In total, Hermès received and cancelled 81,000 carbon credits for

2021, and contributed the same amount to reducing climate change

impacts.

This amount is equivalent to the entire scopes 1 and 2 carbon

emissions, plus 63.6% of emissions related to upstream and

downstream transportation of merchandise, i.e. more than 76% of the

total represented by scope 1, scope 2 and Transportation items.

§ 2.7.2.1.4 “Communities: stakeholders and local integration” provides

further information on the Livelihoods societal aspects.

2.5.5

BIODIVERSITY

Maintaining an environmental setting conducive to the development of

activities requires respect for and the protection of biodiversity.

According to the recent WWF “Living Planet” report, there has been a very

worrying decline in the populations of birds, mammals, amphibians and

reptiles on the planet’s surface since 1970.

Hermès is working to protect biodiversity in its direct sphere of

responsibility, in its extended sphere of influence, and through voluntary

commitments reaching beyond its economic sphere of influence.

“Nature has been inspiring us since 1837. Protecting biodiversity is a

wonderful opportunity. We must pass on this wealth to future

generations. It’s a challenge we must win today.” Axel Dumas,

Executive Chairman of Hermès.

POLICY

To meet the current challenges regarding the global loss of biodiversity,

Hermès has made a concrete commitment with a strategy formalised in

2018 and updated in 2020 around four structuring elements: train,

collaborate, evaluate and act. Hermès is continuing its biodiversity

commitments with a five-year plan covering its activities in France (80%

of production) and internationally. The subject is supervised by the

Sustainable Development Committee (three members of the Executive

Committee) and is managed by a dedicated committee.

The purpose of the four pillars chosen is to guide the Group and its

business lines in measuring the biodiversity footprint of value chains, to

co-construct corrective and positive actions, or to support the

organisation’s skills development. They include specific commitments

that describe clear objectives and dedicated time horizons.

Hermès took advantage of the update of this biodiversity strategy to

renew its individual commitment to Act4Nature International. The

strategy and the related objectives have therefore been validated by a

committee of stakeholders inherent to the governance of this

multi-stakeholder alliance (companies, public authorities, scientists and

environmental associations).

The House’s new commitments are a continuation of the previous ones

and are defined as follows:

◆

assessment of the main environmental challenges of the supply

chains (diagnosis, action plans);

◆

specific work on water risk issues thanks to the WWF’s freshwater

footprint assessment tool: the Water Risk Filter;

◆

innovative work on the global measurement of its biodiversity

footprint, in collaboration with CDC Biodiversité.

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MEASURES IMPLEMENTED AND RESULTS

The actions are developed according to the four strategic axes stated

above.

2.5.5.1

IMPLEMENT TRAINING INITIATIVES

FOR EMPLOYEES

The e-learning module dedicated to biodiversity was rolled out in 2021.

This training, accessible to everyone, was developed in a co-operative

mode with employees of the House from different backgrounds.

As a reminder, in 2020, members of the Group’s sustainable

development Operational Committee attended training courses organised

by Conservation International (CI) on biodiversity as part of the Fashion

Pact. Specific training sessions were organised for a working group

composed of internal experts as part of the project to map biodiversity

issues using the GBS methodology with the WWF and CDC Biodiversité.

An awareness-raising seminar attended by around 100 managers and

co-hosted by WWF France, recalled the scientific findings from the latest

IPBES report, presented the five major pressures that human activities

exert on nature and communicated the positioning of the House and its

objectives.

2.5.5.2

WORKING IN PARTNERSHIP

WITH STAKEHOLDERS

Hermès wants to surround itself with the best skills to make progress in

the field of biodiversity.

The partnership agreement with WWF France, signed in May2016, was

renewed in 2020. The aim is to work together to preserve ecosystems by

analysing interactions with the Group’s supply chains. This partnership is

expressed in the following areas:

Hermès continued its collaboration with the Cambridge Institute for

Sustainable Leaders, after the study on the Brazilian silkworm sector, by

starting the analysis of the impact on biodiversity of a new raw materials

sector.

The Group also continued its highly operational work with NGOs involved

in the protection of biodiversity: in South Africa, with SAOBC, on the

subject of ostriches but also local ecosystems (water); with the ICFA for

crocodilians, and with the British NGO RSPCA on animal welfare issues.

In 2019, the Hermès Group initiated a process to better familiarise itself

with its water footprint across all its sites and those of its suppliers

(75sites). As part of this study, potential impacts on biodiversity are

taken into account and analysed.

At the same time, the Fondation d’Entreprise Hermès has also renewed

its partnership with WWF France for the preservation of natural heritage

and ecosystems, by supporting the reduction of crime related to wildlife,

the fourth largest transnational criminal activity in the world, and future

protection projects.

2.5.5.3

DIAGNOSING IMPACTS ACROSS THE ENTIRE

VALUE CHAIN

In 2021, Hermès measured its footprint using the Global Biodiversity

Score tool developed by CDC Biodiversité (a subsidiary of Caisse des

Dépôts), implemented with the support of WWF France and based on

field, financial and theoretical data from 2019.

The GBS is a tool for assessing the biodiversity footprint of companies.

The results are expressed in MSA.km , where MSA is the average

abundance of species (Mean Species Abundance), a metric

characterising the integrity of ecosystems.

DIFFERENCES BETWEEN METRICS, UNITS, TOOLS AND INDICATORS (CDC BIODIVERSITÉ, 2020)

METRIC / UNIT

kg - unit measuring the mass of a person

MSA.m

MSA.m² - system by which

ecological integrity can be

measured

TOOL

balance - tool for weighing a person

GBS

GBS - tool to assess the biodiversity

footprint

INDICATOR

weight - indicator of the mass of a person

Biodiversity footprint -

indicator that can be used

by a company

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The analysis is conducted by analysing the impact of the various

components of economic activity on these ecosystems according to the

following pressures: land use, fragmentation, encroachment,

atmospheric nitrogen deposition, climate change, hydrological

disturbance, wetland conversion, nutrient emissions and land use

change in the watershed. These pressures are derived from the work of

IPBES. The calculation is based on the use of the GLOBIO database, and

makes it possible to calculate static and dynamic impacts, on scopes 1

(direct operations) and 2 (energy purchases excluding fuels), as well as 3

upstream (other purchases).

DATA COLLECTION AND ANALYSIS PROCESS (CDC BIODIVERSITÉ, 2020)

Environmental

extensions

(EXIOBASE)

Input

data

Company

Economic

quantifications of

human activities

Revenue (€)

Purchases (€)

Input-output

models

(EXIOBASE)

Commodities, services

or processed products

consumed; GHG

emissions, water

consumed or

abstracted; nitrogen

(N) and potassium (P)

emissions

Inventories

Commodities

and products (t)

Emissions (t)

and water use

)

Change in land use

by type and location; N

and P- concentration;

wetland conversion

Comprehensive

ecological

inventories

Pressures

Land

and aquatic

pressures and

ecotoxicity

(provisional)

Impacts,

state of

biodiversity

Biodiversity

CDC

Biodiversité

tools

GLOBIO

model

Revenue and

purchase amounts

by industry and

region

In total, 92% of Hermès’ revenue is covered by this analysis, i.e. all

Hermès métiers, with a limited number of exceptions, such as jewellery,

for which the GBS methodology is not yet adapted (data and impact

factors inadequate, in particular on Hermès’ use of recycled gold and not

gold from mining, at the date of the assessment, versions 1.1 and

1.2.1-beta used). The scope of the study includes scopes1, 2 and 3

upstream (i.e. excluding the use phase). This scope is called the

“Vertically Integrated Scope” by CDC Biodiversité.

BREAKDOWN OF HERMÈS' TERRESTRIAL DYNAMIC IMPACT BY SCOPE

Scope 3

95%

Scope 1

Scope 2

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Hermès has chosen to steer the Group’s actions and investments by

focusing on the Terrestrial Dynamic impact, which reflects the annual

deterioration. The majority of the footprint is related to the upstream part

of the value chain. The main pressures on land biodiversity are linked to

land use (crops, livestock) and greenhouse gas emissions (Scope3

upstream), demonstrating a strong relationship between climate and

biodiversity.

Although calculations of the impact on biodiversity are still not

widespread, initial comparisons suggest that Hermès’ activity has a less

intensive impact on biodiversity than that identified in available

inter-sector data.

Chemical Industry

(Vertically Integrated

Scope)

Average company

(all sectors,

world, Scope 1)

Hermès

(Vertically Integrated

Scope)

325

100

Focus on the Leather Goods & Saddlery métier

Particular attention was paid to the Leather Goods & Saddlery métier,

which represents 45.5% of Group revenue, while contributing more than

50% of the dynamic land footprint.

TERRESTRIAL DYNAMIC IMPACT BY ACTIVITY (VERTICALLY-INTEGRATED SCOPE,

MSA.KM )

Silk and

Textiles

Perfume

and

Beauty

Other

Hermès

métiers

Leather Goods & Saddlery

Ready-to-

wear and

Accessories

Distribution

Support

◆

At the end of 2021, several projects were initiated with other industry

players and experts on these levers in order to better understand their

impacts within the value chain, in order to understand how to reduce

their footprint on biodiversity.

animal feed;

livestock farming (excluding food).

INDEX OF THE TERRESTRIAL DYNAMIC IMPACT INTENSITY IN MSA.M /€ (AVERAGE

COMPANY AT BASE 100)

Sector data provided by CDC Biodiversité

Land use change

To fight against deforestation, Hermès takes into account its risks

related to its upstream value chain. Within this, three main topics

were identified: land use for animal feed, use of wood species for

Hermès Maison objects and use of cardboard in packaging.

1- The GBS analysis of the Terrestrial Dynamic footprint of Hermès

leather showed that cattle feed represents a significant area of

work. As a result, a multidisciplinary working group was formed to

work on reducing this footprint. In view of the complexity of the

subject, both theoretical academic support and a pragmatic

approach with certain partners are planned for 2022.

2- By ensuring demand for certified wood (FSC certification for oak,

SVLK for mahogany), Hermès ensures that wood from forests is

sourced with greater consideration for biodiversity, while

maintaining the quality of water and preventing soil erosion. The

House conducts a biannual assessment with its suppliers, taking

into account the vulnerability of species (classification of species on

the IUCN Red Lists: International Union for the Conservation of

The analysis of the contributions to pressures on biodiversity is based on

a detailed analysis of the supply chain (mainly in France and Europe for

leather goods). These pressures are at 95% within the upstream supply

chain (scope3). The work identified two priority levers for action within

our sectors:

Nature). This approach aims to reduce the risk of deforestation (use

of valuable species) and thus the preservation of natural

environments.

3- The cardboard and paper used for the orange bags and boxes

given to customers are 100% FSC-certified.

Moreover, an impact study incorporating issues relating to animal

and plant life and the preservation of natural environments is

carried out prior to establishing any new industrial site. For the

establishment of new leather goods workshop sites, Hermès now

favours the conversion of brownfield sites or wastelands whenever

possible. For example, the Montereau leather goods workshop is

located on the former site of an energy sector company, and that of

Guyenne on a road construction aggregate site. The future site of

an energy sector company of Riom, Louviers, and Saint Junien are

also redevelopments of brownfield sites and this approach

considerably limits the artificialisation of land surfaces while

continuing to allow the activity to expand.

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2.5.5.4

IMPLEMENT ACTIONS IN THE MÉTIERS,

SECTORS AND SITES

Together with the partners supplying it with natural materials, the Hermès

Group is continuing constructive efforts incorporating biodiversity

protection. The Group is collaborating with international NGOs in this

area, as appropriate, in order to better assess the various biodiversity

components that concern it and to assess the impact on its supply chain.

Through their location in rural areas, the production sites are involved in

various biodiversity initiatives.

Leather goods workshops and other production sites

In order to integrate the protection of biodiversity into the consideration

of the establishment of future leather goods workshops, a guide listing

best practices was drawn up in 2020. The following principles have been

adopted: at the plot level, actions result in the implementation of

ecological management of green spaces. At the landscape level, the aim

is to promote ecological connectivity of sites with their surrounding

environment. The sustainable construction standard used for each new

site project has therefore been enhanced and will now enable architects

and landscapers to best integrate this dimension into their projects.

In 2021, 14 leather goods workshops were assessed against 16

indicators based on the five erosion factors defined by IPBES: they are

intended to measure the pressure on biodiversity, i.e. the impact of

activities on the sites, the resulting state of the environment and the

responses or corrective actions taken. These indicators assess the

implementation of the best practices guide of the Leather Goods division

with, for example, no use of phytosanitary products in these 14 leather

goods workshops.

The pilot actions carried out by the leather métier are intended to be

extended to all production sites in France, making it possible to achieve

the 2025 objective of 100% of sites involved in biodiversity actions.

At CATE, a green space of approximately 5,000m

is left fallow and is

maintained only once a year to promote the development of biodiversity.

ATBC’s textile site in Bussières has built a 225m

“flower – alfalfa

meadow” area to provide food for insects and wild rabbits.

Farms (crocodilians)

The vast majority of the animals bred on the farms come from eggs

collected in the natural environment, according to quotas set each year

by the local authorities. Several players ensure the smooth running of the

farming industry in Australia and the United States, in particular local

governments and their conservation departments, landowners, hunters

and egg collectors and incubators from which the breeding farms buy the

eggs or hatchlings.

As such, the income earned by landowners from the collection of eggs

contributes to the upkeep of these wetlands, and therefore to the

maintenance of biodiversity in these natural areas. In addition, Cites

tags, the use of which is made mandatory by the Washington Convention,

and egg collection permits generate benefits for local authorities (such as

the US Fish and Wildlife Service or the Department of the Environment

and Natural Resources of the Northern Territory in Australia). These

resources are then devoted to the operation of the services involved in

the management of species conservation programmes, the monitoring of

animal populations in the natural environment, the control of compliance

with regulatory requirements and research programmes on crocodilians.

In addition, specific actions are decided at local level. This is particularly

the case in Louisiana, where farmers must reintroduce into the natural

environment at least 5% of alligators – in good health and having

reached a minimum size – raised on their farm. This reintroduction is

carried out in areas defined by local authorities and under their control.

The alligator industry, considerably reorganised in line with the

Washington Convention, has contributed to protecting the species and its

unprecedented development in the areas in question and, as a result, to

protecting and maintaining the marshlands where these animals live and

reproduce. According to the US Fish & Wildlife department, an area of

1.2million hectares of wetlands is thus better maintained. The objective

is to continue to support farmers in their development, and thus

perpetuate these effects.

The production sites, by their activity and their location, therefore play a

key role in the preservation of species, the protection of biodiversity and

the local economy. The effectiveness of their actions comes from strong

local integration thanks in particular to relationships with the various

authorities in charge of nature protection, egg collectors and landowners

2.5.5.5

CONTRIBUTE TO POSITIVE ACTIONS OUTSIDE

HERMÈS’ SPHERE OF RESPONSIBILITY

As a responsible company, Hermès voluntarily undertakes

biodiversity-related efforts reaching beyond its business activities.

Fondation d’entreprise

The Fondation d’entreprise Hermès contributes to various

biodiversity-related projects and is continuing its efforts in this area. It

supports a wide-scale project in Africa, for example, in partnership with

the WWF France: Traffic/AfricaTwix. This project aims to improve the fight

against the poaching, trafficking and illegal trade of protected species in

Africa, through the establishment of IT tools fostering dialogue between

the different authorities of the countries in question. The Fondation

d’entreprise Hermès will continue to support this project. The Fondation

d’entreprise Hermès has increased its commitment in this area since

2019, supporting the Natural History Museum’s Vigie Nature École

programme, which aims to allow schoolchildren to take part in monitoring

biodiversity, as well as supporting the NGO L’Atelier paysan, which with

its agro-ecological approach lays the foundations for agricultural

development that is more respectful of biodiversity.

https://www.fondationdentreprisehermes.org/en/project/vigie-nature-ecole

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Act4Nature International

Act4Nature is an initiative launched by EpE (the French association

Entreprises pour l’environnement) and several partners. It aims to

mobilise companies to protect, promote and restore biodiversity through

shared commitments set by scientific institutions and associations, and

through individual commitments specific to each partner.

The shared commitment (10 commitments in total) aims to integrate

biodiversity considerations into all activities, from governance and

strategy to the most practical operations, to legitimise those

considerations among the Company’s employees and stakeholders in

order to elicit and encourage spontaneous and widespread actions.

The individual commitment is defined by each company and specific to its

activities. This commitment must be adapted regularly, as Act4Nature

strives to follow a continuous progress approach.

In 2018, Hermès joined Act4Nature project alongside 64members of the

French economy, thereby confirming its commitment to supporting and

factoring biodiversity into its overall development strategy, and also

contributing to the biodiversity targets set by the international community.

In 2020, Act4Nature became “Act4Nature International”, which retains

the characteristics of the voluntary commitment of the first initiative but

strengthens the terms of commitment required for companies and joins

the global “Business for Nature” initiative. Hermès’ commitments are

presented in the “Strategy” paragraph of this section.

Also in 2020, Hermès took the opportunity to update its more ambitious

biodiversity commitments and renew its individual commitment made in

2018. These objectives were validated by all stakeholders inherent in the

governance of this multi-stakeholder alliance (companies, public

authorities, scientists and environmental associations).

Fashion Pact

Under the Fashion Pact, Hermès joined a coalition, one of whose goals is

to support the development of the Science Based Targets for biodiversity

and to help protect and restore ecosystems and protect species. By

participating in this coalition, the Group is committed to an objective that

goes beyond its operations and contributes to the alignment of a sector

with global objectives.

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EXPERTS' HANDBOOK

This section takes a closer look and provides key figures, in particular on Hermès’ actions and results on the “Environment” pillar.

CONTRIBUTION TO THE UN'S SUSTAINABLE DEVELOPMENT GOALS (SDGS)

Hermès’ environmental commitments contribute to the UN’s sustainable development goals (SDGs).

◆

6.4 “By 2030, substantially increase water-use efficiency

across all sectors and ensure sustainable withdrawals and

supply of freshwater to address water scarcity and substantially

reduce the number of people suffering from water scarcity”

◆

7.2 “By 2030, increase substantially the share of renewable

energy in the global energy mix”

◆

7.3 “By 2030, double the global rate of improvement in energy

efficiency”

◆

9.4 “By 2030, upgrade infrastructure and retrofit industries to

make them sustainable, with increased resource-use efficiency

and greater adoption of clean and environmentally sound

technologies and industrial processes, with all countries taking

action in accordance with their respective capabilities”

◆

9.5 “Enhance scientific research, upgrade the technological

capabilities of industrial sectors in all countries, in particular

developing countries, including, by 2030, encouraging

innovation and substantially increasing the number of research

and development workers per 1 million people and public and

private research and development spending”

◆

12.4 “By 2020, achieve the environmentally sound

management of chemicals and all wastes throughout their life

cycle, in accordance with agreed international frameworks, and

significantly reduce their release to air, water and soil in order

to minimize their adverse impacts on human health and the

environment”

◆

No.12: Responsible consumption and production

◆

12.2 “By 2030, achieve the sustainable management and

efficient use of natural resources”

◆

13.1 “Strengthen resilience and adaptive capacity to

climate-related hazards and natural disasters in all countries”

◆

13.2 “Integrate climate change measures into national policies,

strategies and planning”

◆

13.3 “Improve education, awareness-raising and human and

institutional capacity on climate change mitigation, adaptation,

impact reduction and early warning”

12.5 “By 2030, substantially reduce waste generation through

prevention, reduction, recycling and reuse”

14.1 “By 2025, prevent and significantly reduce marine

pollution of all kinds, in particular from land-based activities,

including marine debris and nutrient pollution”

No.14: Life below water

◆

No.6: Clean water and sanitation

No.7: Affordable and clean energy

No.9: Industries, innovation and infrastructure

No.13: Climate action

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◆

15.a “Mobilize and significantly increase financial resources

from all sources to conserve and sustainably use biodiversity

and ecosystems”

◆

15.1 “By 2020, ensure the conservation, restoration and

sustainable use of terrestrial and inland freshwater ecosystems

and their services, in particular forests, wetlands, mountains

and drylands, in line with obligations under international

agreements”

◆

15.2 “By 2020, promote the implementation of sustainable

management of all types of forests, halt deforestation, restore

degraded forests and substantially increase afforestation and

reforestation globally”

◆

15.9 “By 2020, integrate ecosystem and biodiversity values

into national and local planning, development processes,

poverty reduction strategies and accounts”

No. 17: Partnerships for the goals

◆

17.17 “Encourage and promote effective public, public-private

and civil society partnerships, building on the experience and

resourcing strategies of partnerships”

No.15: Life on land

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2.5.2.2.1 WATER

BREAKDOWN OF INDUSTRIAL WATER CONSUMPTION BY ACTIVITY

In megalitres

2019 2020 2021

CHANGE IN INDUSTRIAL WATER CONSUMPTION (EXCLUDING FARMS)

Note: The reporting scope includes the Tanneries du Puy, acquired in November 2015. From 2018, the reference period is the 12-month period from

1 November of the previous year to 31 October of the current year. The scope of reporting includes the Mégisserie Jullien (acquired in May 2020)

whose data measured over the period May 2020 to October 2020 are included in these figures.

2.5.2.2.2 ENERGY

BREAKDOWN OF THE GROUP’S ENERGY CONSUMPTION BY DIVISION (EXCLUDING FARMS)

Tanneries 407 343 352

Textile 198 165 196

Leather 29 26 33

Metal - 9 13

Crystal manufacturing 11 9 8.9

Logistics 6.6 7.0 4.2

Perfume and Beauty 5.1 6.7 6.2

Watch division 3.2 4.9 4.9

Beyrand 2.6 2.3 2.1

Bootmaker 3.0 5.0 3.3

Porcelain 2.3 2.3 2.3

Jewellery - 0.24 0.18

TOTAL 668 580 627

Farms 4,514 4,514 4,810

Year

In m

Intensity (m /€M)

2012 376,938 108

2013 510,314 136

2014 493,252 120

2015 502,632 104

2016 768,163 148

2017 713,533 129

2018 719,725 121

2019 668,469 97

2020 580,253 91

2021 627,491 70

GROUP BREAKDOWN

(IN MEGAWATT-HOURS)

Industry Stores Services Total

Intensity

(MWh/€M revenue)

2018 161,531 31,305 15,846 208,682 35

2019 158,117 31,592 13,952 203,640 30

2020 147,955 36,969 14,253 199,177 31

2021 162,147 38,451 14,209 214,808 24

2021 in% 75,5% 17,9% 6,6% 100%

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BREAKDOWN OF INDUSTRIAL ENERGY CONSUMPTION BY ACTIVITY

In GWh (gas, electricity) In GWh (gas, electricity)

2019 20192020 20202021 2021

Gas Electricity

Consumption 2021 (MWh) (MWh)

Tanneries 26,155 11,404

Textile 23,350 12,629

Leather 7,884 16,496

Metal 162 4,163

Crystal manufacturing 34,882 7,343

Logistics 1,879 2,549

Perfume and Beauty 1,631 2,020

Gas Electricity

Consumption 2021 (MWh) (MWh)

Watch division 0 1,539

Beyrand 2,181 1,894

Bootmaker 141 925

Porcelain 699 1,659

Jewellery 442 119

TOTAL 99,406 62,741

Farms 1,007 4,113

Note: The reporting scope includes the Tanneries du Puy, acquired in November 2015. From 2018, the reference period is the 12-month period from

1November of the previous year to 31 October of the current year. Lastly, the scope of reporting includes the Mégisserie Jullien (acquired in May

2020), whose data measured over the period from May 2020 to October 2020 are included in these figures.

CHANGE IN INDUSTRIAL ENERGY CONSUMPTION (EXCLUDING FARMS) BREAKDOWN OF ELECTRICITY CONSUMPTION BY STORES BY GEOGRAPHICAL AREA

IN 2020/2021 (MWH)

Tanneries 41 40 38

Textile 35 31 36

Leather 22 23 24

Metal - - 4.3

Crystal manufacturing 41 40 42

Logistics 5.4 4.8 4.4

Perfume and Beauty 3.5 3.1 3.7

Watch division 1.4 1.4 1.5

Beyrand 3.9 3.7 4.1

Bootmaker 0.98 0.95 1.1

Porcelain 2.0 1.7 2.4

Jewellery 0.69 0.64 0.56

TOTAL 158 148 162

Farms 4.5 4.1 5.1

YEAR

Gas

(MWh)

Electricity

(MWh)

Total

(MWh)

Intensity

(MWh/€M)

2012 79,429 41,893 121,322 35

2013 90,052 47,818 137,870 37

2014 83,397 50,398 133,795 32

2015 81,625 51,678 133,303 28

2016 99,449 54,645 154,094 30

2017 105,894 54,768 160,662 29

2018 105,042 56,489 161,531 27

2019 101,744 56,373 158,117 23

2020 91,106 56,849 147,955 23

2021 99,406 62,741 162,147 18

Geographical area

Nov 2019 -

Oct 2020

(MWh)

Nov 2020 -

Oct 2021

(MWh)

France 2,721 3,536

Europe (excl. France) 7,321 7,513

Americas 9,698 10,682

Japan 5,164 4,471

Asia-Pacific (excl. Japan) 12,066 12,249

Total 36,969 38,451

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2.5.3.1 REDUCING THE FOOTPRINT AND CONTROLLING WASTE AND DISCHARGES

(1) Ordinary Industrial Waste

(2) Hazardous Industrial Waste

INDUSTRIAL WASTE INTENSITIES (EXCLUDING FARMS) OVER THE LAST THREE YEARS

TONNES/2021

Total

Tanneries 6,995

OIW

HIW

6,690 305

Textile 557 707 1,265

Crystal 168 988 1,157

Leather 1,134 59 1,193

Perfume and Beauty 662 356 1,018

Logistics 420 0 420

Metal 177 289 466

Porcelain 91 10 101

Beyrand 46 30 76

Watches 53 41 94

Footwear 45 1 46

TOTAL (EXCLUDING FARMS) 10,043 2,787 12,830

Farms 993 73 1,066

2019 2020 2021

OIW intensity

(t/€M)

1.03 0.94 1.12

Change -9% +19%

HIW intensity

(t/€M)

0.92 0.81 0.31

Change -12% -62%

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1. Products and services purchased 402.9 365.6 336.2 361.8

2. Capital goods 26.7 10.7 31.5 24.6

3. Fuel- and energy-related activities not included

in scope 1 or scope 2 3.0 2.9 2.8 3.0

4. Upstream transportation and distribution 10.9

5. Waste generated by the sites 8.8 9.3 5.8 6.2

6. Business travel 27 15.9 3.2 1.3

7. Employee commuting 19.7 13.1 14.6 20.3

8. Upstream leased assets Not significant Not significant Not significant Not significant

9. Downstream transportation and distribution 70 51.7 48.5 57.7

10. Processing of products sold Not significant Not significant Not significant Not significant

11. Use of products sold Not significant Not significant Not significant Not significant

12. End-of-life treatment of sold products Not significant Not significant Not significant 1.9

13. Downstream leased assets Not significant Not significant Not significant Not significant

14. Franchises - - 2.1 2.4

15. Investments Not significant Not significant Not significant Not significant

2.5.4 CLIMATE CHANGE

SUMMARY OF GREENHOUSE GAS EMISSIONS - DETAIL OF SCOPE 3

SCOPE 3 –

In k tonnes CO eq

2018 2019 2020 2021

Upstream

20.7 14.2 17.7

Downstream

TOTAL SCOPE 3 578.7 483.3 462.5 490.1

NB: calculations or estimates that led to non-material amounts (threshold <0.5% of the total) are included as “not significant”.

CONTRIBUTION TO CARBON NEUTRALITY

In k tonnes CO eq

2018 2019 2020 2021

VOLUNTARY CONTRIBUTION

Carbon credits received 36 44 46 81

CARBON FOOTPRINT COMPARISON

% credits vs the Group’s CO

emissions 5.8% 8.4% 9.2% 14.4%

% credits vs scopes1&2 (market-based) 82% 106% 119% 217%

% credits vs upstream & downstream freight transportation footprint 40% 67% 70% 118%

% credits vs scopes1&2 (market-based) + freight transportation 27% 41% 44% 76%

Bottles of eau de Cologne “Eau d’orange verte”, manufactured by the company Pochet

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©Photographer: Pascal Biomez

◆

CSR and Supply Chain Briefs sent to suppliers;

◆

Opening of the ethics whistleblowing line for suppliers;

◆

Commitment of 12 subsidiaries and suppliers to the Medef French Business Climate Pledge;

◆

Five-fold increase in purchases from socially supported organisations in France since 2017 (€3.8M).

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2.6

COMMUNITIES: SUPPLIERS & PARTNERS

Hermès’ sustainable development is linked to the ability of its partners and suppliers to develop sustainably with regard to social, environmental

and ethics issues, in particular human rights, fundamental freedoms, employment conditions, respect for nature and its biodiversity.

More broadly, Hermès contributes to the deployment of responsible sustainable development practices through its influence, and by exercising a

duty of care towards its partners as well as by promoting the socially supported sector.

Introduction

In line with its strategy of preserving unique savoir-faire and securing

supplies, most of Hermès’ production is integrated: 58% of our objects

are made in Hermès exclusive and in-house workshops. Our ability to

grow is however also linked to the retention and development of our

suppliers and subcontractors, whose exceptional savoir-faire and future

success will contribute to that of the Hermès Group whose exceptional

savoir-faire and future success will contribute to that of the Hermès

Group and therefore, their social and environmental practices must be

irreproachable.

These subcontractors and suppliers of the House are, for the most part,

historical partners. As such, for direct purchasing (production purchases),

the average length of trading relationships with the Hermès Group’s 50

largest suppliers in 2021 was 20 years. They operate mainly in the

Leather Goods division (tanneries and manufacturers) but also in other

métiers (jewellery and shoes, notably). This stability is also true for small

suppliers, some of which have been working with the House for more

than 50 years.

The Hermès Group has also been working with socially supported

organisations in France for many years for its direct and indirect

purchases, and this practice is growing steadily every year.

In terms of organisation, indirect purchases are supervised by a Group

department, which pools certain items (such as packaging) and

coordinates a network of dedicated buyers in the métiers, subsidiaries

and central services. It also coordinates Group action plans on major

topics, such as the elimination of single-use plastics (§ 2.4.1.1.1).

Direct purchasing is also supervised by a dedicated Group department

which coordinates a network of buyers within the métiers and

coordinates the process of analysing supply chains (§ 2.4), managing

supplier risks and the supplier audit programme. Moreover, it defines the

Group’s purchasing policy as well as the CSR objectives for suppliers and

partners (human rights and labour-related, biodiversity, energy and

carbon, water, plastics).

Particular attention is paid to human rights issues, which are, for

instance, the main topic of a dedicated section in the supplier handbook

signed by suppliers.

Hermès pursues a corporate strategy in which ethics and proper

business conduct are the pillars and guardians of responsible and

sustainable performance. An Ethics Committee has been set up to

receive and process alerts, as well as to provide advice and

recommendations on the Group’s ethics culture (§ 2.8).

In 2021, the Group made progress on the major procurement issues, with the aim of making a long-term difference through steady improvements

with a significant impact. Among these, the selected elements below are particularly illustrative of 2021 for this section:

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COMMUNITIES

SUPPLIERS AND PARTNERS

OBJECTIVES INDICATORS 2021 RESULTS

CO-CONSTRUCT SUSTAINABLE DEVELOPMENT ACTION PLANS WITH OUR SUPPLIERS AND PARTNERS

Work with our suppliers to achieve

the highest existing standards

% of suppliers that are part of certified

supply chains

100% of Jewellery workshops RJC certified

100%

of the paper and cardboard used for orange boxes and

bags is FSC-certified

Commitment of partner tanneries to the

LWG

(Leather Working

Group)

ENSURE THE APPLICATION OF OUR SOCIAL, ENVIRONMENTAL AND ETHICAL REQUIREMENTS (DUTY OF CARE)

Guarantee suppliers’ adherence

to the Group’s CSR commitments

% of purchasing suppliers that have signed

handbooks 1 and 2

89%

of direct purchasing suppliers have signed handbooks 1

and 2

Monitor the CSR performance of

suppliers

Number of suppliers (French and

international) assessed by EcoVadis and

average score of suppliers by EcoVadis

322

suppliers (French and international) assessed by EcoVadis,

with an average score of

55.4

, compared to 42.8 for all

assessments carried out by EcoVadis, i.e. an outperformance

of 29%

Control the application of the

Group’s requirements by all

suppliers

Number of audits performed on direct

suppliers

audits performed on direct tier 1 suppliers

and

performed on direct tier 2 suppliers

Allow suppliers to report actions

that do not comply with the

Group’s codes

Activation of an alert system

Launch of the alert system

H-Alert!

for all suppliers

SUPPORT THE DEVELOPMENT AND EVOLUTION OF SUPPLIER PRACTICES TO PRESERVE KEY SAVOIR-FAIRE AND SECURE SUPPLIES

Average length of relationships with the top

50 direct suppliers

Supplier payment terms in France

Amount paid in advance of the contractual

term

years of trading for relationships with the top 50 direct

suppliers

An average of

days for supplier payments in France in 2021,

compared to a general average of 43 days in France (according to

the Banque de France), and improvement (27 days in 2020 and

29 days in 2019)

€3.6million

ahead of the contractual deadline, thanks to

the implementation of an automated service or delivery validation

system, in order to support the cash flow of our partners

Create lasting relationships with

our suppliers to promote

sustainable action plans

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OBJECTIVE KPI 2021 RESULTS

INCREASING PARTNERSHIPS WITH SOCIALLY SUPPORTED ORGANISATIONS

Amount of purchases made from socially

supported organisations

€3.8

million in purchases from adapted companies (EAs)

and sheltered work establishments (ESATs)

Encourage the use of suppliers

that use socially supported

organisations and employ socially

supported organisations directly

Number of suppliers referenced that are

Social and Solidarity Enterprises (ESS

530

referenced suppliers are Social and Solidarity Enterprises

(ESS)

DEVELOP BALANCED PARTNERSHIPS, SUPPORT OUR PARTNERS, AND PROMOTE LOCAL INTEGRATION AND OTHER REGIONAL DEVELOPMENT OF

BASINS AND SITES WHERE WE ARE LOCATED

20%

of our French suppliers contribute to development in

priority regions, in particular 560 suppliers located in Rural

Revitalisation Zones and 1,480 suppliers located in priority urban

areas

% of our suppliers that contribute to the

development of priority areas (rural areas,

districts, the long-term unemployed)

Contribute to regional

development through our

purchasing policies

◆

security: ensuring long-term relationships with suppliers, in particular,

with the preservation of key savoir-faire, securing of supplies and

services, and the establishment of balanced and sustainable

relationships with partners;

◆

quality and innovation: seeking the best quality and enriching

Hermès’ creation with concrete proposals, resulting from the

innovation of partners;

◆

CSR: ensure a social, societal, environmental and ethical commitment

across all supply chains, by sharing the House’s objectives in these

areas with partners and supporting them in their implementation;

◆

cost control: contribute to the House’s economic performance both by

controlling costs, considered as a whole, and by providing value to the

customer.

◆

The CSR brief specifies the House’s objectives and its expectations

vis-à-vis suppliers on five themes: human and social rights,

biodiversity, energy and carbon, water and plastics;

◆

The supply chain brief presents, for each raw material, both the

short-term objectives and the trajectory for 2024, the points requiring

particular attention, and those that are prohibitive. In particular, this

brief includes certification objectives for most materials according to

the best existing standards (cf. 2.4.2.1 “Management of supply

chains”).

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2.6.1

SUPPORT AND CONTROL

Hermès is committed to providing long-term support for all its partners

and maintaining balanced relationships characterised by goodwill and

high standards; it therefore ensures that all its partners share and

respect its social, environmental and ethics ambitions. In particular, the

Group monitors issues related to human rights and fundamental

freedoms, employment conditions (hygiene, health, safety, working hours,

wages, etc.), the environment and biodiversity, as well as animal welfare.

This monitoring applies to its tier one suppliers, but also to their own

suppliers (tier two) and subcontractors, with the aim of always better

understanding all the supply chains and align their CSR objectives with

Hermès.

POLICY

At Group level, the direct and indirect purchasing departments coordinate

and monitor policies, tools and outcomes. The Group purchasing policy,

issued in May2013 and updated in January 2021, is based on four

elements:

In January2021, this policy was updated to strengthen its CSR

component, by adding a CSR brief and a supply chain brief:

Operationally, each métier is responsible for managing its suppliers and

more generally, its supply chains. This approach guarantees proximity,

understanding of issues and pragmatism of its mechanisms, while

complying with the House’s rules.

These three documents, the Group purchasing policy, the CSR brief and

the supply chain brief, were presented to all of the House’s purchasers

during a purchasing network meeting in April2021. Purchasing managers

then gradually rolled out these documents to their suppliers throughout

the year. Supplier meetings have been organised by the métiers with

their main suppliers to present these CSR and supply chain briefs in

person and advise them on the implementation of these objectives.

Suppliers so wishing were offered more in-depth training in 2022, in

particular in the areas of energy and carbon, water and biodiversity, in

order to continue to support them in the best possible way using a

collaborative approach.

Focus on the real estate department

Since 2017, the real estate purchasing policy has been gradually

rolled out at subsidiaries. For any new construction, the supplier’s

undertaking to adhere to local rules and acceptance of the charters

on fair trading and good labour and environmental practices are a

prerequisite to engagement with the Hermès Group.

The contractor’s societal responsibility drives it to reach beyond

legal obligations and to implement all approaches that would

benefit society. An internal methodology for analysing and managing

supplier risks in real estate has been defined. Hermès hope that its

partners can also be actors in this ambition. Its suppliers are invited

to ascertain their “CSR” profile.

Based on the importance of the risks identified, specialised

third-party firms are requested to conduct an on-site audit. They are

responsible for determining action plans that will be shared with the

suppliers for actions to be monitored internally by the Hermès

Group.

2.6.1.1

SOCIAL, ENVIRONMENTAL AND ETHICS

REQUIREMENTS

The supplier risk management system, which had already existed in the

Hermès Group for many years, has been strengthened since 2018 as

part of the rollout of a reasonable duty of vigilance plan with respect to

suppliers and subcontractors as required by French law.

This monitoring is undertaken in the specific context of Hermès, which

carries out more than 58% of its production internally: this not only

reduces its exposure to risk, but it often gives it a better understanding of

operational issues (being itself an actor on the subject). Thus, through its

purchasers by métier, the Group is in most cases close (geographically,

on account of an ongoing relationship and technically) to its suppliers.

In addition to quality issues, special attention is given to human rights

and fundamental freedoms, the health and safety of people, and more

generally their working conditions, as well as the protection of the

environment and biodiversity. Ethics, specifically the prevention of

corruption and influence-peddling, are also closely monitored.

All of this work is carried out systematically across the entire scope of the

Group, using a “risk-based” approach that aims to prioritise the issues

using successive filters, to focus efforts on the most significant issues.

◆

risk mappings aimed at identifying and assessing the risks generated

by the activities of suppliers and subcontractors, and more generally

by all of the supply chains;

◆

procedures to regularly assess the situation of suppliers and

subcontractors with which we have an established trading

relationship, but also to assess the situation of tier2 suppliers and

subcontractors, in order to gain an ever-stronger understanding of the

supply chains;

◆

appropriate action to mitigate risks identified and prevent serious

breaches of human rights, fundamental freedoms and health, safety

and environmental regulations;

◆

a whistleblowing mechanism and alert monitoring;

◆

a system for monitoring the measures implemented and assessing

their effectiveness.

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In accordance with the recommendations of law No.2017-399 of

27March 2017 on the duty of care of parent companies and ordering

companies, this vigilance plan is specifically structured around:

A methodology for monitoring supplier risks was formalised in 2018 and

is applied by the direct purchasing and indirect purchasing departments

at all the House’s métiers.

The diagram below summarises this methodology and the corresponding

tools:

◆

payment of orders made, even in the absence of physical

receipt;

◆

acceleration of payment terms (even if the standard internally is

already to pay suppliers as soon as possible and not when due);

◆

maintain order volumes in line with pre-existing plans;

◆

orders sometimes made ahead of need to support the level of

activity.

Risk mapping

by métier

Risk mapping

by purchase category

Analysis of risks

by supplier

Supplier

information

questionnaire

Third-party

audit

COVID-19: SUPPORT FOR SUPPLIERS DURING THE CRISIS

In 2021, the purchasing teams in all métiers have strengthened

their presence with their suppliers through very regular contacts,

at least weekly, to check collectively the health challenges for their

teams, their financial health and their level of activity. In this

context, several actions were implemented to support their cash

flow:

As indicated above, these practices have led to concrete results

(payment terms improved to 24 days in France vs. an average of 43

days, €3.6 million in cash advanced compared to the payment

term).

Masks and hydroalcoholic gel were naturally provided to some

suppliers to enable them to reopen more quickly and safely,

especially at the beginning of the period when a certain shortage

existed, making use of the House’s ability to make bulk purchases.

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The métier purchasers must sort their suppliers by purchase category,

then, for each of these categories, map the global risks and then analyse

the risks by supplier. For suppliers identified as “at-risk” (notably

corruption, politically exposed persons, negative press, breach of human

rights, risk to the health and safety of persons, environmental risk) and

those identified as strategic or sensitive (volume of business, special

savoir-faire, intuitu personae, succession, financial health), the

purchasers must complete a “supplier information questionnaire” to

enable them to investigate the risks further. If the risk is confirmed, an

external audit is requested.

2.6.1.2

RISK MAPPING

The Hermès Group has produced a risk mapping (see chapter4 “Risks

and control”, § 4.1), into which the mappings produced by each of the

main métiers, Retail subsidiaries and support activities are fed. Each of

these mappings takes risks related to suppliers and subcontractors into

account.

In addition, to guarantee the thorough assessment of all suppliers and,

more generally, all supply chains, the purchasers in each métier

formalise a risk mapping for each of their purchasing categories,

assessing in particular the risks with respect to human rights and

fundamental freedoms, the health and safety of people, social

aspects, the environment and sustainable development, ethics and

corruption risks. Since 2019, these risk analyses by purchasing

category (manufacturing methods, metal parts, fabrics, etc.) have been

supplemented by analyses of the supply chains by raw material (cotton,

linen, gold, silver, etc.) (see § 2.4.2.1 “Management of supply chains”).

Since 2018, the emphasis has been on direct production purchases, for

which control of the supply chain is a strategic challenge. With its 16

métiers, the Group has around 100 direct purchasing categories and

more than 80 raw materials supply chains. At the end of 2021, risk

mapping and a risk analysis by supplier had been conducted for 93%

of purchasing categories and a comprehensive analysis had been

completed for 74 raw materials supply chains.

Among the risks identified, ensuring the sustainability of craftsmanship

savoir-faire and maintaining our capacity in France are major challenges

for several divisions, as is improving the traceability of raw materials

throughout the supply chain. The impact of climate change, water and

energy consumption and biodiversity are important issues, systematically

taken into account (see § 2.5). Issues relating to the health and safety of

people are also identified, but deemed to be less critical, this point being

already controlled thanks to the long-standing monitoring with all

suppliers, notably through audits, with a particularly high level of

exigence. Lastly, as the majority of suppliers are located in France, the

risk of violation of human rights and fundamental freedoms as well as the

risk of corruption are generally assessed as very low; however, they are

particularly closely monitored for the small number of supplies from

further afield.

2.6.1.3

REGULAR ASSESSMENT PROCEDURES

For each purchasing category previously covered in a risk mapping, the

métier purchasers carry out a second-level risk analysis by supplier. This

aims to assess the performance (deliveries, quality, etc.) and financial

independence of each supplier, but also the risks related to human rights

and fundamental freedoms, the health and safety of people, and more

generally, employment conditions, as well as environmental risks.

Corruption risks are also assessed according to the country in which the

supplier is based and its activity.

If a risk is suspected, the purchaser arranges an audit to confirm or rule

out this risk, supported by a “supplier information questionnaire” setting

out the various topics included in the previously completed supplier risk

analysis framework.

This “supplier information questionnaire” is more generally used by the

direct purchasers as the basis of visits to a tier1 or higher supplier with

the aim of constantly improving their knowledge of the supply chains.

Purchasers also use this questionnaire during pre-accreditation visits

before starting to work with a new supplier. These pre-accreditation visits

are compulsory within the scope of direct purchasing.

Audits

If the supplier information questionnaire confirms a significant level of

risk, the purchaser alerts the direct purchasing department and their line

manager, a member of the métier’s Management Committee, and an

action plan is drawn up to prevent or mitigate the risks. If the risk is

related to the environment, the health and safety of people, social issues

or human rights and fundamental freedoms, an external body recognised

for its expertise, is asked to conduct an audit. The results of these audits

and action plans are taken into account during any continuation of

relationships.

Audits are also requested for strategic or sensitive suppliers (volume of

business, specific savoir-faire, intuitu personae, located in a country far

from France, etc.). Specifically, in terms of direct purchases, the

Hermès Group’s 50 largest suppliers must be audited at least once

and all suppliers outside Europe must be audited regularly,

approximately every three years.

These audits last at least two days each and are carried out in the

presence of a Hermès representative. They make it possible to verify in

situ the reality of suppliers’ social, environmental and ethics

commitments, the proper implementation of regulations that concern

them, and the reality of the working conditions and well-being of

employees.

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In keeping with the supplier information questionnaire, these audits cover

the following seven issues:

◆

fire risk: non-compliance of electrical installations, inaccessibility of

emergency equipment and exits, ATEX (explosive atmospheres) study

not carried out;

◆

chemical risk: inventory not conducted, lack of search for substitutes

for CMR products (carcinogenic, mutagenic and reprotoxic), lack of

measurement of exposure to substances with OELs (occupational

exposure limits);

◆

risks related to workstations: incomplete or outdated generic single

document, no prevention plan or lack of lockout-tagout procedure;

◆

compliance with mandatory periodic inspections: lifting equipment

and accessories, pressurised equipment, boilers, etc.

Of these seven topics, the three priorities, which meet our obligations

under the duty of care law are those identified in orange in the diagram

above.

In 2021, the health situation related to Covid-19 once again impacted

the supplier audit programme. Despite this, 105 audits were completed,

i.e. 80% of planned audits (compared to 71 audits in 2020, i.e. 55% of

the target). This represents an increase of 48%. The vast majority of

these audits were conducted in Italy (51%) and in France (28%). They

were distributed among 66 tier1 suppliers, on 87sites, and 41 tier2

suppliers, 93% of which were located in Italy. In total, 145days of audits

were carried out on site.

These audits led to the identification of 1,364 findings, of which 0.2%

were considered critical, 18.5% major and 52.5% significant. The

remaining 28.8% concern simple points for improvement, with proposals

for best practices to encourage suppliers to constantly progress in a

spirit of continuous improvement.

Breakdown of supplier audit findings by family

Hermès places the safety of people at the heart of its concerns, which is

why the level of health and safety audits is particularly high. It is therefore

no surprise that 57% of the findings are related to this theme, i.e. 776

findings, of which 23% considered major (no critical findings).

Only three critical findings were identified in 2021. They concerned a

single supplier and were linked to a proven environmental soil pollution

issue. The supplier took immediate steps and implemented the

necessary actions to correct the situation and comply once more.

The most frequent major observations in terms of personal health and

safety relate to:

In terms of the environment, the main recurring findings relate to

non-compliance with the obligations related to ICPE regulations, the

administrative management of waste, and the absence of an asbestos

technical file.

In terms of labour, the most frequently occurring observations concern

the exceeding of the overtime quota, the absence of an SEC or the lack of

training for this committee and the absence of formalised professional

interviews.

In terms of ethics and anti-corruption, although some suppliers have not

yet formalised their own ethics and anti-corruption charter, they have all

signed and implement Hermès’ social, environmental and ethics policy as

a basis (Handbook 2) which notably contains clauses relating to the fight

against corruption.

These audits are a fundamental part of the risk assessment system for

suppliers and subcontractors. They also contribute to the quality of the

relationship, a key factor in the success of sustainable support towards

best practices. This is why purchasers are involved in the auditing of their

suppliers, supporting the process upstream, participating in audits

alongside the external firm, and monitoring the progress made in the

action plans in a more formal manner. An employee from the direct

purchasing department is also involved in most of the audits. It also

helps develop the purchasers’ CSR expertise, which they can then apply

to the identification of risks when visiting their suppliers.

Supplier Audit Committee (direct purchases)

Since early 2019, a Supplier Audit Committee is tasked with analysing

the various audit reports and defining the actions to be implemented as a

priority with each of the audited suppliers. This Supplier Audit Committee

brings together the direct purchasing department, the Director of

Industrial Affairs, the Director of Audit and Risk Management and the

purchasers concerned within the métiers. The Supplier Audit Committee

meets twice a month to review the findings of new audits and dedicate

time to follow up on past audits. The purchaser of the métier in question

is responsible for distributing the conclusions of the Supplier Audit

Committee to each supplier and monitoring action plans. Audit follow-up

visits are planned three months, six months and/or one year after the

audit, depending on the type and severity of the findings. If necessary, a

member of the Group direct purchasing department can accompany the

purchaser on these visits. Lastly, once all the findings have been cleared

by the supplier, a closing visit is carried out by the purchaser concerned

and a member of the Group direct purchasing department to confirm the

Business ethics and

anti-corruption

Health and

safety of people

Confidentiality

Human rights,

fundamental

freedoms and

labour

Environment and

sustainable

development

Supplier

audit

Finance

Business

continuity

◆

handbook 1: defining undertakings with respect to non-disclosure and

fair trading;

◆

handbook 2: defining undertakings with respect to social,

environmental and ethics policies.

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successful completion of all corrective actions and ensure their

sustainability over time.

EcoVadis

In line with its responsible purchasing strategy, the indirect purchasing

division selected EcoVadis at the end of 2018, which offers a

collaborative platform for assessing the environmental performance and

social responsibility (CSR) of its suppliers (environmental, social and

human rights, ethics and responsible purchasing). Each company is

assessed on these fundamental issues according to their size, location

and sector of activity. Evidence-based assessments are reported in

assessment sheets enabling the implementation of corrective action

plans.

Since the programme was launched, 322 French and international

suppliers have accepted Hermès’ invitation to join the programme. The

average score of these indirect suppliers is 29% higher than the

EcoVadis average (55.4 compared to 42.8). In 2021, the objective of

inviting the top 150 indirect purchasing suppliers in France to self-assess

or share their score was achieved. With the aim of ensuring progress, a

number of suppliers whose scores did not yet meet Hermès’ demanding

standards were also reassessed. The target is to invite 50 additional

suppliers during 2022, in order to cover the 200 main indirect suppliers

in France.

2.6.1.4

RISK MANAGEMENT AND MITIGATION

OR PREVENTION OF SERIOUS VIOLATIONS

The Group’s policy is also based on a desire to train purchasers in an

increasingly complex métier and formalise concrete commitments by

suppliers.

Network management and training

The two purchasing divisions, direct and indirect, are responsible for

coordinating the network of purchasers and organising joint training

actions.

Each direct purchasing network, led by its Group department, regularly

brings together purchasers from the métiers every three months to

review the Group’s policy and procedures, regulations, legal rules and

tools for monitoring suppliers and subcontractors. These meetings are

also an opportunity to share the purchasing risk mapping of the various

métiers. This helps purchasers to exercise their duty of care vis-à-vis their

suppliers and subcontractors, and more generally vis-à-vis all supply

chains. In particular, in 2021, the enhancement of the CSR component of

the Group’s purchasing policy was presented to the entire community of

purchasers, i.e. 120direct purchasers, during these meetings.

In addition, networks specific to certain supply chains have existed since

2019 and meet on average three times a year, and more frequently if

necessary. These are the leather, textile, metal parts, cashmere and

precious metals purchasing networks. These meetings provide the

opportunity to discuss the risks identified within the chains and steer the

action plans to prevent or mitigate these risks.

Since the end of 2018, the development of a training course for

purchasers has been ongoing, with the aim of strengthening and

structuring the training already existing within the Group. These

dedicated sessions are either more general, with detailed CSR

components, or more technical on EHS (Environment, Health and Safety),

legal compliance and human rights topics.

The Fundamentals of purchasing at Hermès training course was finalised

in early 2021 and is currently being rolled out. It lasts three days,

including a full day dedicated to CSR, responsible purchasing and supply

chain management.

An Environment, health and safety training course has also been running

since 2020. It addresses purchasers, as a priority, but also everyone

who is required to travel to the House’s suppliers and subcontractors.

This one-day classroom training aims to acquire sufficient expertise to

identify any EHS shortcomings on the part of a supplier or a

subcontractor and support it in the corrective actions to be implemented,

in an approach of partnership and continuous improvement. At the end of

2021, despite the constraints related to the health situation, 161people

had already been trained, with the aim being to reach an additional

150people in 2022.

In addition, a Legal and compliance training course is being finalised with

the legal department, as well as a training course on Human rights,

fundamental freedoms and labour. These two programmes will be rolled

out in 2022. A Carbon Assessment training course will also be introduced

in 2022.

Supplier commitments

From a legal standpoint, Hermès systematically requests a formal

commitment from its suppliers to comply with their social, regulatory and

environmental obligations through two undertaking handbooks signed by

both parties. These handbooks, which define the contractual

relationships, are regularly updated, with:

These two handbooks are public and available online

They were updated in 2020 to include an email address facilitating the

reporting by suppliers of any breaches they witness in terms of ethics.

The vast signature campaign launched in 2018 continued in 2021 to

present and encourage all the Group’s suppliers to subscribe to this new

version.

(https://finance.hermes.com/en/ethics-human-rights-and-diversities/).

◆

Hermès’ internal and external ethics approach is based on the

universal framework established by major international principles.

The ethics charter, signed by the Executive Chairman, established

in 2009, is communicated to all employees. It is available on the

intranet and can be accessed by the public at

It specifies that these principles

apply to both Group companies and suppliers. In particular, explicit

reference is made to the Universal Declaration of Human Rights, the

charter of fundamental rights of the European Union, the charter of

fundamental principles and rights of the International Labour

Organization, which covers freedom of association, the fight against

forced labour, child labour and the fight against discrimination, and

the OECD Guidelines. It is also a member of the United Nations Global

Compact (in which Hermès is “Advanced” level), which invites

companies to adopt, support and implement in their sphere of

influence a set of 10 core values (relating to issues involving human

rights, labour standards, environment, the fight against corruption),

and the UN Guiding Principles on Business and Human Rights, which

commit companies to respect human rights and address the negative

impacts of their activities;

◆

This approach is regularly shared with the teams and was

strengthened in 2018 by the direct and indirect purchasing

departments (internal training, Paris buyer seminar and by the work of

the legal compliance department). It is shared with suppliers during

operational exchanges with purchasers, and was formalised in the

signing of Handbook 2 (see chapter 1 “Presentation of the Group and

its results”), which is also available to the public online at

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Handbook 2 includes items relating to international standards and

agreements, rules of labour-related, environmental and ethical conduct,

as well as personal data.

By signing Handbook 2, suppliers and subcontractors formally undertake

to carry out their own duty of care with respect to their suppliers and

subcontractors. Moreover, they are responsible for declaring all their

subcontractors to Hermès and may not subcontract any production of

Hermès products to a new subcontractor without Hermès’ prior written

agreement. This agreement is tied to a pre-accreditation visit based on

the “supplier information questionnaire”.

Purchasers must take care to regularly remind their suppliers and

subcontractors of the undertakings they have made by signing

Handbooks 1 and 2. Furthermore, any new supplier is required to sign

Handbooks 1 and 2 before any partnership can be undertaken, and in

particular prior to participating in any call for tenders or listing.

The percentage of active suppliers in the direct purchasing scope

who signed undertaking Handbooks 1 and 2 increased again to reach

89% at the end of 2021 (compared with 85% in 2020 and 76% in

2019).

In addition, the CSR briefs, created in 2020, and the supply chain briefs,

developed in January2021, specify the House’s objectives and its

expectations vis-à-vis suppliers on these topics. To strengthen supplier

engagement, a “CSR self-assessment questionnaire” has been

developed, comprising more than 100 questions relating to CSR. It allows

purchasers to retrieve all the information they need from their suppliers

in terms of CSR (social policy, commitments to the environment and

biodiversity, ethics charter, waste management, commitments to reduce

the water footprint, carbon footprint and greenhouse gas emissions,

etc.). It will be widely rolled out to suppliers in the 1sthalf of 2022.

2.6.1.5

ALERT MECHANISM AND SYSTEM

FOR MONITORING MAJOR ISSUES

The close relationships between Hermès and its suppliers are key to

identifying suspicious conduct. On-site visits by purchasers and frequent

assessments are important aspects that make it possible to detect any

breaches and to alert the Group.

Each métier is responsible for monitoring the challenges identified and

the proper implementation of corrective actions with suppliers. Similarly,

the legal framework of relations with suppliers and subcontractors is

regularly updated in light of actual experience. In particular, the

conclusions of the audits, which bring together the auditors, the métiers,

the purchasers and the industrial department, offer deep insights solidly

rooted in the real circumstances of suppliers and subcontractors.

In accordance with the code of business conduct, any employee who

identifies suspicious behaviour in the supply chain is invited to report

it internally thanks to the H-Alert! mechanism. Furthermore, in the

event of a breach or situation contrary to the ethics, social and

environmental principles, the Hermès Group has provided its suppliers

and subcontractors with a whistleblowing mechanism in the form of

a generic email address. These reports are analysed by the legal

compliance department and the Group purchasing department.

§ 2.8.4.1. describes in more detail the implementation of this alert

system.

2.6.1.6

HUMAN RIGHTS IN THE SUPPLY CHAIN

The Hermès craftsmanship model, in which 58% of objects are made in

Hermès’ exclusive in-house workshops, and 78% in France, relies on a

network of suppliers based mainly in Europe, where labour practices are

stricter than in other environments. Hermès' exposure to supplier risk is

therefore reduced, all the more so as 66% of the top 50 direct suppliers

are in France and 28% in Europe. Just 5% of purchases are made in

more distant countries, mainly raw materials (e.g. exotic leathers), and

control and monitoring there are extremely strong.

The Group’s policy, for its own operations as well as for those carried out

by its suppliers and subcontractors, is to enforce compliance with major

international Human Rights principles.

https://finance.hermes.com/en/.

1. Medef: Mouvement des Entreprises de France (French business association)

2. EA – Adapted company

3. ESAT – Sheltered work establishment

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Monitoring of practices is primarily the responsibility of the métiers and

their purchasers, who are in direct contact with suppliers. The topics that

are monitored closely include working conditions (hours, health and

safety, compensation, right to organise and representation, disciplinary

practices), risks of discrimination, forced labour, child labour, and, more

broadly, acceptable living conditions (considering the local environment).

Industry (for the packaging sector, for example) and geographical

discussions are held to help identify the issues more precisely. When a

subject is identified, it is discussed with the partner to help it understand

why the topic is important to Hermès, examine possible improvement

solutions and put in place an action plan as part of a long-term

relationship. If this process cannot be put in place, the subject is

discussed by the Management Committee of the appropriate métier, the

industrial affairs department and the Sustainable Development

Committee. Depending on the outcome, the relationship is suspended.

Respect for Human Rights and fundamental freedoms is part of the

vigilance plan put in place by the Group as part of its duty of care. This is

repeated and detailed in § 2.8.4.

French Business Climate Pledge

In July 2021, as part of the “French Business Climate Pledge”

initiative led by Medef , and in addition to the renewal of its 2019

membership, Hermès led to the participation of 12 Group

companies, subsidiaries or partners to join this initiative. By

encouraging participation in its ecosystem, Hermès is contributing

to the successful transition to a low-carbon economy, by promoting

awareness of these issues and sharing best practices and

operational solutions.

2.6.2

RESPONSIBLE PRACTICES WITH

SOCIALLY SUPPORTED ORGANISATIONS

The ambitious target to increase the use of the socially supported and

sheltered organisation sector in France by 20% per year was widely

exceeded in 2021, with purchases made growing from €0.7million at the

end of 2017 to €3.8million at the end of 2021, i.e. a fivefold increase

in five years. Driven by a proactive policy, these purchases are mainly

made at the initiative of Hermès Maroquinerie-Sellerie and Hermès

Group Services.

The Group regularly uses the Hors les Murs initiative, in which EA and/or

ESAT workers come and carry out work in the workshops. In many métiers

(Hermès International, Hermès Group Services, Hermès

Maroquinerie-Sellerie, Hermès Parfum et Beauté, etc.), these workers

made available on a daily basis by EAs and ESATs contribute to various

activities (cutting, preparation of orders or meeting rooms, logistics,

security, concierge, mail dispatching, etc.). These collaborations provide

long-term employment opportunities.

MEASURES IMPLEMENTED AND RESULTS

Hermès Maroquinerie-Sellerie’s commitment in favour of disability is at

the heart of an ambitious prevention policy for all employees. Hermès

Maroquinerie-Sellerie wishes to continue and strengthen the partnership

whenever possible, with the aim that each internal regional division

develops a partnership with one or more EA-ESATs in its region. Each

partnership is first and foremost a human journey, providing an

opportunity to integrate people with disabilities into the teams, drawing

on the experience and skills of these structures.

The first step is to have the EA/ESAT partners work locally on the skills

they already offer: green spaces, company restaurants, renovation of

workbenches, small equipment, etc. Once this potential is tapped, a

ramp-up of skills is envisaged in the techniques necessary for the

manufacture of objects. The ultimate goal is to enable certain EA/ESAT

partners to become contract manufacturers to whom the sites could

entrust the manufacture of certain small finished products.

It is in this context that Hermès Maroquinerie-Sellerie organised the

second Handispensable day in 2021, bringing together all of its EA/ESAT

partners and their internal contacts, to jointly build progress plans and

spread to other divisions the results of this commitment which exceeded

€1.95million in 2021.

The Le Puy, Montereau and Vivoin tanneries have enlisted the help of

ESAT employees to maintain their green spaces and clean the sites. The

Annonay tannery also works with an ESAT on an occasional basis for

commercial brochure packaging and leather sampling assignments. In

2021, the Compagnie des Cuirs Précieux extended its partnership with

the ESAT that provides catering services and meal trays for seminars and

meetings at its headquarters. Lastly, all tanneries are keen to continue

these partnerships over the long term, and the ESATs are called upon as

a priority in all calls for tenders.

Conscious of its social responsibility, Hermès traditionally uses socially

supported organisations in France for its direct and indirect purchases,

and this practice is growing strongly every year.

POLICY

The Group has long pursued a policy in favour of people with a disability,

through partnerships with companies in the socially supported and

sheltered organisation sector (EA

, ESAT

) in France. This ambitious

responsible purchasing policy is based on allowing EA and ESAT workers

to exercise a professional activity in a meaningful environment. The

legislation changes of the Disability Reform, which set a ceiling for the tax

reductions generated by purchases from socially supported

organisations, will not threaten this policy, which has been reaffirmed to

all players and influencers.

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Hermès Bijouterie developed a partnership with an EA in the Paris

region for the assembly, quality control, packaging and shipping of horn

jewellery accessories. At the last Handi'Cap Forum, the partners testified

to the quality of this collaboration, which opens up other opportunities for

after-sales service, repackaging for other métiers, the preparation of

boxes, and even upcycling operations (dismantling unsold items).

Hermès Parfum et Beauté continues its collaboration with an ESAT

partner for the recognition of prior learning (RAE).

Petit h strengthened the partnership launched in 2018 with the Domaine

Emmanuel ESAT. At the time, the agreement focused on two areas of

savoir-faire, machine sewing and hand embroidery, to craft small objects

and clothes for independent designers. Petit h asked them again to carry

out precision work on silk Christmas baubles, followed by other delicate

sewing assignments (after-sales service repairs), as well as packaging of

charms and, more recently, the production of hand-embroidered silk

handkerchief cases or the making of button strips.

Hermès Sellier General Services include in each call for tenders an

inclusive clause on purchases from socially supported organisations and

the sheltered sector, and regularly set up tripartite co-contracting

contracts. These involved more than €870 thousand in purchases in

2021.

In Hermès Commercial, the Bobigny Logistics division has collaborated

for several years with two EAs/ESATs, which provide five workers for

logistics and quality control positions. A team of three people was also

deployed within the exceptional sales department to prepare products for

donations to charities. The partnership with the APF and Ateliers

d’Aubervilliers continued with the provision of logistics operators in the

workplace and, since 2020, the management of internal mail has been

entrusted to a dedicated APF unit on site. Some of these collaborations

result in hires.

Hermès Distribution France regularly calls on ESATs for catering and

printing activities during various internal events (Sustainable

Development Week, SEEPH, training sessions, team seminars, etc.). An

ESAT supports the recruitment team in managing responses to paper job

applications. Each year, the subsidiary calls on visually impaired

massage practitioners, via a social utility company, to give massages to

employees in stores. Finally, the Bordeaux store has been cooperating for

more than a year with an ESAT, employing one or two employees several

days a week to help with logistics activities.

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EXPERTS' HANDBOOK

CONTRIBUTION TO THE UN’S SUSTAINABLE DEVELOPMENT GOALS (SDGS)

The relations that Hermès maintains with its suppliers and partners contribute to the UN’s sustainable development goals (SDGs).

◆

8.5 “Achieve full employment”

◆

8.3 “Promote development-oriented policies that support

productive activities, decent job creation, entrepreneurship,

creativity and innovation, and encourage the formalization and

growth of micro-, small- and medium-sized enterprises, including

through access to financial services"

◆

8.4 “Improve progressively, through 2030, global resource

efficiency in consumption and production and endeavour to

decouple economic growth from environmental degradation, in

accordance with the 10-year framework of programmes on

sustainable consumption and production, with developed

countries taking the lead”

◆

8.5 “By 2030, achieve full and productive employment and

decent work for all women and men, including for young people

and persons with disabilities, and equal pay for work of equal

value”

◆

8.8 “Protect labour rights and promote safe and secure working

environments for all workers, including migrant workers, in

particular women migrants, and those in precarious

employment”

No.8: Decent work and economic growth

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◆

10.2 “By 2030, empower and promote the social, economic

and political inclusion of all, irrespective of age, sex, disability,

race, ethnicity, origin, religion or economic or other status”

No.12: Responsible consumption and production

◆

12.8 “By 2030, ensure that people everywhere have the

relevant information and awareness for sustainable

development and lifestyles in harmony with nature”

No. 10: Reduced inequalities

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“Les couleurs en Jeu” exhibition by Julio le Parc at the Forum in Tokyo, under the aegis of the Fondation

©Photographer: Nacása & Partners Inc.

◆

Nearly 400 solidarity and social actions around the world

◆

29.5% consolidated tax rate at Group level

◆

Donation of €7 million to AP-HP (the Parisian public hospital system) in France in 2021, following €20 million in 2020

◆

Improvement in the scores of non-financial assessments, Grand Prix de la Transparence (CAC Large 60), Most Responsible Company (Le Point,

Clothing and Accessories sector)

◆

Initial analysis using the European Taxonomy regulation, in line with its TCFD and SASB publications

◆

Reasonable assurance report on a selection of CSR information published in this document.

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2.7

COMMUNITIES: STAKEHOLDERS AND TRANSPARENCY

Hermès’ sustainable development is rooted in harmonious long-term relationships with its stakeholders. Hermès develops its corporate citizenship

wherever it operates, contributing to the economic, social and cultural vitality of the regions.

Hermès communicates its sustainable development ambitions and achievements with its stakeholders. More broadly, the House contributes to

the public dialogue by sharing the specificities of its responsible and sustainable model.

Introduction

Aware of its responsibility in terms of contribution to regional

development, Hermès locates its production activities in France. With

more than 400 reasonably-sized sites (production units, stores,

logistics sites, offices) worldwide, and more than 80 in France,

Hermès contributes to regional sustainable development by providing

employment (4,761 new employees over the past five years) and

promotes the creation of sustainable value (local recruitment,

training of employees, etc.).

In line with the strategy adopted in 2020, in 2021 the Group did not

request any assistance from the State for mechanisms related to the

Covid-19 crisis in any of the countries where it operates.

Diverse initiatives enable Hermès to express its uniqueness, as well as

extend its outreach into numerous regions, and create constructive ties

with local economic players. These harmonious relationships with our

stakeholders contribute to its local integration and contribution for a

positive impact, strengthen employee pride in belonging to the Company.

Moreover, the House’s subsidiaries and sites organise local charitable

operations. They encourage employees to become more involved in the

various issues, each in their own way. Giving time, giving of one’s self,

opening oneself up to others, giving back to the world part of what they

have received. Throughout the world, numerous local interest projects

are alive and active thanks to Hermès.

The founding values of Hermès are also expressed through the Fondation

d’entreprise Hermès, created in 2008, which sets up the necessary

conditions for the creation of works of art, transmission of savoir-faire,

protection of the environment and encouragement of solidarity actions.

(https://www.fondationdentreprisehermes.org/en).

In 2021, the Group made progress on the main issues relating to local integration and relations with stakeholders, with the aim of making a

long-term difference through steady improvements with a significant impact. Among these, the selected elements below are particularly illustrative

of 2021 for this section:

(https://www.fondationdentreprisehermes.org/en).

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COMMUNITIES

STAKEHOLDERS AND TRANSPARENCY

OBJECTIVES INDICATORS 2021 RESULTS

PURSUE A MANUFACTURING DEVELOPMENT POLICY IN FRANCE BY JOINTLY DEVELOPING PROJECTS WITH THE REGIONS WHERE IT OPERATES

Maintain a high level of

commitment in terms of

production in France

78%

of objects made in France

Number of production sites in France and number of

new sites established in France

production sites

Continue to develop new

production sites in France

Number of regions in which the Group has established

sites

of the 13 French regions (including 9 for

production sites)

Number of new employees in France

3,065

new employees in France over five years

DEVELOP HARMONIOUS RELATIONSHIPS WITH LOCAL STAKEHOLDERS

Implement stakeholder relations

action plans in each host region

Number of local events with local authorities, local

institutions, associations, etc.

Collaboration with “Sup de Sub”Participation in Réseau

Entreprendre 93Signature of a company-region charter

with Est Ensemble

GIVE BACK TO THE WORLD PART OF WHAT IT GIVES US (OPERATIONAL, FINANCIAL, SPONSORSHIP) – GROUP OR FONDATION

Ensure value is shared

Group tax rate

29.5%

consolidated Group tax rate

Group tax expense in millions of euros

€1 015

million in tax expense in 2021

Establish the necessary conditions

for the creation of works of art,

transmission of savoir-faire,

protection of the environment and

encouragement of solidarity

actions

Fondation budget by mandate

€40

million budget for the Fondation d’entreprise

(over five years 2018-2023)

External evaluation

in the Carenews Corporate Foundation ranking

(endowment vs revenues, 2018 study)

Strong commitments from the

entire Group to local sponsorship

initiatives

At least one sponsorship or social and solidarity action

per year and per country

See table § 2.7.2.1.2

Number of solidarity projects set up

More than

400

solidarity projects around the world

Develop global philanthropic

actions

Projects led by the Group

€7

million Group donation to AP-HP (the Parisian

public hospital system)

Livelihoods project

1.7

million people impacted by Livelihoods projects

worldwide

CONTRIBUTE TO DISCUSSIONS BY CIVIL SOCIETY OR ACADEMIC RESEARCH EFFORTS BY PARTICIPATING IN MULTI-STAKEHOLDER INITIATIVES

Establish partnerships with

educational establishments

Number of partnerships with educational

establishments, chairs, etc.

partner educational establishments

Partnership with the Sciences Po Paris Sustainable

Development Chair

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OBJECTIVES INDICATORS 2021 RESULTS

DEVELOP A CONSTRUCTIVE AND TRANSPARENT DIALOGUE WITH ALL OF THE COMPANY’S STAKEHOLDERS

Be transparent about our

non-financial performance

Number of non-financial assessments

main non-financial assessments

Achieve the highest rating

category in each assessment

Improve non-financial ratings

CDP climate from B to

A-

, MSCI from BBB to

, VE from

43 to

“Advanced”

Be transparent about the strategic

actions taken by the Company and

the results obtained

Number of CSR documents shared on Hermès' sites

documents published in addition to the annual

report on the Hermès Finance website

PARTICIPATE IN ADVOCACY ACTIONS FOR DIFFERENT PRODUCTION METHODS (CRAFTSMANSHIP, LESS INTENSIVE AGRICULTURE, LOCAL

INTEGRATION)

Fashion Pact

Act4Nature International

UNFCCC

ICFA

Contribute to initiatives and

coalitions

Contribution to an action in each of our value chains

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2.7.1

REGIONAL RESPONSIBILITY IN FRANCE

As part of its regional responsibility, Hermès undertakes initiatives in

France in particular to support the regions in which it is located,

enhancing their value, regenerating them, transforming and revealing

them.

POLICY

Hermès chooses to locate its manufacturing sites mainly in France. This

is the case for its Leather Goods & Saddlery division’s activity, where the

industrial development approach is that of spin-offs: organic

development that creates human-scale production sites (approximately

250 people), that start with a core group of experienced craftspeople,

who train newcomers.

Hermès' ambition is to contribute to the development of the regions by

creating direct and indirect jobs, as well as by local initiatives in social,

economic, educational and cultural fields, among others..

2.7.1.1

PURSUE A MANUFACTURING DEVELOPMENT

POLICY IN FRANCE

The Hermès Group operates in 11 of the 13 regions of metropolitan

France, with more than 80 sites (production units, stores, logistics

sites, offices) representing 10,969 Group employees. The

craftsmanship model that it employs in France brings with it a

regional corporate responsibility. The House establishes itself for the

long-term and has increased the number of employees in France by

3,065 in five years.

Since the launch of the first site in 1837, the locations for production

units have been chosen to support hubs of regional expertise. Hermès

has 52 production sites in 9 of France’s 13 regions. The Textile division

has 5 sites in the Lyon region (839 jobs), concentrating the House’s

savoir-faire in this domain. The complementary lines of savoir-faire –

such as weaving, engraving, printing, dyeing, finishing and sewing – are

grouped together under the holding company Holding Textile Hermès. The

“Passerelle” extension project, launched in 2019, is the concrete

demonstration of the House’s desire to contribute to the sustainability of

local savoir-faire. This large project at Pierre-Bénite (near Lyon) aims to

support two new printing lines and eventually create 120 additional jobs.

The project is expected to be finalised in 2022.

The Cate porcelain production site (178 jobs) is based in the Limousin

region, the cradle of porcelain production, with Beyrand, a colour printer

since 1926, which joined the Hermès Group in 2013.

In the Périgord region, the Nontron site is a good example of the Group’s

desire to develop its local footprint. Hermès, thanks to its decision to set

up a porcelain production site, was able to hire 200 people impacted by

the closing of a manufacturing site in 1990. Today, with three

companies, Hermès has more than doubled its workforce and employs

497 people at Nontron.

Cristallerie Saint-Louis, founded in 1586, is located in the heart of the

Lorraine forest, the source of all the raw materials necessary for crystal

manufacture. It holds more than 10,000 moulds that can be reactivated

at any time to fashion the production unit’s crystal objects. At 31

December 2021, the Cristallerie Saint-Louis employed 2,457 people and

is a remarkable area of activity in the Pays de Bitche region, including

thanks to the presence of the Musée du Cristal “La Grande Place”,

located in the heart of the production unit.

The Leather Goods sites continue to expand according to customer

demand. As at December 2021, the House had 19 leather goods

workshops. The leather goods workshops of Guyenne (Gironde) and

Montereau (Seine-et-Marne) are completed and were inaugurated in

2021. In addition, a number of site projects are underway: the leather

goods workshops of Louviers (Eure) and de la Sormonne (Tournes/Cliron)

will be completed in 2023 and Riom (Auvergne) in 2024.

The choice of new sites responds to a desire for local integration on three

levels: respect for local expertise, sustainability of savoir-faire, and desire

to create local jobs bringing life to the regions.

These sites are built according to several different types of opportunity:

the labour pool, the takeover of existing sites or a change of activity, or

the establishment of new sites. Sites are deliberately chosen near

establishments offering leatherwork training programmes, in particular.

The geographical location of the sites covers the whole of France,

organised by regional divisions, particularly in the leather sector (see

production site location map in § 1.4.2 of chapter 1 “Presentation of the

Group and its results”).

The history of the local architecture and the emblematic materials of the

region are also integrated in the thinking and design of new production

units. The choice of construction projects for the three future leather

goods workshops reflects these intentions in particular, with the Louviers

leather goods workshop, for example, being the first French

manufacturing site to aim to obtain E4C2 certification, which guarantees

excellence in taking climate issues into account in construction.

The projects of the three leather goods workshops in progress (Louviers,

Tournes/Cliron and Riom) are designed to comply with the highest levels

of the Hermès sustainable construction standard (§ 2.5.4.2.2) and to

comply with HQE+ (high environmental quality) standards, and are taking

place in close collaboration with all stakeholders. Local companies are

given preference in competitive bidding when they meet the

specifications.

In addition, the creation of sites organised by division (maximum three

sites) promotes project synergies, recruitment of experts, skills

improvement, and also presents opportunities for internal mobility

ensuring the sustainability of the model.

◆

workshop visits by high school students to discover the craftsmanship

métiers;

◆

talks in secondary schools to present the métiers prior to the pupils’

choice of a career path;

◆

organising information forums with the Job Centre;

◆

the creation of appropriate local training programmes.

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2.7.1.2

DEVELOPING HARMONIOUS RELATIONSHIPS

WITH REGIONAL STAKEHOLDERS

In order to contribute to the development of the host regions, site

construction projects are prepared in cooperation with the local

association of municipalities. They address the impacts related in

particular to employment, training, mobility (mobility plans, impacts on

transport), biodiversity and, more generally, the integration of the House

in the challenges of the area concerned.

Special attention will be paid to the potential of the local employment

pool, in particular transport infrastructures, possibilities for local housing

and schooling for families. The quality of the partnership with town halls

is decisive, driven by the desire for a real local life for the families who

settle there.

The Group works to promote these relationships, based on trust,

transparency and joint actions. In 2019, for example, a “Mayors' Day”

event in Paris brought together 17 elected representatives from the local

authorities where our French sites are located for discussions with the

Group’s Executive Committee and members of the management

committees.

The development of craftsmanship métiers and job creation

The sites all maintain close relations with local Job Centres (Pôle Emploi)

and schools. The goal is to help train the new generations of

craftspeople, as well as showcase our offers and métiers, allow hands-on

practice, and explain the Group’s métiers to the young generations.

Regardless of the site’s activity (leather, silk, or other métier) or its

geographical location, this approach consists of:

The establishments, which are often in rural areas, provide a major local

boost to the communities concerned: stimulation of local consumption,

supporting real estate, impact on community needs (maintenance of

classes in schools, public transport support, etc.) and tax resources for

municipalities.

Our regional development also promotes the development of educational

establishments and local training programmes, from which a number may

join the Hermès Group.

In addition to actions linked to its own activities, it is also a socially

responsible company in the places in which Hermès conducts its

business, building harmonious and constructive relations with

stakeholders. The production sites interact with the municipalities, the

local association of municipalities, and local agencies such as Action

Logement. Hermès cooperates with partner associations for employment,

as well as with junior and high schools which will provide the House with

fresh young talent, thereby contributing to its expansion.

The following examples illustrate the operations conducted in 2021:

Leather

In every project, a temporary workshop is set up for a period of 18 to 24

months prior to the opening of the site, in existing buildings that have

been renovated in accordance with the Hermès Group’s standards.

These temporary workshops are attached to a reference site, and

in-house trainers ensure the transmission of savoir-faire.

Recruitment is carried out locally; the first intakes, each consisting of

around 30 craftspeople, are recruited on the basis of manual skills via

the MRS (simulation recruitment method developed with the National

Employment Agency (Pôle Emploi)) on the basis of manual aptitude

(dexterity tests in particular) and without a CV, regardless of their

previous career path. Every six months, a new group is brought on board

and trained by in-house trainers. The craftspeople are then provided with

continuous training from tutors. In this way, upon opening, about 100

people are already operational and ready to launch the leather goods

activity. In the long term, the average workforce will be 250 craftspeople.

This number of employees will allow the craftsmanship dimension to be

preserved, and quality relations between employees and management.

In line with this regional approach, Hermès has decided to set up a new

division in Auvergne. The establishment of the future site, in the former

tobacco factory in Riom, is being prepared in close collaboration with the

urban community of Riom Limagne and Volcans. In addition, in order to

successfully integrate into the life of the region, we have developed close

links with the Riom town hall, the sub-prefecture, the ABF, DRAC, DREAL

and the police department. Hermès aims to become an economic player

in the region, by contributing to its development, creating jobs and its

commitment to soft mobility and carbon reduction.

The temporary workshop was opened in Riom in November 2020 and

now accommodates 160 people.

Lastly, the Leather Goods sites are working with local players to promote

the craftsmanship métiers and favour a return to employment:

◆

The Hermès Leather Goods & Saddlery division continues to support

the “Manufacto” programme piloted by the Fondation d’entreprise

Hermès, which aims to introduce children and teenagers to the

universe of craftsmanship by showing them how to manufacture an

object in several stages.

From the start of the 2021-2022 school year, this support has

resulted in presentations by 11 craftspeople in several middle and

high school classrooms in the Paris region, Lyon, Normandy and

Franche-Comté, Nouvelle-Aquitaine and the Ardennes, and visits by

classes to these same manufacturing sites.

Since the start of the programme in 2016, nearly 5,600 students, or

225 classes, have met craftspeople during 12 production sessions.

Today, eleven academies are participating in this programme to

discover the worlds of carpentry, saddlery and upholstery, leather

goods and plastering;

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◆

in Pantin, a team has started a collaboration with “Sup de Sub”,

winner of the French Ministry of Labour’s skills investment plan (PIC –

100% inclusion), in collaboration with the Fondation d’entreprise

Hermès. This structure aims to help young people between the ages

of 16 and 26 who have no or limited resources, networks or

knowledge to support their capabilities and take the path of life they

would like. In 2021, 17 employees dedicated a day to Skills

Sponsorship for this project, representing 149 hours.

In Seine-Saint-Denis, Hermès joined the Réseau Entreprendre 93

association from its creation in 2003. The House participates, along

with the other members, in the selection, financial support and coaching

for start-up projects whose common point is their strong job creation

potential. In 17 years, 2,000 jobs were created by 200 new companies

under the system. Some 10 employees of the House are involved in an

advisory role with start-ups fostered by Réseau Entreprendre 93.

Between Pantin and Bobigny, the sites located in Seine-Saint-Denis

represent a total surface area of 100,000 m2 and house 2,600

employees, 700 of whom live in the department. This proportion is

expected to increase thanks to link-ups with candidates by the

employment agency in Pantin. Hermès is one of the largest employers in

Seine-Saint-Denis, and is involved in promoting talent from this region.

At Pantin, the House also provided its assistance to the local authority to

create the Revel house, a centre for promoting the métiers of art and

design, and a “métiers workshop” at the employment centre. In 2017,

Axel Dumas, Executive Chairman of Hermès, strengthened this

partnership by signing an “Enterprise-region” charter with Est

Ensemble. This association of nine municipalities includes Pantin and

Bobigny, where Hermès is also located. One of the objectives is to

strengthen the Company’s participation in local economic development

and employment.

Textile

Holding Textile Hermès maintains close relations with the silk apprentice

training centre (CFA Textile) and FrenchTex, France’s leading regional

professional textile organisation. As such, it also sits on the Board of

Directors of Cepitra, the Chambre d’Apprentissage des Métiers Textile

and AR2I (OPCO). The Chief Executive Officer of HTH is Chairman of

Intersoie, an inter-professional organisation in the sector in France. The

division participates in the “Alliances et Territoires” community, which

meets quarterly to examine current topics and issues relating to local

recruitment, training, skills development or CSR.

2.7.2

SOCIALLY RESPONSIBLE COMPANY

Hermès seeks to fit harmoniously into the local economic fabric. The

House is determined to be a socially responsible company actively

involved in the life of local communities with which it builds and develops

strong ties. The craftsmanship model that it employs in France brings

with it a regional corporate responsibility, and even beyond, because its

employees contribute to the development of their communities through

simple actions: giving time, giving of one’s self, opening oneself up to

others, receiving, and so on. Hermès has a multitude of mechanisms

around the world.

POLICY

The Hermès Group’s policy is to ensure that each production and

distribution unit maintains a dialogue and undertakes concrete actions

with local authorities and stakeholders, with the goal of healthy

integration in the local community, as a good, trustworthy, civic-minded

neighbour, poignant examples of which are set out below.

The distribution subsidiaries, for example, have an annual target in this

area.

2.7.2.1

GIVING BACK TO THE WORLD A PART OF WHAT

IT GIVES, THROUGH ACTIONS

2.7.2.1.1 Corporate responsibility – sharing value

Hermès participates in value creation in France through the direct

employment of 10,969 people, and increased its workforce by 587

people in 2021. Although 78% of the objects are produced in France,

91% of the Group’s sales are made outside France, thus making a

positive contribution to the French trade balance.

In addition, the Group is attentive to the harmonious sharing of added

value in order, on the one hand, to secure its future development and, on

the other hand, to contribute to social and societal equilibrium. Thus, on

average over three years, the Group’s added value was distributed as

follows:

Shareholders

11%

Investments

and reserves

37%

Employees

24%

Public

authorities

28%

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•

compliance by all Group companies with the regulations in force in

the States where these companies are located, compliance with

the deadlines provided for by the regulations applicable in each

State, for the filing of the required declarations and the payment of

the taxes due;

•

income is taxable in the place where the income is generated;

•

absence of creation of legal structure or transactions to meet a

primarily tax-related objective;

•

the fight against tax evasion with the absence of use of tax

evasion schemes or structures without substance.

◆

the location of the Hermès Group’s activities is based exclusively on

operational choices, and tax considerations do not modify that

approach. That is how the location of production in France, which is a

key element of the Hermès Group’s strategy for sustainable

development, impacts the amounts of taxes paid in the country as

well as the Group’s effective tax rate;

◆

the Hermès Group’s tax positions are tracked and audited by the

consolidation and tax department, which reports directly to a member

of the Executive Committee, one of whose objectives is to anticipate,

identify, and manage, with the finance department, the tax

challenges;

◆

every year, the Group files, as part of its tax obligations, a statement

of transfer prices and a country-by-country statement, the

Cross-Border Currency Reporting (CBCR) with the French tax

administration. The CBCR is created in accordance with the

recommendations of the OECD (as interpreted in French tax law). It is

subject to an exchange of information between the tax

administrations of the countries in which the Group is established. In

the countries in which the exchange of information is not operational,

the Group has a CBCR programme with the local tax administration.

The Hermès Group’s income tax expense amounted to €1,015

million, i.e. a tax rate of 29.5% (see note 10 to chapter 5

“Consolidated financial statements”).

Concerning taxes, the Hermès Group follows the recommendations of the

CSR GRI 207 reporting standard:

◆

Hermès’ tax strategy is based on the following principles:

This tax strategy is implemented by Group Financial General

Management, based on internal (the tax department) and external

expertise in France and abroad. This strategy is reviewed and approved

by the Executive Committee at least once per year:

2.7.2.1.2 Tangible and generous commitments: financial

donations, contributions in-kind and volunteering actions

Group entities get involved

Hermès reaffirmed its active commitment, in 2021, to increase its

generous initiatives in all the regions where it operates. Manufacturing

sites and distribution subsidiaries get involved regularly, and are keen to

continue the partnerships established. While Group Management is at

the root of many initiatives and commitments, the international

distribution subsidiaries remain a source of ideas and contribute

significantly to the development of local initiatives and partnerships. They

encourage involvement and nurture a sense of belonging among

employees, who come together around a project and with common

objectives. These commitments, made locally, are carried out in addition

to the philanthropic initiatives carried out by the Fondation d’entreprise

Hermès.

Nearly 400 operations in 2021 brought together employees around

the world (240 actions excluding Covid-19 in 2020). They contributed,

during their working hours as well as in their own time, to environmental,

cultural or solidarity actions with local communities. In addition to

employee mobilisation, the subsidiaries provided financial support for

numerous projects. In 2021, the Group set up the monitoring and

validation of these projects with a dedicated committee, responsible for

validating the quality of the operations carried out, the volume of which is

as follows:

In France

In 2021, 90 solidarity actions were identified in France. Since 2017, toys

have, for example, been collected at the 13 French sites. In 2021, 500

kg were collected for the partner association promoting solidarity and

contributing to a more circular economy.

International

The editions of Carrés Solidaires continue, and in particular, allow

solidarity initiatives throughout the world to be supported and

encouraged. Thus, in 2021, the subsidiaries in France, Greece, Hong

Kong, Germany, England and Luxembourg took part in the operation. A

total of 2,000 carrés, created specifically for these initiatives, were sold

to benefit nine associations.

BREAKDOWN OF ACTIONS CARRIED OUT BY GEOGRAPHICAL AREA

2019 2020 2021

France 40 58 90

Europe 70 65 109

Asia and Asia-Pacific 70 72 110

Americas 100 45 69

TOTAL 280 240 378

◆

The Japanese subsidiary is committed to the Coral Okinawa

association, which organises coral planting campaigns on the reefs of

the island of Okinawa, as well as activities open to everyone to

promote knowledge of this ecosystem.

◆

Korea reaffirmed its support for the Seoul Museum of Art (SeMA)

contemporary art exhibition by supporting the monographic exhibition

of Korean artist Lee Bul.

◆

For example, the United States subsidiary supported the GO Project

association, which works for equal opportunities and seeks to

promote the schooling of children from families experiencing financial

difficulties in New York.

◆

In Mexico, the subsidiary is committed to Teach for All and its project

to support 20 education professionals working with disadvantaged

children.

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The subsidiaries are also part of global dynamics. The World Clean Up

Day movement was followed by China, Italy, France and Germany and

enabled the collection of more than 100 kilos of waste thanks to the

mobilisation of more than 200 employees.

The Europe zone encouraged its subsidiaries to be involved and

recorded a total of 109 local actions.

◆

For example, Italy supported the Cecilia Gilardi Foundation, which

aims to protect craftsmanship trades that are in danger of

disappearing by training and encouraging young talents and giving

them financial assistance through scholarships for university studies.

Employees in Asia and Asia-Pacific carried out 110 actions, mainly

through concrete initiatives to preserve local savoir-faire, art, heritage

and the environment.

The Americas region committed to a total of 69 actions, particularly in

favour of education.

2.7.2.1.3 Fondation d’entreprise Hermès (see chapter 1

“Presentation of the Group and its results”, § 1.11)

In 2021, the Fondation d’entreprise Hermès wanted to confirm its

mission in promoting the public interest as part of a collective drive.

Expressed in a desire to act together, whether it involves the creation of

works of art, transmission of savoir-faire, protection of the environment

and encouragement of solidarity actions, four pillars structure the

Fondation’s action. Throughout a new year marked by the pandemic, the

Fondation continued its commitments through its programmes while

remaining mobilised alongside its beneficiaries and project leaders faced

with the uncertainties of the context. To combat climate change and

damage to biodiversity with increasingly severe consequences, the

Fondation d’entreprise Hermès launched Manuterra, an environmental

education programme for primary to high school students.

Since the start of the school year in 2021, pupils have been invited to

create, plant and pass on a vegetable garden cultivated during 12

two-hour sessions in school time. Under the guidance of a professional

gardener, they cultivate a plot using the permaculture technique while

addressing multiple environmental themes. Six classes, i.e. 150

students, are involved in this pilot year, set up in partnership with the

Saline royale d’Arc-et-Senans, the Besançon education board and the

Compagnons du Devoir et du Tour de France. In addition to Manuterra,

the Fondation also added new support for the Massane nature reserve

(Pyrénées-Orientales), a beech forest that has been growing unfettered

for more than 150 years and has been classified as a Unesco World

Heritage site since last summer. This choice reinforces the Fondation’s

action in favour of the preservation of our ecosystems.

The budget of the third mandate of the Fondation d’entreprise Hermès

(April 2018 – April 2023) is €40 million over five years. This budget (as

a proportion of revenue) is the highest of French business foundations

(source: Carenews study dated 18 February 2018).

€40M

million budget

for the Fondation

d’entreprise

(2018-2023)

2.7.2.1.4 Livelihoods Carbon Fund

Since 2012, Hermès has been a partner of the Livelihoods Carbon Fund

(LCF), which aims to improve the living conditions of disadvantaged

communities in a sustainable manner by developing large-scale projects

with real impact against climate change.

LCF aims to be a start-up investor (with an entrepreneurial approach and

investment risk) in three types of projects (ecosystems, agroforestry and

energy) in Africa, Asia and Latin America. The fund has 10 partners in its

LCF1 & LCF2 compartments: Danone, Crédit Agricole, CDC, Schneider

Electric, La Poste, Hermès International, Voyageurs du Monde, SAP,

Firmenich and Michelin. The initial duration of the funds is 24 years, and

the duration of a project varies between 10 and 20 years. LCF1,

launched in 2011, is fully invested; the LCF2 compartment, launched in

2017, which is larger than LCF1, is reaching the end of its investment

process, including with the extension of projects in the LCF1

compartment. In June 2021, by joining LCF3, Hermès International

renewed its commitment to local economic development, the protection

of biodiversity and the fight against climate change.

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• 9 MtCO

eq. forecast

• 2.4 MtCO

eq. verified to date

Number of beneficiaries

(1)

1.5 million

people positively

impacted to date

Number of households supported

> 250,000

Number of more efficient

stoves distributed to families

(mainly women)

> 163,000

Amount of carbon

sequestered or avoided

Hectares planted or preserved

36,000 hectares

Duration of commitment

20 years

Social results

Number of trees planted

(2)

127million

to date

Investment capacity of the fund

€45 million

KEY INDICATORS OF THE LCF1 FUND

Results for the first Livelihoods Carbon Fund (nine projects):

Environmental results Economic results

Definitions

Macro objectives

Categories of impact

• 15,200 hectares

• 6,000 hectares under restoration

and preservation of biodiversity

Number of beneficiaries

(1)

260,000

people positively

impacted to date

Number of households impacted

43,600

Number of more efficient stoves

distributed to families

78,500

Number of women supported

(3)

83,000

Self-help groups set up

110

Amount of carbon sequestered or

avoided (target)

12 MtCO

eq.

Hectares planted or preserved

Duration of commitment

20 years

Social results

Economic results Environmental results

Number of trees planted

(2)

5.43million

to date

Investment capacity of the fund:

€65 million

KEY INDICATORS OF THE LCF2 FUND

Results for the 2

Livelihoods Carbon Fund (eight projects to date):

Definitions

Macro objectives

Categories of impact

The third Carbon Livelihoods Fund (LCF3) aims to invest €150 million to

improve the lives of 2.5 million beneficiaries in developing countries.

Following on from LCF1 (2011, €45 million) and LCF2 (2017, €65

million), this new impact fund will invest in community projects for the

restoration of natural ecosystems, agroforestry and regenerative

agriculture. More than €250 million have been collected to help

disadvantaged communities, the fight against climate change and the

protection of biodiversity. Fifteen companies and financial investors have

joined LCF3 in a common investment vehicle to make the transition a

success: Bel group, Chanel, Danone, DEG, Eurofins, the Global

Environment Fund, Hermès, L'Occitane group, Mars,

Mauritius

(1) N Number of people involved who are positively affected by the project's activities.

(2) T Trees, seeds, propagules (mangroves and agro-forestry trees) planted as part of the project's activities.

(1) N Number of people involved who are positively affected by the project's activities.

(2) T Trees, seeds, propagules (mangroves and agro-forestry trees) planted as part of the project's activities.

(3) N Number of women participating in training on how to create improved stoves and/or agroforestry

and natural ecosystem restoration activities.

◆

Restoration and preservation of natural ecosystems, for example

mangrove forests. Nearly 10,500 hectares were replanted in

Casamance (“Océanium” project); 4,500 hectares in the Ganges

delta (“News” project); 10,000 hectares in Indonesia (“Yagasu”

project). These projects secure populations (protection against

cyclones or the invasion of salt water) and provide food sources

through ecosystem regeneration;

◆

Agroforestry and soil remediation through sustainable agricultural

practices. With the support of the Naandi Foundation, Adivasi tribal

communities in the Araku valley in India have, for example, planted six

million trees (fruit trees, as well as for firewood, construction, etc.),

including three million coffee bushes, in accordance with agroforestry

models, the aim of tripling these plantings in the coming years with

the LCF2 project. In Guatemala, 1,750 hectares of trees and food

crops have been planted in the Cerro San Gil mountain area

(“Fundaeco” project), allowing rural families to increase their food

security and incomes, while protecting biodiversity. In Kenya (project

VI “Agroforestry”), on the slopes of Mount Elgon near Lake Victoria,

the livelihoods of 40,000 small farms will improve through the

intensification of agriculture respectful of natural resources

(Sustainable Agricultural Landscape Management – SALM) and the

development of dairy production. The project also contributes to the

protection of water resources and generates positive social impacts

for women’s jobs.

◆

Access to rural energy to reduce deforestation. In Kenya, the

“Hifadhi” project will ultimately have equipped 120,000 households

with improved wood-burning cooking stoves that significantly reduce

wood consumption compared to the previous cooking equipment,

thereby reducing pressure on forests, firewood collection time for

families, and exposure to the toxic fumes generated by old stoves. In

Burkina Faso, with the support of the Tiipaalga NGO, 30,000

improved stoves were installed by inhabitants in their villages, in an

effort to secure their use over time in part of the Sahel region. With

the financial support of the French development agency (AFD), an

agroforestry component has been added to this project. In Peru, the

ITYF project (taken from the name of the Instituto Trabaja y Familia

NGO) is installing 30,000 improved wood-burning cooking stoves and

hygiene kits to families in extreme poverty in the Peruvian Andes. At

the same time, the project brings training and awareness on health

(reduction of toxic fumes, importance of boiling water, basic hygiene

gestures, etc.), and will also have a significant impact against

deforestation.

◆

for the first time in Europe, LCF2 launched a project called Sols de

Bretagne in the Brittany region of France. In partnership with the

Brittany Region, the Regional Chamber of Agriculture and the local

association Sols d'Armorique, this project will support some 100

farmers in the transition to regenerative agriculture, as well as

capture 140,000 tonnes of CO

in 10 years. (Find out more about the

Sols de Bretagne project: https://livelihoods.eu/portfolio/brittany-

france-regenerative-agriculture/);

◆

in Mexico, in the mountainous region of Oaxaca, Livelihoods and its

partners launched a shaded agroforestry coffee project to restore the

fragile mountainous ecosystem of Oaxaca, while helping more than

3,000 smallholders to improve their incomes. This 20-year project will

be implemented by the local cooperative CEPCO, which has more

than 30 years of experience with coffee producers in the region. The

Livelihoods-CEPCO initiative will restore and preserve a total of 6,000

hectares, as well as generate more than one million tonnes of CO

over its lifetime. (Find out more about the Livelihoods agroforestry

project in Oaxaca, Mexico: https://livelihoods.eu/fr/restoring-the-

earth-livelihoods-writes-a-new-chapter-with-coffee-farmers-in-mexico/).

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Commercial Bank, McCain Foods, Orange, SAP, Schneider Electric and

Voyageurs du Monde.

Fully operational, the fund is now seeking field partners in various regions

of the world to accelerate nature-based solutions.

The projects generate profits for local communities and ecosystems, as

well as for the partners in the fund, which earn carbon credits with a

significant environmental and social impact in proportion to their

investment over the project development period. These projects, one of

the characteristics of which is the aim to expand their scope to a very

large scale, and for periods from 10 to 20 years, are the following, in

particular:

In 2021, the above projects impacted the lives of more than 1.7 million

people since their creation, and helped replant more than 132 million

trees, i.e. an area equivalent to five times the size of Paris. They also

equipped more than 240,000 families with improved cooking stoves,

which reduce deforestation and preserve women’s health, with a target

of 20 million tonnes of CO2 captured or avoided over the period (projects

last between 10 to 20 years). They therefore help to offset Hermès’

carbon emissions on a voluntary basis (§ 2.5.4.3.2).

2021 was marked by the launch of new projects financed by the 2nd

Carbon Livelihoods Fund (LCF2), which currently includes a portfolio of

eight projects:

2.7.2.2

COMMUNICATION AND TRANSPARENCY

VIS-À-VIS STAKEHOLDERS

Hermès, a company with a discreet culture, strives nonetheless to make

its sustainable development strategy, objectives and actions more

transparent, in a rapidly changing context, and in particular to meet the

expectations of stakeholders and demonstrate the virtue of its particular

business model, its ambitions and efforts in this area.

Thus, in a proactive approach, the teams are working to create the

conditions for external communication that is as transparent as possible.

This includes the responses given to questionnaires and external

analysts, as well as the dialogue established and initiated with the press,

and influence.

A page dedicated to CSR on the financial website

(https://finance.hermes.com/en/a-value-creating-and-sustainable-french-

model/) notably presents the site's main actions.

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◆

CDP (Carbon Disclosure Project) for carbon, water and forest issues

in chapter 2.5 "The Planet: Environment", § 2.5.2;

◆

SASB (Sustainability Accounting Standards Board): cross-reference

table in § 2.7.2.2.1 below;

◆

TCFD (Task Force on Climate-related Financial Disclosures) in

§ 2.7.2.2.2.

Launched in 2020, this digital space incorporates in its communication

the best practices established by:

The Hermès Group’s interactions with its stakeholders illustrated in this chapter break down as follows :

CDP / SUSTAINALYTICS / MSCI / VE / HUMPACT

Hermès

• Hermès in the Making

• Portes du cuir • Open days

• Empreintes sur le Monde (Footsteps across the World)

• Relations with elected officials

• Schools

• National Employment Agency

• Manufacto (Fondation d’Entreprise)

• Sciences Po (Sustainable Development

Chair)

• Paris School of Economics

• Cambridge Institute for Substainability

Leadership (CISL)

• ISS ESG

• CDP • Sustainalytics

• MSCI • V.E • Humpact

• Fashion Pact • EPE (Enterprises for

the Environment) • ORSE

• MEDEF • AFEP

• Federation of Haute Couture and

Fashion • CNC / CTC (National

Leather Council/Leather Technical

Centre) • French federation of

enterprises and companies in the silk

industry • Colbert Committee • ICFA

• CABAT (French Army Wounded Aid

Unit)

• Seine-Saint-Denis

• Production sites

Customers

Non-financial

Schools

Professional

organisations

Suppliers

• Chapter 2.6

Non-

governmental

organisations

Local

governments

Local

governments

• WWF

• Livelihoods

• RSPCA

• UICN

1. List not exhaustive.

2. Environment, Social and Governance

The relevance of Hermès’ business model has been recognised on

several occasions by independent bodies, such as ESG rating and

ranking agencies

dedicated, through their 2021 ratings. These

assessments were carefully chosen by Hermès for their credibility, rigour

and

representativeness of the priority challenges of the sector, including,

but not limited to, the following analysts:

Change in methodology in 2020.(a)

(b) The 2019 and 2020 scores were recalculated using the new 2021 methodology.

CDP is an international organisation that has been recording the

environmental performances, particularly climate actions, of more than

8,400 companies since 2002. The average scores of the “apparel

design” segment in Europe are C for Climate & Forest, and B- for Water.

ISS ESG (formerly Oekom) is a specialist ESG (environment, social and

governance) rating agency. The scores it attributes range from D- to A+.

This year Hermès reached the “Prime” level with a C+ rating.

SUBJECT

Assessor 2019 score 2020 score 2021 score

Climate change CDP B B A-

Water CDP B A- A-

Forests CDP B B A-

ESG risks ISS ESG C C C+ “Prime”

ESG risks Sustainalytics

72/100 - 10.2 “Top 1%”

ESG risks MSCI BBB BBB A

ESG risks VE - 43 61 “Advanced”

ESG risks FTSE Russel - - 2.9

Human resources Humpact - Grand Prix Grand Prix (5stars)

General Positive Economy Institute

C+ C+ B

General UN Global Compact Advanced Advanced Advanced

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Sustainalytics, which analyses companies using more than 80 ESG

criteria, based on their publications as well as those of their stakeholders

and the media, has published a new analysis. Hermès is identified as the

second best player in the Textiles and Apparel sector out of 174

companies, and belongs to the top 1% of the global Sustainalytics

ranking (148thout of 13,657 companies). With an overall ESG risk rating

of 10.2, Hermès’ exposure is “Low”.

The MSCI ESG rating index, which assesses more than 8,500 companies

worldwide, measures the resilience of companies to risks (ESG).

Hermès is now rated A and made significant progress in all three

categories.

Hermès was included in the CAC40 ESG index, which includes 40

companies on the basis of their environmental, social and governance

performance and is based on the rating of VE (Vigeo-Eiris). With an

overall score of 61/100, Hermès is now in the “Advanced” category.

For the second consecutive year, the House received the Grand Prix de

l’Emploi France awarded by Humpact, a non-financial rating agency that

specialises in employment. It designates the most employment-friendly

company in France in 2021, all categories combined.

The Positive Economy Institute gives Hermès a B rating in its survey of

the positivity of CAC40 companies. In particular, Hermès ranks second

among CAC40 companies with the greatest improvement compared to

the previous year, as well as second in terms of environmental footprint.

The “Advanced” level is the highest level of recognition that can be

awarded by the United Nations Global Compact to a Communication on

Progress (COP). Hermès publishes its COP on the Global Compact

website each year.

These assessments are also supported in 2021 by various awards and

studies conducted by the press or external organisations (§ 2.1.1),

including the Grand Prix de la Transparence (CAC large 60), first prize in

the Diversity Leader ranking of the Financial Times, and the 1st ranking

Correspondence grid based on SASB

by Le Point magazine in the Clothing sector for the most responsible

company.

2.7.2.2.1 SASB correspondence analysis

The Sustainability Accounting Standards Board (SASB) is an independent,

not-for-profit standard-setting body that develops and maintains reporting

standards for financially material sustainable development information.

The SASB has established standards specific to 77 activity sectors

including with the "Apparel, Accessories and Footwear (consumer goods)"

sector.

In addition to the information presented in this report, Hermès presents a

summary of its actions according to the sector reading grid.

This publication is also an opportunity to highlight the House’s progress.

Hermès’ business model is quite unusual compared to the sector taken

into account by the SASB. SASB identifies nine key topics for the sector,

five of which concern supply chain (CG-AA-430); very few concern human

resources and societal aspects. Hermès operates according to a highly

integrated business model (58% of products are produced in-house), with

partnership relationships with its suppliers (the average length of

relationships with the top 50 direct suppliers is 20 years), and production

in France (for example, for 100% of leather goods, which represents half

of the Group’s sales) and 78% in total. Although important, the topics

highlighted by the SASB relating to the supply chain are not the only ones.

Human and societal challenges are also key to the House’s sustainability.

In terms of risk, the categories identified by SASB are not always the

most significant for Hermès. As explained in § 2.1, the Group has

identified and prioritised 10 key topics that structure its reporting and

provide material non-financial economic information that is useful,

comparable (even if sometimes specific) and evidence-based. In

addition, as presented in this document, the Group uses the CDP

reporting framework for its carbon, water and forest issues, and complies

with the TCFD recommendations.

Paragraphs from chapter 2 of the universal registration

document

Management of Chemicals in Products (CG-AA-250) § 2.5.3.3

Hermès assumes all its responsibilities as a company that places goods on markets, to ensure

the regulatory compliance of all products sold, in all countries where it operates.

The list of controlled substances monitored by the Group is the list of controlled substances

worldwide. The Group has set a target of compliance with the most stringent regulations, which

are generally European regulations..

Environmental impacts in the supply chain (CG-AA-430a) § 2.6.1

Hermès ensures that it controls the environmental footprint of its supply chain as described in

the items below.

Effluent management (GC-AA-430a.1) § 2.2.1, § 2.5.3, § 2.6

The Group verifies through regular audits that its suppliers (tier 1) comply with local regulations

regarding the regulatory compliance of their effluents.

Environmental assessments (GC-AA-430a.2) § 2.4.2, § 2.6

The Group’s entities and those of its suppliers are regularly subject to audits carried out by

Hermès’ teams and external consultants, in addition to those carried out by the authorities (in

particular for sites subject to authorisations).

◆

Oversight by the Board of Directors of climate-related risks and opportunities

◆

Management role in assessing and managing climate-related risks and opportunities

◆

Group processes to identify and assess climate-related risks

◆

Group processes for managing climate-related risks

◆

Integration of processes for identifying, assessing and managing climate-related risks into the

organisation’s overall risk management

§ 4

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2.7.2.2.2 TCFD correspondence analysis

updated in 2021, on how to report and publish the risks and

opportunities related to climate change, with the aim of increasing

transparency between companies and investors in order to reduce

investment risks, and reconcile the short-term financial decisions with the

long-term consequences of climate change.

Hermès presents its actions according to the framework

recommended by the TCFD. The TCFD (Task Force on Climate-related

Financial Disclosures) is a working group created in December2015

during COP 21. This working group has published recommendations,

Correspondence grid based on TCFD

Sections in the universal registration

document

Governance

The Group’s Executive Chairman, Axel Dumas, was involved in many climate-related issues in 2021, including

the decisions to revise Hermès’ climate commitment upwards with the SBTi validation for a trajectory of 1.5° C.

§ 2.1 and 2.5

Climate strategy § 1.10 and § 2.5

◆

The exposure to transition risk is studied both by the audit and risk management department in its vertical

analysis of the House’s main activities, by the industrial affairs and sustainable development departments

and by the Sustainable Development Committee, with a more cross-cutting vision.

Risks and opportunities related to the climate that the Group has identified in the short, medium and long

term

§ 2.5.4.1

◆

Climate system disruptions and related operational, regulatory and political transition issues, such as

carbon pricing, are already identified as physical and transition risks with impacts on the Group’s supply

chain, various operations (manufacturing, logistics, distribution), as well as on the behaviour of its

customers.

Impact of climate-related risks and opportunities on the Group’s activities, strategy and financial planning § 1.10

◆

In 2019, the Group initiated the analysis of the IPCC (Intergovernmental Panel on Climate Change)

scenarios RCP 2.6 (equivalent to a 2° C scenario), RCP 4.5 and RCP 8.5. These analyses are conducted

over three time scales (two-year budget vision, within five years and a long-term vision of 25years).

Resilience of the organisation’s strategy, taking into account different climate-related scenarios, including

a 2°C or lower scenario.

§ 2.5.4.1

Management of climate risk

The Group’s risk management process is based on the preparation of risk mapping as well as the use of

additional tools to define the level of priority to be associated with the risks identified and the actions to be

implemented to mitigate them. These risk maps are regularly updated and the action plans are monitored

directly by the Group’s various entities under the supervision of the audit and risk management department.

They are consolidated annually into a Group-wide risk map, including climate-related risks such as the scarcity of

certain raw materials.

§ 2.5 and § 4.3

Paragraphs from chapter 2 of the universal registration

document

Labour conditions in the supply chain (CG-AA-430b) § 2.6.1, § 2.6.2, § 2.8.1 and 2.8.4

The Group’s supplier relations policy is based on four pillars: safety, quality & innovation, cost

control and CSR. Hermès systematically requests a formal commitment from its suppliers to

comply with their social, regulatory and environmental obligations through two undertaking

handbooks signed by both parties.

Raw materials sourcing (CG-AA-440) § 2.4

The Group exercises close control over these raw materials, particularly in terms of quality and

the conditions for obtaining these materials and their environmental and social impact. As soon

as a risk of social or environmental non-compliance is detected, the Group carries out

investigations that may lead to supplies being halted.

The objectives and recommendations concerning Hermès' supply chains are presented in the

supply chain brief and 65 supply chains had been analysed in detail by the end of 2021.

§ 2.4.2.1.1

§ 2.1.6 and 2.5.4

§ 2.1.6, § 2.5.1 and § 2.5.4

§ 2.5.4.1 and § 4.3

§ 4.3

1. https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32020R0852&from=EN

2. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=PI_COM:C(2021)2800

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2.7.2.2.3 Application of the European Taxonomy to the Hermès

Group’s activities

The European Taxonomy for sustainable activities, or “Taxonomy”,

establishes a list of economic activities considered environmentally

sustainable, on the basis of ambitious and transparent technical criteria.

The introduction of this standard designed to distinguish economic

activities contributing to the European objective of carbon neutrality – the

Green Deal – underlines the scale of the economic and industrial

transformations to be achieved as well as the ambition of the European

authorities in terms of sustainable and transparent finance. On the

strength of its environmental, social and societal commitments, Hermès

supports the European Commission in its work to analyse activities and

define technical review criteria intended to guide the investments of

public and private players towards projects contributing to the transition

to a sustainable and low-carbon economy.

The first environmental objectives of the Taxonomy relating to the

mitigation of and adaptation to climate change have prioritised the

activity sectors that have a major contribution to greenhouse gas

emissions at the European Union level. The Hermès Group’s activities,

built on a craftsmanship, value-creating and sustainable business model,

have not been considered by the Taxonomy as making a substantial

contribution to these objectives. On the other hand, the Group is ramping

up its climate commitments, among others described in § 2.5. The Group

is also closely monitoring the publication of delegated acts for the other

four environmental objectives, which should better reflect the

contribution of its activities to a more sustainable world.

2.7.2.2.3.1 Qualification levels retained by Hermès

In accordance with European regulation 2020/852 of 18June 2020 on

the establishment of a framework to promote sustainable investments

within the European Union (EU)

, the Hermès Group is required to

publish, for financial year 2021, the portion of its revenue, eligible

investments and operating expenses resulting from products and/or

services associated with economic activities considered sustainable

within the meaning of the classification and criteria defined in the

Taxonomy for the first two climate objectives of mitigation and

adaptation.

This first assessment of the eligibility of the Hermès Group’s activities for

climate change mitigation of and adaption was conducted on the basis of

the Delegated Regulation of 4June 2021 and its annexes

supplementing Regulation (EU) 2020/852 of the European Parliament

and of the Council using the technical review criteria to determine the

conditions under which an economic activity can be considered as

contributing substantially to climate change mitigation or adaptation. The

financial information detailed in the section below corresponds to the

definitions specified in Article8 of the regulations and has been subject

to joint analysis and control by the consolidation department, the CSR

department, investment department, real estate development

department and the métier teams.

To arrive at this assessment, a detailed analysis of the Group’s activities

was carried out in parallel to a review of the existing processes and

reporting systems, allowing the financial aggregates required by the

Taxonomy to be excluded. The methodological elements on which the

Group conducted its analysis – assumptions, estimates and limitations –

are described in this report.

At the end of this assessment, no eligible revenue was identified for

this first year for the climate change mitigation and adaptation

objectives, as the activities defined for these objectives do not cover

the Group’s activities. Due to the lack of eligible revenue, capital

expenditure and operating expenses related to activities contributing to

revenue could not be classified as eligible.

Nevertheless, since Hermès is taking actions to mitigate its carbon

emissions and making investments to decarbonise its activities,

particularly in the construction and renovation of owned and leased

buildings, the Group has deepened its analysis by focusing on CapEx

related to this type of investment. This in-depth analysis is presented

below.

Lastly, the analysis of OpEx led to the amount analysed being considered

not material with regard to the Group’s materiality thresholds, the

amount of OpEx within the meaning of the Taxonomy representing less

than 5% of total Group OpEx. This observation, combined with the fact

that the Group’s activities are not eligible to date, leads the Group to use

the exemption provided for not calculating the Taxonomy OpEx KPI in

more detail.

Sections in the universal registration

document

Metrics and targets § 2.5

The SBTi validated Hermès’ carbon emission reduction targets, confirming the consistency of its policy with the

Paris Agreements' 1.5°C trajectory.

◆

§ 2.5.1 and § 2.5.4

◆

Indicators used by the Group to assess climate-related risks and opportunities, in accordance with its

strategy and risk management process

Communicate scopes1, 2 and, if appropriate, 3 greenhouse gas (GHG) emissions, as well as related risks § 2.5.4.2.1

Objectives used by the Group to manage climate-related risks and opportunities and performance against

these objectives

§ 2.5.4.2 and § 2.5.4.3

https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32020R0852&from=EN

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=PI_COM:C(2021)2800

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2.7.2.2.3.2 Presentation of Taxonomy indicators: eligible CapEx

The analysis of the eligibility for CapEx was conducted by analysing the

various operational investments of the Group by category. In particular,

investments related to the construction of new buildings, the renovation

of existing buildings as well as ad-hoc work related to the energy

efficiency of buildings were analysed in detail by the real estate

development department with the help of an external firm on

methodology.

In addition, as required under the Taxonomy, the change in right-of-use

assets relating to leases recognised in accordance with IFRS16 was

included with an eligibility ratio of 100%.

The CapEx indicator obtained is 61%, with a strong contribution from

right-of-use assets. The Group’s operational investment eligibility

ratio is 41%.

Figures related to the analysis of the 2021 CapEx within the meaning of the Taxonomy are presented below:

These CapEx related to real estate investments do not fully reflect the

efforts made by the Group within the Sustainable Construction

Framework of the real estate development department. These guidelines

were created according to the strictest requirements in terms of CO

emissions, air quality, local supplies, and respect for biodiversity, in

addition to using criteria related to the environmental quality and comfort

in use of buildings (§ 2.5).

The Group will revise its methodology and its eligibility analysis as the

Taxonomy is implemented and according to changes to the activities

listed and the technical review criteria.

In millions of euros

Amounts for 2021

Operating investments (IAS16 and IAS38) 532

◆

218

Eligibility ratio of operational investments

Right-of-use assets (IFRS16)

◆

Overall total CapEX Taxonomy

Taxonomy CapEx eligibility ratio

Eligible investments after analysis

41%

267

Right-of-use assets eligible at 100% 267

799

61%

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EXPERTS' HANDBOOK

CONTRIBUTION TO THE UN'S SUSTAINABLE DEVELOPMENT GOALS (SDGS)

The actions taken in relation to stakeholders and in terms of local integration contribute to the UN’s sustainable development goals (SDGs).

No.1: No poverty

◆

1.a “Ensure significant mobilisation of resources from a variety

of sources, including through enhanced development

cooperation, in order to provide adequate and predictable

means for developing countries, in particular least developed

countries, to implement programmes and policies to end

poverty in all its dimensions”

◆

1.b “Create sound policy frameworks at the national, regional

and international levels, based on pro-poor and

gender-sensitive development strategies, to support

accelerated investment in poverty eradication actions”

No.4: Quality education

◆

4.4 “By 2030, substantially increase the number of youth and

adults who have relevant skills, including technical and

vocational skills, for employment, decent jobs and

entrepreneurship”

◆

8.1 “Sustain per capita economic growth in accordance with

national circumstances and, in particular, at least 7 per cent

gross domestic product growth per annum in the least

developed countries”

◆

8.3 “Promote development-oriented policies that support

productive activities, decent job creation, entrepreneurship,

creativity and innovation, and encourage the formalisation and

growth of micro-, small- and medium-sized enterprises, including

through access to financial services”

◆

9.5 “Enhance scientific research, upgrade the technological

capabilities of industrial sectors in all countries, in particular

developing countries, including, by 2030, encouraging

innovation and substantially increasing the number of research

and development workers per 1 million people and public and

private research and development spending”

No.8: Decent work and economic growth

No. 9: Industries, innovation and infrastructure

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COMMUNITIES: STAKEHOLDERS AND TRANSPARENCY

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11.a “Support positive economic, social and environmental

links between urban, per-urban and rural areas by

strengthening national and regional development planning”

◆

11.b “By 2020, substantially increase the number of cities and

human settlements adopting and implementing integrated

policies and plans towards inclusion, resource efficiency,

mitigation and adaptation to climate change, resilience to

disasters, and develop and implement, in line with the Sendai

Framework for Disaster Risk Reduction 2015-2030, holistic

disaster risk management at all levels”

◆

11.3 “By 2030, enhance inclusive and sustainable urbanisation

and capacity for participatory, integrated and sustainable

human settlement planning and management in all countries”

◆

11.4 “Strengthen efforts to protect and safeguard the world’s

cultural and natural heritage”

No. 12: Responsible consumption and production

◆

12.6 “Encourage companies, especially large and transnational

companies, to adopt sustainable practices and to integrate

sustainability information into their reporting cycle”

◆

15.1 “By 2020, ensure the conservation, restoration and

sustainable use of terrestrial and inland freshwater ecosystems

and their services, in particular forests, wetlands, mountains

and drylands, in line with obligations under international

agreements”

◆

15.2 “By 2020, promote the implementation of sustainable

management of all types of forests, halt deforestation, restore

degraded forests and substantially increase afforestation and

reforestation globally”

◆

No. 15: Life on land

15.5 “Take urgent and significant action to reduce the

degradation of natural habitats, halt the loss of biodiversity and,

by 2020, protect and prevent the extinction of threatened

species”

◆

17.1 “Strengthen domestic resource mobilisation, including

through international support to developing countries, to

improve domestic capacity for tax and other revenue collection”

◆

17.17 “Encourage and promote effective public, public-private

and civil society partnerships, building on the experience and

resourcing strategies of partnerships”

No. 11: Sustainable Cities and Communities

No. 17: Partnerships for the goals

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the Universal Declaration of Human Rights;

◆

the charter of fundamental rights of the European Union;

◆

the International Labour Organization’s declaration on fundamental

rights, whose principles are grouped under the following themes:

freedom of association, forced labour, child labour, discrimination;

◆

the OECD Guidelines for Multinational Enterprises;

◆

the OECD convention on combating bribery of foreign public officials;

◆

the Global Compact under the aegis of the United Nations.

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ETHICS – COMPLIANCE

2.8

ETHICS – COMPLIANCE

Introduction

Even though these values are experienced and transmitted

above all through personal adherence, the Group’s ethics

Henri-Louis Bauer – Chairman of the Executive Management Board

of Émile Hermès SAS; Axel Dumas – Executive Chairman

In 2021, the Group made progress on the main issues relating to ethics and compliance, with the aim of making a long-term difference through

steady improvements with a significant impact. Among these, the selected element below is particularly illustrative of 2021 for this section:

◆

Rollout of e-learning course on ethics (9,000 people).

2.8.1

PROMOTING ETHICS

The Hermès Group’s ethics policy aligns with the universal framework set

down by the major principles, standards and international agreements.

The Group has a two-fold requirement: zero tolerance for breaches of

probity on the one hand, and a determined commitment to a culture of

ethics, on the other.

POLICY

The Group’s policy is to maintain, wherever it operates, healthy and

lasting relationships with its employees, customers, suppliers, partners

and communities. This approach is organised with a specific governance,

demonstrated at the highest level of the organisation, a policy, efforts to

promote and raise awareness of ethics and integrity issues, and using

tools that formalise its commitments.

The promotion of ethical values is supported through actions to raise

awareness and provide training in the Group's policies for the Group's

employees. The Group has also put in place prevention and detection

systems to prevent any infringement of its principles.

2.8.1.1

FRAMEWORK AND TOOLS

2.8.1.1.1 Promotion and compliance of fundamental

conventions on human rights and fundamental freedoms

Hermès is committed to promoting respect for human rights and

fundamental freedoms. The Group is committed to respect the major

principles, standards and international agreements:

The Hermès Group and its employees strive to comply with the laws and

regulations applicable in all countries where they operate.

These principles have been clearly set forth in the Group’s ethics charter

since 2009 and in its code of business conduct since 2012, given to all

employees and available on the Group intranet, as well as on the

“Hermès is a mosaic of women and men who work hard every

day for its development throughout the world. Beyond their

uniqueness, the people who bring the Group to life have a

common desire to share certain unifying and founding values of

the spirit that has characterised Hermès since 1837.

culture reaffirms our common desire to respect certain

fundamental principles that facilitate relations both internally

and with customers, suppliers and, more generally, with the

environment in which Hermès operates.”

website: https://finance.hermes.com/en/ethics-human-rights-and-

diversities/.

◆

relations between Hermès and its employees;

◆

relations between Hermès and its suppliers;

◆

relations between Hermès and its customers;

◆

relations between Hermès and its shareholders;

◆

uncompromising principles of Hermès objects;

◆

relations between Hermès and society;

◆

in terms of the environment, the House ensures that it respects the

environment and works harmoniously with it. It complies with

regulatory requirements and aims to anticipate their development

whenever possible. It seeks to enhance its production processes by

choosing the cleanest possible technologies and the most

environmentally friendly products, respecting natural resources and

minimising the use of energy resources. It keeps waste to a minimum,

recycling it whenever possible. Hermès designs its manufacturing

sites so as to blend into the landscape, to prevent accidental

pollution and to limit noise and other nuisances;

◆

regarding its stakeholders, Hermès aims to ensure dialogue and

consultation with all stakeholders in order to contribute to the

economic and social development of the regions and employment

areas where its manufacturing and commercial sites are located.

Hermès invests in each of the Company’s manufacturing and

commercial sites, using local resources as much as possible, so as to

contribute to local economic life as well as conduct itself as a socially

responsible company, in a spirit of responsibility throughout the

region.

◆

via the line management or via the Human Resources or the Ethics

Committee; or

◆

via an online solution specially designed for this purpose and which

protects the person reporting, operated by an external provider

chosen by the Hermès Group, and for which the link is available on

the Group’s intranet site (“Our ethics” section).

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2.8.1.1.2 Ethics charter

Henri-Louis Bauer – Chairman of the Executive Management Board

of Émile Hermès SAS; Axel Dumas – Executive Chairman

The House’s ethics have been enshrined, since 2009, in a 40-page ethics

charter, available in 13 languages and updated in 2016, distributed to all

employees worldwide. It is also available on the HermèSphère intranet,

under “Our ethics”. It aims to enrich the corporate purpose and to reaffirm

the Group’s determination to uphold certain fundamental principles in

relations with its stakeholders and society. Signed by the Executive

Management, it is sent to all new employees as soon as they enter the

The ethics charter aims to promote compliance and to ensure the proper

application of laws, regulations and key principles. It is designed to be an

instrument of progress and dialogue, and encourages employees to seek

guidance from their line managers in cases where the principles seem

difficult to apply or are open to misunderstanding. It is structured around

the following points:

2.8.1.1.3 Code of business conduct

Axel Dumas – Executive Chairman

A 32-page code of business conduct, available in 13 languages and

updated in 2018, is distributed to all employees worldwide along with a

verbal explanation. It lays down the House’s guiding principles on

business ethics. The code is signed by the Executive Management, and is

given to all employees as soon as they join the House. The Group’s code

of business conduct is available on the website:

was updated in 2018 and redistributed with an explanation of its

contents to all Group employees.

The purpose of the code of business conduct is to raise employees’

awareness about ethics risks and to instil behavioural and alert reflexes.

It consists of factsheets, dealing with key issues.

The code sets out whistleblowing protocols as part of a Group system

called H–Alert!. Employees confronted with situations that raise ethics

issues, or who believe, in good faith, that a serious and obvious violation

of a code, charter, procedure, law or regulation, of which they are

personally aware, has been committed, are encouraged to report the

irregularities or breaches, as soon as possible, using the following

reporting channels:

“The ethics charter serves to enrich the corporate project

around the genuineness of the Group’s purpose and ethics. It

guarantees respect for the debt of gratitude that we owe to our

employees and partners.

This charter does not replace the laws and regulations

applicable in the countries where the Group operates, but rather

aims to promote compliance with them and ensure their proper

application. It is of course in line with fundamental principles

such as the Universal Declaration of Human Rights, and the

rules of the ILO, the OECD and the Global Compact governing

sustainable development.

It is an instrument of progress and dialogue: any employee of

the Group who encounters difficulties in understanding or

applying it must inform his or her manager.”

“To help make sure that everyone is on the same page, we have

formalised this “code of business conduct”. Its role is to raise

awareness of certain risks and to instil Group employees with

behavioural reflexes in response to frequently raised issues.

The sheets below, each of which must be responsible for the

proper application of the code, are instruments of progress and

dialogue.”

House and is available on the website: https://finance.hermes.com/en/

ethics-human-rights-and-diversities/.

https://finance.hermes.com/en/ethics-human-rights-and-diversities/.

(i)

advise on the Group’s ethics culture and make recommendations;

(ii)

receive alerts (through various reporting channels);

(iii)

direct and monitor the treatment of these alerts.

◆

Compliance Chief Officer;

◆

Group General Counsel;

◆

Director of Audit and Risk management;

◆

Director of Sustainable Development;

◆

Director of Consolidation, Taxation and Management Control;

◆

Group Director of Labour Relations;

◆

Group Direct Purchasing Manager;

◆

Group Indirect Purchasing Director;

◆

Group Director of Retail Activities.

◆

the definition of compliance guidelines;

◆

advice and recommendations on prevention and monitoring actions in

terms of duty of care and the fight against corruption for all Group

entities;

◆

the management of the deployment of awareness-raising and training

campaigns for employees most at risk.

◆

the provision of expertise;

◆

the dissemination of a culture of compliance by relaying the

programmes to the entities’ governing bodies and employees;

◆

ensuring programme coordination and consistency;

◆

developing the Group’s policies in this area.

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These reports are treated confidentially and in line with the applicable

legal framework, protecting the whistle-blower.

The opportunity to revise the ethics charter and code of business

conduct is reviewed each year by the Compliance and Vigilance

Committee described in section2.8.1.2.3. Any amendment to these

documents must be validated by the relevant member of the Executive

Committee.

2.8.1.2

GOVERNANCE

2.8.1.2.1 Ethics Committee

The Executive Committee oversees all ethics issues. It is supported by an

Ethics Committee which was set up in 2018. It comprises the Executive

Vice-President of Corporate Development and Social Affairs, who is a

member of the Executive Committee and chairs the meetings, the Group

General Counsel, the Director of Human Resources and the General

Counsel Compliance.

The committee oversees ethics actions with three main duties:

The Ethics Committee met formally twice in 2021 and its members

interact with each other as often as necessary.

2.8.1.2.2 Legal compliance department

The main task of the legal compliance department is to design, develop,

implement and lead compliance programmes and ethics policies

worldwide. It identifies, evaluates and controls the compliance risks to

which the Hermès Group is exposed, verifies compliance with the various

laws and regulations, and ensures the coordination, implementation and

updating of compliance programmes, in close cooperation with the

Group’s various departments. The Compliance Chief Officer reports to the

Group General Counsel, who reports to the Executive Vice-President of

Corporate Development and Social Affairs, member of the Executive

Committee, who in turn reports to the Group’s Executive Chairman.

The independence of the Compliance Chief Officer is ensured by direct

reporting, on a regular basis, to the Executive Vice-President of Corporate

Development and Social Affairs. Meetings are accordingly held on a

regular basis.

The Compliance Chief Officer chairs and oversees the Compliance and

Vigilance Committee. He is also a member of the Ethics Committee,

chaired by the Executive Vice-President of Corporate Development and

Social Affairs.

The Compliance Chief Officer reports to the Audit and Risk Committee of

the Hermès International Supervisory Board.

The legal compliance department relies on the in-house counsels in the

Hermès International legal department, based in Paris, on subsidiaries’

legal departments (in Lyon, New York, Shanghai, Singapore, Seoul and

Tokyo) and on the Group’s network of internal control officers, to deploy

compliance programmes and ethics policies within the Group.

These employees take part in the implementation and management of

compliance programmes, including the corruption prevention and

combatting plan, as well as the deployment of ethics policies in all of the

Group’s métiers and entities. They verify in particular that operational

and métiers staff apply the policies and procedures put in place.

2.8.1.2.3 Compliance and Vigilance Committee

The Compliance and Vigilance Committee is composed of the following

people:

The Compliance and Vigilance Committee meets regularly (four times in

2021).

Its duties specifically include:

For example, in 2021, the Compliance and Vigilance Committee

monitored the creation and rollout of an anti-corruption e-learning module,

the strengthening of the first, second and third-level control systems, as

well as accounting controls dedicated to the fight against corruption.

Generally speaking, the actions of the Compliance and Vigilance

Committee contribute to:

◆

to their direct or indirect line manager or above, to Human Resources,

or to the Ethics Committee;

◆

using an intranet platform, a secure, independent technical system,

or by voice messaging, systems available 24/7 and operated by an

external service provider. These alerts are forwarded to the Ethics

Committee.

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2.8.1.2.4 Network of compliance ambassadors within

the Group

Legal teams located in France (Paris and Lyon) and abroad, particularly

in the United States, China, Japan, Singapore and South Korea, are part

of network of compliance ambassadors. They act with the Group legal

compliance department and with the Group Data Protection Officer in

order to develop, facilitate, coordinate and monitor compliance

programmes and ethics policies within the Group. Legal teams have

access to a compliance review framework developed in collaboration with

the legal compliance department.

Internal control officers and auditors also play a role in the

implementation and monitoring of the application of compliance

programmes (see § 4.3 “risk management, internal control and internal

audit”). Internal Group controllers have access to a compliance review

framework and second-level control plan developed in collaboration with

the legal compliance department and the audit and risk management

department.

2.8.1.3

PREVENTION AND DETECTION MEASURES

2.8.1.3.1 Professional whistleblowing line

In order to ensure compliance with laws and regulations and to step up

the fight against breaches of ethics and integrity, in 2019 the Group

introduced its global whistleblowing system, H-Alert!, intended to enable

its employees worldwide, as well as its external and occasional

employees, to report breaches and violations of which they are personally

aware. It is supplemented by an e-mail whistleblowing system for its

suppliers and commercial partners.

The H-Alert! system is used to report serious cases that could constitute

a breach of a legal standard as defined in Article6 of law

No.2016-1691 of 9December 2016, known as the SapinII law, or a

breach of the Group’s codes, procedures and ethics standards, as well

as to signal the existence of risks or serious infringements of human

rights and fundamental freedoms, health and safety of people, or the

environment, resulting from the Group’s activities and/or those of its

subcontractors or suppliers.

The information notice regarding the whistleblowing system reminds

employees that they are protected from any type of retaliation if the alert

is made in accordance with the legislation in force. Employees are

encouraged to report the aforementioned irregularities or breaches, as

soon as possible, using the following reporting channels:

Group employee,

external or occasional

Alert

Line manager

HR Manager

Ethics Committee

IT platform

for receiving

alerts/Voice messaging

“H-Alert!” system

Within 15days following receipt of the alert through any means, the

whistle-blower will receive a written and dated acknowledgement of

receipt. The acknowledgement of receipt specifies a reasonable and

foreseeable expected deadline (about one month) for examining the

alert. The alert processing time varies depending on the complexity of the

alert, in strict compliance with legal and regulatory provisions.

This technical system is available in 18 languages. It was validated by

the Group’s governing bodies and communicated to all Group entities

and structures. An information notice has been forwarded and explained

to all Group employees.

In 2021, 53alerts were received through the H-Alert! system. All alerts

were followed up and some cases are still being examined.

The Group has introduced effective measures guaranteeing the

confidentiality of information and processing of reports at all times. The

whistleblowing system also allows Group employees to report an incident

anonymously. Where appropriate, following an investigation, disciplinary

sanctions may be decided upon and implemented against employees

who violate the Group’s ethics rules.

Furthermore, the Hermès Group has provided its suppliers and

subcontractors, concessionaires, distributors and sales intermediaries

with an external whistleblowing mechanism in the form of a generic email

adress, in the event of a breach or situation contrary to the ethics, social

and environmental principles. These alerts are analysed by the legal

department and the operating departments concerned.

The Company undertakes not to impede access to legal or other available

mechanisms, including mediation processes, for any persons reporting

negative impacts, especially on human rights, and undertakes to protect

the whistle-blower.

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2.8.1.3.2 Sanctions system set up

The sanctions system in place for compliance programmes corresponds

to the system of sanctions described in the internal rules of procedure,

any breach of ethics and integrity being contrary to the Group’s intrinsic

values and internal rules laid down in this area.

In accordance with existing law, internal rules of procedure, for example,

devote a chapter to disciplinary law and the right of defence.

On an international level, depending on the local applicable law, either

the internal rules of procedure set out rules on disciplinary matters, or an

employee handbook contains rules on disciplinary law; both include

anti-corruption measures.

2.8.1.3.3 Audit of the application of ethics values

Internal control evaluations, and internal and external audits on the

application of Group procedures are carried out regularly at the Group’s

companies and métiers, as well as at its significant suppliers and

partners. Among other areas, these audits cover compliance with ethics

procedures, the fight against corruption, combatting money laundering,

the protection of personal data, respect for the environment, respect for

human rights and fundamental freedoms, hygiene, health and employee

safety. The methodology of these controls and audits is described in

section4.3 “risk management, internal control and internal audit”.

2.8.1.3.4 Training programmes on ethics issues

Several Group internal departments offer employee training, particularly,

the legal department, the human resources department, the purchasing

department, the industrial affairs department and the audit and risk

management department.

Training provided by the legal department

Specific face-to-face or distance training modules on the Group’s ethics

and anti-corruption policy, the contents of which are adapted to the

teams, subsidiaries and métiers in question, are delivered by the legal

compliance department to those employees who are most exposed to the

risks of corruption, as identified and prioritised in the Group risk

mapping. They aim to provide employees with the knowledge and tools

needed to prevent and detect at-risk situations and to determine the

behaviour to adopt in such cases.

During financial year 2021, the training programme continued despite

the context of the health crisis, and face-to-face or remote training was

provided in many Group entities: 17 training sessions were held and

405employees were trained.

The roll-out of these training sessions is closely monitored by the legal

compliance department, in collaboration with Internal Control and Human

Resources.

In addition, an online Group training programme (e-learning) dedicated to

ethics and the fight against corruption has been rolled out to all

employees worldwide, as well as to external and occasional employees. It

uses practical scenarios to give them the keys to preventing risks of

corruption and breaches of ethics. This e-learning system includes a

comprehension and simulation exercise, for which a minimum score must

be achieved, to ensure that employees have fully understood the risks of

corruption and how to manage them. This e-learning is mandatory for all

people considered to be exposed to the risk of corruption in accordance

with the Group’s corruption risk mapping. In 2021, more than

9,000people followed this programme.

Other training aimed at preventing the risks of corruption and

breaches of ethics

An Ethics, integrity and anti-corruption module, introduced by the human

resources department, is designed for all in-store sales staff in Group

entities. In 2021, 628people attended this training. The aim of this

module is to present the risks of corruption to sales staff. They learn

about different forms of corruption and how to effectively combat these

risks in their daily tasks. Lastly, they learn about the tools and

procedures that sales staff can use in case of doubt. Attendance at these

training sessions is monitored. This module is regularly delivered in all

subsidiaries worldwide. Since the creation of the module in 2017,

7,570people have been trained. The objective is to train all distribution

subsidiary employees, whether their contract is fixed-term, permanent,

temporary or as an intern, etc. and whatever their role (members of the

Management Committees, support, sales staff, stockists, cashiers,

managers, etc.).

The content of this training module was updated in 2021.

The purchasing department provides training for purchasers and, makes

them aware, in particular, of the risks of corruption in their daily tasks. At

its own level, it ensures the implementation of these ethical ambitions

thanks to the CSR brief, distributed to the House’s suppliers and

partners. This document may be consulted at: https://finance.hermes.

com/en/sustainable-procurement.

The audit and risk management department trains its internal control

officers and participates in the Group training sessions in order to

promote an awareness of risk management and internal control best

practices amongst the management. Activities focusing on ethics and

compliance issues continued this year with the organisation of three

seminars by the audit and risk management department for internal

control officers in all Group entities throughout the world.

2.8.2

THE FIGHT AGAINST CORRUPTION

Axel Dumas – Executive Chairman and Olivier Fournier – Executive

Vice-President of Corporate Development and Social Affairs

“Combatting corruption is a clear priority for the Hermès Group.

The culture of probity, integrity and transparency is intrinsic to

the values of Maison Hermès. Since its creation, the House has

endeavoured to promote it to its employees, business partners

and stakeholders”.

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POLICY

Corruption is in contradiction with the values of the Hermès Group. The

Group has a two-fold requirement: zero tolerance for breaches of probity

on the one hand, and a determined commitment to a culture of ethics, on

the other.

The Group’s policies in terms of ethics and the fight against corruption

are clearly set out in the code of business conduct, available on the

The Hermès Group continues to improve its corruption prevention plan, in

accordance with the requirements of French law No.2016-1691 of

9December 2016 on transparency, the fight against corruption and the

modernisation of economic life.

Furthermore, the Group conducts global legal monitoring of legislative

changes on the fight against corruption and complies with current

legislative and regulatory requirements both in France and in countries

abroad in which it operates, such as the Foreign Corrupt Practices Act in

the United States, the United Kingdom Bribery Act and Legislative Decree

231 in Italy. This monitoring is carried out in-house and by external firms.

2.8.2.1

COMMITMENT OF THE GOVERNING BODY

The governing body’s commitment can be seen at the Group’s highest

level. Alongside other members of the Executive Committee, AxelDumas,

Executive Chairman, drives compliance with ethics rules, applying a firm

policy of zero tolerance of any act of corruption.

Corruption risk mapping, initiated by the governing body and driven by the

legal compliance department, was validated by all the members of the

Executive Committee, thus clearly demonstrating the importance put on

analysing and identifying Group-specific risks.

The fight against corruption in all its forms permeates all the Group’s

policies and procedures.

2.8.2.2

GOVERNANCE

2.8.2.2.1 Legal compliance department

The governance of the legal compliance department is detailed in

section2.8.1.2.2 above.

2.8.2.2.2 Compliance and Vigilance Committee

The governance of the Compliance and Vigilance Committee is detailed in

section2.8.1.2.3 above.

2.8.2.2.3 Ethics Committee

The governance of the Ethics Committee is explained in § 2.8.1.2.1

above.

2.8.2.2.4 Network of compliance liaison officers within

the Group

The governance of the network of compliance liaison officers within the

Group is detailed in section2.8.1.2.4 above.

2.8.2.3

ACTIONS IMPLEMENTED AND RESULT

2.8.2.3.1 Risk mapping

Axel Dumas – Executive Chairman and Olivier Fournier – Executive

Vice-President of Corporate Development and Social Affairs

A Group corruption risk mapping was produced jointly by the legal

compliance department and the audit and risk management department

and was approved by the Group’s Executive Committee.

A first Group corruption risk mapping exercise was prepared in 2018 and

updated in 2020. This update has been communicated to all Group

entities and departments, and action plans have been put in place.

The risk mapping, carried out according to a rigorous methodology,

covers all the Group’s activities in all the geographical areas in which it

operates.

Each risk scenario identified corresponds to a potentially risky behaviour

or situation in terms of corruption or influence-peddling and specifies the

geographical areas and métiers that are most affected so as to

determine the priority measures to be taken as part of the corruption

prevention plan. For each risk scenario, a focus is put on the activities

and geographical areas concerned and the third parties involved.

The participation of many stakeholders across the Group has also

ensured a good representation of the Group’s activities and processes at

different levels of responsibility (management and operational) as well as

full coverage of the geographical areas in which the Group operates.

Following the update of the mapping in 2020, action plans corresponding

to each risk scenario were put in place in order to respond in a

proportionate and effective manner to the challenges facing the Group.

“The update in 2020 of the Group’s anti-corruption risk

mapping, as well as all the recommendations resulting from the

action plans aimed at controlling these risks, demonstrate the

Group’s unwavering commitment to combating all forms of

corruption and influence-peddling.

This exercise is part of the Group’s approach to continually

improve its anti-corruption and influence-peddling plan to make

it increasingly robust and effective.”

Group intranet as well on the website https://finance.hermes.com/en/

ethics-human-rights-and-diversities/.

good labour practices: prohibition of child labour, prohibition of forced

labour, compliance with health and safety rules, respect for freedom

of association, non-discrimination, respect of working time,

appropriate compensation, prohibition of illegal work;

best environmental practices: compliance with environmental

regulations, management of natural resources and consumption,

effluent and waste, respect for biodiversity;

good ethical conduct: the fight against corruption and money

laundering and recommendations on best practices in relation to

subcontracting.

◆

risk mapping;

◆

procedures for entering into business relationships with third parties;

◆

procedures for selecting suppliers and subcontractors, business

intermediaries, agents, distributors and concessionaires;

◆

an IT tool for assessing the integrity and reputation of third parties,

set up with the help of an external service provider and accessible to

all Group entities;

◆

analysis grids and questionnaires to assess third party risk levels;

◆

a list of “sensitive countries”;

◆

a procedure to prevent money laundering and corruption;

◆

a suppliers’ charter, a business ethics charter for the selling of

products and compliance clauses to ensure third parties’

commitment to complying with social, environmental and ethics

policies, including anti-corruption regulations;

◆

external evaluations on third-party compliance and integrity risks;

◆

rights of access and right to request documentation;

◆

the right to conduct internal and external on-site audits and, if

necessary, to implement corrective measures.

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2.8.2.3.2 Anti-corruption code of conduct

An anti-corruption code of conduct, drafted in 2018 from the results of

the Group’s corruption risk mapping, is available in 18 languages. This

code of conduct was validated by the Group’s governing bodies and

communicated to all Group entities and structures. It has also been

provided to each Group employee.

This anti-corruption code of conduct has a global reach and applies to all

Group employees.

Axel Dumas – Executive Chairman

The anti-corruption code of conduct is available on the website:

This code describes rules on gifts and invitations, relations with third

parties and public officials, the ban on facilitation payments,

management of conflicts of interest, patronage and sponsorship,

representation of interests, etc.

The opportunity to update the anti-corruption code of conduct is

reassessed each year by the Compliance and Vigilance Committee.

2.8.2.3.3 Whistleblowing system

The H-Alert! internal Group whistleblowing system is described in

paragraph2.8.1.3.1 above. It is supplemented by an external e-mail

whistleblowing system managed by the Group legal department.

2.8.2.3.4 Procedures for assessing the situation of customers,

tier1 suppliers and intermediaries

The Group’s business model primarily consists of purchasing raw

materials from suppliers and manufacturing most of its products

in-house, which are then mainly sold through stores, the majority of which

are owned by the Company (branches), to customers who visit said

stores. Upstream, i.e. relationships with goods suppliers and service

providers, accounts for most of the Group’s relationships with third

parties.

To a lesser extent, the Group also has downstream relationships, with

concessionaires, distributors and business intermediaries in some

métiers.

The Group develops long-term relationships with its partners, thereby

protecting its sources of supply and business relationships. The average

length of relationships with suppliers in the industrial sector is 20 years

and a large majority of these partnerships are European.

The commitments made by the Group and its partners focus on the

following points:

On an operational level, each métier or entity is responsible for managing

its relations with third parties, monitoring the challenges identified and

the implementation of corrective actions with third parties. Experience

has shown that adopting a métier or entity approach guarantees third

party proximity, awareness of the challenges ahead and realistic systems

that comply with the Group’s rules. Nevertheless, to ensure that the

Group’s anti-corruption system is well implemented in the métiers,

entities and subsidiaries, coordination of procedures, tools, training and

controls is carried out at Group level by the legal compliance department.

To ensure their partners’ integrity and compliance with anti-corruption

regulations, the métiers and entities have the following tools at their

disposal:

“This anti-corruption code of conduct (the “Code of Conduct”) is

in line with the commitments taken by the Hermès Group in the

area of ethics and integrity. It sets forth the personal

commitment of the Hermès Group’s Senior Executives and forms

an integral part of the values and principles that unite all

Hermès Group employees.”

https://finance.hermes.com/en/ethics-human-rights-and-diversities/.

◆

the first level of control is implemented directly by operational staff. It

involves applying, on a daily basis, the principles and steps relating to

ethics and integrity as described in Group procedures and, in

particular, those relating to the fight against corruption and

influence-peddling;

◆

the second level of control involves internal control officers in each

entity/métier, working in close collaboration with the legal

department, in particular, on the proper application of procedures

relating to the fight against corruption. To this end, the legal

compliance department and the audit and risk management

department have drawn up a dedicated anti-corruption work

programme for all of the Group’s internal control officers;

◆

the third level of control is operated by the audit and risk

management department when it audits the métiers and entities. This

control assesses the implementation of the anti-corruption and

influence-peddling policy of the métier or entity in question. The audit

and risk management department also conducts audits of the various

Group anti-corruption programmes.

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The métiers and entities manage their relationships with third parties and

update their assessments and engagement policies on a regular basis.

The distribution in 2021 of the CSR briefs is a step forward in the

formalisation and dissemination of our high standards. The Group

ensures that métiers and entities comply with these third party

assessment policies by means of internal control and internal audits

conducted by the audit and risk management department, as well as

through controls carried out by the legal department.

2.8.2.3.5 Accounting control procedures

Internal control and risk management procedures relating to the

preparation and processing of accounting and financial information, as

described in section4.3, form an integral part of the Group’s

anti-corruption system and, in particular, are aimed at preventing and

detecting any act of corruption. Controls on accounts deemed “more

sensitive” in terms of the fight against corruption are regularly

strengthened. An accounting control procedure dedicated to the

prevention and detection of corruption and influence-peddling was put in

place in 2020 and controls were carried out in 2021.

Furthermore, annual self-assessment campaigns (see § 4.3.4.1) are an

important tool when it comes to the process of applying accounting

control procedures across all the Group’s entities.

The audit and risk management department monitors the proper

application of these procedures during its internal audits.

2.8.2.3.6 Training system for executives and employees most

at risk

The training system is described in section2.8.1.3.4 above.

2.8.2.3.7 Disciplinary regime for sanctioning violations of the

anti-corruption code of conduct

The sanctions system is described in section2.8.1.3.2 above.

2.8.2.3.8 Internal control and evaluation system

In order to verify the proper application of its anti-corruption system, the

Hermès Group has deployed a control plan based on three levels:

2.8.3

PERSONAL DATA PROTECTION

Respect for privacy is more than a legal obligation, it is a Hermès value

and an essential commitment to maintaining a relationship of trust with

our employees, customers and partners.

POLICY

Since 2015, the Hermès Group has adopted a set of rules to protect the

personal data of its customers in the form of Binding Corporate Rules

(BCR). These BCRs, approved by the European Data Protection

Authorities, apply to all Group entities with a distribution activity. These

BCRs, still in full force, foreshadowed the Group’s more general data

protection system. Since then, the Hermès Group has implemented a

more extensive data protection system covering all the personal data it

collects (customers, employees, third parties, etc.) and all of its

subsidiaries and métiers, regardless of their location. This Group system

complies with the European Data Protection Regulation (GDPR) which is

one of the highest levels of data protection in the world and also takes

into account local regulatory requirements. This system also includes the

code of business conduct, which contains a “Personal Data” sheet (see

§ 2.8.1.1.3).

2.8.3.1

DATA PROTECTION OFFICER

The Group Data Protection Officer is responsible for informing and

advising the Company on its legal and regulatory obligations with regard

to personal data, and steering and monitoring data processing and

ensuring its compliance with these obligations. The Group Data

Protection Officer is the point of contact for data subjects and for data

protection authorities.

This position reports to the Compliance Chief Officer, who reports to the

Group General Counsel, reporting to the Executive Vice-President of

Corporate Development and Social Affairs, member of the Executive

Committee, who in turn reports to the Group’s Executive Chairman.

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2.8.3.2

“PERSONAL DATA PROTECTION” GOVERNANCE

The Data Protection Officer relies on a network of people throughout the

Group – mainly consisting of the Head of Information Systems Security

(CISO), members of the legal department, and internal control officers.

This network enables him or her to be regularly informed of issues related

to the processing of personal data, to ensure that they are dealt with

consistently by the subsidiaries and to be alerted to local legal and

regulatory changes where applicable.

Data protection guidelines have been rolled out to the network of internal

control officers since 2020 to support them in their second-level control

duties. These guidelines provide in particular a reminder of the elements

of governance, the control themes and the tools available for this

purpose. A matrix of precise and concrete annual controls to be carried

out by internal control officers has been added to the rollout of the

guidelines.

In 2021, a Regional Data Protection Officer was appointed for China,

enabling the Group to strengthen its support and expertise in a

constantly changing local legislative context (in particular the new law on

the protection of personal data that entered into in force on 1November

2021). The Regional Data Protection Officer acts in coordination with the

Group Data Protection Officer and the local legal department in order to

maintain consistency in the management of personal data across the

entire Hermès Group.

2.8.3.3

MAIN ACTIONS IMPLEMENTED

The awareness-raising and training programme was enhanced with new

employee training sessions. In particular, the French human resources

teams continued to be trained, across all métiers, as part of the rollout of

a new human resources management information system. This

awareness raising and training programme is complemented by the

international release of an online training module (e-learning) for all

Group employees and translated into 11 languages. To date, nearly

9,000people in the most sensitive functions and métiers have taken this

module.

The principles of protection of privacy by design and by default are

ensured by the use of tools for managing privacy impact assessments

(PIA) and managing the register of processing activities. These tools are

part of the procedure for integrating security and privacy into projects

(ISP), which involves the Group’s CISO and Data Protection Officer teams.

In 2021, 269projects were processed through the ISP procedure.

The management of the rights exercised by the people concerned has

been made more efficient, in particular thanks to the use of a tool

following the dissemination of a new procedure for managing customer

rights that allows for prompt handling and harmonisation of requests

regardless of their geographical origin and the contact channel used. In

2021 (figures from November2020 to November2021), 457 requests

were processed, of which 10% were requests for modifications, 15%

requests for information, 10% requests for access and 60% requests for

deletion of data.

The security of personal data is an essential component of the protection

of privacy. In this context, the issues were highlighted through

awareness-raising operations ("cybersecurity month") and addressed as

part of regular work with the CISO teams. The data breach procedure has

been included in the broader cyber crisis management process (see

§ 4.1.1.3 “Information systems and cyberattacks”).

Lastly, checks are carried out in cooperation with the teams of the audit

and risk management department and the internal controllers of Group

entities to assess compliance with the Group’s rules and applicable

regulations.

2.8.4

DUTY OF CARE

Hermès is committed to respect for human rights and fundamental

freedoms, the health and safety of employees and the protection of the

environment. It ensures control through a policy and concerted actions.

POLICY

In accordance with French law No.2017-399 of 27March 2017 relating

to the duty of care of parent companies and contractors, the Hermès

Group has drawn up a reasonable vigilance plan to identify risks and

prevent serious violations of human rights and fundamental freedoms,

and the health and safety of people and the environment, resulting from

its activities as well as the activities of its subcontractors and suppliers.

GOVERNANCE

The legal compliance department contributes to the identification of risks

in terms of the duty of care (human rights, fundamental freedoms, health

and safety and environmental protection) and to the development of

measures to prevent breaches, in particular within its supply chains.

To do this, it works with the Group’s main support departments and relies

on the Compliance and Vigilance Committee (see § 2.8.1.2.3).

2.8.4.1

ACTIONS IMPLEMENTED AND RESULT

Each year, the legal compliance department reviews the actions taken

within the Group as part of the vigilance plan. This is set out in the table

below and refers to Group policies, measures implemented in 2021, as

well as key performance indicators.

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CROSS-REFERENCE TABLE

HUMAN RIGHTS AND FUNDAMENTAL FREEDOMS

Group activities Suppliers and subcontractors

Risk mapping

◆ ◆

◆

Indicators:

◆

Non-financial risk analysis (2.1.4)

◆

Indicators:

108 purchasing categories identified

93% of risk mappings by purchase category

completed

At end-2021, 74 raw material supply chains analysed

◆

Indicators:

66 audits of tier one suppliers and 47 audits of tier

two suppliers in 2021 (direct purchases)

322 suppliers on EcoVadis

◆

Indicators:

Signature rate for Handbook 2: 89%

◆

Analysis by supply chain (2.4.2)

Risk mapping (2.6.1.2)

Regular assessment procedures Industrial affairs department network: internal

diagnostics, audits conducted by external

specialists and operational improvement plans

(2.2.1.1.1)

Audit and Direct Purchasing Committee –

managing audit results and action plans

(2.6.1.1.3)

Internal control and risk management systems

established by the Company (4.3)

Coordination of Group policies for direct and

indirect purchasing (2.6.1)

Tools for analysing supplier and subcontractor

risks provided to and applied by purchasers

(2.6.1.3)

Audits conducted by specialist service providers in

certain channels (alligator, cashmere, wood) WWF

(2.4.2)

Supplier audits by a third-party organisation

(2.6.1.3.2)

Mitigation and prevention measures Dissemination of Group values: code of business

conduct (2.8.1.1) and three specific SD training

modules included in the My Campus internal

integration training programmes

Training for direct and indirect purchasers

(2.6.1.3)

Training on ethics issues (2.8.1.3.4)

Social, environmental and ethics policy (Handbook

2) (2.6.1.3)

Training and development of employee expertise

(2.3.2.3)

CSR brief communicated to suppliers and partners

(social and environmental issues) (2.6.1.4)

Responsible management and Social diversity

(2.2.2.1) Alterego training programme

Launch of a certification or label award process for

32 supply chains (2.4.2.1)

Health and well-being at work initiative (2.2.1.1)

(73% participation rate over the last three years)

Monitoring audits (2.6.1.3)

Maintaining the quality of social dialogue (2.2.1.3)

Second Disability Agreement (2.2.2.1.4)

Alert mechanisms Professional whistleblowing system (2.8.1.3.1) Professional whistleblowing email alert address for

suppliers and subcontractors (2.6.1.5)

Measuring and monitoring system Audit and risk management department (4.3.2) System of monitoring by audit and risk

management department (2.6.1.3)

Audit of the application of ethical values

(2.8.1.3.3)

Employer award received by Hermès (2.1.1)

Number of hours devoted to training: over

423,317 hours (2.3.2)

Gender pay equality index: 90/100 (2.2.2.1.3)

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HEALTH & SAFETY

Group activities Suppliers and subcontractors

Risk mapping

◆ ◆

◆

Indicators:

Work accident rate: 9.07 with a severity rate of 0.34

(2.2.1.1.3)

Turn-over: 1.38% (2.3.1)

CSR risk analysis (2.1.3 and 2.1.4)

◆

Indicators:

108 purchasing categories identified

93% of risk mappings by purchase category

completed

◆

Indicators:

66 audits of tier one suppliers and 47 audits of tier

two suppliers in 2021

322 suppliers on EcoVadis

◆

Indicators:

Signature rate for Handbook 2: 89%

◆

Analysis by supply chain (2.4.2)

Risk mapping by purchase category (2.6.1.2)

Regular assessment procedures EHS audits conducted by an external specialist

(2.2.1.1)

Audit and Direct Purchasing Committee –

managing audit results and action plans (2.6.1.3)

Information system rolled out on sites for Group

health and safety reporting (2.2.1.1)

Coordination of Group policies for direct and

indirect purchasing (2.6.1)

Internal safety audits (2.2.1.1) Tools for analysing supplier and subcontractor

risks provided to and applied by purchasers

(2.6.1)

Internal control and risk management systems

established by the Company (4.3)

Audits conducted by specialist service providers in

certain channels (alligator, cashmere, wood) WWF

(2.4.2)

Supplier audits by a third-party organisation

(2.6.1)

Mitigation and prevention measures Dissemination of Group values: code of business

conduct (2.8.1.1) and three specific SD training

modules included in the My Campus internal

integration training programmes

Training for direct and indirect purchasers (2.6.1)

Training on ethics issues (2.8.1.3.4)

EHS regulatory monitoring conducted by an

external specialist and distributed to each

industrial métier (2.2.1.1.2)

Coordination of the Environmental, Health and

Safety network by the industrial affairs

department, training and sharing best practices

(2.2.1.1.2)

Health and well-being at work initiative (2.2.1.1.1)

(73% participation rate over the last three years)

Social, environmental and ethics policy (Handbook

2) (2.6.1.4)

CSR brief communicated to suppliers and partners

(social and environmental issues) (2.6.1.4)

Launch of a certification or label award process for

32 supply chains (2.4.2.1)

Monitoring audits (2.6.1)

Alert mechanisms Professional whistleblowing system (2.8.1.3.1) Professional whistleblowing email alert address for

suppliers and subcontractors (2.6.1.5)

Email alerts when reporting work accidents in the

dedicated information system (2.2.1.1.3)

Measuring and monitoring system Audit and risk management department (4.3.2) System of monitoring by audit and risk

management department (2.6.1.3)

Audit of the application of ethical values

(2.8.1.3.3)

External firm specialising in conducting EHS

compliance audits in our various units (2.2.1.1.2)

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ENVIRONMENT

Group activities Suppliers and subcontractors

Risk mapping

◆ ◆

◆

CSR risk analysis (2.1.3 and 2.1.4)

◆

Climate risk mapping (2.5.4)

Indicators:

108 purchasing categories identified

93% of risk mappings by purchase category

completed

Climate change: two value chains studied, using six

direct supply chains impact scenarios and two

systemic scenarios with direct and indirect impacts

on Hermès’ global activity (2.5.4).

◆

Indicators:

66 audits of tier one suppliers and 47 audits of tier

two suppliers in 2021

322 suppliers on EcoVadis

◆

Indicators:

Signature rate for Handbook 2: 89%

◆

Analysis by supply chain (2.4.2)

Risk mapping by purchase category (2.6.1.2)

Study of the physical risks related to climate

change (2.5.4)

Regular assessment procedures EHS audits conducted by an external specialist

(2.2.1.1.2)

Audit and Direct Purchasing Committee –

managing audit results and action plans (2.6.1)

Water risk assessment with WWF (2.5.4.1) Coordination of Group policies for direct and

indirect purchasing (2.6.1)

Tools for updating the overall assessment of

greenhouse gas emissions from Group production

and distribution sites (2.5.4.2)

Tools for analysing supplier and subcontractor

risks provided to and applied by purchasers

(2.6.1)

Audits of the supply chains for exotic skins by

external parties (WWF, veterinarians, associations,

etc.) (2.4.2)

Audits conducted by specialist service providers in

certain channels (alligator, cashmere, wood) WWF

(2.4.2)

Internal control and risk management systems

established by the Company (4.3) Supplier audits by a third-party organisation

(2.6.1.3)

Mitigation and prevention measures Group environmental policy (2.5.1.1) Training for direct and indirect purchasers (2.6.1)

Membership of the Fashion Pact (2.5) Social, environmental and ethics policy (Handbook

2) (2.6.1.3)

EHS regulatory monitoring conducted by an

external specialist and distributed to each

industrial métier (2.2.1.1.2)

CSR brief communicated to suppliers and partners

(social and environmental issues) (2.6.1.4)

Coordination of the Environmental, Health and

Safety network by the industrial affairs

department, training and sharing best practices

(2.2.1.1.2)

Launch of a certification or label award process for

32 supply chains (2.4.2.1)

Sustainable development ambassadors: over

350employees worldwide (2.3.2.3)

Limiting the consumption of natural resources

(2.5.2)

Improving production processes (2.5)

Combating climate change (2.5.4)

Limiting the carbon impact in scopes1, 2&3and

carbon offset (2.5.4)

Waste management (2.5.3)

Respect and protect biodiversity (2.5.5)

High-quality supplies, and work on animal welfare

(2.4.2), Global biodiversity score (2.5.5.3)

Circular economy (2.4.1)

Three specific SD training modules included in the

My Campus internal integration training

programmes

Monitoring audits (2.6.1.3)

Alert mechanisms Professional whistleblowing system (2.8.1.3.1) Professional whistleblowing email alert address for

suppliers and subcontractors (2.6.1.5)

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Group activities Suppliers and subcontractors

◆

Indicators:

CDP Climate Change score: A- (2.5.2)

Water consumption at industrial sites (2.5.2)

Energy consumption at industrial sites (2.5.2)

Audit and risk management department (4.3.2)

Audit of the application of ethical values

(2.8.1.3.3)

External firm specialising in conducting EHS

compliance audits in our various units (2.2.1.1.2)

◆

System of monitoring by audit and risk

management department (2.6.1.3)

Measuring and monitoring system

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EXPERTS' HANDBOOK

CONTRIBUTION TO THE UN’S SUSTAINABLE DEVELOPMENT GOALS (SDGS)

◆

8.7 “Take immediate and effective measures to eradicate

forced labour, end modern slavery and human trafficking and

secure the prohibition and elimination of the worst forms of

child labour, including recruitment and use of child soldiers, and

by 2025 end child labour in all its forms”

◆

8.8 “Protect labour rights and promote safe and secure working

environments for all workers, including migrant workers, in

particular women migrants, and those in precarious

employment”

◆

16.5 “Substantially reduce corruption and bribery in all their

forms”

◆

16.5 “Reduce corruption and bribery”

◆

16.10 “Ensure public access to information and protect

fundamental freedoms, in accordance with national legislation

and international agreements”

No.16: Peace, justice and strong institutions

◆

16.b “Promote and enforce non-discriminatory laws and

policies”

No.8: Decent work and economic growth

◆

the consistency of the Statement with the provisions of articleR.225-105 of the French Commercial Code;

◆

the fairness of the information provided in accordance with articleR.225-105I, 3 andII of the French Commercial Code, i.e., the outcome of the

policies, including key performance indicators, and the measures implemented in light of the principal risks (hereinafter the “Information”).

◆

the entity’s compliance with other applicable legal and regulatory provisions, in particular the French duty of care law and anti-corruption and tax

legislation;

◆

the consistency of products and services with the applicable regulations.

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REPORT BY ONE OF THE STATUTORY AUDITORS, APPOINTED AS AN INDEPENDENT THIRD PARTY, ON THE CONSOLIDATED NON-FINANCIAL INFORMATION STATEMENT

2.9

REPORT BY ONE OF THE STATUTORY AUDITORS, APPOINTED AS AN

INDEPENDENT THIRD PARTY, ON THE CONSOLIDATED NON-FINANCIAL

INFORMATION STATEMENT INCLUDED IN THE MANAGEMENT REPORT

For the year ended 31 December 2021

This is a free translation into English of the Statutory Auditor’s report issued in French and is provided solely for the convenience of English speaking

readers. This report should be read in conjunction with, and construed in accordance with, French law and professional standards applicable in France.

To the Shareholders,

In our capacity as Statutory Auditor of Hermès International (hereinafter the “entity”), appointed as an independent third party and certified by COFRAC

(Cofrac Inspection Accreditation no. 3-1060, whose scope is available at www.cofrac.fr), we hereby report to you on the consolidated non-financial

information statement for the year ended 31December2021 (hereinafter the “Statement”), included in the Group management report pursuant to the

legal and regulatory provisions of articlesL.225-102-1, R.225-105 and R.225-105-1 of the French Commercial Code (Code de commerce).

THE ENTITY’S RESPONSIBILITY

Pursuant to legal and regulatory requirements, Executive Management is responsible for preparing the Statement, which must include a presentation of

the business model, a description of the principal non-financial risks, a presentation of the policies implemented in light of those risks and the outcome

of said policies, including key performance indicators.

The Statement has been prepared in accordance with the entity’s procedures (hereinafter the “Guidelines”), the main elements of which are presented

in the Statement and available on request from the entity’s head office.

INDEPENDENCE AND QUALITY CONTROL

Our independence is defined by the provisions of articleL.822-11-3 of the French Commercial Code and the French Code of Ethics (Code de

déontologie) of our profession. In addition, we have implemented a system of quality control including documented policies and procedures regarding

compliance with the ethical requirements, French professional standards and applicable legal and regulatory requirements.

RESPONSIBILITY OF THE STATUTORY AUDITOR, APPOINTED AS AN INDEPENDENT THIRD PARTY

On the basis of our work, our responsibility is to provide a reasoned opinion expressing a limited assurance conclusion on:

However, it is not our responsibility to comment on:

NATURE AND SCOPE OF OUR WORK

The work described below was performed in accordance with the provisions of articlesA.225-1 et seq. of the French Commercial Code determining the

conditions in which the independent third party performs its engagement and with the professional standards applicable in France to such

engagements, as well as with ISAE 3000 – Assurance engagements other than audits or reviews of historical financial information.

◆

we obtained an understanding of all the consolidated entities’ activities, the description of the social and environmental risks associated with their

activities, and the impact of those risks on compliance with human rights and anti-corruption and tax evasion legislation, as well as the resulting

policies and their outcomes;

◆

we assessed the appropriateness of the Guidelines with respect to their relevance, completeness, reliability, objectivity and understandability, with

due consideration of industry best practices, where appropriate;

◆

we verified that the Statement includes each category of social and environmental information set out in articleL.225-102-1III, as well as the

information provided for in paragraph2 of articleL.22-10-36 regarding compliance with human rights and anti-corruption and tax evasion

legislation;

◆

we verified that the Statement presents the business model and the principal risks associated with all the consolidated entities’ activities, including,

where relevant and proportionate, the risks associated with their business relationships and products or services, as well as their policies,

measures and the outcomes thereof, including key performance indicators;

◆

we verified, where relevant with respect to the principal risks or the policies presented, that the Statement provides the information required under

articleR.225-105II;

◆

we assessed the process used to identify and confirm the principal risks;

◆

we asked what internal control and risk management procedures the entity has put in place;

◆

we assessed the consistency of the outcomes and the key performance indicators used with respect to the principal risks and the policies

presented;

◆

we verified that the Statement covers the scope of consolidation, i.e., all the companies included in the scope of consolidation in accordance with

articleL.233-16 within the limitations set out in the Statement;

◆

we assessed the data collection process implemented by the entity to ensure the completeness and fairness of the Information;

◆

for the key performance indicators and other quantitative results that we considered to be the most important (see the list provided in the

appendix), we implemented:

•

analytical procedures to verify the proper consolidation of the data collected and the consistency of any changes in those data,

•

tests of details, using sampling techniques, in order to verify the proper application of the definitions and procedures and reconcile the data with

the supporting documents. This work was carried out on a selection of contributing entities

and covers between 20% and 69% of the

consolidated data relating to the key performance indicators and outcomes selected for these tests;

◆

we referred to documentary sources and conducted interviews to corroborate the qualitative information (measures and outcomes) that we

considered to be the most important (see the list provided in the appendix);

◆

we assessed the overall consistency of the Statement based on our knowledge of all the consolidated entities.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 213

CORPORATE SOCIAL RESPONSIBILITY

REPORT BY ONE OF THE STATUTORY AUDITORS, APPOINTED AS AN INDEPENDENT THIRD PARTY, ON THE CONSOLIDATED NON-FINANCIAL INFORMATION STATEMENT

Our procedures allowed us to assess the consistency of the Statement with regulatory provisions and the fairness of the Information:

We believe that the work carried out, based on our professional judgement, is sufficient to provide a basis for our limited assurance conclusion; a higher

level of assurance would have required us to carry out more extensive procedures.

Selected sample: For the Group Real Estate Department: Cannes (France), Paris George V (France), Palermo (Italy), Rome (Italy), Vancouver (Canada), Toronto (Canada), East1.

Coast Corporate Office (United States), New York Madison 691 (United States), NY Madison 635 (United States), NY Wall Street (United States), Hawaii Ala Moana (United

States), Miami (United States), Hangzhou (China), Chengdu (China), Hong Kong Plaza (Hong Kong), Shanghai Maison (China), Seoul Dosan Park (South Korea), Ginza

Maison H (Japan). For the Industrial Affairs Department: Ateliers HCI (Italy), Compagnie des Cristalleries de Saint-Louis (France), Pyramide (France), J3LP (Portugal), SIEGL

(France), Gordon Choisy Montereau (France), Tanneries d’Annonay (France), Tanneries du Puy (France), Janamba Croc Farm (Australia), Pinnacle Alligator Farm (United

States). For the Human Resources Department: Pôle Maison (France), Hermès Homme (France), Hermès Femme (France), Hermès IDO (France), Hermès Bijouterie (France),

Hermès International (France), Hermès Commercial (France), Manufactures de Franche-Comté (France), Compagnie des Cuirs précieux (France), Tanneries d’Annonay

(France), Tanneries de Montereau (France), Tanneries de Vivoin (France), Maroquinerie du Sud-Ouest (France), Maroquinerie des Alpes (France), Hermès Maroquinerie

Sellerie (France), Hermès Parfums (France), Hermès APAC HK & Macao (Hong Kong and Macao), Hermès China & China Trading (China), Hermès APAC Taiwan (Taiwan),

Hermès Japon (Japan).

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL214

CORPORATE SOCIAL RESPONSIBILITY

REPORT BY ONE OF THE STATUTORY AUDITORS, APPOINTED AS AN INDEPENDENT THIRD PARTY, ON THE CONSOLIDATED NON-FINANCIAL INFORMATION STATEMENT

MEANS AND RESOURCES

Our work was carried out by a team of eight people between November2021 and March2022 and took a total of ten weeks.

We were assisted in our work by our specialists in sustainable development and corporate social responsibility. We conducted some 15 interviews with

the people responsible for preparing the Statement, representing the Industrial Affairs Department, the Group Real Estate Department, the Human

Resources Department and the Sustainable Development Department.

CONCLUSION

Based on our work, nothing has come to our attention that causes us to believe that the consolidated non-financial information statement is not in

accordance with the applicable regulatory provisions and that the Information, taken as a whole, is not presented fairly and in accordance with the

Guidelines.

Neuilly-sur-Seine, 3 March 2022

One of the Statutory Auditors

PricewaterhouseCoopers Audit

Olivier Auberty

Partner

Sylvain Lambert

Partner in charge of the Sustainable Development Department

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 215

CORPORATE SOCIAL RESPONSIBILITY

REPORT BY ONE OF THE STATUTORY AUDITORS, APPOINTED AS AN INDEPENDENT THIRD PARTY, ON THE CONSOLIDATED NON-FINANCIAL INFORMATION STATEMENT

APPENDIX: LIST OF INFORMATION THAT WE CONSIDERED TO BE THE MOST IMPORTANT

Key performance indicators and other quantitative results:

◆◆

Number of dismissals*

◆

Work accidents, Frequency rate, Severity rate*

◆

Number of deaths following a work accident*

◆

Number of occupational illnesses*

◆

Absenteeism rate in France*

◆

Number of disability officers

◆

Number of social dialogue agreements signed in France in 2021

◆

Teams Chapter2.2

Including outcomes and KPIs:

Total workforce and breakdown*

◆◆

Percentage of items produced in-house and in exclusive workshops

◆

Number of Living Heritage Companies

◆

Number of partnerships with leatherworker training schools in France

◆

Savoir-faire

Chapter2.3

Including outcomes and KPIs:

Number of training hours*

◆◆

Percentage of Eoko-Tex certified cotton pouches

◆

Percentage of recycled gold and silver processed in workshops (excluding semi-finished products and

suppliers)

◆

Materials Chapter2.4

Including outcomes and KPIs:

Change in the overall tonnage of industrial waste*

◆◆

Gas consumption of industrial sites and farms*

◆

Electricity consumption of industrial sites and farms and stores and offices*

◆

Fuel consumption of industrial sites and farms*

◆

Renewable energy consumption of industrial sites and farms*

◆

Total energy consumption of industrial sites and farms*

◆

Weight of ordinary industrial waste (OIW) of industrial sites and farms*

◆

Weight of hazardous industrial waste (HIW) of industrial sites and farms*

◆

Scope1 and scope2 carbon emissions of industrial sites and farms*

◆

Scope3 carbon emissions*

◆

Percentage of industrial waste recycled

◆

Percentage of the Group’s activities covered by the GBS study

◆

Percentage of green electricity at Group level

◆

Environment Chapter2.5

Including outcomes and KPIs:

Total water consumption of industrial sites and farms*

◆◆

Number of supplier audits conducted

◆

Number of raw material chains that have undergone supplier risk analysis

◆

Amount of purchases from supported and protected sectors in France

◆

Stakeholders and transparency Chapter2.7

Including outcomes and KPIs:

Percentage of purchasing categories that have been risk-mapped and risk-analysed by supplier

At the request of Hermès International, we performed more extensive procedures on the outcomes and key performance indicators presented in the table with the “*”1.

symbol, enabling us to express a reasonable assurance conclusion regarding said selected information. Our reasonable assurance report is available on request from the

Company’s headquarters.

Main risks or opportunities identified Sections of the management report presenting the associated policies, measures and outcomes reviewed as part of our work

◆

Climate Champion Award – Challenges;

◆

Most responsible “Clothing and accessories” company – Le Point Statistica;

◆

best employer in France – Glassdoor;

◆

Validation of the carbon trajectory by the SBTi;

◆

Supplier CSR Brief;

◆

Animal Welfare Policy;

◆

Maternity Policy;

◆

Diversity and Inclusion Barometer;

◆

Deployment plan for the Campus Hermès training offer;

◆

“Storytellers of Culture” training;

◆

Hermès apprenticeship training centre dedicated to the leather goods industry;

◆

Number of “Best Artisans in France” (Meilleurs Ouvriers de France – MOF) within Hermès;

◆

Naturalness indicator for fragrance ingredients;

◆

CDP water security score;

◆

Membership of the ZDHC initiative;

◆

Science-based targets;

◆

Sector Brief;

◆

HMS Handispensable Day;

◆

Collaboration with Sup de Sub;

◆

Launch of new projects financed by the 2

Carbon Livelihoods Fund;

◆

H-Alert! system;

◆

Procedure for auditing accounts deemed to be the “most sensitive”;

◆

ISP information systems security procedure.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL216

CORPORATE SOCIAL RESPONSIBILITY

REPORT BY ONE OF THE STATUTORY AUDITORS, APPOINTED AS AN INDEPENDENT THIRD PARTY, ON THE CONSOLIDATED NON-FINANCIAL INFORMATION STATEMENT

Qualitative information (measures and outcomes):

◆

Total workforce and breakdown

◆

Number of dismissals

◆

Number of training hours

◆

Absenteeism rate in France

◆

Work accidents, Frequency rate, Severity Rate

◆

Number of occupational illnesses

◆

Total water consumption of industrial sites and farms

◆

Gas consumption of industrial sites and farms

◆

Electricity consumption of industrial sites and farms

◆

Fuel consumption of industrial sites and farms

◆

Renewable energy consumption of industrial sites and farms

◆

Total energy consumption of industrial sites and farms

◆

Change in the overall tonnage of industrial waste

◆

Weight of ordinary industrial waste (OIW) of industrial sites and farms

◆

Weight of hazardous industrial weight (HIW) of industrial sites and farms

◆

Scope1 and scope2 carbon emissions of industrial sites and farms

◆

Scope3 carbon emissions

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 217

CORPORATE SOCIAL RESPONSIBILITY

REASONABLE ASSURANCE REPORT BY ONE OF THE STATUTORY AUDITORS ON A SELECTION OF ENVIRONMENTAL AND SOCIAL INFORMATION

2.10

REASONABLE ASSURANCE REPORT BY ONE OF THE STATUTORY

AUDITORS ON A SELECTION OF ENVIRONMENTAL AND SOCIAL

INFORMATION PUBLISHED IN THE MANAGEMENT REPORT OF

HERMÈS INTERNATIONAL

For the year ended 31December2021

This is a free translation into English of the Statutory Auditor’s report issued in French and is provided solely for the convenience of English speaking

readers. This report should be read in conjunction with, and construed in accordance with, French law and professional standards applicable in France.

To the Shareholders,

Further to your request and in our capacity as Statutory Auditor of Hermès International, we have performed the review described below for the purpose

of expressing reasonable assurance on a selection of social and environmental indicators published in the 2021 management report.

The environmental and social information selected by Hermès International is as follows:

The information was prepared under the responsibility of the Industrial Affairs Department, the Human Resources Department and the Sustainable

Development Department in accordance with the Company’s procedures, which are available on request from the Company’s head office.

Our role is to form a reasonable assurance conclusion on the selected information, based on our work. The following conclusions relate to the selected

information and not to all CSRinformation contained in the management report.

NATURE AND SCOPE OF OUR WORK

We performed our work in accordance with the professional standards applicable in France to such engagements, as well as with ISAE 3000 –

Assurance engagements other than audits or reviews of historical financial information.

◆

we reviewed, at Group level, the appropriateness of the reporting procedures used by the Company as regards relevance, completeness, reliability,

objectivity and clarity;

◆

we verified the implementation of data collection, compilation, processing and control processes to ensure the completeness and consistency of the

information and obtained an understanding of the internal control and risk management procedures used to prepare the information;

◆

we performed analytical procedures and verified, on a sample basis, that the data had been correctly calculated and consolidated. This work

involved, in particular, interviews with the persons from the Industrial Affairs and Human Resources Departments responsible for compiling and

applying the procedures and consolidating the data;

◆

we selected a sample of entities, as follows:

•

for the Industrial Affairs Department: Ateliers HCI (Italy), Compagnie des Cristalleries de Saint-Louis (France), Pyramide (France), J3LP (Portugal),

SIEGL (France), Gordon Choisy Montereau (France), Tanneries d’Annonay (France), Tanneries du Puy (France), Janamba Croc Farm (Australia),

Pinnacle Alligator Farm (United States),

•

for the Human Resources Department: Pôle Maison (France), Hermès Homme (France), Hermès Femme (France), Hermès IDO (France), Hermès

Bijouterie (France), Hermès International (France), Hermès Commercial (France), Manufactures de Franche-Comté (France), Compagnie des

Cuirs précieux (France), Tanneries d’Annonay (France), Tanneries de Montereau (France), Tanneries de Vivoin (France), Maroquinerie du

Sud-Ouest (France), Maroquinerie des Alpes (France), Hermès Maroquinerie Sellerie (France), Hermès Parfums (France), Hermès APAC HK &

Macao (Hong Kong and Macao), Hermès China & China Trading (China), Hermès APAC Taiwan (Taiwan), Hermès Japon (Japan);

◆

with regard to the selected entities:

•

we checked that the procedures had been properly understood and correctly implemented on the basis of interviews with the persons

responsible for preparing the data,

•

we performed tests of details, using sampling techniques, to verify the calculations and reconcile the data with the supporting documents.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL218

CORPORATE SOCIAL RESPONSIBILITY

REASONABLE ASSURANCE REPORT BY ONE OF THE STATUTORY AUDITORS ON A SELECTION OF ENVIRONMENTAL AND SOCIAL INFORMATION

We performed the procedures described below in order to obtain reasonable assurance that the selected information was prepared, in all material

respects, in accordance with the Company’s procedures:

These entities represent between 54% and 69% of the selected environmental and social information reported by the Company.

We were assisted in our work by our experts in corporate social responsibility.

CONCLUSION

Based on our work, we believe that the above-listed environmental and social information selected by the Company and reported in the 2021

management report, was prepared, in all material respects, in accordance with the guidelines used by the Company and applicable in 2021.

Neuilly-sur-Seine, 3March2022

One of the Statutory Auditors

PricewaterhouseCoopers Audit

Olivier Auberty

Partner

Sylvain Lambert

Partner in charge of the Sustainable Development Department

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 219

CORPORATE SOCIAL RESPONSIBILITY

REASONABLE ASSURANCE REPORT BY ONE OF THE STATUTORY AUDITORS ON A SELECTION OF ENVIRONMENTAL AND SOCIAL INFORMATION

3.1.1

Corporate governance principles applied

223

3.1.2

Provisions of the Afep-Medef Corporate Governance Code not applied and those

newly complied with

223

3.2.1

Organisational structure of Hermès International as at 31December 2021

226

3.2.2

Two types of partners

227

3.2.3

Governance by nature dissociated

228

3.3.1

The Active partner and its Executive Management Board

229

3.3.2

Executive Management

230

3.3.3

Governing bodies

234

3.3.4

Non-discrimination and diversity policy

238

3.3.5

Succession plan for Senior Executives

240

3.4.1

Key data on the Supervisory Board as at 31December 2021

241

3.4.2

Applicable principles

242

3.4.3

Diversity policy applied within the Supervisory Board

244

3.4.4

Succession plan for the Chairman of the Supervisory Board

246

3.4.5

Composition of the Supervisory Board

247

3.4.6

Independence of the members of the Supervisory Board

251

3.4.7

Supervisory Board ethics

253

3.4.8

Information on sitting members of the Supervisory Board

256

3.5.1

Role of the Supervisory Board

276

3.5.2

Meetings of the Supervisory Board and the Joint Council

277

3.5.3

Information and training of the Supervisory Board

278

3.5.4

Main duties of the Supervisory Board and work carried out in 2021

281

3.5.5

Ethics and compliance – Personal data protection

282

3.5.6

Corporate social responsibility (CSR)

283

3.5.7

Compensation and reimbursement of expenses

283

3.6.1

Applicable principles

284

3.6.2

CAG-CSR Committee

285

3.6.3

Audit and Risk Committee

288

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 221

CORPORATE GOUVERNANCE

AFR

SUPERVISORY BOARD CORPORATE GOVERNANCE REPORT

223

3.1

THE COMPANY’S CORPORATE GOVERNANCE CODE

223

3.2

AMBITIOUS AND BALANCED GOVERNANCE

226

3.3

ADMINISTRATIVE AND MANAGEMENT BODIES

229

3.4

ORGANISATION OF THE SUPERVISORY BOARD

241

3.5

FUNCTIONING OF THE SUPERVISORY BOARD

276

3.6

SPECIALISED COMMITTEES

284

3.7.1

Methodology

290

3.7.2

Changes since the last evaluations

291

3.7.3

Annual discussion in 2021 on the functioning of the Board

292

3.8.1

Compensation policy for the Executive Chairmen (Executive Corporate Officers)

and members of the Supervisory Board (Non-Executive Corporate Officers)

293

3.8.2

Overview of compensation and benefits of all kinds for Corporate Officers

303

3.8.3

Allocation of free shares and stock options

308

3.8.4

Tables drawn up in accordance with AMF position-recommendation doc 2021-02

(§ 13.3) of 5january 2022 on the presentation of compensation

309

3.9.1

Agreements

315

3.9.2

Capital structure and factors liable to affect the outcome of a public offering

318

3.9.3

Special conditions for attending General Meetings

319

3.9.4

Summary table of the use of financial delegations of authority

321

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL222

CORPORATE GOUVERNANCE

3.7

EVALUATION OF THE SUPERVISORY BOARD AND COMMITTEES

290

3.8

COMPENSATION AND BENEFITS OF CORPORATE OFFICERS

293

3.9

OTHER INFORMATION

315

OTHER INFORMATION FROM THE EXECUTIVE MANAGEMENT REPORT

324

3.10

3.10.1

Interests of Corporate Officers and Executive Committee members in the share

capital

324

3.10.2

Declarations concerning Corporate Officers and the Executive Committee

325

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 223

CORPORATE GOUVERNANCE

SUPERVISORY BOARD CORPORATE GOVERNANCE REPORT

AFR

SUPERVISORY BOARD CORPORATE GOVERNANCE REPORT

This chapter3 “Corporate governance” incorporates § 3.1 to 3.9, the

Supervisory Board corporate governance report prepared pursuant to

ArticleL.22-10-78 of the French Commercial Code (Code de

commerce) and in accordance with the recommendations of the

French Financial Markets Authority (AMF).

A cross-reference table for the corporate governance report is

presented in chapter9 “Additional information”, § 9.5.3.

It was jointly prepared by the Chairman of the Supervisory Board, the CAG-CSR Committee, the Board secretary and with assistance from the functional

departments concerned. It was approved by the Supervisory Board at its meeting of 17February 2022.

3.1

THE COMPANY’S CORPORATE GOVERNANCE CODE

3.1.1

CORPORATE GOVERNANCE PRINCIPLES APPLIED

The Supervisory Board officially adopted the Afep-Medef

recommendations on corporate governance in 2009, as it deemed

these recommendations to be entirely in keeping with the Group’s

corporate governance policy. This framework includes the Afep-Medef

Corporate Governance Code for listed companies, updated in

January2020, available on the Afep website (www.afep.com) or the

Medef website (www.medef.com), and the application guide of the

High Committee on Corporate Governance (HCGE), revised in

March2020, which explains the recommendations of this code.

The recommendations issued by the Financial Markets Authority (AMF)

are also taken into account in its annual report on corporate

governance and senior executive compensation of listed companies.

With each revision of the Afep-Medef Code, the CAG-CSR Committee

performs an exhaustive comparative analysis of the Company’s

application of the Afep-Medef Code’s recommendations, and reports to

the Supervisory Board.

These periodic reviews, as well as monitoring of market practices and

analyses, make it possible to adapt the systems in force each year with

the aim of constant improvement.

3.1.2

PROVISIONS OF THE AFEP-MEDEF CORPORATE GOVERNANCE CODE NOT APPLIED

AND THOSE NEWLY COMPLIED WITH

The table below lists the provisions of the Afep-Medef Code not applied

by the Company at the date of publication of this universal registration

document. In line with the recommendations of the AMF, the provisions

not applied on account of the Company’s legal form are singled out from

those not applied for other reasons, with the corresponding explanations.

We have also listed the changes made since the most recent update of

the Afep-Medef Code in January2020 to ensure compliance therewith.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL224

CORPORATE GOUVERNANCE

THE COMPANY’S CORPORATE GOVERNANCE CODE

Provisions of the Afep-Medef Code not applied due

to the Company’s legal form Explanations

Board meetings and committee meetings (Article11.3)

It is recommended that at least one meeting not

attended by the Executive Corporate Officers be

organised each year.

Hermès International’s Supervisory Board holds powers that are strictly defined by the

Company’s Articles of Association and does not have the power to appoint the Executive

Chairmen or determine their compensation policy. These decisions are the responsibility of

the Active partner, Émile HermèsSAS, under the aegis of its Executive Management Board.

Furthermore, and this is an essential point of the Company’s governance, the duties of the

Supervisory Board do not entail any involvement in the Executive Management, nor any

liability for management actions and the results thereof. This provision of the Afep-Medef

Code is therefore not applicable to Hermès International, given its legal form and the role

assigned to the Supervisory Board (described in § 3.5.1).

Succession plan for Executive Corporate Officers

(Article17.2.2)

The Appointments Committee (or an ad hoc committee)

should design a plan for replacement of Executive

Corporate Officers. This is one of the Committee’s most

important tasks even though it can, if necessary, be

entrusted by the Board to an ad hoc committee. The

Chairman may take part or be involved in the

Committee’s work during the conduct of this task.

The Company’s CAG-CSR Committee (described in § 3.6.2) is not in charge of establishing

the succession plan for the Executive Chairmen, a task that does not fall within the remit of

the Supervisory Board in a société en commandite par actions (partnership limited by

shares).

In accordance with its rules of procedure, since 2016 the CAG-CSR Committee has been

tasked with ensuring the existence of a succession plan for the Executive Chairmen, which

is reviewed annually (see § 3.3.5.1). Since 2018, the CAG-CSR Committee has also

ensured the existence of a succession plan for the Chairman of the Supervisory Board (see

§ 3.4.4) and this mission is included in its rules of procedure (see

Composition of the Compensation Committee

(Article18.1)

It is recommended that one of its members be an

employee director.

The Company’s CAG-CSR Committee (described in § 3.6.2) is not tasked with establishing

the compensation policy for the Executive Chairmen, a task that falls within the remit of the

Active partner and not the Supervisory Board. The Supervisory Board therefore decided

that it was not relevant for an employee representative to be a member. The role of the

Supervisory Board in the decision-making process applicable to the compensation policy

for the Executive Chairmen is described in § 3.8.1.2.

Proportion of independent members on the Audit and

Risk Committee (Article16.1)

Independent directors should account for at least two

thirds of Audit and Risk Committee members and the

Committee should not include any Executive Corporate

Officers.

◆◆

in its 2017 report “that it would prefer to see the proportions not completely achieved

rather than having the independence criteria interpreted too freely (for example by

excluding the criterion requiring 12years of service on the Board), and that it considers

that 60% independent members on the Audit Committee or 50% on the other two

committees does not constitute a serious deviation”.

◆

There are no immediate plans to increase the proportion of independent members of the

Audit and Risk Committee to two-thirds, however the Board will review the matter at each

annual evaluation.

The Supervisory Board determined that slightly less than two-thirds of the Audit and Risk

Committee members are independent (60%, i.e. three out of five members). This situation

enables the Audit and Risk Committee to carry out its duties in an appropriate manner. The

Audit and Risk Committee rules of procedure stipulate that at least one-half of the seats on

the Audit and Risk Committee should be held by members who qualified as independent at

the time of their appointment and throughout their term of office.

The HCGE considers:

in its 2014 report “that an Audit Committee with, for example, three independent

members out of five remains compliant with the spirit of the Code, provided that the

Chairman is an independent member”;

Severance payment (Article25.5.1)

The performance requirements set out by Boards for

these benefits must be evaluated over at least two

financial years. They must be demanding and may not

allow for the indemnification of a director unless his or

her departure is forced, regardless of the form of this

departure.

The Company undertook to pay MrAxel Dumas a severance payment under the conditions

described in § 3.8.1.2.4.

Given the importance of the Active partner’s role in a société en commandite par actions

(partnership limited by shares) – including the power to appoint and dismiss any Executive

Chairman – and, in the case of a legal entity, its legal representative, it was decided that

any termination of MrAxel Dumas’ duties as Executive Chairman resulting from the

replacement of the Chairman of Émile HermèsSAS should be deemed a forced departure.

The Supervisory Board accordingly considered that the deferred compensation undertaking

made for the benefit of MrAxel Dumas complied with the requirements of the Afep-Medef

Corporate Governance Code.

In its November2018 report on corporate governance and Senior Executive

compensation, the AMF recommends that the Board carry out a regular review of the

components of compensation that may be due at the time of or subsequent to the

departure of a Senior Executive and that it questions the possibility and desirability of

compliance with new Code provisions.

No compliance was made necessary by the new provisions of the Afep-Medef Code

updated in January2020.

Provisions of the Afep-Medef Code excluded for other reasons Explanations

None

https://finance.hermes.com/en/governing-bodies-rules-procedure-articles-association/).

◆

the reorganisation of the CSR, governance and risk factor sections

of the universal registration document, which were subject to a

major semantic, informational and infographic review;

◆

the digital accessibility of the four information sources on which

the transparency awards are based;

◆

the publication of the 2020 universal registration document in

XHTML format.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 225

CORPORATE GOUVERNANCE

THE COMPANY’S CORPORATE GOVERNANCE CODE

Corporate governance award

Since 2009, the Grand Prix de la transparence has rewarded the

quality of regulated information of French SBF120 companies. The

objective of these awards is to enable issuers to measure their

performance each year in terms of transparency and to identify market

best practices. Each year, standards rise.

They are based on the criteria of accessibility, accuracy, comparability

and availability of the information presented in the four key sources of

information of each company (universal registration document,

website, notice of Shareholders’ General Meeting – for which an

award was already received last year – and ethics charter). An

independent scientific committee ensures the neutrality and fairness

of the ranking. It is composed of 10members of organisations and

associations representing users of information, including Paris

Europlace, Euronext, AMF, IFA, SFAF, AFG and F2ic.

Hermès International was the Winner of the “CAC Large 60”

(CAC40 and CAC Next 20) at the Grand Prix de la transparence in

2021. This award recognises the work of all the House’s teams who

contribute to the production of regulated information.

Hermès has also made the Top 20 for the 2021 Transparency

Awards and has been nominated for the “Website” and “All

categories” awards.

Faithful to the values of craftspeople and the validity of the

craftsmanship model, the Hermès Group strives to achieve quality

in all areas and to pursue its quest for continual improvement.

Changes made since the most recent update of the Afep-Medef Code

in January2020 to ensure compliance therewith Explanations

Gender balance policy in Governing bodies (Article7)

This gender balance policy and the resulting objectives, as well as the results achieved

during the financial year, are described in § 3.3.4.1 and § 3.3.4.2.

The Executive Management appointed two new female members to the Executive

Committee on 1 March 2022, bringing the proportion of female members to 40% and the

proportion of women on Governing bodies to 54.2% (excluding the Executive Chairman).

Equity ratios (Article26.2)

These ratios and the methodology used for their calculation are presented in § 3.8.2.3.

The scope used in the denominator is that provided for in ArticleL.22-10-9, 6° and 7° of

the French Commercial Code (Code de commerce), i.e. employees of the listed company

Hermès International. In addition to the legal requirement, this choice is likely to facilitate

understanding of changes in ratios and the consistency of the calculation basis over time,

which will be less affected by changes in the scope of consolidation

(acquisitions/disposals) within the Group.

This award applauded in particular:

the recent redesign of the website https://finance.hermes.com/en;

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL226

CORPORATE GOUVERNANCE

AMBITIOUS AND BALANCED GOVERNANCE

3.2

AMBITIOUS AND BALANCED GOVERNANCE

3.2.1

ORGANISATIONAL STRUCTURE OF HERMÈS INTERNATIONAL AS AT 31DECEMBER 2021

Individuals and legal entities (H51, H2 and ÉMILE HERMÈS SAS in particular)

ÉMILE HERMÈS SAS

Chairman of the Company and Chairman

of the Executive Management Board

Mr Henri-Louis Bauer

Executive Management Board

ACTIVE PARTNER

Supervisory Board

Chairman

Mr Éric de Seynes

Executive Management

Mr Axel Dumas

ÉMILE HERMÈS SAS

HERMÈS FAMILY GROUP

PUBLIC

LIMITED PARTNERS

HERMÈS INTERNATIONAL

GROUP MANAGEMENT

TREASURY SHARES

GOVERNING BODIES

Executive Committee Operations Committee

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 227

CORPORATE GOUVERNANCE

AMBITIOUS AND BALANCED GOVERNANCE

◆

establishing the compensation policy for the Executive Chairmen;

◆

authorising all significant transactions (loans, guarantees,

investments, etc.) when their amount exceeds 10% of the Hermès

Group’s net consolidated financial position;

formulating recommendations to the Executive Management on all

issues of general interest to the Group;

3.2.2

TWO TYPES OF PARTNERS

Hermès International was converted into a société en commandite par actions (partnership limited by shares – SCA) by a decision of the Extraordinary

General Meeting held on 27December 1990, in order to preserve its identity and culture and thus ensure its sustainability over the long term, in the

interests of the Group and all shareholders. This singular legal form, whose capital is divided into shares, brings together two types of partners:

The Active Partner (Émile HermèsSAS) – § 3.3.1 The Limited Partners (shareholders) – chapter7

“Information on the Company and its share capital”,

§ 7.2.2

The Active partner Émile HermèsSAS is involved in the operation and

organisation of the Company. It has structuring powers.

Powers:

determining for the Group: (i)strategic options, (ii)consolidated

operating and investment budgets, and (iii)proposals to the

General Meeting for the distribution of share premiums, reserves

and retained earnings;

◆

approving the decisions of the General Meeting of Limited

Partners (except those falling within their own powers);

◆

appointing or dismissing the Executive Chairmen;

◆

proposing the appointment or dismissal of members of the

Supervisory Board.

◆

Émile HermèsSAS has been the sole Active partner of Hermès

International since 1April 2006.

The Executive Management Board of Émile HermèsSAS exercises

the powers attached to being an Active partner of the Company.

The Active partner cannot participate in the vote on the appointment

of members of the Supervisory Board at a General Meeting. The

shares held in the Company are therefore removed from the quorum

of the resolutions of the General Meetings concerned.

The Active partner is jointly and severally liable for the Company’s

debts.

In accordance with Article 26 of the Articles of Association, each year,

the Company pays the Active partner an amount equal to 0.67% of

the distributable profits.

The Limited Partners or shareholders, who provide capital, enjoy

limited prerogatives.

Powers:

voting the parent company financial statements and the

consolidated financial statements approved by Executive

Management;

◆

determining the allocation of net income (including the distribution

of dividends);

◆

approving related-party agreements;

◆

appointing the Statutory Auditors;

◆

appointing and dismissing the members of the Supervisory Board.

Any other decision of the shareholders is only valid if approved on the

same terms by the Active partner.

The law explicitly prohibits them from any interference in the

Company’s management, for any reason whatsoever, on pain of

being liable under the same conditions as the Active partner.

The liability of the shareholders is limited to the amount of their

contribution.

Shareholders receive a share of the profits in the form of dividends.

The main Limited Partners are listed in § 7.2.2.5.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL228

CORPORATE GOUVERNANCE

AMBITIOUS AND BALANCED GOVERNANCE

◆

preparing the management report for the General Meeting;

◆

exercising the broadest of powers to act on behalf of the Company

in all circumstances with regard to third parties, subject to the

limits of the corporate purpose and powers granted to the

Supervisory Board and to Shareholders’ General Meetings.

3.2.3

GOVERNANCE BY NATURE DISSOCIATED

The organisation of governance within an SCA follows the principle of the separation of powers. Executive powers are exercised by the Executive

Management and control powers by the Supervisory Board. Hermès International’s governance therefore has a structure that is by nature dissociated.

Executive Management – § 3.3.2 Supervisory Board – § 3.4

The Company is currently administered and managed by two

Executive Chairmen, one of whom is the Active partner.

The role of Executive Chairman is to manage the Group.

Powers:

defining and implementing the Group’s strategy in accordance

with the strategic options adopted by the Active partner;

◆

directing the Group’s operations;

◆

approving the parent company and consolidated financial

statements;

◆

convening General Meetings and setting their agendas;

◆

establishing and implementing internal control and risk

management procedures;

The Executive Management is controlled by a Supervisory Board

representing the Limited Partners.

The Afep-Medef Code qualifies the Executive Chairmen as “Executive

Corporate Officers”.

The Executive Management is assisted by the Executive Committee

(see § 3.3.3.1) and the Operations Committee (see § 3.3.3.2), which

constitute the Governing bodies.

The Joint Council – § 3.5.2.2

The Joint Council, composed of the members of the Executive

Management Board of Émile Hermès SAS (see § 3.3.1.5), the Active

Partner (see § 3.2.2 and § 3.3.1) and the members of the Hermès

International Supervisory Board (see § 3.4) is a consultation body

that has no decision-making powers of its own.

It is aware of all issues that are submitted to it or that it takes up,

without being able to replace the bodies to which the

decision-making powers are assigned.

Nevertheless, the Active Partner, through the Executive Management

Board, and the Supervisory Board may, as the Joint Council if they so

wish, take any decisions or issue any opinions within their

competence.

The Supervisory Board is an offshoot of the General Meeting of

Limited Partners. The appointment of members of the Board (except

for the employee representatives) is solely that body’s responsibility.

Powers:

controlling the management of the Company (power comparable

to that of the Statutory Auditors): audit of the parent company and

consolidated financial statements and respect for equality

between shareholders;

◆

determining the allocation of net income to be put to the General

Meeting each financial year;

◆

convening the Shareholders’ General Meeting whenever it deems

it appropriate;

◆

preparing the corporate governance report;

◆

authorising or downgrading related-party agreements;

◆

preparing a report to the General Meeting on the performance of

its duties;

◆

establishing the compensation policy for the members of the

Supervisory Board;

◆

deliberating on the actual compensation of the Executive

Chairmen;

◆

approving any proposed new wording of certain clauses of the

Articles of Association of Émile HermèsSAS;

◆

it must be consulted by the Active partner regarding: (i)strategic

options; (ii)consolidated operating and investment budgets;

(iii)proposals to the General Meeting pertaining to the

appropriation of share premiums, reserves or retained earnings;

and (iv)setting the compensation policy for the Executive

Chairmen;

◆

issuing, for the attention of the Active partner, a reasoned opinion

on: (i)any appointment or dismissal of any Executive Chairman of

the Company; and (ii)the reduction in the notice period in the

event of resignation of the Executive Chairman.

◆

The functions exercised by the Supervisory Board do not entail any

interference with the Executive Management, or any liability arising

from the management’s actions or from the results of such actions.

The law does not confer any other powers on the Supervisory Board.

Consequently, it may neither appoint or dismiss the Executive

Chairmen, nor set their compensation policy.

The Afep-Medef Code qualifies the Chairman and the members of the

Supervisory Board as “non-Executive Corporate Officers”.

The Board is supported by the work of two permanent committees:

Audit and Risk Committee;

◆

authorising the Executive Management to grant sureties,

endorsements and guarantees;

◆

These committees act under the collective and exclusive

responsibility of the Supervisory Board. Their role is to discuss,

analyse and prepare for certain deliberations of the Board, to which

they submit their opinions, proposals or recommendations.

Compensation, Appointments, Governance and CSR Committee or

“CAG-CSR Committee”.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 229

CORPORATE GOUVERNANCE

ADMINISTRATIVE AND MANAGEMENT BODIES

3.3

ADMINISTRATIVE AND MANAGEMENT BODIES

3.3.1

THE ACTIVE PARTNER AND ITS EXECUTIVE MANAGEMENT BOARD

Composition at 31/12/2021

ACTIVE PARTNER

Émile HermèsSAS

Represented by its Executive Management Board:

◆

Ms Alice Charbin

◆

Mr Édouard Guerrand

◆

to serve as Active partner and, if applicable, as Executive Chairman of

Hermès International,

◆

potentially, to hold direct or indirect equity interests in Hermès

International, and

◆

to carry out all transactions in view of pursuing and accomplishing

these activities and to ascertain that any liquid assets it may hold are

appropriately managed.

◆

descendants of MrÉmile-Maurice Hermès and his wife, born Julie

Hollande, and

◆

their spouses, but only as usufructuaries of shares.

◆

Other members of the

Executive Management Board:

Ms Sandrine Brekke

Ms Capucine Bruet

◆

Mr Laurent E. Momméja

◆

Mr Jean-Baptiste Puech

◆

Mr Guillaume de Seynes

3.3.1.1.

TRANSFORMATION INTOSAS IN 2021

The company Émile HermèsSAS, incorporated as aSARL (société à

responsabilité limitée, or limited liability company), was transformed in

2021 into aSAS (société par actions simplifiée, or simplified joint-stock

company). This transformation was unanimously approved by the

partners on 17February 2021. The aim is to allow a number of partners

that may exceed 100, the limit provided for in ArticleL.223-3 of the

French Commercial Code (Code de commerce) forSARLs.

The economy and the essential characteristics of Émile Hermès SARL,

such as its operations, the organisation of its governance and the powers

of its various corporate bodies, remain unchanged.

Given the status of Émile Hermès SARL as Active partner, and in

accordance with the Articles of Association of Hermès International

(Articles14.3 and 20.4), the Supervisory Board of Hermès International

has approved the new Articles of Association of Émile Hermès SARL

intended to transform it into aSAS at its meeting of 18February 2021.

The Hermès International General Meeting of 4May 2021 amended

Articles1, 6.2, 14.3, 17, 19.2, 20.4 and 21.1 of the Company’s Articles

of Association, in order to ensure strict consistency between the Articles

of Association of Hermès International and those of Émile HermèsSAS.

The adjustments carried out only concerned modifications made strictly

necessary by the change in the legal form of Émile HermèsSAS.

The transformation therefore became effective on 4May 2021.

3.3.1.2

PRESENTATION

Émile HermèsSAS is a société par actions simplifiée à capital variable

(simplified joint stock company with variable capital) incorporated under

French law on 2November 1989, whose partners are the direct

descendants of MrÉmile-Maurice Hermès (see chapter1 “Presentation

of the Group and its results”, § 1.1) and his wife. It is registered with the

Trade and Companies Register under number352 258 115 RCS Paris.

Its registered office is located at 23, rue Boissy-d’Anglas, 75008 Paris,

France.

Its sole purpose is:

The role and powers of the Active partner are described in § 3.2.2.

The control exercised by Émile Hermès SAS over Hermès International is

described in chapter 7 “Information on the Company and its share

capital”, § 7.2.2.3.

3.3.1.3

PARTNERS

Only the following may be partners in Émile HermèsSAS:

Mr Henri-Louis Bauer

Chairman of Émile HermèsSAS, Chairman and member of the Executive Management Board

Mr Frédéric Dumas

Vice-Chairman and member of the Executive Management Board

MsPascale Mussard

Vice-Chairwoman and member of the Executive Management Board

◆

either a number of Hermès International shares, undivided and free

from any encumbrance or other commitment to third parties, equal to

2,250; or

◆

the beneficial or legal ownership of a number of Hermès International

shares, free from any encumbrance or commitment to third parties,

equal to 4,500.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL230

CORPORATE GOUVERNANCE

ADMINISTRATIVE AND MANAGEMENT BODIES

All partners of Émile HermèsSAS must have, for each share they hold, on

deposit with the social funds:

Any transaction that would result in a change of owner, even for the

benefit of a spouse, ascendant or descendant of a partner, of

wholly-owned shares, shares in bare ownership or usufruct, immediately,

in the future or on option, is subject to the approval of the group of

partners of Émile HermèsSAS. Nevertheless, transfers between partners

may be freely made. The subscription of shares, other than by persons

who are already partners, is also subject to this approval.

3.3.1.4

CHAIRMAN

The Chairman of Émile HermèsSAS is MrHenri-Louis Bauer, a direct

descendant of MrÉmile-Maurice Hermès.

He was manager of Émile Hermès SARL from 1July 2012. He was

appointed Chairman of Émile HermèsSAS under its new legal form

effective from 4May 2021.

3.3.2

EXECUTIVE MANAGEMENT

The Executive Chairmen are appointed by the Active partner, after

consultation with the Supervisory Board. In accordance with the Articles

of Association, the Executive Management comprises one or two

Executive Chairmen, who are natural persons, Active partners or from

outside the Company, each having the same powers. The term of office of

the Executive Chairmen is open-ended.

3.3.1.5

EXECUTIVE MANAGEMENT BOARD

Émile HermèsSAS has an Executive Management Board with

10members, including the Chairman, who is an ex-officio member and

chairs the Board.

The Executive Management Board appoints two Vice-Chairmen from

among its members.

The members of the Executive Management Board are all natural

persons chosen from among the shareholders of Émile HermèsSAS.

The Executive Management Board of Émile HermèsSAS exercises the

powers attached to being an Active partner of the Company.

The new Articles of Association of Émile HermèsSAS have established, in

place of theSARL Executive Management Board, aSAS Executive

Management Board whose powers are identical to those granted by the

previous Articles of Association to theSARL Executive Management

Board.

All members of theSARL Executive Management Board have been

appointed to theSAS Executive Management Board for the remainder of

their term of office.

The role and powers of Executive Management are described in § 3.2.3.

The roles of the Executive Chairmen are distributed as follows: MrAxel

Dumas is in charge of strategy and operational management, and Émile

HermèsSAS, through its Executive Management Board, is responsible for

vision and strategic priority areas.

Mr Axel Dumas

Executive Chairman

Appointed by decision of the Active partner

dated 4June 2013 (effective 5June 2013)

◆

Changes among the Executive Management in 2021: None.

◆

Changes among the Executive Management since 31December 2021: None.

Émile Hermès SAS

Executive Chairman (represented by MrHenri-Louis Bauer)

Appointed by decision of the Active partner

dated 14February 2006 (effective 1April 2006)

3.3.2.1

NUMBER OF SHARES TO BE HELD

BY THE EXECUTIVE CHAIRMEN

At its meeting of 21March 2017, the Supervisory Board decided that the

Executive Chairmen should each be required to hold a minimum of 1,000

Hermès International shares pursuant to Article23 of the Afep-Medef

Code revised in January2020.

The two Executive Chairmen fulfil this obligation at 31December 2021.

Information concerning restrictions relating to the sale of shares by the

Executive Chairmen is provided in § 3.10.2.3.

Composition at 31/12/2021

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 231

CORPORATE GOUVERNANCE

ADMINISTRATIVE AND MANAGEMENT BODIES

3.3.2.2

PROFILE, EXPERIENCE AND EXPERTISE OF THE EXECUTIVE CHAIRMEN

Age

51years

(3July 1970)

Nationality

French

Address

c/o Hermès International

24, rue du Faubourg Saint-Honoré

75008 Paris

Shares held at 31December 2021

11,768

in full ownership and registered

Date of first appointment

5June 2013

Term of current office

Open-ended

◆

Faubourg Middle East (United Arab Emirates)

Director

◆

Hermès Asia-Pacific (Hong Kong)

Director (term ended on 15/05/2021)

◆

Hermès China (China)

Chairman and Director

(term ended on 09/04/2021)

◆

Comptoir Nouveau de la Parfumerie

✱

Permanent representative of Hermès

International, Director

◆

Hermès Sellier

Chairman

◆

Hermès China Trading (China)

Chairman and Director

(term ended on 09/04/2021)

◆

Hermès Japon (Japan)

Director (term ended on 30/03/2021)

◆

Hermès Korea (South Korea)

Chairman (term ended on 05/08/2021) and

Director (term ended on 26/03/2021)

◆

Hermès Of Paris (United States)

Chairman and Director

◆

La Montre Hermès (Switzerland)

Director (term ended on 30/06/2021)

◆

Axam 2

Manager

◆

H51

Director

◆

Maia

Manager

◆

Mathel

Manager

AXEL DUMAS

Executive Co-Chairman

Direct descendant of MrÉmile-Maurice Hermès

Summary of main areas of expertise and experience

MrAxel Dumas is a graduate of the Institut d’Études Politiques de Paris and Harvard Business School

(AMP 179). He also has a bachelor’s degree in philosophy and a master’s degree in business law. He

began his career at BNP Paribas in China from 1995 to 1997 and then in the United States from

1999 to 2003.

MrAxel Dumas joined the Hermès Group in 2003. He served as Director of Sales in France and

headed up the Jewellery division from 2006 to 2008, followed by the Leather Goods & Saddlery

division from 2008 to 2011. He was appointed Managing Director of Operations and member of the

Executive Committee on 2May 2011.

He was appointed Executive Chairman by the Active partner on 4June 2013 (effective 5June 2013).

Offices and positions

held during 2021

In Hermès Group

companies

◆

French companies ▲ Foreign companies ▲

Hermès International

Executive Co-Chairman

●

Offices and positions

held during 2021

Outside Hermès

Group companies

French companies Foreign companies

None

(1) The ages indicated are determined in number of full years at 31 December 2021.

▲

Hermès Group entity.

●

Listed company.

✱

Office taken into account when calculating plurality of offices.

◆

L'Oréal

● ▲ ✱

Director and member of the Audit and Risk

Committee (term ended on 18/04/2019)

◆

Ateliers A.S.

▲ ✱

Permanent representative of Hermès

International, Director (term ended on

18/10/2018)

◆

CHP3

▲

Chairman (term ended on 12/10/2018)

◆

Compagnie Hermès de Participations

▲

Permanent representative of Hermès

International, Chairman (term ended on

12/10/2018)

◆

Hermès Sellier

▲

Executive Corporate Officer of the divisions:

◆

Hermès Bijouterie

(term ended on 01/04/2019

)

◆

Hermès Commercial

(term ended on 01/04/2019)

◆

Hermès Femme

(term ended on 01/04/2019)

◆

Hermès Homme

(term ended on 01/04/2019)

◆

Hermès Maison

(term ended on 01/04/2019)

◆

Hermès Maroquinerie-Sellerie

(term ended on 01/04/2019)

◆

Hermès Services Groupe

(term ended on 01/04/2019)

◆

Hermès Soie et Textiles

(term ended on 01/04/2019)

◆

Hermès Vente aux voyageurs – Travel Retail

(

term ended on 01/04/2019)

◆

Hermès Distribution France

▲

(term ended on 30/06/2018)

◆

Boissy Mexico

▲

(Mexico)

Director

(term ended on 14/11/2018)

◆

Hermès Canada

▲

(Canada)

Chairman and Director

(term ended on 12/10/2018)

◆

Hermès de Paris (Mexico)

▲

(Mexico)

Director (term ended on 14/11/2018)

◆

Hermès do Brasil

▲

(Brazil)

Member of the Advisory Board

(term ended on 25/09/2017)

◆

Hermès Grèce

▲

(Greece)

Director

(term ended on 30/11/2018)

◆

Hermès Ibérica

▲

(Spain)

Director

(term ended on 14/11/2018)

◆

Hermès India Retail and Distributors

▲

(India)

Director

(term ended on 07/09/2018)

◆

Hermès Monte-Carlo ▲ (Principality of Monaco)

Permanent Representative of Hermès

International, Deputy Chairman, Permanent

Representative of Hermès International,

Director

(term ended on 12/10/2018)

◆

Hermès Retail (Malaysia)

▲

(Malaysia)

Chairman and Director

(term ended on 12/10/2018)

◆

Herlee

▲

(Hong Kong)

Chairman and Director

(term ended on 30/06/2017)

◆

Herlee

▲

(Australia)

Chairman and Director

(term ended on 30/06/2017)

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL232

CORPORATE GOUVERNANCE

ADMINISTRATIVE AND MANAGEMENT BODIES

Other offices and positions held during the

previous four financial years and ending

before 1 January 2021

▲

Hermès Group entity.

●

Listed company.

✱

Office taken into account when calculating plurality of offices.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 233

CORPORATE GOUVERNANCE

ADMINISTRATIVE AND MANAGEMENT BODIES

Address

c/o Hermès International

24, rue du Faubourg Saint-Honoré

75008 Paris

Shares held at 31December 2021

33,236

in full ownership

and registered

Date of first appointment

From 27December 1990 to 31December

1994 and again since 1April 2006

Term of current office

Open-ended

◆

Aucleris 2

Manager

◆

Director

◆

H51

Director

◆

Sabarots

Manager

◆

Samain B2

Manager

◆

SIFAH

Director and partner

ÉMILE HERMÈSSAS

Executive Co-Chairman

Represented by its Chairman, Henri-Louis Bauer

Summary of main areas of expertise and experience

Émile HermèsSAS is a société par actions simplifiée à capital variable (simplified joint stock company

with variable capital), incorporated under French law, whose partners are the direct descendants of

MrÉmile-Maurice Hermès and his wife.

It is represented by its Chairman, MrHenri-Louis Bauer.

Émile Hermès SAS’s main purpose is to be the Active partner of Hermès International. Its operation is

presented in § 3.3.1.

Émile HermèsSAS has been the Active partner of Hermès International since 27December 1990.

Émile HermèsSAS was appointed as Executive Chairman on that date and held that office until

31December 1994. Since 1April 2006, it has again been Executive Chairman of Hermès

International for an open-ended term.

It does not now hold nor has in the past held any offices in any other company.

Émile Hermès SAS Henri-Louis Bauer

Direct descendant of

MrÉmile-Maurice Hermès

Offices and positions

held during 2021

In Hermès Group

companies

Outside Hermès

Group companies

None Émile Hermès SAS

Chairman of the Company and Chairman of the

Executive Management Board

◆

▲ Hermès Group entity. ● Listed company. ✱ Office taken into account when calculating plurality of offices.

Main activities outside the Company

None

Foreign companies

None

Foreign companies

None

Other offices and positions held during the

previous four financial years and ended

before 1January 2021

French companies French companies

None None

Foreign companies Foreign companies

None None

French companies ▲

◆

Foreign companies ▲

French companies

Hermès International

●

Active partner and Executive Co-Chairman

None

French companies ▲

None

Foreign companies ▲

None

French companies

◆

the Executive Committee;

◆

the Operations Committee.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL234

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ADMINISTRATIVE AND MANAGEMENT BODIES

3.3.3

GOVERNING BODIES

The definition of the Governing bodies retained for a number of years includes the committees established by the Executive Management several years

ago to regularly assist it in exercising its general duties, namely:

This scope complies with the definition of Article L. 23-12-1 of the French Commercial Code (Code de commerce) in its wording resulting from law

No. 2021-1774

of 24 December 2021 aimed at accelerating economic and professional equality (known as the Rixain law).

The policy of non-discrimination and gender balance within the Governing bodies is described in § 3.3.4.

3.3.3.1

EXECUTIVE COMMITTEE

3.3.3.1.1 Role and composition

MEMBERS

40%

WOMEN MEMBERS

(EXCLUDING

EXECUTIVE CHAIRMAN)

8 years

AVERAGE LENGTH

OF SERVICE ON THE

EXECUTIVE COMMITTEE

The role of the Executive Committee is to oversee the Group’s

strategic and operational management.

The Executive Committee meets every two weeks.

Its composition reflects the Group’s main areas of expertise.

19 years

AVERAGE LENGTH

OF SERVICE IN THE GROUP

54 years

AVERAGE AGE

The members of the Executive Committee in the Hermès store on Avenue George-V, Paris. From left to right:Éric du Halgouët,

Catherine Fulconis, Wilfried Guerrand, Axel Dumas, Olivier Fournier, Charlotte David, Guillaume de Seynes,

Pierre-Alexis Dumas and Florian Craen

Agnès de Villers

Sharon MacBeath

Two new members

joined the Executive Committee

on 1 March 2022.

Role Composition at 01/03/2022

The Executive Chairmen are supported in their management of the

Group by the Executive Committee. This consists of Executive

Vice-Presidents, each of whom has well-defined areas of

responsibility.

◆

MrFlorian Craen

Executive Vice-President Sales & Distribution

◆

MsCharlotte David

Executive Vice-President Communication

◆

MrPierre-Alexis Dumas

Artistic Executive Vice-President

◆

MrOlivier Fournier

Executive Vice-President Corporate

Development and Social Affairs

◆

MsCatherine Fulconis

Executive Vice-President Leather Goods &

Saddlery (which also includes the Hermès

Horizons and Equestrian métiers) and petit h

◆

MrWilfried Guerrand

Managing Director Métiers, Information

Systems and Data

◆

MrÉric du Halgouët

Executive Vice-President Finance

◆

MrGuillaume de Seynes

Executive Vice-President Manufacturing

Division & Equity Investments

◆

Ms Agnès de Villers (since 1March 2022)

Chairwoman and Executive-Vice President of

Hermès Perfume and Beauty

◆

MsSharon MacBeath (since 1March 2022)

Group Director of Human Resources

◆

MsAgnès de Villers, Chairwoman and Executive Vice-President of Hermès Perfume and Beauty

◆

MsSharon MacBeath, Group Director of Human Resources

(1) Average calculated on the basis of the age of the members of the Executive Committee, determined on a full-year basis at 31December 2021.

(2) The appointments made on 1March 2022 changed the composition of the Executive Committee. As of 31 December 2021 it was composed as follows:

◆

9members;

◆

25% women (excluding the Executive Chairman).

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 235

CORPORATE GOUVERNANCE

ADMINISTRATIVE AND MANAGEMENT BODIES

Mr Axel Dumas

Executive Chairman

Changes in the Executive Committee in 2021

None

Changes in the Executive Committee since 31December 2021

On 1March 2022, two new members joined the Executive Committee:

3.3.3.1.2 Profile, experience and expertise of the members of the Executive Committee

The ages indicated are determined in number of full years at 31December 2021.(1)

Name

Age

Date of birth

Nationality

Date of appointment

to the Executive

Committee Education Positions held in the Hermès Group (date of appointment) Other positions

◆

02/05/2011 See § 3.3.2.2

51years

03/07/1970

French

◆

51years

31/10/1970

French

◆

46years

28/03/1975

French

◆

55years

04/06/1966

French

Axel Dumas

Florian Craen 01/09/2013 École Supérieure du

Commerce Extérieur de

Paris (1992)

Executive Vice-President Sales & Distribution of

Hermès International (since 1September 2013)

Harvard Business

School (AMP 184)

Managing Director of Hermès North Asia (2009)

Managing Director of Hermès Great Britain

(2006)

International Director of Hermès Travel Retail

(2001)

European Director of Hermès Travel Retail

(1997)

Charlotte David 12/10/2015 Essec (1997) Executive Vice-President Communication

(since 12/10/2015)

Pierre-Alexis Dumas 01/10/2005 Graduate in visual arts

from Brown University

(1991)

Artistic Executive Vice-President

(since 01/10/2005)

Chairman of the

Fondation d’Entreprise

Hermès

(from 2008 to 2016)

Chairman of Les Arts

Décoratifs

(from 2016 to 2021)

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL236

CORPORATE GOUVERNANCE

ADMINISTRATIVE AND MANAGEMENT BODIES

The ages indicated are determined in number of full years at 31December 2021.(1)

Name

Age

Date of birth

Nationality

Date of appointment

to the Executive

Committee Education Positions held in the Hermès Group (date of appointment) Other positions

◆

01/06/2015 EM Lyon (1983)

Graduate degree in

accounting and finance

Executive Vice-President Corporate Development

and Social Affairs of Hermès International

(2015)

Chairman of the

Fondation d’Entreprise

Hermès (since

08/02/2016)

60years

10/07/1961

French

Executive Vice-President Hermès Sellier

craftsmanship division (2008)

◆

60years

01/09/1961

French

◆

50years

01/02/1971

French

◆

58years

14/03/1963

French

Olivier Fournier

Managing Director of Holding Textile Hermès

(2001)

Managing Director of Bucol (1998)

Managing Director of Sport Soie (1994)

Director of Internal Audit and Taxation of Hermès

International (1991)

Catherine Fulconis 01/04/2019 École des hautes

études commerciales

(HEC) (1983)

Executive Vice-President Leather

Goods-Saddlery (which also includes the Hermès

Horizons and Equestrian métiers)

and petit h (since 01/04/2019)

Director and Chairwoman

of Rallye’s Compensation

and Appointments

Committee

(since 13/05/2014)

Executive Vice-President Hermès Leather

Goods-Saddlery and Chairwoman of the Board of

Directors of Hermès Parfums (2015)

Chairwoman and Managing Director of Hermès

Parfums (2010)

Managing Director and Chairwoman of the

Management Board of Hermès Parfums (2006)

Wilfried Guerrand 01/07/2014 Neoma Business School

(1993, Rouen)

Managing Director Métiers (Hermès Femme,

Hermès Homme, Hermès Bijouterie, Hermès

Soie et Textiles and Hermès Maison),

Information Systems and Data (since

01/04/2019)

MBA from London

School of Economics,

NYU Stern and HEC

(2011, TRIUM) Executive Vice-President Digital Projects and

E-commerce of Hermès International

(2014)

Managing Director of Hermès Femme

(2012)

Managing Director Europe of Hermès

International (2009)

Group Director of Sales of Hermès International

(2007)

Managing Director Hermès France for Hermès

Sellier (2004)

Director of Industrial Development of Hermès

International (2002)

Advisor to the Chairman of Hermès Sellier

(1999)

Financial Controller for Hermès Sellier (1995)

Éric du Halgouët 01/06/2015 Neoma Business School

(1986, Rouen)

Executive Vice-President Finance of Hermès

International (2015)

Graduate degree in

accounting and finance

Chief Financial Officer (2007)

Director of Consolidation and Financial Control

(2006)

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 237

CORPORATE GOUVERNANCE

ADMINISTRATIVE AND MANAGEMENT BODIES

The ages indicated are determined in number of full years at 31December 2021.(1)

OPERATIONS COMMITTEE

3.3.3.2

The Operations Committee, which reports to the Executive Management,

is made up of the Executive Committee and the Senior Executives of the

main métiers and geographical areas of the Group.

Its duties are:

◆

to involve Senior Executives in the Group’s major issues and strategic

orientations;

◆

to promote communication, sharing and reasonable exchanges

amongst its members in their area of responsibility;

◆

to enable the Executive Committee to take certain decisions.

The Operations Committee meets two or three times a year.

MEMBERS

64%

WOMEN MEMBERS

14%

WITH A FOREIGN

NATIONALITY

(EXCLUDING THE EXECUTIVE CHAIRMAN

AND THE EXECUTIVE COMMITTEE)

Name

Age

Date of birth

Nationality

Date of appointment

to the Executive

Committee Education Positions held in the Hermès Group (date of appointment) Other positions

◆

01/01/2005 Graduate in law and

political science in Paris

(1978) and an Essec

graduate (1982)

Executive Vice-President Manufacturing Division

& Equity Investments of Hermès International

(since 02/05/2011)

Chairman of the Comité

Colbert (since

10/06/2016 and until

June2022)

64years

14/10/1957

French

Chairman of John Lobb (2007)

Chairman of the European

Cultural and Creative

Industries Alliance

(2016-2017)

Deputy Managing Director of Hermès

International (2006)

◆

52years

24 December 1969

French

◆

52years

30 March 1969

British

Guillaume de Seynes

Managing Director métiers of Hermès Sellier

(2004)

Chairman of the Chambre

syndicale du prêt-à-porter

des couturiers et des

créateurs de mode

(2008-2012)

Managing Director of La Montre Hermès (1999)

Director of Sales and Marketing of La Montre

Hermès (1997)

Chairman of the Strategic

Committee, Fashion and

Luxury sector (since

2018)

Agnès de Villers 01/03/2022 Institut d'études

politiques de Paris

Economics and Finance

(graduated in 1993)

University of Paris X

Master’s in Economic

History (1991)

Hypokhâgne/Khâgne

Modern Letters

(1988- 1989)

Executive Vice President of Hermès Perfume and

Beauty (since 01/05/2015) and Chairwoman of

the Board of Directors (since 06/06/2019)

Director of CEW

(since 2015)

Sharon MacBeath 01/03/2022 University of Glasgow

Master’s Psychology &

Management (1990)

Panthéon-Sorbonne

University Paris I

HR Master's (1994)

INSEAD (2004)

Group Director of Human Resources

(since 17/06/2019)

Coface – Independent

Director and member

of the Appointments &

Compensation Committee

(since 01/07/2014)

Member of the Supervisory Board

(from 2016 to 2019)

Member of the Audit and Risk Committee

(from 2016 to 2019)

Member of the CAG-CSR Committee

(from 2017 to 2019) since 6 June 2017

Role

Composition at 01/03/2022

◆

it is the responsibility of the Executive Management to set gender

balance objectives and the time frame for attaining them, as well as

to determine how these objectives and the action plan are

implemented;

◆

the Supervisory Board ensures compliance with and monitoring of this

recommendation. It is informed annually by the Executive

Management of the results obtained so that they can be included in

the corporate governance report.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL238

CORPORATE GOUVERNANCE

ADMINISTRATIVE AND MANAGEMENT BODIES

MrAxel Dumas

Executive Chairman

(1) The appointments made to the Executive Committee on 1March 2022 changed the composition of the Operations Committee. As of 31 December 2021, it was

composed as follows:

24members;

67% women and 13% foreign nationals (excluding the Executive Chairman and the Executive Committee).

(2) Members with a foreign nationality

3.3.4

NON-DISCRIMINATION AND DIVERSITY POLICY

3.3.4.1

GENDER BALANCE POLICY IN GOVERNING

BODIES

In accordance with the provisions of 2 of ArticleL.22-10-10 of the

French Commercial Code (Code de commerce), we describe below how

the Company seeks balanced representation of men and women on the

committees established, where relevant, by the Executive Management,

in order to regularly assist it in exercising its general duties, and the

results in terms of gender balance in the 10% of key management

positions.

Since 2018, the Supervisory Board has been tasked with ensuring that

the Executive Chairmen implement a non-discrimination and diversity

policy in the Governing bodies.

This policy was presented to the Supervisory Board in late 2018.

Pursuant to Article7 of the Afep-Medef Code, updated in January2020,

Boards are recommended to set gender balance objectives within

Governing bodies.

The HCGE implementation guide published in March2020stipulates that

in sociétés en commandite par actions (Partnerships limited by shares):

Executive Committee members

(see § 3.3.3.1)

Other members

Senior Executives of the métiers

◆ ◆

MsAnne-Sarah Panhard

Home

◆

MsAgnès de Villers

Perfume and Beauty

◆ ◆

◆

Senior Executives of the Geographical areas

◆ ◆ ◆

◆ ◆

Changes in the Operations Committee in 2021

◆

Changes in the Operations Committee since 31December 2021

On 1March 2022 two new members of the Executive Committee joined the Operations Committee (see § 3.3.3.1.1).

◆

MrLaurent Dordet

Watches

MsCielo Dunbavand

Women’s Ready-to-wear

MsÉlodie Potdevin

Fashion accessories and IoT

MsAntoinette Louis

Silk and Textiles

MsAmbre Pulcini

Jewellery and Footwear

MsVéronique Nichanian

Men’s Ready-to-wear

MrMasao Ariga

Japan

MrÉric Festy

South Asia

MsJuliette Streichenberger

Europe (until 01/07/2021)

MrRobert Chavez

United States and Latin America

MrLuc Hennard

China

MsSégolène Verdillon

Travel Retail

MsHélène Dubrule

France

MsHinde Pagani

Digital Sales and Service

MrFlorian Craen has taken over the responsibility of the general management of the Europe zone, replacing MsJuliette Streichenberger (01/07/2021)

MsAgnès de Villers, Chairwoman and Executive Vice-President of Hermès Perfume and Beauty

MsSharon MacBeath, Group Director of Human Resources

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 239

CORPORATE GOUVERNANCE

ADMINISTRATIVE AND MANAGEMENT BODIES

◆

the Executive Committee (role and composition described in

§ 3.3.3.1);

◆

the Operations Committee (role and composition described in

§ 3.3.3.2).

The Executive Management has set Company gender balance objectives

since 2020 as follows:

Overall gender balance target for Governing bodies: the proportion

of members of each gender should be at least equal to 40%. The

scope of the Governing bodies selected includes the committees

established by the Executive Management several years ago to

regularly assist it in exercising its general duties, namely:

Time horizon: the proportion set having already been reached on

31 December 2019, the Executive Management has set the target

of maintaining the current balance (over both the medium and long

term).

Action plan: for several years now, the Company has been

encouraging female representation among Senior Executives, which

should help achieve this goal.

At the start of 2022, the Supervisory Board noted that the overall gender

balance of the Governing bodies remained in line with the objectives set.

The diversity policy applied to the members of the Supervisory Board is

described in § 3.4.3.

3.3.4.2

GENDER BALANCE OF GOVERNING BODIES

The table below illustrates gender balance on the governance bodies, on the Supervisory Board and in the Senior Executives category:

◆

(1) The appointments made to the Executive Committee on 1 March 2022 changed the composition of the Governing bodies (excluding the Executive Chairman) as

follows:

24members;

◆

54.2% women;

◆

45.8% men.

Within the meaning of ArticleL.3111-2 of the French Labour Code. This category comprises the 105 positions with the highest levels of responsibility according to the(2)

classification used by the Group in 2020 and 2021.

3.3.4.3

PROFESSIONAL GENDER EQUALITY INDEX

The Hermès Group is committed to the principles of recognition and

respect, irrespective of one’s origin, gender, family situation or

position. Employees are reminded of this respect for differences in

the ethics charter (available at https://finance.hermes.com/en/

ethics-human-rights-and-diversity/) ensuring objectivity and equal

opportunities and promoting diversity and inclusion in recruitment,

career development and day-to-day management.

As the results published below illustrate, the Hermès Group is constantly

committed to promoting gender equality. Particular attention is paid to

equality, particularly in the awarding of equal pay for equal work and

ensuring equal opportunities in access to employment and internal

promotions. At all levels of the organisation, equality of opportunity,

diversity and inclusion in terms of employment, training, supervision and

compensation are backed by the House’s commitment, with the objective

of taking concrete and sustainable actions.

The Group is mainly composed of women (67%), represented at all levels

of the hierarchy, for example on the Operations Committee (67%).

Since 2019, Hermès has harmonised its international maternity leave

practices by defining a minimum maternity leave period of 16weeks,

maintaining 100% basic pay and making 100% coverage of maternity

expenses available in all locations.

In addition, in order to offer an increasingly inclusive framework for

parenthood and to support the professional careers of women, from

1January 2022 the Group is offering paternity or adoption leave for

employees in France (i.e. 62% of the House’s workforce) by maintaining

the compensation of the persons concerned at 100%.

AS AT 31DECEMBER

2021 2020

Governing bodies (Executive Committee and Operations Committee, excluding the Executive Chairman)

Proportion of women 52.2% 12/23 54.2%

Proportion of men 47.8% 11/23 45.8%

Overall female representation

Supervisory Board (excluding the employee representatives on the Supervisory Board) 50.0% 50.0%

CAG-CSR Committee 66.7% 66.7%

Audit and Risk Committee 40.0% 40.0%

Senior Executives 47.0%

44.0%

◆

gender pay gap (39/40);

◆

difference in the breakdown of individual pay increases (20/20);

◆

breakdown of promotions (15/15);

◆

number of employees receiving a pay increase upon their return from

maternity leave (15/15);

◆

number of employees of the under-represented gender among the 10

highest-paid employees (10/10).

◆

temporary interim succession (temporary absence of an Executive

Chairman, e.g. due to illness or accident);

◆

unplanned succession (permanent impairment, death or resignation

of an Executive Chairman in the short or medium term).

◆

take stock of our leadership talents to ensure succession within

Hermès;

◆

improve anticipation of succession plans;

◆

engage a stronger dynamic in the development of talents.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL240

CORPORATE GOUVERNANCE

ADMINISTRATIVE AND MANAGEMENT BODIES

In France, agreements or action plans relating to professional equality

are regularly renewed in order to reaffirm the guarantee of a balanced

salary positioning between men and women, as well as respect for equal

treatment in the allocation of salary increases. These agreements define

progress targets in order to promote the role of fathers in the exercise of

family responsibility, and to enable women to carry out a professional

activity corresponding to their wishes. Women in managerial roles and

positions of responsibility at production sites also benefit from

personalised coaching support.

In accordance with ArticleL.1142-8 of the French Labour Code

(Code du travail), on March 2022 Hermès International published

the professional gender equality index for 2021, which was

99/100.

This index measures the gender pay gap within a single company. It takes

into account all components of a compensation package and must be

calculated each year, thereby serving to identify any points of progress.

This index includes the following five indicators (the results obtained for

each indicator are given in brackets):

The overall weighted average index of the Group for financial year 2021

was 90/100.

The results of the other Group companies are available at

3.3.4.4

DIVERSITY POLICY AND RESULTS IN TERMS

OF GENDER BALANCE IN THE TOP 10%

OF POSITIONS WITH THE HIGHEST

RESPONSIBILITY

Whether appointments to governing bodies, recruitment or the

appointment of any employee, the Hermès Group is particularly

committed to compliance with the principle of non-discrimination.

Whenever possible, all employees are reminded of the importance of this

principle.

The “Hermès, a Responsible Employer” policy insists on compliance with

two essential principles: the principle of non-discrimination and the

principle of gender equality. This policy is described in chapter2

“Corporate social responsibility”, § 2.2.2.

The Group has also made commitments to promote the professional

integration and employment of people with disabilities (see in chapter2

“Corporate social responsibility”, § 2.2.2.1.4).

The Group has put in place an Alterego training programme which

focuses on integration and diversity management. This training is

attended by all Management Committee members and the Group’s local

managers. It takes the form of a one-day programme, which alternates

between a theory-based and a more hands-on approach, for preventing

and identifying all forms of discrimination (direct, indirect or even

involuntary) and reaffirming the Group’s zero tolerance with regard to this

type of practice.

3.3.5

SUCCESSION PLAN FOR SENIOR EXECUTIVES

It should be noted that the existence of two Executive Chairmen,

one of which is a legal entity, guards against the Executive

Management falling vacant unexpectedly.

The succession plan for the Chairman of the Supervisory Board is

presented in § 3.4.4.

3.3.5.1

SUCCESSION PLAN FOR EXECUTIVE

MANAGEMENT

A succession plan was established in 2016 for the Executive

Management. This succession plan, which has been set down in writing

since 2019, covers:

Each year, the CAG-CSR Committee conducts an annual review of this

plan. In early 2022, it noted that it remained unchanged and maintained

its assessment that this plan is understandable, of good quality and

sufficiently protective to ensure business continuity.

3.3.5.2

TALENT REVIEW

A new “Talent Review” process, now annual, was rolled out throughout

the Group in 2020, with the following objectives:

This Talent Review covers the succession of the members of the

Executive Committee and of the members of the Operations Committee.

The Talent Review and succession plans for the Executive Management

and the Chairman of the Supervisory Board are presented to the

CAG-CSR Committee every year.

https://finance.hermes.com/en/ethics-human-rights-and-diversities/.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 241

CORPORATE GOUVERNANCE

ORGANISATION OF THE SUPERVISORY BOARD

3.4

ORGANISATION OF THE SUPERVISORY BOARD

3.4.1

KEY DATA ON THE SUPERVISORY BOARD AS AT 31DECEMBER 2021

Supervisory Board

7 meetings in 2021 I 91.84% attendance

6 meetings in 2021 I 93.33% attendance

60% independence

40% women including the Chairwoman 67% women including the Chairwoman

I I 8 years' average length of service

6 meetings in 2021 I 88.89% attendance

67% independence I 8 years' average length of service

PROPORTION

OF WOMEN

PROPORTION OF INDEPENDENT

MEMBERS

1/3

members

ANCIENNETÉ

MOYENNE

AUDIT AND RISK COMMITTEE

COMPENSATION, APPOINTMENTS,

GOVERNANCE AND CSR COMMITTEE

members

committees

years

2022 GM End of 2022

(2)

2023 GM 2024 GM

Number of terms

of office expiring

1/3

per year

Less than

3 years

Between 3

and 5 years

Between 6

and 8 years

12 years

and over

Between 9

and 11 years

Seniority

Average

years

Age

Average

to 44 years

to 54 years

to 64 years

65 and

over

5353

years

1. The members of the Supervisory Board representing employees are not taken into account for the calculation of these proportions.

2. The ages and lengths of service indicated are determined in number of full years at 31 December 2021.

3. Twelve members are appointed by the Shareholders' General Meeting and two members, representing employees, are appointed by the Group Works Council.

4. Supervisory Board members representing employees.

5. Excluding Supervisory Board members representing employees.

◆

the Supervisory Board sets objectives for changes in its composition

in accordance with the diversity policy (see § 3.4.3);

◆

a recruitment advisor is tasked with identifying candidates (male

and/or female) in addition to those proposed by the Executive

Management Board and Supervisory Board;

◆

the profiles of male or female candidates from a variety of

backgrounds and likely to be interested in joining the Supervisory

Board are then preselected by the recruitment advisor;

◆

on the basis of a detailed report and an oral presentation from the

recruitment advisor, the Chairman of the Supervisory Board and a

member of the CAG-CSR Committee draw up a shortlist of candidates

whom they will meet individually;

◆

the selected candidates then meet the other members of the

CAG-CSR Committee and the Executive Chairmen;

◆

the CAG-CSR Committee discusses the results of these interviews and

submits its recommendations to the Émile HermèsSAS Executive

Management Board and the Supervisory Board;

◆

this selection is carried out taking into account the personal and

professional qualities of the candidates and ensuring that they are

able to comply with the guiding principles for exercising the duties of

Supervisory Board member laid down in the rules of procedure (Article

2.2.2.1).

◆

to have or have had an employment contract for at least two years

with the Company or one of its direct or indirect subsidiaries having

its registered office in France or abroad;

◆

to have a clean criminal record;

◆

to complete the application form prepared by the Group Works

Council.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL242

CORPORATE GOUVERNANCE

ORGANISATION OF THE SUPERVISORY BOARD

3.4.2

APPLICABLE PRINCIPLES

Number of Supervisory Board members

The Supervisory Board is composed of between three and fifteen

members (not including members representing employees). These

members are chosen from among shareholders who are neither Active

partners nor legal representative of the Active partner nor Executive

Chairmen (Article18.1 of the Articles of Association). They are

appointed by the Ordinary General Meeting.

The Afep-Medef Code qualifies the Chairman and the members of the

Supervisory Board as “non-Executive Corporate Officers”. The

Supervisory Board accordingly does not include any Executive

Corporate Officers.

When appointments to the Supervisory Board come up for renewal, the

number of Supervisory Board members is set by a decision adopted by

the Active partner.

Two Supervisory Board members representing the Group’s employees

are designated by the Group Works Council in accordance with the

provisions of ArticleL.225-79-2 of the French Commercial Code (Code

de commerce).

The diversity policy applied within the Supervisory Board is described

in § 3.4.3.

3.4.2.1

SELECTION PROCESS FOR NEW MEMBERS

OF THE SUPERVISORY BOARD

3.4.2.1.1Members of the Supervisory Board appointed

by the General Meeting (ArticleL.226-4 of the French

Commercial Code)

The selection process for Supervisory Board members appointed by the

General Meeting is as follows:

3.4.2.1.2Members of the Supervisory Board representing

employees appointed by the Group Works Council

(ArticleL.225-79-2 of the French Commercial Code)

Pursuant to ArticleL.225-79-2 of the French Commercial Code (Code de

commerce), a Supervisory Board of more than eight members must

appoint two employee representatives, respecting gender parity.

Conditions of eligibility are as follows:

Each trade union active at Group level may submit a candidate through

its union representative on the Group Works Council.

Each Economic and Social Committee may nominate one candidate by

secret ballot.

As an exception, companies with more than 300employees may present

two candidates (one male and one female).

Candidates submitted by representative trade union organisations and

employee representative bodies are examined by the Group Works

Council, which appoints two employee representatives to the Supervisory

Board, one male and one female, in two rounds.

Since late 2019, the Supervisory Board has included two members

representing employees.

3.4.2.1.3 Effective implementation

The selection process was not implemented in 2021.

It is not planned to implement it in 2022 for members of the Supervisory

Board appointed by the General Meeting insofar as no appointments of

new members are proposed to the General Meeting of 20April 2022.

With regard to the members of the Supervisory Board representing the

employees, the process of appointment by the Group Works Council will

be implemented at the end of 2022 at the expiry of current terms of

office.

3.4.2.2

APPOINTMENT OF THE CHAIRMAN

AND VICE-CHAIRMEN

The Supervisory Board elects a Chairman (a natural person) and two

Vice-Chairmen from among its members (Article19.2 of the Articles of

Association) whose duties are described respectively in § 3.5.1.2 and

§ 3.5.1.3.

◆

at the time of first appointment, in accordance with the principle of

replacing one-third of the Supervisory Board, as set out in Article18.2

of the Articles of Association;

◆

if there is a renewal, in accordance with the rules relative to the

duration of the term of office for independent members or to the age

limit.

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ORGANISATION OF THE SUPERVISORY BOARD

3.4.2.3

TERM OF OFFICE

The term of office of the members of the Supervisory Board is three years

(Article18.2 of the Articles of Association).

This duration may be less:

Following the General Meeting of 2June 2009, the Company has

introduced, in accordance with the recommendations of the Afep-Medef

Code, the practice of replacing one-third of Supervisory Board members

each year.

3.4.2.4

CO-OPTATION

In the event of a vacancy, the Supervisory Board may appoint a new

member of the Board on a provisional basis, subject to ratification by the

next Ordinary General Meeting, for the remaining term of office of his or

her predecessor.

3.4.2.5

NUMBER OF SHARES TO BE HELD BY MEMBERS

OF THE SUPERVISORY BOARD

The rules of procedure (Article2.2.1), since their adoption in 2009,

require Supervisory Board members, except for the employee

representatives, for whom this requirement is waived, to own a relatively

significant number of registered shares. The number was originally set at

200. In view of the high Hermès International share price, the number of

shares to be held by the members of the Board was reduced in 2019 to

100shares.

At the Hermès International share price as at 31December 2021

(€1,536), this represents more than five years of compensation for a

member of the Board.

The Supervisory Board meeting of 10January 2022 noted that all

members of the Supervisory Board continued to comply with this

obligation as at 31December 2021.

The number of shares held by each member of the Supervisory Board is

shown in § 3.10.1.

Information on the restrictions on the sale of shares by members of the

Supervisory Board is provided in § 3.10.2.3.

3.4.2.6

AGE LIMIT

Pursuant to Article18.3 of the Articles of Association “No person

over the age of 75May be appointed to the Supervisory Board if

their appointment would result in more than one-third of Board

members being over that age” (collective age limit).

In 2021, the Supervisory Board decided to add to its rules of procedure

(Article 2.1.7.1), as an internal rule, that no person may be appointed to

the Supervisory Board or have his or her term renewed if they have

reached the age of 80 (individual age limit).

The Chairman and Vice-Chairmen are not subject to any age limit other

than the age limits applicable to all Board members (individual and

collective).

No member of the Supervisory Board has reached the age of 75 and the

oldest member was 68 in 2021.

The breakdown of Board members by age group is detailed in § 3.4.1.

3.4.2.7

EMPLOYEE REPRESENTATION

ON THE SUPERVISORY BOARD

3.4.2.7.1Members of the Supervisory Board representing

employees (with voting rights)

Pursuant to ArticleL.225-79-2 of the French Commercial Code

(Code de commerce), two members of the Supervisory Board

representing the Group’s employees (one woman and one man) sit

on the Board with voting rights.

The process for selecting the members of the Supervisory Board

representing employees is described in § 3.4.2.1.2.

They have the same status, rights and obligations as any other member

of the Supervisory Board, including confidentiality. They are required to

comply with the Board’s rules of procedure.

The members of the Supervisory Board representing employees are not

counted for the purpose of determining the minimum and maximum

number of members of the Supervisory Board, nor for the calculation of

the diversity of the Board or the proportion of independent members.

Category Appointment procedures Term of office Number

Board members Appointment by the Shareholders’

General Meeting

3years (until the end of the 3rdOrdinary General

Meeting following their appointment)

Board members representing

employees

Designated by the Group Works Council 3years (from the date of their appointment) 2

◆

internal training: discovery of the podium (see page15);

◆

internal training: visit to the Hermès Parfums production site in

Vaudreuil;

◆

internal training: presentation of the anti-counterfeiting system;

◆

IFA training: Being a Director of a family business;

◆

IFA training: Civil and criminal liability of directors;

◆

IFA training: The Board and CSR;

◆

IFA training: Posture of the director.

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ORGANISATION OF THE SUPERVISORY BOARD

Their term of office as members of the Supervisory Board is three years.

Notwithstanding the rule contained in Article18.1 of the Articles of

Association, the members of the Supervisory Board representing

employees are not required to be shareholders.

They have a credit of 15 hours per meeting (plus meeting time) to carry

out their duties.

In accordance with ArticleL.225-30-2 of the French Commercial Code

(Code de commerce), the members of the Supervisory Board

representing employees receive training adapted to the performance of

their duties, at the expense of the Company. This training must ensure

that they acquire and improve the knowledge and techniques required to

carry out their duties. It mainly concerns the role and functioning of the

Supervisory Board, the rights and obligations of the members of the

Supervisory Board and their responsibilities, as well as the organisation

and activities of the Group.

This training period, which may not be less than 40 hours per year, is not

deducted from the hours credited. A portion of this training time is carried

out within the Group but most of it is carried out by an external training

organisation (in particular the IFA). After obtaining the favourable opinion

of the members concerned, the Supervisory Board determines the

training programme for the year at the beginning of each year.

During the second year of their office, MsPureza Cardoso and MrRémy

Kroll attended the following training programme:

3.4.2.7.2 Representative of the Social and Economic

Committee (without voting rights)

In accordance with the provisions of ArticleL.2312-75 of the French

Labour Code (Code du travail), a full member of the Social and Economic

Committee (SEC) appointed by the latter attends all meetings of the

Supervisory Board in an advisory capacity (meetings and site visits). The

SEC has decided to set up a rotation in order to allow several

representatives of the SEC to sit on it for one year each.

The SEC representative receives the same documents as those provided

to the members of the Supervisory Board and at the same time. During

the meeting, he or she has the opportunity to take the floor and give

opinions on the items on the agenda.

3.4.3

DIVERSITY POLICY APPLIED WITHIN THE SUPERVISORY BOARD

3.4.3.1

CHANGES IN THE COMPOSITION

OF THE SUPERVISORY BOARD SINCE 2011

The Supervisory Board is composed of members, one-third of whom

are independent, with qualifications or a professional background

enabling them to contribute effectively to the work of the

Supervisory Board, as a collegiate body, in all its areas of activity

and to the quality of the discussions.

In accordance with the provisions of ArticleL.22-10-10 (2) of the French

Commercial Code (Code de commerce), we hereby report to you on the

diversity policy applied to members of the Supervisory Board based on

criteria such as age, gender or qualifications and professional

experience, and provide a description of the objectives of this policy, its

means of implementation and the results obtained in the financial year

ended.

Since 2011, the CAG-CSR Committee has been assigned the duty to

advise the Supervisory Board of its recommendations as to the changes

in the Board’s composition.

The Supervisory Board has set itself objectives or principles in terms of

optimal Board size, age limit, number of independent members and

diversity (representation of women and men, nationalities, international

experience, expertise, etc.), and gradually changed the composition of

the Board to achieve this.

The work carried out has been presented in each subsequent registration

document/universal registration document as follows:

At the end of 2020, the Supervisory Board reviewed and approved the

diversity policy applied to the members of the Supervisory Board, taking

into account the changes in the composition of the Board in recent years,

as set out in § 3.4.3.2.

At the end of 2021, it reviewed the diversity policy applied within the

Supervisory Board and considered that there was no need to change the

composition of the Board for 2022.

WORK CARRIED OUT SINCE 2011

Registration document

from 2011 to 2013 2013 (part 2, pages21 and 22)

in 2014 and 2015 2014 (part 2, page19)

in 2016 2015 (part 2, page19)

in 2017 2016 (page113)

in 2018 2017 (page142)

in 2019 2018 (page171)

Universal registration document

in 2020 2019 (page236)

in 2021 2020 (page243)

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 245

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ORGANISATION OF THE SUPERVISORY BOARD

3.4.3.2

SUMMARY TABLE OF THE DIVERSITY POLICY APPLIED TO MEMBERS OF THE SUPERVISORY BOARD

Size (number of Board members)

14members

Pursuant to Article18.1 of the Articles of Association, the Supervisory Board comprises between three and fifteen members

appointed by the General Meeting.

Objective:

Maintain the size of the Board at 14members, which is satisfactory, ensures a balanced representation of men and women,

meets the legal obligation to appoint two members representing employees and fulfils the market recommendations in terms of

proportion of independent members.

This objective could be reconsidered if new constraints lead to the need to review the size of the Board.

Implementation procedures and results obtained:

Since November2019 the Board has comprised twelve members appointed by the General Meeting and two members

representing employees, appointed by the Group Works Council.

Age

average age:

53years

the members of the Board were between the ages of 38 and 68;

◆

the average age of Board members was 53;

◆

as shown in the “Age” chart in § 3.4.1, the breakdown of age groups within the Board is balanced.

◆

Pursuant to Article18.3 of the Articles of Association, the number of members aged over 75 cannot exceed one-third of the total

(collective age limit).

Since 2021, pursuant to Article 2.1.7.1 of the Board’s rules of procedure, as an internal rule, no person may be appointed to

the Supervisory Board or have his or her term renewed if they have reached the age of 80 (individual age limit).

Objective:

Maintain the current statutory age limit rule, which is satisfactory.

Implementation procedures and results obtained:

As at 31December 2021:

no member was over the age of 75;

◆◆

Gender parity

50%

women

ArticleL. 22-10-74 of the French Commercial Code (Code de commerce) requires a minimum of 40% of each gender.

Objective:

Maintain a proportion of women and men in line with legal requirements.

Implementation procedures and results obtained:

Since the end of 2017: 50% women and 50% men; the legal requirement is therefore exceeded.

Number of independent members

1/3

independent

In accordance with Article9.3 of the Afep-Medef Code updated in January2020, independent members must make up at least

one-third of the Supervisory Board in controlled companies as defined by ArticleL.233-3 of the French Commercial Code (Code

de commerce). This minimum proportion has been included in the Supervisory Board’s rules of procedure (Article 2.1.5.3).

Objective:

Maintain the proportion of independent members, which is satisfactory and complies with market recommendations.

Implementation procedures and results obtained:

The proportion of one-third independent members has been met since it was introduced in 2009, i.e. as at 31December 2021,

four out of 12members appointed by the General Meeting.

(1) Only Board members appointed by the General Meeting are included in the calculation of the percentages of women members (ArticleL.225-79,II of the French

Commercial Code (Code de commerce)) and independent members (Afep-Medef Code – Article9.3), not employee representatives.

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ORGANISATION OF THE SUPERVISORY BOARD

Nationalities, experience and expertise

◆

retain a variety of skills and experience that can cover each of the six areas of expertise (see § 3.4.5.2) corresponding to the Hermès Group’s

major operational challenges and the main issues that the Supervisory Board and its committees are required to monitor as part of their duties:

◆

business management/operational management of companies/Director of large companies,

◆

finance/internal control/risks,

◆

human resources/CSR,

◆

international/Asia,

◆

legal/ethics/compliance/governance,

◆

IT/cybersecurity/artificial intelligence/digital;

◆

maintain a composition that takes into account the specific nature of the Maison Hermès with members:

◆

all French-speaking, culture of the Maison Hermès being very French,

◆

benefiting from experience or belonging to a family group (collective rather than individual ambition),

◆

having a good knowledge of the history and culture of the Maison Hermès,

◆

without experience in the luxury goods sector (given potential conflicts of interest).

Objectives:

◆

a majority of members were direct descendants of MrÉmile-Maurice Hermès belonging to the Hermès family who bring to the Board their

knowledge of the history and culture of the Maison Hermès,

◆

no member had experience in the luxury goods sector;

◆

temporary interim succession (temporary absence of the Chairman,

e.g. due to illness or accident);

◆

unplanned succession (permanent impairment, death or resignation

of the Chairman in the short or medium term);

◆

normal succession (medium and long term).

Implementation procedures and results obtained:

As at 31December 2021:

the proportion of Board members competent in each of the six areas of expertise (see § 3.4.5.2) corresponded to the Hermès Group’s major

operational challenges and the main issues that the Supervisory Board and its committees are required to monitor as part of their duties;

◆◆

the composition takes into account the specific nature of the Maison Hermès:

◆

all members were French-speaking,

◆

two Board members were dual nationals.

3.4.3.3

NUMBER OF MEMBERS AND REPRESENTATION OF WOMEN AND MEN ON THE SUPERVISORY BOARD

Only Board members appointed by the General Meeting are included in the calculation of these percentages (ArticleL.225-79-2,II of the French Commercial Code(1)

(Code de commerce)), not employee representatives.

n/a: not applicable

3.4.4

SUCCESSION PLAN FOR THE CHAIRMAN OF THE SUPERVISORY BOARD

A succession plan for the Chairman of the Supervisory Board was drawn

up in 2018.

This succession plan, which has been set down in writing since 2019,

covers:

The succession plan for the Chairman of the Supervisory Board was

co-signed by MsDominique Senequier then placed in two sealed

envelopes, one of which was handed to the Chairwoman of the CAG-CSR

Committee and the other to the legal department.

Every year, the CAG-CSR Committee conducts an annual review of this

plan. In early 2022, it noted that it remained unchanged and maintained

its assessment that this plan is of good quality and appropriate.

31/12

2019 2020 2021

Members appointed by the General Meeting 12 12 12

Employee representative members appointed by the Group Works Council 2 2 2

Women

50% 50% 50%

Men

50% 50% 50%

◆

7 women and 7 men (i.e. 50% of each gender);

◆

4 independent members (i.e. one-third, see § 3.4.6); and

◆

2members representing employees (see § 3.4.2.1.2).

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ORGANISATION OF THE SUPERVISORY BOARD

3.4.5

COMPOSITION OF THE SUPERVISORY BOARD

3.4.5.1

COMPOSITION OF THE SUPERVISORY BOARD AS

AT 31DECEMBER 2021

The Company has a Supervisory Board comprising 14members,

including:

Twelve members are appointed by the General Meeting from among the

shareholders who are neither the Active partner nor the legal

representative of the Active partner nor Executive Chairman.

As the provisions of ArticleL.225-79-2 of the French Commercial Code

(Code de commerce) apply to the Company, two members of the

Supervisory Board representing employees are appointed by the Group

Works Council, given the role of this employee representative body which

is the preferred contact for management and whose members are drawn

from the Social and Economic Committees of the Group companies.

All the Supervisory Board members are French except MsOlympia

Guerrand, who is Franco-Portuguese, and MrAlexandre Viros, who is

Franco-American.

MsNathalie Besombes, Director of Corporate law and Stock Exchange

regulations and Compliance Officer, is the Supervisory Board Secretary.

★

Independence ✿ CAG-CSR Committee ✱ Audit and Risk Committee

Main areas of experience and expertise of the members of the Board appointed by the General Meeting

(1)(2)

2/12

5/12

6/12

8/12

9/12

IT/CYBERSECURITY/ARTIFICIAL INTELLIGENCE/DIGITAL

LEGAL/ETHICS/COMPLIANCE/GOVERNANCE

INTERNATIONAL/ASIA

HUMAN RESOURCES/CSR

FINANCE AND AUDIT/INTERNAL CONTROL/RISKS

BUSINESS MANAGEMENT/OPERATIONAL MANAGEMENT OF COMPANIES/

DIRECTOR OF LARGE COMPANIES

Areas of expertise and experience

Number of members

MEMBERS APPOINTED BY THE GENERAL MEETING

Éric

deSeynes

Chairman

Estelle

Brachlianoff

Julie

Guerrand

Renaud

Momméja

Alexandre

Viros

Monique

Cohen

Vice-Chairwoman

★

✱

Dominique

Senequier

Vice-Chairwoman

★

✿

★

✿ ✱

Charles-Éric

Bauer

✱

Blaise

Guerrand

Matthieu

Dumas

✿

Dorothée

Altmayer

Olympia

Guerrand

✱

★

✱

MEMBERS REPRESENTING EMPLOYEES APPOINTED BY THE GROUP WORKS COUNCIL

Pureza

Cardoso

Rémy

Kroll

(1) Average calculated on the basis of the age and seniority of the members of the Supervisory Board, determined on a full-year basis at 31 December 2020.

(2) Supervisory Board members representing employees.

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ORGANISATION OF THE SUPERVISORY BOARD

SUMMARY PRESENTATION OF THE MEMBERS OF THE SUPERVISORY BOARDAS AT 31DECEMBER 2021

Personal details

Gender, nationality, age

date of birth

Experience Position on the Board Membership of Board committees

Number of shares

(direct holding)

Number of

offices in

listed

companies

Independence

Date of first

appointment

Date term

ends

Length of

service on

the Board

Audit and Risk

Committee

CAG-CSR

Committee

Members of the Supervisory Board appointed by the General Meeting

Éric de Seynes (M)

(Chairman) Nationality:

French

61years – 09/06/1960

226

(NP) 285

07/06/2010

03/03/2011

(Chairman)

2023 GM 11years

Monique Cohen (F)

(Vice-Chairwoman)

Nationality: French

250 2

BNP Paribas

Safran

√

03/06/2014 2023 GM 7years

√

(Chairwoman)

65years – 28/01/1956

Dominique Senequier (F)

(Vice-Chairwoman)

Nationality: French

68years – 21/08/1953

200 04/06/2013 2022 GM 8years

√

(Chairwoman)

√

Dorothée Altmayer (F)

Nationality: French

60years – 01/03/1961

200 06/06/2017 2023 GM 4years

Charles-Éric Bauer (M)

Nationality: French

57years – 09/01/1964

75,748 03/06/2008 2022 GM 13years

Estelle Brachlianoff (F)

Nationality: French

49years – 26/07/1972

100 04/06/2019 2022 GM 2years

Matthieu Dumas (M)

Nationality: French

49years – 06/12/1972

√

√√

1,563 03/06/2008 2024 GM 13years

Blaise Guerrand (M)

Nationality: French

38years – 04/06/1983

√

200 29/05/2012 2024 GM 9years

Julie Guerrand (F)

Nationality: French

46years – 26/02/1975

6,825 02/06/2005 2022 GM 16years

Olympia Guerrand (F)

Nationality: French and

Portuguese

44years – 07/10/1977

600 06/06/2017 2024 GM 4years

Renaud Momméja (M)

Nationality: French

59years – 20/03/1962

89,012

(US) 60,960

02/06/2005 2023 GM 16years

Alexandre Viros (M)

Nationality: French and

American

43years – 08/01/1978

100

√

04/06/2019 2024 GM 2years

√

Members of the Supervisory Board representing employees appointed by the Group Works Council

(1) The ages and seniority indicated are determined in number of full years as at 31December 2021.

(2) The independence criteria for its members, formalised since 2009 by the Supervisory Board, are described in § 3.4.6.1.

(3) The obligation to hold a minimum number of Company shares does not apply to members of the Board representing employees.

(4) n/a: not applicable. In accordance with the provisions of the Afep-Medef Code (Article9.3), employee representatives are not included in the calculation of independent members.

(5) Other than the Company. In accordance with the recommendation of the Afep-Medef Code (Article19.4), a member of the Supervisory Board may not hold more than four other offices in

listed companies outside the Group, including foreign ones.

Pureza Cardoso (F)

Nationality: French

50years – 04/03/1971

Rémy Kroll (M) Nationality:

French

49years – 04/05/1972

100

n/a

12/11/2019 12/11/2022 2years

220

n/a

12/11/2019 12/11/2022 2years

Average 8years

◆

the six areas of expertise selected;

◆

the number of Board members for each area of expertise.

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ORGANISATION OF THE SUPERVISORY BOARD

3.4.5.2

MAIN AREAS OF EXPERTISE AND EXPERIENCE

OF BOARD MEMBERS

Each member of the Supervisory Board is asked to make a

declaration listing the areas in which he or she has particular

expertise. This declaration is made upon their appointment and

again each year, when the universal registration document is

prepared.

The six areas given reflect the Hermès Group’s major operational

challenges and the main issues that the Supervisory Board and its

committees are called upon to oversee in the course of their duties.

The chart “Main areas of experience and expertise of the members of the

Board appointed by the General Meeting” in § 3.4.5.1 indicates:

A description of the main areas of expertise and experience of each

Board member can be found in the individual presentations in § 3.4.8.

3.4.5.3

CHANGES IN THE SUPERVISORY BOARD DURING

FINANCIAL YEAR 2021

The General Meeting of 4May 2021 renewed the terms of office of

MsOlympia Guerrand as well as MessrsMatthieu Dumas, Blaise

Guerrand and Alexandre Viros, for a period of three years expiring at the

end of the Annual Ordinary General Meeting called in 2024 to approve

the financial statements for the financial year ending on 31December

2023.

SUMMARY OF CHANGES IN THE COMPOSITION OF THE SUPERVISORY BOARD OVER THE PAST THREE FINANCIAL YEARS

A summary of changes in the composition of the Board committees can be found in § 3.6.1.1.

3.4.5.4

CHANGES WITHIN THE SUPERVISORY BOARD AFTER 31DECEMBER 2021

None

Departures Appointments Renewals

2019

◆ ◆

◆

MsPureza Cardoso (12/11/2019)

MrRémy Kroll (12/11/2019)

◆

MsEstelle Brachlianoff (04/06/2019)

MsDominique Senequier (04/06/2019)

MsJulie Guerrand (04/06/2019)

MrCharles-Éric Bauer (04/06/2019)

2020 MsDorothée Altmayer (24/04/2020)

MsMonique Cohen (24/04/2020)

MrRenaud Momméja (24/04/2020)

MrÉric deSeynes (24/04/2020)

2021 MsOlympia Guerrand (04/05/2021)

MrMatthieu Dumas (04/05/2021)

MrBlaise Guerrand (04/05/2021)

MrAlexandre Viros (04/05/2021)

Changes in terms of

diversification (representation

of women, nationality or

experience) or change with

respect to corporate

governance

The appointment of two members of the Supervisory Board representing employees in 2019 was made pursuant to

the provisions of ArticleL.225-79-2 of the French Commercial Code (Code de commerce).

The renewal of Board members in 2019, 2020 and 2021 made it possible for:

◆

the proportion of independent members on the Board (1/3), the Audit and Risk Committee (60%) and the

CAG-CSR Committee (2/3) to be maintained;

◆

the proportion of women (50%) to be maintained;

◆

the balance of powers within the Board to be maintained.

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3.4.5.6

FUTURE CHANGES TO THE SUPERVISORY BOARD

The “Number of terms expiring” chart in § 3.4.1 indicates the number of terms of office expiring over the next three years.

SUMMARY OF TERMS OF OFFICE

Maturity Member concerned Office(s) concerned Impacted functions

2022 GM MsDominique Senequier Vice-Chairwoman of the Board

Chairwoman and member of the CAG-CSR

Committee

Board member appointed by the

General Meeting

MrCharles-Éric Bauer Member of the Audit and Risk Committee

MsEstelle Brachlianoff Member of the Audit and Risk Committee

Member of the CAG-CSR Committee

MsJulie Guerrand

End 2022 MsPureza Cardoso Member of the Board representing

employees appointed by the Group

Works Council

MrRémy Kroll

2023 GM MrÉric de Seynes Chairman of the Board

Board member appointed by the

General Meeting

MsMonique Cohen Vice-Chairwoman of the Board

Chairwoman and member of the Audit

and Risk Committee

MsDorothée Altmayer

MrRenaud Momméja Member of the Audit and Risk Committee

2024 GM

MrMatthieu Dumas Member of the CAG-CSR Committee

Board member appointed by the

General Meeting

MrBlaise Guerrand

MsOlympia Guerrand

MrAlexandre Viros Member of the Audit and Risk Committee

3.4.5.6.1 Renewal of terms of office expiring in 2021

The terms of office of four members of the Supervisory Board

(MssEstelle Brachlianoff, Julie Guerrand, Dominique Senequier and

MrCharles-Éric Bauer) expire in 2022 and all four have chosen to run for

office.

It is proposed that the General Meeting of 20April 2022 renew their

terms of office for the period of three years as set out in the Articles of

Association, for the reasons set out in chapter8 “Combined General

Meeting of 20April 2022”, § 8.2.1 “Explanatory statement to the

thirteenth to sixteenth resolutions”.

3.4.5.6.2 Non-renewal of terms of office expiring in 2022

As indicated opposite, it is proposed that the General Meeting of 20April

2022 renew all terms of office expiring in 2022.

3.4.5.6.3 Appointment of new members of the Supervisory

Board proposed to the General Meeting of 20April 2022

No appointment of new members of the Supervisory Board is proposed to

the General Meeting of 20April 2022.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 251

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ORGANISATION OF THE SUPERVISORY BOARD

3.4.6

INDEPENDENCE OF THE MEMBERS OF THE SUPERVISORY BOARD

3.4.6.1

DEFINITION AND CRITERIA OF INDEPENDENCE

Members of the Supervisory Board are independent if they have no relationship of any kind whatsoever with the Company, its group or its management

that is liable to compromise the exercise of their freedom of judgement in any way (Article2.1.5 of the rules of procedure). This independence allows for

freedom of expression and judgment that contributes to the quality of the Board’s debates and deliberations.

In 2009 the Supervisory Board formally adopted the following criteria for its members to be deemed independent:

◆

Comply with the criteria set out in the Afep-Medef Code revised in January2020 (Article9.5):

◆◆

an employee, Executive Corporate Officer or a Director of a company consolidated by the Company;

◆

an employee, Executive Corporate Officer or a Director of the Company’s parent company or a company consolidated by this

parent.

◆

Criterion 1: Employee or Corporate Officer in the previous five years

Not to be and not to have been during the course of the previous five years:

an employee or Executive Corporate Officer of the Company;

Criterion 2: Cross-directorships

Not to be an Executive Corporate Officer of a company in which the Company holds a directorship, directly or indirectly, or in which an

employee appointed as such or an Executive Corporate Officer of the Company (currently in office or having held such office during

the last five years) is a director.

◆◆

or for which the Company or its group represents a significant part of its business.

◆

The evaluation of the significant or non-significant relationship with the Company or its group must be debated by the Board and the

quantitative and qualitative criteria that lead to the evaluation (continuity, economic dependence, exclusivity, etc.) must be explicitly

stated in the corporate governance report.

Criterion 3: Significant business relationships

Not to be a customer, supplier, commercial banker, investment banker or consultant:

that is material to the Company or its group;

Criterion 4: Family ties

Not to be related by close family ties to a Corporate Officer.

Criterion 5: Statutory Auditors

Not to have been a Statutory Auditor of the Company within the previous five years.

Criterion 6: Term of office exceeding 12years

Not to have been a Director of the Company for more than 12years. The status of independent director is lost as soon as the

12years is reached.

Criterion 7: Status of non-Executive Corporate Officer

A non-Executive Corporate Officer cannot be considered as independent if he/she receives variable compensation in cash or in

shares or any compensation linked to the performance of the Company or the Group.

Criterion 8: Status of main shareholder

Directors representing main shareholders of the Company or its parent company can be considered as independent provided that

they do not contribute to the control of the Company. However, beyond the threshold of 10% shareholding or voting rights, the Board,

based on the report of the Appointments Committee, systematically reviews the qualification of independence, by taking into account

the share ownership in the Company and the existence of a potential conflict of interest.

◆

Comply with an additional criterion specific to Hermès International:

Criterion 9:

Status of partner or member of the Executive Management Board of the Active partner

Not to be a partner or member of the Executive Management Board of Émile HermèsSAS, Active partner.

◆

the recommendations of the Afep-Medef Code (Article9.3) for

controlled companies within the meaning of ArticleL.233-3 of the

French Commercial Code (Code de commerce);

◆

the Supervisory Board rules of procedure (Article 2.1.5.1).

◆

in order to categorise Board members as independent under the

criteria set out above;

◆

to detail the business relationships with the Group during the year

and to confirm that these are not likely to create a potential conflict of

interest.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL252

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ORGANISATION OF THE SUPERVISORY BOARD

3.4.6.2

SITUATION AT 31DECEMBER 2021 WITH REGARD TO THE INDEPENDENCE CRITERIA SET OUT ABOVE

3.4.6.2.1 Independence of the Supervisory Board

The proportion of independent members on the Supervisory Board has

been one-third (i.e. four out of twelve members appointed by the

General Meeting) since the criteria were introduced in 2009. In

accordance with the provisions of the Afep-Medef Code, revised in

January2020 (Article9.3), the members of the Board representing

employees are not taken into account when calculating this proportion.

This proportion is consistent with:

On 31December 2021, the CAG-CSR Committee examined the situation

of each of its members in respect of the above criteria on a case-by-case

basis, and deemed four of them to be “independent”: MssEstelle

Brachlianoff, Monique Cohen, Dominique Senequier and MrAlexandre

Viros.

This analysis is carried out each year on the basis of a questionnaire sent

to all Supervisory Board members (see § 3.4.7.5) in which they are asked

to make a sworn statement:

In particular, the Board identified no significant business relationships

between its members and the Company.

The table below summarises the criteria satisfied for each member of the Supervisory Board:

represents an independence criterion satisfied.°:

n/a: not applicable

3.4.6.2.2 Independence of the CAG-CSR Committee

The proportion of independent members on the CAG-CSR Committee is

two-thirds (i.e. two out of three members), including its Chairwoman.

This proportion is in line with the recommendations of the Afep-Medef

Code, revised in January2020 (Article18.1).

3.4.6.2.3 Independence of the Audit and Risk Committee

The proportion of independent members on the Audit and Risk

Committee is 60% (i.e. three out of five members), including its

Chairwoman.

This proportion is slightly lower than the recommendation of the

Afep-Medef Code, revised in January2020 (Article16.1). The Board

considered however that it enabled the Committee to function properly. In

its 2014 report, the HCGE considers “that an Audit Committee with, for

example, three independent members out of five remains compliant with

the spirit of the Code, provided that the Chairman is an independent

member”, as is the case for this Company.

CRITERIA

Éric de

Seynes

(Chairman)

Monique

Cohen

(Vice-

Chairwoman)

Charles-

Éric

Bauer

Estelle

Brachlianoff

Pureza

Cardoso

(employee

representative)

Matthieu

Dumas

Blaise

Guerrand

Julie

Guerrand

Olympia

Guerrand

Rémy Kroll

(employee

representative)

Renaud

Momméja

Alexandre

Viros

Criterion 1 √ √ √

Dominique

Senequier

(Vice-

Altmayer

(Vice-

Chairwoman)

Dorothée

Altmayer

√

Criterion 2 √ √ √ √ √ √ √ √ √ √ √ √ √ √

Criterion 3 √ √ √ √ √ √ √ √ √ √ √ √

Criterion 4 √ √ √ √ √ √

Criterion 5 √ √ √ √ √ √ √ √ √ √ √ √ √ √

Criterion 6 √ √ √ √ √ √ √ √ √ √ √ √

Criterion 7 √ √ √ √ √ √ √ √ √ √ √ √ √ √

Criterion 8 √ √ √ √ √ √

Criterion 9 √ √ √ √ √ √

INDEPENDENT √ √ √ n/a n/a √

◆

duties: guiding principles;

◆

confidentiality;

◆

prevention of insider trading – stock market ethics – abstention

obligations – reporting obligation;

◆

business relationships, conflicts of interest and personal statements.

◆

prevention of insider trading;

◆

stock market ethics;

◆

abstention requirement (blackout periods);

◆

reporting obligation.

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ORGANISATION OF THE SUPERVISORY BOARD

3.4.7

SUPERVISORY BOARD ETHICS

3.4.7.1

SUPERVISORY BOARD RULES OF PROCEDURE

At its meeting of 18March 2009, the Supervisory Board adopted its

rules of procedure, which set out the terms Governing the structure

and functioning of Hermès International’s Supervisory Board and its

committees, in addition to applicable legal and statutory provisions.

Their purpose is to enhance the quality of the Board’s work by

promoting the application of good corporate governance principles

and best practices, in the interests of ethics and greater

effectiveness.

These rules of procedure are regularly reviewed to adapt to legal

and regulatory changes and to take into account the

recommendations of the Financial Markets Authority (AMF) and

revisions to the Afep-Medef Code.

They were revised in 2021 (version No.15) mainly to add new

provisions for educational purposes and to reflect the Board’s

current practices. In addition, an individual age limit of 80 has been

added (see § 3.4.2.6).

The full text of the Supervisory Board’s rules of procedure is made

The main provisions of the Supervisory Board and committee rules of

procedure are set out in this chapter3.

It details in particular the ethics principles during the holding of office:

3.4.7.2

COMMITTEE RULES OF PROCEDURE

The rules of procedure of the committees are described in § 3.6.2.2 for

the CAG-CSR Committee and § 3.6.3.2 for the Audit and Risk Committee.

The full text of the committees’ rules of procedure is made

available at each update at

governing-bodies-rules-procedure-articles-association/.

3.4.7.3

STOCK MARKET ETHICS CODE

On 1February 2017, the Supervisory Board adopted a Hermès

Group stock market ethics Code as recommended by the AMF. Its

purpose is to describe the measures put in place within the Hermès

Group to prevent market abuse in Hermès International shares.

This Stock Market Ethics Code is regularly reviewed to adapt to

legislative and regulatory changes and to take into account the

recommendations of the Financial Markets Authority (AMF).

A summary of the Hermès Group stock market ethics Code can be

found in chapter7 “Information on the Company and its share

capital”, § 7.2.4.

It covers the following measures:

This code is sent to all members of the Supervisory Board each time it is

updated.

The members of the Supervisory Board are subject to blackout periods.

They are also required to report transactions in Hermès International

shares to the AMF within three trading days. The AMF General Regulation

provides that the reporting obligation only applies when the total amount

of transactions carried out during the calendar year is greater than

€20,000.

The declarations made during 2021 are listed in chapter7 “Information

on the Company and its share capital”, § 7.2.3.

They may seek the advice of the Compliance Officer prior to carrying out a

transaction.

In addition, the Company has developed an e-learning training course on

the prevention of market abuse, which all Supervisory Board members

must follow.

3.4.7.4

ATTENDANCE

The Supervisory Board’s rules of procedure (Article 2.2.2.1) state that

Supervisory Board members undertake to participate actively in all

meetings of the Board and of the specialised committees of which they

are a member.

available at each update at https://finance.hermes.com/en/

governing-bodies-rules-procedure-articles-association/.

https://finance.hermes.com/

It is made available at each update at https://finance.hermes.com/

en/governing-bodies-rules-procedure-articles-association/.

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ORGANISATION OF THE SUPERVISORY BOARD

The compensation policy for members of the Supervisory Board

established by the Board is described in § 3.8.1.3.

This policy includes a variable component proportional to attendance at

meetings, which is currently 64.54% for the Supervisory Board and

60.00% for the specialised committees (see table in § 3.8.1.3.4).

Barring an unforeseen obstacle or exceptional circumstances (and in

particular the Covid-19 crisis), remote participation by telecommunication

means should remain exceptional but is remunerated under the same

conditions.

During financial year 2021, seven meetings of the Supervisory

Board, six meetings of the Audit and Risk Committee and six

meetings of the CAG-CSR Committee were held, with the regular

attendance of almost all members, as shown in the table below:

seven of the 14members attended all Board meetings.

Each absence was the subject of a precise and detailed

justification by the relevant Board members.

Attendance calculated by establishing the ratio between the number of actual attendance or attendance using telecommunication and the number of meetings applicable

to each member.

n/a: not applicable

3.4.7.5

MEASURES TAKEN TO ENSURE A BALANCE

OF POWERS WITHIN THE BOARD AND AVOID

POTENTIAL CONFLICTS OF INTEREST

The governance of the Company is by nature dissociated (see § 3.2.3),

which guarantees a strict separation of executive powers and control

powers.

The Supervisory Board comprises at least one-third independent

members (see § 3.4.3.2). The Audit and Risk Committee is three-fifths

independent members and the CAG-CSR Committee two-thirds.

In accordance with Article 2.2.2.4 of the Supervisory Board’s rules of

procedure, each member of the Supervisory Board shall at all times

maintain his or her independence of thought, analysis, judgment and

action and shall endeavour to this end to avoid any conflicts of interest.

Each member shall inform the Supervisory Board of any conflicts of

interest in which they might be involved. In the event of a potential

conflict of interest, the member concerned must immediately notify the

Chairman of the Supervisory Board, who then informs the CAG-CSR

Committee so that, based on an analysis of the situation declared, it can

form an opinion. This opinion is then submitted to the Supervisory Board

and, if the Board decides to follow it, is then notified to the person

concerned by the Chairman of the Board. The Board’s decision is

recorded in the minutes of the meeting. The Supervisory Board member

concerned shall refrain from attending the discussions and from voting

on the corresponding deliberation and any decisions on the matters in

question.

More specifically, the member concerned shall inform the Chairman of

the Supervisory Board of their intention to accept a new corporate office

or any involvement in the specialised committees of a corporate body, or

any new position, such that the Supervisory Board, upon the proposal of

the CAG-CSR Committee, may decide on the compatibility of such an

appointment with the term of office as a member of the Company’s

Supervisory Board.

At the end of their term of office, members of the Supervisory Board must

respect a minimum period of three years before seeking and/or

accepting the exercise of a term of office in a company conducting

activities that compete with those of the Group and/or in a company in

which the Group holds a significant investment.

2021

Attendance at Supervisory

Board meetings

Attendance at Audit and

Risk Committee meetings

Attendance at CAG-CSR

Committee meetings

Total number of meetings 7 6 6

Overall attendance rate 91.84% 93.33% 88.89%

Éric de Seynes (Chairman) 100.00% n/a n/a

Monique Cohen (Vice-Chairwoman) 100.00% 100.00% n/a

Dominique Senequier (Vice-Chairwoman) 71.43% n/a 100.00%

Dorothée Altmayer 85.71% n/a n/a

Charles-Éric Bauer 100.00% 100.00% n/a

Estelle Brachlianoff 85.71% 66.67% 66.67%

Pureza Cardoso (employee representative) 100.00% n/a n/a

Matthieu Dumas 85.71% n/a 100.00%

Blaise Guerrand 100.00% n/a n/a

Julie Guerrand 100.00% n/a n/a

Olympia Guerrand 85.71% n/a n/a

Rémy Kroll (employee representative) 85.71% n/a n/a

Renaud Momméja 85.71% 100.00% n/a

Alexandre Viros 100.00% 100.00% n/a

◆

at the time of his or her appointment;

◆

each year when the universal registration document is being

prepared.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 255

CORPORATE GOUVERNANCE

ORGANISATION OF THE SUPERVISORY BOARD

Each member of the Supervisory Board must also draw up a signed

declaration stating whether or not there is a conflict of interest, even a

potential one:

The declaration describes all possible situations, with precise examples,

inviting the members of the Board to declare all situations that could

represent a potential conflict of interest.

The declaration serves as a basis to evaluate the material nature of

business relationships that could affect the independence of a

Supervisory Board member as required by recommendation 9.5.3 of the

Afep-Medef Code updated in January2020. The business relationship

evaluation criteria are quantitative (amount of sales or revenue

generated during the financial year and the percentage represented by

those amounts in relation to the counterparty’s total sales or revenue)

and qualitative (nature of existing business relationships).

As regards the quantitative criteria, the Supervisory Board did not

consider it appropriate, given the diversity of possible situations, to set a

threshold below which a business relationship would be deemed

immaterial. The evaluation is made on a case-by-case basis.

MsMonique Cohen, MsEstelle Brachlianoff and MrAlexandre Viros have

not declared any business relationships with the Company.

MsDominique Senequier declared a non-significant business

relationship described in chapter5 “Consolidated financial statements”,

§ 5.6 (Note13.2 [Ardian Holding]) under related-party transactions.

After examining each of these situations in early 2022, the

CAG-CSR Committee concluded that none of them were of such a

nature as to constitute a conflict of interest for the persons

concerned and that none of the independent members of the Board

had, directly or indirectly, significant business relationships with the

Company or its group.

3.4.7.6

PLURALITY AND NUMBER OF OFFICES

The offices of members of the Supervisory Board are not taken into

account when calculating the plurality of offices, ArticlesL.225-21 and

L.225-77 of the French Commercial Code (Code de commerce) being

expressly excluded from the provisions applicable to sociétés en

commandite par actions (Partnerships limited by shares).

Each member of the Supervisory Board must disclose the list of offices

and positions held in any company during the last five years at the time

of his or her first appointment and each year when the universal

registration document is being prepared. The information disclosed, and

in particular the offices held in listed companies, is detailed in the

information on each individual Board member presented in § 3.4.8.

The examination of the situation of each member of the Supervisory

Board and of the Executive Chairmen as regards the plurality and number

of offices, showed that no member of the Supervisory Board or Executive

Chairman was in a situation of concurrent holding of offices, with regard

to both the legal rules and to the principles set out in Article19.4 of the

Afep-Medef Code updated in January2020.

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ORGANISATION OF THE SUPERVISORY BOARD

3.4.8

INFORMATION ON SITTING MEMBERS OF THE SUPERVISORY BOARD

3.4.8.1

MR ÉRIC DE SEYNES

Age

61years

(9June 1960)

Nationality

French

Address

c/o Hermès International

24, rue du Faubourg Saint-Honoré

75008 Paris

Shares held at 31December 2021

226 full ownership and 285 bare ownership

of which at least 100 registered shares

—

Date of first

appointment

Supervisory Board

7June 2010 (he previously held this office from

2005 until 2008)

Chairman of the Supervisory Board

3March 2011

Éric de Seynes was also:

a member of the Audit and Risk Committee

from 2005 to 2008 and a member

of the Executive Management Board of

Émile HermèsSAS (SARL at that time)

from 2008 to 2010

Term of current office

2023 GM

ÉRIC DE SEYNES

Member of the Hermès International Supervisory Board (Chairman)

Direct descendant of MrÉmile-Maurice Hermès

Summary of main areas of expertise and experience

MrÉric de Seynes is a graduate of the École Supérieure Libre des Sciences Commerciales Appliquées

(ESLSCA) with a specialisation in marketing.

Until 2017 he was successively: Head of Marketing for Mobil Oil Française, Director of Sponsoring for

Seita, Marketing Director for Sonauto-Yamaha, Director of Marketing and Sales for Yamaha Motor

France, Chairman of Groupe Option, Chairman and CEO of Yamaha Motor France, Operational Director

of Yamaha Motor Europe, and Chief Operating Officer of Yamaha Motor Europe.

He has been Chairman and Chief Executive Officer of Yamaha Motor Europe since 1January 2018,

Executive Officer of Yamaha Motor Co.Ltd (Japan) since 2016 and a member of the Executive

Committee of the European Association of Motorcycle Manufacturers since 2014.

He was appointed Senior Executive Officer Yamaha Motor Co.Ltd (Japan) in 2020.

Key skills

He brings to the Board his in-depth knowledge of the history and culture of Hermès, alongside his

leadership skills. His professional background, his extensive managerial experience, his skills as an

operational and functional executive of an industrial group with an international dimension, and the

commitment with which he carries out his duties and chairs the Board enable him to make an effective

contribution to the quality of the discussions and work of the Board in all of its areas of responsibility.

(1) The ages indicated are determined in number of full years at 31December 2021.

▲ Hermès Group entity. ● Listed company. ✱ Office taken into account when calculating plurality of offices.

Main activities outside the Company

Chairman and Chief Executive Officer of Yamaha Motor Europe

Offices and positions In Hermès Group

companies held during 2021

Foreign companies ▲ French companies ▲

◆

Hermès International

●

Chairman and member

of the Supervisory Board

Hermès Sellier

Member of the Management Board

None

◆

CAPI

Co-manager

◆

Group optionSARL

Manager

◆

H51

Director

◆

MBKSA

✱

Director

◆

SféricSAS

Chairman

◆

Yamaha Motor France FinanceSAS

Director

◆

Yamaha Motor EuropeNV (Netherlands)

Chairman and Chief Executive Officer

◆

Inha Works Limited (Finland)

Director

◆

Motori Minarelli (Italy)

Director

◆

Yamaha Motor Germany GmbH (Germany)

Chairman

◆

Yamaha Motor Research & Development

EuropeS.p.A (Italy)

Director

◆

CSIAM

Co-Chairman (term ended on 16/11/2017)

◆

Les ProducteursSA

Director (term ended January2019)

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 257

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ORGANISATION OF THE SUPERVISORY BOARD

Offices and positions

held during 2021

Outside Hermès

Group companies

French companies Foreign companies

Other offices and positions held during the

previous four financial years and ended

before 1January 2021

French companies Foreign companies

None

▲

Hermès Group entity.

●

Listed company.

✱

Office taken into account when calculating plurality of offices.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL258

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ORGANISATION OF THE SUPERVISORY BOARD

3.4.8.2

MSMONIQUE COHEN

Age

65years

(28January 1956)

Nationality

French

Address

c/o Hermès International

24, rue du Faubourg Saint-Honoré

75008 Paris

Shares held at 31December 2021

250

in full ownership and registered

—

Date of first appointment

Supervisory Board

3June 2014

Audit and Risk Committee

3June 2014

Term of current office

2023 GM

◆

SC Fabadari

Managing Partner

◆

Fidès Participations

Member of the Supervisory Board

MONIQUE COHEN

Independent member of the Hermès International Supervisory Board

(Vice-Chairwoman)

Member of the Audit and Risk Committee (Chairwoman)

Summary of main areas of expertise and experience

MsMonique Cohen is a graduate of École Polytechnique (X76), and holds a master’s degree in

mathematics and a degree in business law.

She began her career in 1979 at Paribas as a senior banker, then as the worldwide manager for

equity-related métiers. From 2000 to 2020, she was a partner at Apax Partners, in charge of

investments in business services, financial services and healthcare. Since July2020, she has been

Senior Advisor at Apax Partners.

MsMonique Cohen is a lead independent Director of the Safran group. She was appointed to the

Board of Directors of BNP Paribas on 12February 2014. Until September2014 she sat on the Board

of the Financial Markets Authority (AMF).

Key skills

Her professional background, her experience as a manager and Director of large international groups,

her knowledge of financial and banking markets, her expertise in managing equity investments and

her financial vision of shareholders, and the commitment with which she carries out her duties and

chairs the Audit and Risk Committee enable her to make an effective contribution to the quality of the

discussions and work of the Board in all of its areas of responsibility.

Offices and positions

held during 2021

Outside Hermès

Group companies

BNP Paribas

● ✱

Director

Member of the Internal Control, Risks and

Compliance Committee

Chairwoman of the Governance, Ethics,

Appointments and CSR Committee

Safran

● ✱

Lead Director and Chairwoman of the

Appointments and Compensation Committee

◆

Proxima Investissement (Luxembourg)

Chairwoman of the Board of Directors and Director

Other offices and positions held during the

previous four financial years and ended

before 1January 2021

(1) The ages indicated are determined in number of full years at 31December 2021.

▲ Hermès Group entity. ● Listed company. ✱ Office taken into account when calculating plurality of offices.

Main activities outside the Company

Senior Advisor at Apax Partners (since 01/07/2020).

In Hermès Group

companies

Foreign companies ▲ French companies ▲

◆

None

French companies

◆

Hermès International

●

Vice-Chairwoman and member of the

Supervisory Board, Chairwoman of the Audit

and Risk Committee

French companies

◆

Apax Partners MidMarket

Director (term ended on 30/06/2020)

Global ProjectSAS

Member of the Supervisory Board

(term ended on 15/09/2017)

JC Decaux

●

Member of the Supervisory Board

(term ended on 11/05/2017)

Foreign companies

None

Foreign companies

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 259

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ORGANISATION OF THE SUPERVISORY BOARD

3.4.8.3

MS DOMINIQUE SENEQUIER

Age

68years

(21August 1953)

Nationality

French

Address

c/o Hermès International

24, rue du Faubourg Saint-Honoré

75008 Paris

Shares held at 31December 2021

200

in full ownership and registered

—

Date of first appointment

Supervisory Board

4June 2013

CAG-CSR Committee

4June 2013

Term of current office

2022 GM

◆

Ardian Holding

Permanent representative of SenusSAS,

Chairwoman

◆

SCI30 rue Jacob SCI

Manager

◆

SenusSAS

Chairwoman

◆

William Christie (law 1901 Association)

Member of the Board of Directors

◆

Ardian Investment SwitzerlandAG (Switzerland)

Chairwoman of the Board of Directors

◆

Ardian Investment Switzerland HoldingAG

(Switzerland)

Chairwoman of the Board of Directors

◆

Ardian Investment UKLtd (United Kingdom)

Member of the Board of Directors

◆

Ardian USLLC (United States)

Chairwoman of the Supervisory Committee,

member of the ANAFII and SOLAR Investment

Committees

◆

Escouf Properties Corp. (USA) Chairwoman

◆

Seneq Srl (Belgium)

Deputy director

DOMINIQUE SENEQUIER

Independent member of the Hermès International Supervisory Board

(Vice-Chairwoman)

Member of the CAG-CSR Committee (Chairwoman)

Summary of main areas of expertise and experience

MsDominique Senequier is a graduate of École Polytechnique (X72) and holds a postgraduate

diploma (DEA) in Currency Banking Finance from the Sorbonne University.

She began her career at GAN (1980) where she started up and developed the subsidiary GAN

Participations, after being Acquisitions Manager for the group and spending five years in the insurance

inspectorate.

In 1996, she joined the Axa group and founded AXA Private Equity. At the end of 2013, AXA Private

Equity became the Ardian group, of which she is currently Chairwoman.

Key skills

She brings to the Board her expertise in the field of finance and private equity, as well as her

understanding of global macroeconomic and geopolitical issues. Her grasp of corporate governance,

her international dimension acquired in China, the United States, the Middle East and emerging

countries, and the commitment with which she carries out her duties and directs the work of the

CAG-CSR Committee enable her to make an effective contribution to the quality of the discussions and

work of the Board in all of its areas of responsibility.

Main activities outside the Company

Chairwoman of the Ardian Group.

In Hermès Group

companies

◆

French companies ▲ Foreign companies ▲

Hermès International

●

Vice-Chairwoman and member of the

Supervisory Board, Chairwoman of the CAG-CSR

Committee

NoneNone

Offices and positions

held during 2021

Outside Hermès

Group companies

French companies Foreign companies

The ages indicated are determined in number of full years at 31December 2021.(1)

▲

Hermès Group entity.

●

Listed company.

✱

Office taken into account when calculating plurality of offices.

◆

Théâtre des Champs-ElyséesSA

✱

Director (term ended 31/08/2020)

◆

YdraSAS

Chairwoman (term ended on 22/10/2018)

◆

Ardian USLLC (United States)

Member of the ASFIII-2, AESFIII-2 and AESFIV

Investment Committees

(term ended on 26/06/2020)

◆

Ardian Beijing Consulting Limited CompanyLLC

(China)

Member of the Board of Directors

(term ended on 13/05/2019)

◆

Ardian Investment Singapore PteLtd (Singapore)

Member of the Board of Directors

(term ended on 13/05/2019)

◆

Ardian Investment UKLtd (United Kingdom)

Member of the Board of Directors

(term ended on 13/11/2018)

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL260

CORPORATE GOUVERNANCE

ORGANISATION OF THE SUPERVISORY BOARD

Other offices and positions held during the

previous four financial years and ended

before 1January 2021

French companies Foreign companies

▲ Hermès Group entity. ● Listed company. ✱ Office taken into account when calculating plurality of offices.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 261

CORPORATE GOUVERNANCE

ORGANISATION OF THE SUPERVISORY BOARD

3.4.8.4

MSDOROTHÉE ALTMAYER

Age

60years

(1March 1961)

Nationality

French

Address

c/o Hermès International

24, rue du Faubourg Saint-Honoré

75008 Paris

Shares held at 31December 2021

200

in full ownership and registered

—

Date of first appointment

Supervisory Board

6June 2017

Term of current office

2023 GM

◆

Alvila

Manager

◆

Alvila Immobilier

Manager

◆

Director

DOROTHÉE ALTMAYER

Member of the Hermès International Supervisory Board

Direct descendant of MrÉmile-Maurice Hermès

Summary of main areas of expertise and experience

MsDorothée Altmayer holds a degree in clinical psychology from École de Psychologues Praticiens

(EPP/Psychoprat) (1984), a diploma in graphology from the Société française de graphologie (1987)

and a diploma in plastic arts mediation psychotherapy (2006).

She first worked as a recruitment and outplacement consultant at International Business Drive (Algoe

Executive group). Since 2000 she has been a practising clinical psychologist.

She has held temporary positions at the Hôpital Necker, the Main dans la main association, the

Institut Mutualiste Montsouris (day hospital for adolescents) and the Centre Recherches et

Rencontres.

From 2007 to 2020, she ran her own private practice, specialising in parent-child interviews,

psychological evaluations and individual art therapy sessions for children.

Since the end of 2020 she has continued to carry out this activity in reduced form, with her current

customers.

Key skills

She brings to the Board her in-depth knowledge of the history and culture of Hermès. Her professional

background, her skills in human resources, and the commitment with which she carries out her duties

enable her to make an effective contribution to the quality of the discussions and work of the Board in

all of its areas of responsibility.

Main activities outside the Company

Clinical psychologist specialized in parent-child interviews and individual art therapy sessions for

children

In Hermès Group

companies

◆

French companies ▲ Foreign companies ▲

Hermès International

●

Member of the Supervisory Board

NoneNone

◆

Comptoir Nouveau de la Parfumerie ✱

Director

Offices and positions

held during 2021

Outside Hermès

Group companies

French companies Foreign companies

None

Other offices and positions held during the

previous four financial years and ended

before 1January 2021

French companies Foreign companies

◆

Hermès Sellier ▲

Member of the Management Board

(term ended on 12/09/2017)

None

(1) The ages indicated are determined in number of full years at 31December 2021.

▲

Hermès Group entity.

●

Listed company.

✱

Office taken into account when calculating plurality of offices.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL262

CORPORATE GOUVERNANCE

ORGANISATION OF THE SUPERVISORY BOARD

3.4.8.5

MR CHARLES-ÉRIC BAUER

Age

57years

(9January 1964)

Nationality

French

Address

c/o Hermès International

24, rue du Faubourg Saint-Honoré

75008 Paris

Shares held at 31December 2021

75,748

in full ownership and registered

—

Date of first appointment

Supervisory Board

3June 2008

Audit and Risk Committee

26January 2005

Term of current office

2022 GM

◆

Almareen 2

Manager

◆

Carlynedie (Spain)

Manager

◆

H51

Director

◆

Hem-Fi Conseil

Associate director

◆

Sabarots

Manager

◆

Samain B2

Manager

◆

Yundal

Manager

◆

Zumsee

Manager

CHARLES-ÉRIC BAUER

Member of the Hermès International Supervisory Board

Member of the Audit and Risk Committee

Direct descendant of MrÉmile-Maurice Hermès

Summary of main areas of expertise and experience

MrCharles-Éric Bauer holds graduate degrees of École d’Administration et Direction des Affaires (EAD)

business school, with an option in finance. He also holds a degree in technical analysis from Institut

des Techniques de Marchés.

He also served as Co-Managing Director and Head of Mutual Fund Management at CaixaGestion from

2000 to 2005, and as Director of Corporate and Institutional Clients, CaixaBank France from 2005 to

2007.

Since March2007 he has been the Managing Partner of Hem-Fi Conseil, a private equity firm.

Key skills

He brings to the Board his in-depth knowledge of the history and culture of Hermès. His expertise in

banking and finance, and the commitment with which he carries out his duties and participates in the

Audit and Risk Committee enable him to make an effective contribution to the quality of the

discussions and work of the Board in all of its areas of responsibility.

Main activities outside the Company

Associate Director of Hem-Fi Conseil, a capital investment company.

In Hermès Group

companies

◆

French companies ▲ Foreign companies ▲

Hermès International

●

Member of the Supervisory Board and Audit

and Risk Committee

NoneNone

Offices and positions

held during 2021

Outside Hermès

Group companies

French companies Foreign companies

Other offices and positions held during the

previous four financial years and ended

before 1January 2021

French companies Foreign companies

None None

(1) The ages indicated are determined in number of full years at 31December 2021.

▲

Hermès Group entity.

●

Listed company.

✱

Office taken into account when calculating plurality of offices.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 263

CORPORATE GOUVERNANCE

ORGANISATION OF THE SUPERVISORY BOARD

3.4.8.6

MSESTELLE BRACHLIANOFF

Age

49years

(26July 1972)

Nationality

French

Address

c/o Hermès International

24, rue du Faubourg Saint-Honoré

75008 Paris

Shares held at 31December 2021

100

in full ownership and registered

—

Date of first appointment

Supervisory Board

4June 2019

Audit and Risk Committee

4June 2019

CAG-CSR Committee

4June 2019

Term of current office

2022 GM

◆

Veolia Environment

● ✱

Director of operations, member of the Executive

Committee

◆

Comgen Australia (Australia)

Chairwoman and Director

◆

Veolia China Holding (China)

Chairwoman and Director

◆

Veolia Decommissioning Services NorwayAS

(Norway)

Chairwoman and Director

◆

Veolia Energy UKPlc. (United Kingdom)

Director

◆

Eaux de Marseille

Chairwoman and Director

◆

SARP

Director

◆

SARP Industries

Director

◆

Veolia Eau – Compagnie Générale des Eaux

Member of the Supervisory Board

ESTELLE BRACHLIANOFF

Independent member of the Hermès International Supervisory Board

Member of the Audit and Risk Committee

Member of the CAG-CSR Committee

Summary of main areas of expertise and experience

MsEstelle Brachlianoff is a graduate of École Polytechnique and École Nationale des Ponts et

Chaussées.

MsEstelle Brachlianoff began her career in transport infrastructure and worked with the Prefect of the

Île-de-France Region on transport and urban planning issues. She joined Veolia in 2005, and was

appointed head of Industrial Cleaning and Facilities Management in 2007 before serving as head of

the Waste Management business in the Île-de-France region from 2010 and then the UK from 2012.

A member of Veolia’s Executive Committee since 2013 and Director of the United Kingdom & Ireland

zone from 2013 to 2018, MsEstelle Brachlianoff has been Deputy Managing Director of Operations

since 1September 2018. On 10January 2022, Veolia announced that she will take over from

MrAntoine Frérot as Chief Operating Officer of Veolia from 1July 2022.

Key skills

Her experience as a high-level executive in a group with an international dimension, steering

structures undergoing transformation, as well as her expertise in CSR and the commitment with which

she carries out her duties and participates in the Audit and Risk Committee and the CAG-CSR

Committee enable her to make an effective contribution to the quality of the discussions and work of

the Board in all of its areas of responsibility. She also brings her dynamism, intellectual agility and the

special care she gives to the quality of human relations in organisations.

Main activities outside the Company

Deputy Managing Director of Operations at Veolia Environnement, member of the Executive

Committee.

Member of the President’s Committee of the Confederation of British Industry (CBI), Chairwoman of

the Franco-British Chamber of Commerce.

In Hermès Group

companies

◆

French companies ▲ Foreign companies ▲

Hermès International

●

Member of the Supervisory Board, member of

the Audit and Risk Committee and member of

the CAG-CSR Committee

NoneNone

Offices and positions

held during 2021

Outside Hermès

Group companies

French companies Foreign companies

(1) The ages indicated are determined in number of full years at 31December 2021.

▲ Hermès Group entity. ● Listed company. ✱ Office taken into account when calculating plurality of offices.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL264

CORPORATE GOUVERNANCE

ORGANISATION OF THE SUPERVISORY BOARD

▲

Hermès Group entity.

●

Listed company.

✱

Office taken into account when calculating plurality of offices.

Outside Hermès

Group companies

Foreign companies

◆

Foreign companies

◆

Veolia Environmental Services Australia

(Australia)

Chairwoman and Director

Veolia Environmental Services China (China)

Chairwoman and Director

Veolia Environmental Services UK

(United Kingdom)

Director

Veolia ES Holding UK (United Kingdom)

Director

Veolia Holding America Latina,SA (Spain)

Chairwoman

Veolia Japan K.K. (Japan)

Director

Veolia UK Limited (United Kingdom)

Director

Veolia Water UK Limited (United Kingdom)

Director

Offices and positions

held during 2021

French companies

Other offices and positions held during the

previous four financial years and ended

before 1January 2021

VE Development Center (United Kingdom)

Chairwoman and Director

(term ended on 15/10/2018)

◆

French companies

◆

Veolia Énergie France

Chairwoman

Veolia Énergie International

Chairwoman and Managing Director,

Director

Veolia Propreté

Chairwoman

Veolia Water

Chairwoman

Zodiac Aerospace

● ✱

Member of the Supervisory Board

and member of the Selection Committee

(term ended on 13/02/2018)

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 265

CORPORATE GOUVERNANCE

ORGANISATION OF THE SUPERVISORY BOARD

3.4.8.7

MSPUREZA CARDOSO

Age

50years

(4March 1971)

Nationality

French

Address

c/o Hermès International

24, rue du Faubourg Saint-Honoré

75008 Paris

Shares held at 31December 2021

100

in full ownership and registered

—

Date of first appointment

Supervisory Board

(Designated by the Group Works Council)

12November 2019

Term of current office

12November 2022

PUREZA CARDOSO

Employee representative member of the Supervisory Board of Hermès

International

Summary of main areas of expertise and experience

With training in office management (BTS – Office Automation and Secretariat), MsPureza Cardoso has

17years’ experience in the administrative, commercial, accounting and legal sector, in a range of

companies (law firms, engineering and IT consulting firm, temporary work agency). She is bilingual,

French and Portuguese.

Key skills

A craftswoman in the “Les manufactures d'Auvergne” division for 11 years, she is skilled in the making

of several different models of leather bags. For nine years, she has been working as a

craftsperson-inspector of finished goods. Her expertise includes working with precious skins (ostrich,

crocodile), areas in which she also conducts training. She has also tutored craftspeople as part of

their vocational training contracts. Currently, as part of the development of the division, she is taking

on a new role as a model trainer for a group of apprentice craftspeople.

She brings to the Board her internal knowledge of the Maison Hermès, and more specifically the

leather goods métier, and the vision of the employees she represents.

The ages indicated are determined in number of full years at 31December 2021.(1)

▲

Hermès Group entity.

●

Listed company.

✱

Office taken into account when calculating plurality of offices.

Main activities outside the Company

None

Offices and positions

held during 2021

In Hermès Group

companies

French companies ▲ Foreign companies ▲

Outside Hermès

Group companies

None None

French companies Foreign companies

None None

Other offices and positions held during the

previous four financial years and ended

before 1January 2021

French companies Foreign companies

None None

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL266

CORPORATE GOUVERNANCE

ORGANISATION OF THE SUPERVISORY BOARD

3.4.8.8

MR MATTHIEU DUMAS

Age

49years

(6December 1972)

Nationality

French

Address

c/o Hermès International

24, rue du Faubourg Saint-Honoré

75008 Paris

Shares held at 31December 2021

1,563

in full ownership and registered

—

Date of first appointment

Supervisory Board

3June 2008

CAG-CSR Committee

3June 2008

Term of current office

2024 GM

MATTHIEU DUMAS

Member of the Supervisory Board of Hermès International

Member of the CAG-CSR Committee

Direct descendant of MrÉmile-Maurice Hermès

Summary of main areas of expertise and experience

MrMatthieu Dumas holds a master’s degree in law from Université ParisII-Panthéon-Assas and a

master’s degree in management, majoring in strategic marketing, development and corporate

communication from the Institut Supérieur de Gestion.

From 2001 to 2003 he was Head of Promotion and Partnerships at Cuisine TV (Canal+ group) and

then Director of Marketing and Business Development from 2003 to 2006. In 2008 he was appointed

Brand Manager of 13e Rue, NBC Universal group, then Deputy Managing Director of all Purescreens

brands in 2010, before holding the position of Director of Marketing and Communication of the

Discovery Channel in France from 2011 to 2013.

MrMatthieu Dumas has been certified as a Company director (ASC France) by the IFA and Sciences

Po since 2015.

Since 2013, he has been the Manager of Eaque.

Key skills

He brings to the Board his in-depth knowledge of the history and culture of Hermès. His professional

background, his skills in the fields of governance and CSR, as well as his expertise in the operational

management of companies and the commitment with which he carries out his duties and participates

in the CAG-CSR Committee enable him to make an effective contribution to the quality of the

discussions and work of the Board in all of its areas of responsibility.

(1) The ages indicated are determined in number of full years at 31December 2021.

▲

Hermès Group entity.

●

Listed company.

✱

Office taken into account when calculating plurality of offices.

Main activities outside the Company

Manager of Eaque.

In Hermès Group

companies

French companies ▲ Foreign companies ▲

Outside Hermès

Group companies

Offices and positions

held during 2021

◆

None

◆

French companies

◆

Hermès International

●

Member of the Supervisory Board

and the CAG-CSR Committee

Comptoir Nouveau de la Parfumerie

✱

Director

Foreign companies

Asope

Manager

None

Axam 2

Manager

Boves

Manager

DCR

Manager

DRestauration

Manager

Eaque

Manager

Director

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 267

CORPORATE GOUVERNANCE

ORGANISATION OF THE SUPERVISORY BOARD

▲

Hermès Group entity.

●

Listed company.

✱

Office taken into account when calculating plurality of offices.

Outside Hermès

Group companies

French companies

◆

French companies

◆

Hestia

Manager

Krefeld

Chairman and Director

Krefeld Immo

Chairman and Director

Krefeld Aref

Chairman and Director

Krefeld Infra

Chairman and Director

LDMD

Manager

Magvinum

Manager

Mathel

Manager

SCI Englesqueville 51

Manager

SIFAH

Director

Xenia

Chairman

Offices and positions

held during 2021

Foreign companies

Other offices and positions held during the

previous four financial years and ended

before 1January 2021

Hecate

Manager

(term ended on 14/11/2020)

None

Foreign companies

None

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL268

CORPORATE GOUVERNANCE

ORGANISATION OF THE SUPERVISORY BOARD

3.4.8.9

MR BLAISE GUERRAND

Age

38years

(4June 1983)

Nationality

French

Address

c/o Hermès International

24, rue du Faubourg Saint-Honoré

75008 Paris

Shares held at 31December 2021

200

in full ownership and registered

—

Date of first appointment

Supervisory Board

29May 2012

Term of current office

2024 GM

BLAISE GUERRAND

Member of the Hermès International Supervisory Board

Direct descendant of MrÉmile-Maurice Hermès

Summary of main areas of expertise and experience

MrBlaise Guerrand is a graduate of HEC Paris.

He began his career as an Analyst in the equity capital markets department of NM Rothschild & Sons

in London between 2005 and 2006. From 2007 to 2010 he was an Associate, then Director of Equity

Investments for the Indian subsidiary of Ashmore Investment Management, one of the world’s leading

investors in emerging countries, with more than 75billion dollars under management and listed on the

London Stock Exchange.

Since 2011 he has been a Managing Partner in corporate takeovers. Moreover, since 2007 he has

been Director of the ACCESS Health International foundation which works in partnership with the

Rockefeller Foundation to improve access to health care for the underprivileged in certain developing

countries.

Key skills

He brings to the Board his in-depth knowledge of the history and culture of Hermès, and emerging

countries. His professional background, his expertise in the fields of finance, private equity and

business management, and the commitment with which he carries out his duties enable him to make

an effective contribution to the quality of the discussions and work of the Board in all of its areas of

responsibility.

(1) The ages indicated are determined in number of full years at 31December 2021.

▲ Hermès Group entity. ● Listed company. ✱ Office taken into account when calculating plurality of offices.

Main activities outside the Company

Managing partner in a company takeover.

In Hermès Group

companies

French companies ▲ Foreign companies ▲

Outside Hermès

Group companies

Offices and positions

held during 2021

◆

None

◆

French companies

◆

French companies

Hermès International

●

Member of the Supervisory Board

Hermès Sellier

Member of the Management Board

SCI Sèvres SCIFAH

Manager

Foreign companies

◆

Foreign companies

ACCESS Health International (USA)

Director

Jakyval (Luxembourg)

Director

Other offices and positions held during the

previous four financial years and ended

before 1January 2021

None None

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 269

CORPORATE GOUVERNANCE

ORGANISATION OF THE SUPERVISORY BOARD

3.4.8.10

MSJULIE GUERRAND

Age

46years

(26February 1975)

Nationality

French

Address

c/o Hermès International

24, rue du Faubourg Saint-Honoré

75008 Paris

Shares held at 31December 2021

6,825

in full ownership and registered

—

Date of first appointment

Supervisory Board

2June 2005

MsJulie Guerrand was also a member of the

Audit Committee (now the Audit and Risk

Committee) from its inception on 26January

2005 until 2March 2011.

Term of current office

2022 GM

◆

Antonino

Manager

◆

Jakyval (Luxembourg)

Director

◆

H51

Chairwoman

◆

Jerocaro

Executive Chaiwoman

◆

La mazarine-SCIFAH

Executive Chaiwoman

◆

Les domaines Barons de Rothschild (Lafite)

Member of the Supervisory Board

◆

SCI Apremont

Executive Chaiwoman

◆

SCI Briand VilliersII

Executive Chaiwoman

◆

SCI8 Drouot

Executive Chaiwoman

JULIE GUERRAND

Member of the Hermès International Supervisory Board

Direct descendant of MrÉmile-Maurice Hermès

Summary of main areas of expertise and experience

MsJulie Guerrand holds a DEUG advanced degree in applied mathematics and social sciences and a

master’s degree in Economics and Industrial Strategy from the Université ParisIX-Dauphine.

From 1998 to 2006 she worked in the Financial Affairs department (mergers and acquisitions

consulting) of the investment bank Rothschild & Cie. From 2007 to 2011, she was Investments

Director in the investment team of Paris Orléans (a holding company listed on Euronext and controlled

by the Rothschild family).

She held positions in the Hermès Group from 2011 to 2017 as Director of Corporate Development of

Hermès International before becoming Deputy Managing Director – Finance and Organisation of the

Hermès Cuirs Précieux division.

MsJulie Guerrand has been certified as a Company director (ASC France) by the IFA and Sciences Po

since 2014.

Key skills

She brings to the Board her in-depth knowledge of the history and culture of Hermès. Her experience

in the fields of finance and M&A, as well as her legal expertise and the commitment with which she

carries out her duties enable her to contribute actively to the quality of the discussions and work of the

Board in all of its areas of responsibility.

Main activities outside the Company

Company director.

Offices and positions

held during 2021

In Hermès Group

companies

◆

French companies ▲ Foreign companies ▲

Hermès International

●

Member of the Supervisory Board

NoneNone

Outside Hermès

Group companies

French companies Foreign companies

◆

SIFAH

Director

(1) The ages indicated are determined in number of full years at 31December 2021.

▲

Hermès Group entity.

●

Listed company.

✱

Office taken into account when calculating plurality of offices.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL270

CORPORATE GOUVERNANCE

ORGANISATION OF THE SUPERVISORY BOARD

Offices and positions

held during 2021

Outside Hermès

Group companies

French companies

◆

Société Immobilière du Dragon

Manager

▲ Hermès Group entity. ● Listed company. ✱ Office taken into account when calculating plurality of offices.

Val d’Isère Carojero

Manager

Other offices and positions held during the

previous four financial years and ended

before 1January 2021

Compagnie des Cuirs précieux

▲

Deputy Managing Director – Finance and

Organisation (term ended on 15/04/2017)

◆

French companies Foreign companies

◆

None

◆

Hermès Cuirs précieux

▲

Member of the Management Board

(term ended on 15/04/2017)

SCI Briand Villiers I

Manager

(term ended on 19/04/2018)

Vie et Véranda group

Director (term ended on 28/01/2019)

Idi

Member of the Supervisory Board

(term ended on 25/06/2020)

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 271

CORPORATE GOUVERNANCE

ORGANISATION OF THE SUPERVISORY BOARD

3.4.8.11

MSOLYMPIA GUERRAND

Age

44years

(7October 1977)

Nationality

Franco-Portuguese

Address

c/o Hermès International

24, rue du Faubourg Saint-Honoré

75008 Paris

Shares held at 31December 2021

600

in full ownership and registered

—

Date of first appointment

Supervisory Board

6June 2017

Term of current office

2024 GM

OLYMPIA GUERRAND

Member of the Hermès International Supervisory Board

Direct descendant of MrÉmile-Maurice Hermès

Summary of main areas of expertise and experience

MsOlympia Guerrand spent nearly one year (2005-2006) working in the communications department

of the subsidiary Hermès Of Paris in New York, performing assignments in the areas of advertising,

public relations and event management. She then joined Hermès International until 2007, carrying out

assignments within various Hermès Group departments (finance, legal, métiers, production units and

stores).

She has been a real estate administrator since 2008.

Key skills

She brings to the Board her in-depth knowledge of the history and culture of Hermès. Her experience

in the fields of communications and public relations, her business management skills, and the

commitment with which she carries out her duties enable her to contribute actively to the quality of the

discussions and work of the Board in all of its areas of responsibility.

(1) The ages indicated are determined in number of full years at 31December 2021.

▲

Hermès Group entity.

●

Listed company.

✱

Office taken into account when calculating plurality of offices.

Main activities outside the Company

Real estate administrator.

In Hermès Group

companies

French companies ▲ Foreign companies ▲

Outside Hermès

Group companies

Offices and positions

held during 2021

◆

Hermès International

●

Member of the Supervisory Board

None

Hermès Sellier

Member of the Management Board

◆

French companies Foreign companies

French companies

None

◆

Foreign companies

Clementsvale LDA (Portugal)

Manager

Other offices and positions held during the

previous four financial years and ended

before 1January 2021

None None

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL272

CORPORATE GOUVERNANCE

ORGANISATION OF THE SUPERVISORY BOARD

3.4.8.12

MRRÉMY KROLL

Age

49years

(4May 1972)

Nationality

French

Address

c/o Hermès International

24, rue du Faubourg Saint-Honoré

75008 Paris

Shares held at 31December 2021

220

in full ownership and registered

—

Date of first appointment

Supervisory Board

(Designated by the Group Works Council)

12November 2019

Term of current office

12November 2022

RÉMY KROLL

Employee representative member of the Supervisory Board of Hermès

International

Summary of main areas of expertise and experience

MrRémy Kroll holds a Baccalauréat (B series).

MrRémy Kroll joined the Hermès Group in March1995 as a stock clerk at the 24, rue du

Faubourg Saint-Honoré store. In the same year, he assumed the management of unsold and second

choice stock. For more than 25years, he has been instrumental in the Hermès Group’s growth by

developing commercial operations for unsold and second-hand goods.

From January2007 to January2022, he held the position of Director of Special Sales within the

Hermès Commercial division of Hermès Sellier, where he was a member of the Management

Committee from January2015.

On 17January 2022, he was appointed Director of Special Sales and Recycling. With the aim of a

gradual end to the destruction of finished products around the world, he is responsible for helping to

develop the disposal of the Group’s unsold products, through discounted or special sales operations

and recycling.

Key skills

He brings to the Board his internal knowledge of the Maison Hermès, and more specifically the

Hermès Commercial division, and the vision of the employees he represents.

Main activities outside the Company

None

Offices and positions

held during 2021

In Hermès Group

companies

French companies ▲ Foreign companies ▲

None None

Outside Hermès

Group companies

French companies Foreign companies

None None

Other offices and positions held during the

previous four financial years and ended

before 1January 2021

French companies Foreign companies

None None

(1) The ages indicated are determined in number of full years at 31December 2021.

▲

Hermès Group entity.

●

Listed company.

✱

Office taken into account when calculating plurality of offices.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 273

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ORGANISATION OF THE SUPERVISORY BOARD

3.4.8.13

MR RENAUD MOMMÉJA

Age

59years

(20March 1962)

Nationality

French

Address

c/o Hermès International

24, rue du Faubourg Saint-Honoré

75008 Paris

Shares held at 31December 2021

89,012 in full ownership and 60,960 in usufruct

registered shares

—

Date of first appointment

Supervisory Board

2June 2005

Audit and Risk Committee

3June 2008

Term of current office

2023 GM

◆

Hermès International

●

Member of the Supervisory Board and Audit

and Risk Committee

◆

JL & Co (United Kingdom)

Director

◆

Altizo

Manager

◆

Binc

Manager

◆

GFA Château Fourcas Hosten

Co-Manager

◆

Chairman

◆

Huso

✱

Director

◆

Lor

Co-Manager

◆

Rose Investissement

Manager

◆

SARL Tolazi

Manager

◆

SCI AJImmo

Co-Manager

◆

SCI Auguste Hollande

Co-Manager

◆

SCI Briand Villiers I

Chairman of SIFAH, Manager

RENAUD MOMMÉJA

Member of the Hermès International Supervisory Board

Member of the Audit and Risk Committee

Direct descendant of MrÉmile-Maurice Hermès

Summary of main areas of expertise and experience

MrRenaud Momméja is a graduate of the École Supérieure Libre des Sciences Commerciales

Appliquées (ESLSCA).

He has been Manager ofSARL Tolazi since 2004, a corporate property management, organisation

and strategy consulting firm. Since 2006 he has been the Representative of SC Lor on the Executive

Management of SC du Château Fourcas Hosten.

Key skills

He brings to the Board his in-depth knowledge of the history and culture of Hermès, as well as that of

Asia. His professional background, his expertise in the fields of real estate, finance, corporate strategy

and CSR, and the commitment with which he carries out his duties and participates in the Audit and

Risk Committee enable him to make an effective contribution to the quality of the discussions and

work of the Board in all of its areas of responsibility.

Main activities outside the Company

Manager of SARL Tolazi and Representative of SC Lor on the Executive Management of SC du Château

Fourcas Hosten.

In Hermès Group

companies

French companies ▲ Foreign companies ▲

◆

Comptoir Nouveau de la Parfumerie

✱

Director

Offices andpositions

heldduring 2021

Outside Hermès

Group companies

French companies Foreign companies

None

(1) The ages indicated are determined in number of full years at 31 December 2021.

▲

Hermès Group entity.

●

Listed company.

✱

Office taken into account when calculating plurality of offices.

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ORGANISATION OF THE SUPERVISORY BOARD

▲

Hermès Group entity.

●

Listed company.

✱

Office taken into account when calculating plurality of offices.

Outside Hermès

Group companies

French companies

◆

French companies

◆

SCI de l’Univers

Manager

SCI Tibemo

Co-Manager

SCI Zotila Vaugirard

Chairman

SIFAH

Chairman

Société Civile du Château Fourcas Hosten

Permanent Representative of Lor, Manager

Offices and positions

held during 2021

Foreign companies

Other offices and positions held during the

previous four financial years and ended

before 1January 2021

SCI du 74 rue du Faubourg Saint-Antoine

Co-Manager

(term ended on 18/01/2019)

SCI Briand VilliersI

Manager

(term ended on 05/06/2019)

SCI Briand VilliersII

Manager

(term ended on 04/12/2019)

None

Foreign companies

None

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 275

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ORGANISATION OF THE SUPERVISORY BOARD

3.4.8.14

MRALEXANDRE VIROS

Age

43years

(8January 1978)

Nationality

Franco-American

Address

c/o Hermès International

24, rue du Faubourg Saint-Honoré

75008 Paris

Shares held at 31December 2021

100

in full ownership and registered

—

Date of first appointment

Supervisory Board

4June 2019

Audit and Risk Committee

4June 2019

Term of current office

2024 GM

◆

OUI.sncf

Chief Executive Officer, member of the

Executive Committee

(term ended on 31/08/2020)

◆

E-Voyageurs group (SAS)

Director and Chief Executive Officer

(term ended on 31/08/2020)

◆

Agence-Oui.sncf (SAS)

Chairman (term ended on 31/08/2020)

◆

Rail Europe SAS

Member of the Supervisory Board

(term ended on 31/08/2020)

◆

Fnac-Darty group

●

Director of Marketing and E-Commerce,

member of the Executive Committee

(term ended on 31/01/2018)

ALEXANDRE VIROS

Independent member of the Hermès International Supervisory Board

Member of the Audit and Risk Committee

Summary of main areas of expertise and experience

MrAlexandre Viros is a qualified philosophy teacher (professeur agrégé), holds a post-graduate

degree in cognitive science from the École des Hautes Études en Sciences Sociales (EHESS) and is a

graduate of the Institut d’études politiques de Paris.

He began his career in higher education and research in 2001. In 2004, he joined the Boston

Consulting Group (BCG) where, for four years, he worked mainly in services (transport, banking,

insurance, media).

In 2008, he joined the strategy department of the Fnac group and was then appointed Director in

charge of music and audio. He then took over as Sales Director and Chairman of France Billet. In

2016, he was appointed Director of Marketing and E-commerce of the Fnac-Darty group and joined

the Executive Committee.

In 2018, he became Chief Executive Officer of OUI.sncf (formerly voyages-sncf.com), a member of the

Executive Committee of SNCF Mobilités and then Chief Executive Officer of Voyageurs SNCF.

Since September2020, MrAlexandre Viros has been Chairman of the Adecco group in France.

Key skills

His expertise in the world of e-commerce and distribution, his knowledge of customer relationships

and human resources, as well as his ability to evolve in industries undergoing profound transformation

and disruptive models, and the involvement with which he carries out his office and participates in the

Audit and Risk Committee, enable him to make a very effective contribution to the quality of the

discussions and the work of the Board in all its areas of intervention. Through his career and his

Franco-American culture, he also brings a very open-minded stance, an innovative approach to topics

and a keen eye on the digital world.

Main activities outside the Company

President France of Adecco

In Hermès Group

companies

French companies ▲ Foreign companies ▲

◆

Hermès International

●

Member of the Supervisory Board and the Audit

Committee

None

Offices and positions

held during 2021

Outside Hermès

Group companies

French companies Foreign companies

◆

The Adecco group France

Chairman France (since 14/09/2020)

None

Other offices and positions held during the

previous four financial years and ended

before 1January 2021

French companies Foreign companies

◆

Loco 2 Holding (United Kingdom)

Director (term ended on 31/08/2020)

(1) The ages indicated are determined in number of full years at 31 December 2021.

▲ Hermès Group entity. ● Listed company. ✱ Office taken into account when calculating plurality of offices.

◆

approves or refuses the acceptance by an Executive Chairman of any

new office in a listed company;

◆

is informed about market developments, the competitive environment

and the most important aspects facing the Company, including in the

area of social and environmental responsibility;

◆

regularly reviews, via the Audit and Risk Committee, the opportunities

and risks, such as financial, legal, operational, social and

environmental risks, as well as the measures taken accordingly;

◆

is regularly informed of the Company’s financial position, cash

position and commitments;

◆

ensures the establishment of a system for preventing and detecting

corruption and influence-peddling;

◆

ensures that the Executive Corporate Officers implement a policy of

non-discrimination and diversity, notably with regard to the balanced

representation of men and women on the Governing bodies;

◆

examines the desired balance between its composition and that of its

committees, and defines its diversity policy (see § 3.4.3).

◆

with the support of the CAG-CSR Committee, the approval of the Board

and of the Shareholders’ General Meeting where appropriate, he or

she strives to create an effective and balanced Board, and to manage

the replacement and succession planning processes concerning the

Board and the appointments for which it is responsible;

◆

he or she may attend all the committees and may add to the agenda

any subject he or she considers relevant;

◆

he or she ensures that the members of the Board have the

documentation and information they need to carry out their duties in a

timely manner, in a clear and appropriate form.

◆

calls meetings of the Supervisory Board, determine the agenda

and chairs the meetings;

◆

organises the proceedings of the Supervisory Board and reports

on these to the General Meeting, and coordinates its work with

that of the specialised committees;

◆

ensures the quality of discussions and the collegiality of Board

decisions;

◆

oversees the proper functioning of the Board and its committees

in accordance with the principles of good governance and ensures

that the members of the Board are able to fulfil their duties;

◆

chairs and directs discussions at Shareholders’ General

Meetings;

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FUNCTIONING OF THE SUPERVISORY BOARD

3.5

FUNCTIONING OF THE SUPERVISORY BOARD

3.5.1

ROLE OF THE SUPERVISORY BOARD

3.5.1.1

DUTIES OF THE SUPERVISORY BOARD

3.5.1.1.1 Principle of collegiality

The confidentiality of the Board’s work and the principle of collegiality

prevent any individual public position being taken by members of the

Supervisory Board.

3.5.1.1.2 Legal and statutory duties

The duties of the Supervisory Board of a société en commandite par

actions (partnership limited by shares) are mainly to exercise

permanent control over the management of the Company in

accordance with the law and the Articles of Association.

The role and powers assigned by law and the Articles of Association

to the Supervisory Board are described in § 3.2.3.

The Supervisory Board describes the due diligence procedures it carried

out during the financial year ended 31December 2021 in a report

presented to the General Meeting called to approve the financial

statements (see chapter8 “Combined General Meeting of 20April

2022”, § 8.3).

In accordance with ArticleL.22-10-78 of the French Commercial Code

(Code de commerce), the Supervisory Board also presents this corporate

governance report.

3.5.1.1.3 Governance assignments not covered by the Articles

of Association

The rules of procedure (Article1.1.3) provide, in respect of governance

assignments not covered by the Articles of Association, that the

Supervisory Board:

Certain decisions of the Supervisory Board are prepared by specialised

committees (see § 3.6).

Details of the subjects dealt with by the Supervisory Board in 2021 are

provided in § 3.5.4.

3.5.1.2

DUTIES OF THE CHAIRMAN

OF THE SUPERVISORY BOARD

3.5.1.2.1 General duties

In relations with the other bodies of the Company and vis-à-vis third

parties, the Chairman is the sole person authorised to speak and act on

behalf of the Board, other than in exceptional circumstances.

The Chairman ensures the proper functioning of the Supervisory Board.

In this respect:

The Chairman organises and directs the work of the Supervisory

Board in order to enable it to perform all its duties. In this respect,

he or she:

◆

explaining the positions taken by the Supervisory Board in its areas of

competence (particularly with regard to governance and Senior

Executive compensation), which were previously the subject of a

communication;

◆

ensuring that shareholders receive the information they expect from

the Company.

◆

having answered questions from individual shareholders;

◆

having answered questions from institutional shareholders;

◆

having responded to questionnaires from stakeholders.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 277

CORPORATE GOUVERNANCE

FUNCTIONING OF THE SUPERVISORY BOARD

◆

deals with any conflicts of interest that may arise within the

Supervisory Board as part of the procedure for managing

conflicts of interest described in the rules of procedure.

As in previous years, the Chairman of the Supervisory Board was invited

to attend all meetings of the Executive Management Board of Émile

HermèsSAS.

3.5.1.2.2 Duties relating to shareholder dialogue

and the activity review

Since 20March 2018, the Chairman of the Supervisory Board has been

responsible for communicating with shareholders, on behalf of the

Supervisory Board, with a view to:

The Chairman may seek the assistance of internal experts in these areas

(in particular the Director of Financial Communications and Investor

Relations or the Director of Corporate law and Stock Exchange

Regulations, Supervisory Board Secretary and Compliance Officer).

The Chairman must report annually to the Supervisory Board on the

execution of his or her duties.

No additional compensation is allocated to the Chairman for executing

these duties.

In early 2022, the Chairman reported to the Supervisory Board on the

performance of his duties in 2021.

In particular, he stated:

It is specified that the answer to the written questions addressed to the

Company on the occasion of the General Meeting is the responsibility of

the Executive Management.

In 2021, the Board did not entrust any other duties to the Chairman of

the Supervisory Board.

3.5.1.3

DUTIES OF THE VICE-CHAIRS

OF THE SUPERVISORY BOARD

Two Vice-Chairs are appointed by the Supervisory Board from among its

members.

In practice, the Vice-Chairs are the Chairmen of one of the two

committees.

In accordance with the Articles of Association, in the absence of the

Chairman, the oldest Vice-Chair shall perform his duties.

3.5.2

MEETINGS OF THE SUPERVISORY BOARD

AND THE JOINT COUNCIL

MEETINGS OF THE SUPERVISORY BOARD

3.5.2.1

The Supervisory Board is a collegial body in which decisions are taken

collectively.

The procedures for convening meetings and the rules of quorum and

majority are described in chapter7 “Information on the Company and its

share capital”, § 7.1.1.3 [Article19 of the Articles of Association].

The Board’s operations are described in detail in Article1.2 of the

Supervisory Board’s rules of procedure.

The Chairman of the Supervisory Board sets the agenda for each Board

meeting with the secretary of the Board.

The Supervisory Board meets as often as the interests of the Company

require and at least twice a year. In practice, the Supervisory Board

meets at least seven times each year, as was the case in 2021.

The schedule of meetings is drawn up annually for the following year and

distributed at the beginning of the first half of each year.

The Statutory Auditors and a representative of the Social and Economic

Committee (see § 3.4.2.7.2) are invited to all Supervisory Board

meetings.

The Executive Management must be convened (see chapter7

“Information on the Company and its share capital”, § 7.1.1.3

[Article19.2 of the Articles of Association]) and may attend meetings of

the Supervisory Board but without voting rights. At each Board meeting,

the Executive Management informs its members of the main significant

facts and events affecting the life of the Group that have occurred since

the date of the previous Board meeting.

In accordance with the provisions of Article19.2 of the Articles of

Association, meetings of the Supervisory Board are validly held when half

of the members are present or represented, it being specified that

members who participate in the meeting by videoconference or

telecommunication means allowing their identification and guaranteeing

their effective participation by the use of technical means allowing the

continuous and simultaneous retransmission of the deliberations are

deemed present.

In practice, meetings held by videoconference or in mixed mode are

exclusively reserved for exceptional situations (and notably including

related to the Covid-19 crisis).

An attendance register is kept that lists the names of the members

present physically or by means of videoconference or telecommunication,

or represented or absent. Proxies are appended to the attendance

A file containing background documents related to issues on the agenda

is sent via Herboard (see § 3.5.3.2) to each Board member prior to the

meeting, at least ten days in advance whenever possible, and a minimum

of 48 hours prior to each meeting, unless there is an urgent situation or a

need to ensure total confidentiality.

◆

be given a presentation by the Executive Management on the annual

and half-year consolidated financial statements and parent company

financial statements and related draft financial press releases;

◆

review the budget for each financial year;

◆

review documents on forecasting and planning;

◆

approve the explanatory statements and the resolutions put to the

General Meeting and acquaint itself with the reports drawn up by the

Executive Management.

◆

a list with contact details of the members of the Executive Committee,

Supervisory Board and Board committees, Statutory Auditors and the

Board secretary;

◆

a table of the dates of terms of office;

◆

the Supervisory Board rules of procedure;

◆

the Audit and Risk Committee rules of procedure;

◆

the CAG-CSR Committee rules of procedure;

◆

the Hermès Group stock market ethics Code;

◆

a calendar of closed periods applicable to Permanent Insiders;

◆

the AMF Guide to Permanent Information and Management of Inside

Information (DOC 2016-08);

◆

regulations regarding the declaration obligations of Senior Executives

and registration of shares;

◆

principles governing the allocation of compensation to Supervisory

Board members;

◆

rules on the reimbursement of expenses;

◆

certification and summary of Corporate Officers’ civil liability

insurance;

◆

the last three registration documents/universal registration

documents;

◆

the notice of meeting for the last General Meeting;

◆

a summary of the results of the last formal three-year evaluation of

the Supervisory Board;

◆

presentations made during site visits since 2011;

◆

the Hermès Group code of business conduct (Hermès Group

guidelines);

◆

Anti-corruption code of conduct;

◆

professional whistleblowing system notice;

◆

Ethics charter of the Hermès Group;

◆

presentations of Hermès International and Émile HermèsSAS;

◆

the annotated Articles of Association;

◆

the Afep-Medef Corporate Governance Code revised in January2020.

◆

organise Board and committee meetings (scheduling of meetings,

sending of meeting invitations, tracking of attendance);

◆

provide highly secure and paperless Board documents relating to

Board and committee meetings and to the Supervisory Board’s

master file in real time (via a username, password and confirmation

code sent via SMS);

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FUNCTIONING OF THE SUPERVISORY BOARD

Persons who are not Board members, in particular members of the

Executive and Operations Committees, may be invited to attend Board

meetings at the Chairman’s discretion, in order to provide any

information that members of the Board might require to reach a full

understanding of certain matters on the agenda and which are technical

in nature or require special expertise. These people usually attend only

the part of the meeting that concerns them.

Minutes are drawn up by the Board secretary at the end of each meeting

and sent to all Board members, who are invited to comment. Any

comments are discussed at the next Supervisory Board meeting, which

approves the final text of the minutes of the previous meeting.

3.5.2.2

JOINT COUNCIL MEETINGS

Whenever it considers it necessary, the Executive Management of

Hermès International or the Chairman of the Supervisory Board of

Hermès International calls a Joint Council between the Executive

Management Board of Émile HermèsSAS and the Supervisory Board of

Hermès International.

The role and powers assigned by law and the Articles of Association

to the Joint Council are described in § 3.2.3.

In practice, the Joint Council meets at least three times each year, as

was the case in 2021.

Its recurring work consists mainly of:

3.5.3

INFORMATION AND TRAINING

OF THE SUPERVISORY BOARD

3.5.3.1

SUPERVISORY BOARD’S MASTER FILE

Since 2011, a “master file” has been provided to the members of the

Supervisory Board. This master file has been available since 2016 on the

Board’s collaborative platform, Herboard (see § 3.5.3.2).

It currently contains the following sections:

This master file is updated on a regular basis.

3.5.3.2

HERBOARD DIGITAL PLATFORM

Since 2016, the Supervisory Board has made use of a secure

digital Board management platform hosted in France by Oodrive

and customised for Hermès.

Dubbed “Herboard” at Hermès, the platform is accessible from a web

browser or via a tablet application and can be used to:

◆

manage document permissions and track document use;

◆

circulate minutes and reports.

•

the SCA legal form and the role of the members of the Supervisory

Board,

•

confidentiality rules,

•

the Group’s organisation chart,

•

the Hermès Sellier divisional organisation chart,

•

minutes of the Supervisory Board for the last three financial years

together with those of the current year;

◆

meetings with the Director of sustainable development, the Group

Director of Human Resources, the General Counsel and all members

of the Executive Committee (for external members);

•

and governance documents containing:

the Supervisory Board’s master file (see § 3.5.3.1),

•

the IFA Director’s Vade-Mecum (2014);

◆

enrolment in a three-day in-house Mosaïque immersion training

session with employees (for external members);

◆

briefing on the Company’s ownership structure and Active partner

(Émile HermèsSAS);

◆

IFA training (particularly for new members).

◆

attended a presentation of the Group’s IT strategy;

◆

attended a presentation of the Group’s HR strategy.

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FUNCTIONING OF THE SUPERVISORY BOARD

Following the implementation of Herboard, an iPad® was issued to

Supervisory Board members who requested one.

Herboard is also available to the Statutory Auditors and the

representative of the Social and Economic Committee for documents

relating to Board meetings.

3.5.3.3

TRAINING OF MEMBERS OF THE SUPERVISORY

BOARD – INDUCTION PROGRAMME

Members of the Supervisory Board receive press releases and

information intended for shareholders (universal registration document,

letters to shareholders) and the press review.

Each year at least two major annual themes are presented to the Board

(see § 3.5.3.4) and an on-site visit is organised (see § 3.5.3.5).

Supervisory Board members can make use of the Company’s Group

membership of the IFA (Institut Français des Administrateurs), and

thereby take advantage of all of its services and training. MsJulie

Guerrand became a certified Company director (receiving the ASC France

Certificate) in 2013 and MrMatthieu Dumas in 2015. Other Board

members will likely be taking part in this company governance

certification programme carried out by IFA in partnership with Sciences

Po.

In 2014, the CAG-CSR Committee set up an induction and training

programme for new Board members, which entails:

◆

presentation by the Board secretary:

MAJOR THEMES IN PREVIOUS YEARS

◆

receipt of a new Supervisory Board member integration kit of legal

Pursuant to ArticleL.225-30-2 of the French Commercial Code (Code de

commerce), the members representing employees must follow a training

programme under the conditions described in § 3.4.2.7.1.

Since 2022, all members of the Supervisory Board must follow an

e-learning training course on the prevention of market abuse.

3.5.3.4

MAJOR ANNUAL THEMES

Every year, one or more detailed presentations are made by the relevant

management team on a specific or general topic relating to the Group’s

activities.

In 2021 the Board:

2011

◆

Presentation of the Group’s human resources policy

2012

◆

Report on the strategy seminar

◆

Strategy to combat counterfeiting and prevent the risk of brand democratisation

2013

◆

Customer survey carried out using CRM (customer relationship management)

Market abuse training

2014

◆

Update on the vertical integration of the métiers following recent acquisitions

2015

◆

The strategy of a growth driver: shoes

◆

Subcontractors in women’s ready-to-wear

◆

Leather subcontractors

2016

◆

Presentation of the Group’s digital strategy

◆

Presentation on shareholding, institutional investors

◆

Customer service and price trends by geographical area

◆

Communication and media

2017

◆

La Montre Hermès

◆

Real estate strategy

2018

◆

Group disability agreement and discussion on well-being at work

◆

Presentation of sustainable development and CSR issues

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FUNCTIONING OF THE SUPERVISORY BOARD

3.5.3.5

SITE VISITS

Since 2011 the Board has devoted one of its meetings to a site visit to

improve its knowledge of one of the Group’s subsidiaries or to gain a

concrete understanding of an area of the Group’s activity.

These site visits are an opportunity for Board members to meet and

discuss with the Group’s Senior Executives and employees.

SITEVISITS IN PREVIOUS YEARS

In 2021, the Board visited the Compagnie des Arts de la Table et de

l’Émail site, where it was given a presentation on the activity and results

of this subsidiary, which manufactures Tableware, Art of Living and

enamel products, (see chapter1 “Presentation of the Group and its

results”, § 1.6.4.2) as well as a tour of the workshops.

◆

Feedback from the first year of the new e-commerce site

Internal communication objectives and actions

Hermès Parfums new product development strategy

2019

2020

◆

Presentation on the measures implemented to protect employees and customers of the Group’s stores in the context of Covid-19

◆

Presentation of investment projects

◆

Cybersecurity within the Group

2021

◆

IT strategy within the Group

◆

HR strategy

2011

◆

leather goods and silk printing site at Pierre-Bénite

2012

◆

Cristallerie Saint-Louis

2013

◆

Puiforcat workshops and archives then Cité des Métiers Hermès in Pantin

2014

◆

Tannerie Gordon Choisy in Montereau

◆

Podiums (Buyer days)

2015

◆

Maroquinerie Iséroise in Les Abrets

◆

SIEGL in Le Grand Lemps (wide-web cashmere printing site)

2016

◆

Hermès Parfums in Vaudreuil

◆

Maroquinerie de Normandie site

2017

◆

John Lobb in Northampton

2018

◆

John Lobb (bespoke workshops) in Mogador

◆

Finishing workshops from Irigny to Pierre-Bénite

◆

Ateliers de Tissages de Bussières et de Challes in Bussières

2019

◆

Logistics in Bobigny

2020

◆

Hermès Horizons in Pantin

◆

Conservatoire des Créations Hermès in Pantin

2021

◆

Compagnie des Arts de la Table et de l’Émail in Nontron

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3.5.4

MAIN DUTIES OF THE SUPERVISORY BOARD AND WORK CARRIED OUT IN 2021

The purpose and nature of the main duties and work carried out by the Supervisory Board in 2021 were as follows:

(1) Non-exhaustive list

•

One-off or multi-year topics

Purpose Main duties and work carried out in 2021

Work related to the health

crisis

◆

•

◆

•

◆

•

◆

Annual topics

be informed by the Executive Management of the Group’s situation related to Covid-19;

take note of the procedures for the General Meeting to be held in closed session.

Group activity and finance

be updated on the Group’s activities by the Executive Management at each meeting;

be given a presentation by the Executive Management on the annual and half-year consolidated financial

statements and parent company financial statements and related draft financial press releases;

be informed about the Company’s financial position, cash position and commitments;

be informed of the Statutory Auditors’ conclusions relating to the annual and half-year consolidated financial

statements;

review the budget for each financial year;

review documents on forecasting and planning;

review the situation of certain affiliates;

formally note proposals for Group acquisitions, disposals and equity investments;

formally note investment proposals;

examine and/or approve the reports and work of the Audit and Risk Committee described in § 3.6.3.4;

regularly review, via the Audit and Risk Committee, the opportunities and risks, such as financial, legal,

operational, social and environmental risks, as well as the measures taken accordingly;

be informed of changes in the composition of the Executive Committee [n/a in 2021];

be informed of changes made by the Executive Management to the list of banks, the list of bank signatories and

the prudential rules;

attend a presentation on foreign exchange and IFRS.

General Meeting of 4May

2021

be informed of the Executive Management’s decision to pay an interim dividend;

decide the proposed allocation of net income to be submitted to the General Meeting;

prepare the Supervisory Board’s corporate governance report;

prepare the Supervisory Board’s report to the General Meeting;

approve the explanatory statements and the resolutions put to the General Meeting and acquaint itself with the

reports drawn up by the Executive Management.

Appointments

decide how new independent members would be recruited and how the target profile would be defined [n/a in

•

2021];

approve the proposals of reappointment or replacement of members of the Supervisory Board to be considered at

the General Meeting;

decide on the renewal of the duties of the Chairman and Vice-Chairwomen after the General Meeting;

decide on the renewal of the composition of the Audit and Risk Committee and the CAG-CSR Committee.

Governance

keep itself informed at each meeting of all transactions carried out by the Executive Chairmen pursuant to the

AMF’s position-recommendation set out in DOC-2016-08 “Guide to Permanent Information and Management of

Inside Information”;

examine and/or approve the reports and work of the CAG-CSR Committee described in § 3.6.2.4 and be informed

of governance news (AMF reports, Afep-Medef reports, HCGE report and application guide, IFA studies, etc.);

approve the revised rules of procedure of the Supervisory Board, the CAG-CSR Committee and the Audit and Risk

Committee;

review the annual report of the Chairman of the Supervisory Board on his duties with regard to shareholder

dialogue;

take note of the gender equality objectives set by the Executive Management, as well as its implementation

methods and the results obtained;

approve or refuse the acceptance by an Executive Chairman of any new office in a listed company [n/a in 2021];

ensure that the Executive Corporate Officers implemented a policy of non-discrimination and diversity, notably with

regard to the balanced representation of men and women on Governing bodies;

decide on the diversity policy applied to the Supervisory Board (representation of women and men, nationalities,

ages, qualifications and professional experience, etc.);

conduct a periodic self-assessment of its operation;

set the amount of preparation time allocated to the members of the Supervisory Board representing employees to

carry out their duties (minimum 15 hours per Board meeting);

determine the content of the training programme to be followed by the members of the Supervisory Board

representing employees.

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(1) Non-exhaustive list

•

One-off or multi-year topics

3.5.5

ETHICS AND COMPLIANCE – PERSONAL

DATA PROTECTION

The systems implemented in the Group are described in chapter2

“Corporate social responsibility”, § 2.8.

3.5.5.1

ETHICS AND COMPLIANCE

Ethics and compliance challenges as well as the related

programmes have been shared regularly with the Supervisory Board

since 2015. It is regularly informed about the ethics and

compliance programmes and on the progress of the corruption

prevention plan within the Group in compliance with law

No.2016-1691 of 9December 2016, known as “SapinII”.

Since 11September 2018, the Supervisory Board’s rules of procedure

have included duties relating to the system for the prevention and

detection of corruption and influence-peddling (Article 1.1.3.2), following

the revision of the Afep-Medef Code in June2018.

As a result, on 16November 2018, the Audit and Risk Committee was

assigned a new duty relating to the prevention of corruption: “ensure the

implementation of a system for the prevention and detection of

corruption and influence-peddling”. On 19March 2019, it was

accordingly renamed the “Audit and Risk Committee”.

Since 2021, the Supervisory Board has delegated the regular review of

the anti-corruption system to the Audit and Risk Committee.

Purpose Main duties and work carried out in 2021

CSR

◆

•

◆

•

◆

•

◆

•

◆

Annual topics

be informed through the CAG-CSR Committee of the main challenges facing the Company in the area of corporate

social responsibility;

assess the level of achievement of the CSR criterion attached to the compensation of the Executive Chairmen,

through the CAG-CSR Committee.

Compensation

establish the compensation policy applicable to members of the Supervisory Board;

issue an advisory opinion on the compensation policy for Executive Chairmen established by the Active partner;

set the allocation and payment of compensation of members of the Board and committees;

be informed of the adoption of free share allocation plans by the Executive Management [n/a in 2021];

be informed of the payment of additional profit-sharing decided by the Executive Management [n/a in 2021].

Ethics and compliance –

Personal data protection

delegate the regular review of the anti-corruption system to the Audit and Risk Committee;

ensure, through the Audit and Risk Committee, the implementation of a system for the prevention and detection of

corruption and influence-peddling and be regularly informed of the Group’s situation;

be informed, through the Audit and Risk Committee, of the personal data protection system put in place within the

Group and its compliance with the GDPR regulation (European regulation of 27April 2016 No.2016/679).

Recommendations,

authorisations and other

items

authorise and declassify, where applicable, related-party agreements and carry out an annual review of those

whose effect persisted over time (see the Supervisory Board’s report to the General Meeting in chapter8

“Combined General Meeting of 20April 2022”, § 8.3);

establish a procedure for the regular evaluation of current agreements concluded under arm’s length conditions

and take note of the annual report of the Current Agreements Committee;

discuss the Company’s policy with regard to gender equality and equal pay;

authorise the Executive Management to grant sureties, endorsements and guarantees to commitments by the

companies controlled without limit of amount and time and be informed annually by the Executive Management of

the guarantees granted;

conduct an annual review of all sureties, endorsements and guarantees granted that are still in force;

be informed of the implementation of an internal procedure for requesting authorisation of a surety or guarantee

from Hermès International in favour of a subsidiary or controlled company;

take note of the opinion of the Social and Economic Committee on the strategic orientations of the Company, on

which the Executive Management is required to formulate a reasoned response;

take note of the updated of the Hermès Group Stock Market Ethics Code;

remind the relevant persons of the responsibility inherent in holding inside information and take note of the

blackout periods applicable to Permanent Insiders;

be informed of the content and impact of legislative and regulatory developments affecting the Supervisory Board

[n/a in 2021];

approve the amendment of certain articles of the Articles of Association of Émile HermèsSAS, Active partner.

Major annual topics – Site

visits

attend several detailed presentations in the year on a specific or general topic relating to the Group’s activity;

(see § 3.5.3.4 and §

3.5.3.5)

devote one of its meetings to a site visit to improve its knowledge of one of the Group’s subsidiaries or to gain a

concrete understanding of an area of the Group’s activity.

◆

corruption risk mapping;

◆

training programme;

◆

third party evaluation system;

◆

accounting controls;

◆

internal control and evaluation system.

◆

assist the Supervisory Board in monitoring matters relating to CSR in

order that the Hermès Group better anticipate associated

opportunities, challenges and risks;

◆

assist the Supervisory Board in monitoring the Hermès Group’s social

policy and the policy of non-discrimination and diversity.

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In 2021, the Director of Legal Compliance provided the Audit and Risk

Committee with an update on the corruption prevention programme, and

in particular:

3.5.5.2

PERSONAL DATA PROTECTION

A presentation to the Supervisory Board on the personal data protection

system, in accordance with the GDPR (EU Regulation No.2016/679 of

27April 2016), implemented in the Group, was made in 2019.

In 2021, the Data Protection Officer presented to the Audit and Risk

Committee the risks identified by the Group in terms of data protection

and the actions implemented to address them.

3.5.6

CORPORATE SOCIAL RESPONSIBILITY

(CSR)

A presentation of CSR challenges has been made to the Board regularly

since 2015.

Since 11September 2018, the Supervisory Board’s rules of procedure

have included new duties relating to CSR issues (Article 1.1.3.2),

following the revision of the Afep-Medef Code in June2018.

As a result, on 16November 2018, the CAG Committee was entrusted

with two new missions in terms of corporate social responsibility:

On 16November 2018, it was renamed the “Compensation,

Appointments, Governance and CSR Committee (CAG-CSR Committee)”.

Since 2019, the CAG-CSR Committee has devoted two meetings per year

to in-depth reviews of CSR issues.

In addition, since the incorporation of a CSR criterion into the Executive

Chairmen’s variable compensation in 2019, the CAG-CSR Committee has

been tasked with annually evaluating the achievement of the three

indicators comprising it (see § 3.8.1.2.4 and § 3.8.2.1.3).

In order to comply with the recommendations of the Afep-Medef Code

updated in January 2020 (Article 16.2), a joint meeting between the

CAG-CSR Committee and the Audit and Risk Committee has been

organised since 2021 to present CSR risk exposure. This joint meeting is

held every year.

3.5.7

COMPENSATION AND REIMBURSEMENT

OF EXPENSES

3.5.7.1

COMPENSATION OF THE MEMBERS OF THE

SUPERVISORY BOARD

Information relating to the compensation of the members of the

Supervisory Board is presented in § 3.8.1 and 3.8.1.3.

Compensation policy for Board members

COMMITTEE

MEMBER

Position

BOARD

MEMBER

COMMITTEE

CHAIRMAN

BOARD

CHAIRMAN

100%

40%

60%

64.54%

35.46%

100%

0% 20% 40% 60%

80%

100% 120%

Percentage of compensation

Variable component Fixed component

3.5.7.2

EXPENSE REIMBURSEMENT

Supervisory Board members are reimbursed for travel, accommodation

and restaurant expenses incurred to attend Supervisory Board meetings,

upon presentation of substantiating documents or receipts. These

reimbursements are capped and based on the rules applicable to Group

employees.

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3.6

SPECIALISED COMMITTEES

3.6.1

APPLICABLE PRINCIPLES

Supervisory Board

◆

the Audit Committee (26January 2005), set up in application of

ArticleL.823-19 of the French Commercial Code (Code de

commerce), whose remit was subsequently extended by the Board

and which was renamed the Audit and Risk Committee (19March

2019);

◆

the Compensation Committee (26January 2005), which was

subsequently assigned new duties and responsibilities by the

Board and renamed the Compensation and Appointments

(18March 2009), Governance (20January 2010) and CSR

(16November 2018) Committee or the “CAG-CSR Committee”.

◆

reappointed MssMonique Cohen (Chairwoman) and Estelle

Brachlianoff and MessrsCharles-Éric Bauer, Renaud Momméja and

Alexandre Viros as members of the Audit and Risk Committee;

◆

reappointed MssDominique Senequier (Chairwoman) and Estelle

Brachlianoff and MrMatthieu Dumas as members of the CAG-CSR

Committee.

Compensation, Appointments, Governance

and CSR (CAG-CSR) Committee

Audit and Risk Committee

Since 2005, the Supervisory Board has relied on the work of two

permanent committees:

These committees act under the collective and exclusive responsibility

of the Supervisory Board. Their role is to discuss, analyse and prepare

for certain deliberations of the Board, to which they submit their

opinions, proposals or recommendations. Their powers do not reduce

or limit the powers of the Board and the opinions, proposals or

recommendations made are in no way binding on the Board.

The members of the committees do not incur any legal responsibilities

in respect of their duties other than those of members of the

Supervisory Board.

The Company’s CAG-CSR Committee is not tasked with setting the

compensation of the Executive Chairmen, a task governed by the

provisions of the Articles of Association and which falls within the remit of

the Active partner and not the Supervisory Board. It was therefore not

relevant to create separate Compensation and Appointments

Committees.

The Supervisory Board decides on the composition of the specialised

committees, taking into account the skills of the Board members in the

areas in question and their availability, as well as the legal requirements

(ArticleL.823-19 of the French Commercial Code(Code de commerce))

and the recommendations of the Afep-Medef Code updated in January

2020 (see § 3.1.2).

SUMMARY OF CHANGES IN 2021

3.6.1.1

CHANGES IN THE COMPOSITION

OF THE COMMITTEES OVER THE FINANCIAL

YEAR

The Supervisory Board meeting of 4May 2021:

Departures Appointments Renewals

Audit and Risk Committee MsMonique Cohen, Chairwoman (04/05/2021)

MsEstelle Brachlianoff (04/05/2021)

MrCharles-Éric Bauer (04/05/2021)

MrRenaud Momméja (04/05/2021)

MrAlexandre Viros (04/05/2021)

CAG-CSR Committee MsDominique Senequier, Chairwoman (04/05/2021)

MsEstelle Brachlianoff (04/05/2021)

MrMatthieu Dumas (04/05/2021)

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3.6.1.2

FUTURE CHANGES TO COMMITTEES

The terms of office of members of the Supervisory Board of

MssDominique Senequier and Estelle Brachlianoff, and MrCharles-Éric

Bauer expire in 2022.

No change is currently planned in the composition of the committees,

subject to the renewal of their terms as members of the Supervisory

Board by the General Meeting of 20April 2022.

3.6.2

CAG-CSR COMMITTEE

3.6.2.1

COMPOSITION AS AT 31DECEMBER 2021

Its rules of procedure provide that the CAG-CSR Committee is

composed of at least three members of the Supervisory Board with

expertise in or carrying out professional activities in the areas in which

the Committee performs its duties.

At least half of its members must, at the time of their appointment and

for the entire term of their office, be qualified as independent under

the Supervisory Board’s rules of procedure. This is currently the case.

The CAG-CSR Committee does not include any Executive Corporate

Officers.

It is chaired by MsDominique Senequier, Vice-Chairwoman of the Board,

who is independent.

Changes in the composition of the CAG-CSR Committee are presented in

§ 3.6.1.1.

The main areas of expertise and experience, and the key skills of the

members of the CAG-CSR Committee are presented in the information

concerning them (see § 3.4.8).

As at 31December 2021, the CAG-CSR Committee was composed of the following three members, including two women and one man:

2021 DATA

Personal details Independence Date of appointment

Expiry of term of office

on the Board

Length of service

on the Committee

Attendance

MEMBERS

MEETINGS

67%

INDEPENDENCE

67%

WOMEN

(1) The ages and length of service indicated are determined in number of full years at 31December 2021.

(2) This figure reflects the average attendance of the members of the CAG-CSR Committee in office as at 31December 2021, and does not take into account

members who left the Committee during the year.

◆

the addition of new provisions for educational purposes or inspired by

best stock market practices;

◆

more detailed description of Committee practices.

Dominique Senequier

(F)

(Chairwoman)

Nationality: French

Age 68years

- 21/08/1953

Estelle Brachlianoff

(F)

04/06/2013 2022 GM 8years 100.00%

Nationality: French

49years

– 26/07/1972

04/06/2019 2022 GM 2years 66.67%

Matthieu Dumas

(M)

Nationality: French

49years

- 06/12/1972

03/06/2008 2024 GM 13years 100.00%

AVERAGE ATTENDANCE 88.89%

3.6.2.2

RULES OF PROCEDURE

On 24March 2010, the Supervisory Board adopted rules of

procedure which specify the rules governing the composition,

powers and operating procedures of the CAG-CSR Committee.

These rules of procedure are regularly reviewed to adapt to legal

and regulatory changes and to take into account the

recommendations of the Financial Markets Authority (AMF) and

revisions to the Afep-Medef Code.

The full text of the CAG-CSR Committee’s rules of procedure is

made available at each update at

The rules of procedure of the CAG-CSR Committee were revised on

26November 2021 (version No.8). The main changes concern:

The main provisions of the CAG-CSR Committee’s rules of procedure are

set out in chapter3 of the universal registration document.

https://finance.hermes.com/en/governing-bodies-rules-procedure-

articles-association/.

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3.6.2.3

OPERATION

The operation of the CAG-CSR Committee complies with the principles

applicable to Board committees (see § 3.6.1).

The Chairman of the Supervisory Board can be invited to certain CAG-CSR

Committee meetings in order to hear his or her opinion in matters of

appointments or governance, which was not the case in 2021.

As part of its responsibilities in terms of social and environmental

responsibility, a meeting dedicated to the presentation of exposure to

CSR risks has been held every year since 2021 with the Audit and Risk

Committee. The purpose of this joint meeting is to strengthen

coordination and sharing between the two committees on this related

subject.

Before each CAG-CSR Committee meeting, Committee members are sent,

in good time, with reasonable lead time and subject to confidentiality

requirements, a file containing documentation on items on the agenda

requiring prior analysis and review.

The Executive Vice-President of Corporate Development and Social

Affairs, and the Group Director of Human Resources, systematically

participate in the meetings of the CAG-CSR Committee. The Group

Director of sustainable development participates at least twice a year for

subjects relating to CSR.

The secretarial duties of CAG-CSR Committee meetings are provided by

the Director of Corporate law and Stock Exchange regulations and

Compliance Officer, and secretary of the Supervisory Board, under the

responsibility of the Chairwoman, or by a member of the CAG-CSR

Committee appointed as rapporteur by the Chairwoman.

At the first Supervisory Board meeting following a meeting of the CAG-CSR

Committee, the Chairwoman gives an oral report on the Committee’s

work to the members of the Board, a summary of which is then included

in the minutes of the Board meeting.

The CAG-CSR Committee uses the Herboard secure digital platform (see

§ 3.5.3.2).

Minutes of CAG-CSR Committee meetings are drawn up at the end of

each meeting and sent to all members of the Committee, who are invited

to comment. Any observations are discussed at the next Committee

meeting, which approves the final text of the minutes of the previous

meeting.

The CAG-CSR Committee uses a dashboard to plan and prepare its work

in a balanced way over the year.

3.6.2.4

MAIN DUTIES AND WORK CARRIED OUT IN 2021

Without prejudice to the powers of the Supervisory Board, which it does

not replace, the main duties of the CAG-CSR Committee and the work

carried out in 2021 are as follows:

Purpose of duties Main duties and work carried out in 2021

General

conduct a periodic self-assessment of its operation;

◆

•

approve the revision of the rules of procedure of the CAG-CSR Committee.

Compensation

Compensation of the Executive Chairmen and the Supervisory Board

evaluate the achievement of the indicators comprising the CSR criterion for the Executive Chairmen’s variable

compensation;

◆

check the compliance of the actual compensation of the Executive Chairmen with the Articles of Association and the

compensation policy established by the Active partner;

◆

make any proposals on the compensation policy for members of the Supervisory Board and committees;

◆

check the compliance of the planned distribution of the compensation of the members of the Supervisory Board with

the compensation policy;

◆

assist the Supervisory Board in determining the conditions and performance criteria to be applied to awarding options

to subscribe for or purchase shares, performance-based shares and/or additional pensions to the Executive Chairmen

[n/a in 2021];

•

review the explanatory statements to the resolutions of the General Meeting on Senior Executive compensation (Say on

Pay).

◆

Compensation of the Group Executive Committee and Senior Executives

be consulted and prepare the recommendations of the Supervisory Board to the Executive Management on the terms

of compensation (fixed compensation for 2021, actual bonus for 2020 and target bonus for 2021) of the members of

the Executive Committee;

◆

approve the compensation arrangements (fixed compensation for 2021, actual bonus for 2020 and target bonus for

2021) of the Executive Corporate Officers of the French subsidiaries paid for their office;

◆

review proposals for share subscription or purchase plans and granting free share awards to Senior Executives to

enable the Supervisory Board to determine the aggregate or individual number of options or shares allotted and the

terms and conditions of allotment [n/a in 2021].

◆

Group compensation policy

review proposals for share subscription or purchase plans and granting free share awards to employees and draw up

recommendations thereon to Executive Management [n/a in 2021];

examine the achievement of the performance conditions and its consequences on the number of free shares actually

awarded to beneficiaries;

◆

carry out specific tasks entrusted to it by the management or supervisory bodies of the Hermès Group’s main French

subsidiaries [n/a in 2021];

◆

be informed of the Company’s policy with regard to gender equality and equal pay.

◆

(1) Non-exhaustive list

◆

Annual topics

•

One-off or multi-year topics

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Purpose of duties Main duties and work carried out in 2021

Appointments

organise a selection procedure in conjunction with the Executive Chairmen for future independent members of the

Board and carry out its own research on potential candidates [n/a in 2021];

•

◆

set up and participate in the induction and training programme for new members of the Supervisory Board;

◆

prepare the Board’s proposals to the Active partner concerning the composition of the Supervisory Board after having

examined all the elements it must take into account in its deliberation: desired balance in the composition of the Board

in relation to the diversity policy applied within the Supervisory Board, the composition and changes in the Company’s

shareholding structure, search for and assessment of potential candidates, opportunity for reappointments;

◆

ensure the existence of a succession plan for the Executive Chairmen and the Chairman of the Supervisory Board and

conduct an annual review.

◆

ensure the existence of a talent succession plan, which covers the members of the Executive Committee and the

Operations Committee;

Governance

propose regular updates to the governance rules taking into account the recommendations issued by the Afep-Medef

Code, the application guide of the High Committee on Corporate Governance (HCGE) and the Financial Markets

Authority (AMF) in its annual report on corporate governance and Senior Executive compensation;

◆

periodically verify the situation of the members of the Supervisory Board with regard to the independence criteria set

by the rules of procedure, the number of directorships, potential conflicts of interest and compliance with the

requirement to hold a minimum of 100shares;

◆

review the composition of the specialised committees;

◆

oversee the annual debate and evaluation of Supervisory Board practices;

◆

determine at least annually the members of the Audit and Risk Committee with specific expertise in finance or

accounting and risk management;

◆

update the Supervisory Board’s permanent file;

◆

manage the three-year formal evaluation of the Supervisory Board: decision on whether or not to use an external firm,

evaluation process and questionnaire, launch of the evaluation, summary and analysis of findings, areas for

improvement [n/a in 2021];

•

analyse related-party agreements before reclassifying them and giving an opinion to the Supervisory Board;

•

give an opinion to the Supervisory Board on the classification of an agreement entered into under arm’s length

conditions;

◆

review chapter3 on corporate governance of the universal registration document and in particular the provisions of the

Afep-Medef Code that have been set aside and the related explanations;

◆

approve the revision of the rules of procedure of the CAG-CSR Committee.

•

be informed of recruitment issues, employer brand and support for growth;

•

be informed of the Group’s approach to diversity, inclusion and gender balance.

CSR

HR challenges

assist the Supervisory Board in monitoring social, non-discrimination and diversity policies;

◆

be informed of leadership development actions;

◆

be informed of the annual rankings regarding the representation of women in large companies and the criteria taken

into account in their preparation;

◆

be informed of the publication of the Hermès International gender equality index;

◆

be regularly informed of the assessments of non-financial agencies;

◆

be informed of the content of the Non-Financial Performance Statement (NFPS);

◆

be informed, in a joint meeting with the Audit and Risk Committee, of exposure to CSR risks.

CSR challenges

assist the Supervisory Board in monitoring CSR issues;

◆

monitor non-financial performance indicators and consideration of social and environmental challenges;

◆

be informed of sustainable development and corporate social responsibility (CSR) issues, the achievements of the past

financial year in relation to the objectives and the outlook;

(1) Non-exhaustive list

◆

Annual topics

•

One-off or multi-year topics

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SPECIALISED COMMITTEES

3.6.3

AUDIT AND RISK COMMITTEE

3.6.3.1

COMPOSITION AS AT 31DECEMBER 2021

Its rules of procedure provide that the Audit and Risk Committee is

composed of at least four members of the Supervisory Board with

expertise in or carrying out professional activities in the areas in

which the Committee performs its duties; and in particular in terms

of finance, risk management and CSR.

At least half of its members must, at the time of their appointment

and for the entire term of their office, be qualified as independent

under the Supervisory Board’s rules of procedure. This is currently

the case.

The Audit and Risk Committee does not include any Executive Corporate

Officers.

It is chaired by MsMonique Cohen, Vice-Chairwoman of the Board, who

is independent and an expert in finance.

Changes in the composition of the Audit and Risk Committee are

presented in § 3.6.1.1.

The main areas of expertise and experience of the members of the Audit

and Risk Committee are presented in the information concerning them

(see § 3.4.8).

As at 31December 2021, the Audit and Risk Committee comprised the following five members, including two women and three men:

2021 DATA

Personal details Independence Date of appointment

Expiry

of term of office

on the Board

Length of service

on the Committee

Attendance

MEMBERS

MEETINGS

60%

INDEPENDENCE

40%

WOMEN

(1) The ages indicated are determined in number of full years at 31December 2021.

(2) MrCharles-Éric Bauer was appointed to the Audit and Risk Committee before joining the Supervisory Board (before Order No.2008-1278 of 8December 2008

there was no law requiring Board membership).

(3) This figure reflects the average attendance of the members of the Audit and Risk Committee in office as at 31December 2021, and does not take into account

members who left the Committee during the year.

◆

the addition of new provisions for educational purposes or inspired by

best stock market practices;

◆

more detailed description of Committee practices.

Monique Cohen

(F)

(Chairwoman)

Nationality: French

65years

– 28/01/1956

03/06/2014 2023 GM 7years 100.00%

Charles-Éric Bauer

(M)

Nationality: French

57years

– 09/01/1964

Estelle Brachlianoff

(F)

Nationality: French

49years

– 26/07/1972

Renaud Momméja

(M)

Nationality: French

59years

– 20/03/1962

Alexandre Viros

(M)

Nationality: French

43years

– 08/01/1978

26/01/2005

2022 GM 16years 100.00%

04/06/2019 2022 GM 2years 66.67%

03/06/2008 2023 GM 13years 100.00%

04/06/2019 2024 GM 2years 100.00%

AVERAGE ATTENDANCE 93.33%

3.6.3.2

RULES OF PROCEDURE

On 24March 2010, the Supervisory Board adopted rules of

procedure which specify the rules governing the composition,

powers and operating procedures of the Audit and Risk Committee.

These rules of procedure are regularly reviewed to adapt to legal

and regulatory changes and to take into account the

recommendations of the Financial Markets Authority (AMF) and

revisions to the Afep-Medef Code.

The full text of the Audit and Risk Committee rules of procedure is

The rules of procedure of the Audit and Risk Committee were revised on

26November 2021 (version No.6). The main changes concern:

The main provisions of the Audit and Risk Committee’s rules of procedure

are set out in this chapter3 of the universal registration document.

made available at each update at https://finance.hermes.com/en/

governing-bodies-rules-procedure-articles-association/.

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SPECIALISED COMMITTEES

◆

review press releases on quarterly revenue, full-year and interim results;

◆

ensure that the accounting policies applied are relevant and consistent;

◆

verify that internal data collection and control procedures guarantee the quality of the information provided;

◆

review the work programme and results of internal and external audit assignments:

◆

monitor the process of preparing financial information and, where appropriate, make recommendations to

ensure its integrity,

monitor the effectiveness of internal control and risk management systems and internal audits regarding the

procedures for preparing and processing accounting, financial and non-financial information without jeopardising

its independence.

◆

hold in closed session with the Statutory Auditors;

◆

approve, on a case-by-case basis, the provision by the Statutory Auditors of services other than the certification

of the financial statements;

report on the results of the engagement regarding the certification of the financial statements, on the way the

engagement contributed to the integrity of the financial reporting and the role it has played in this process.

3.6.3.3

OPERATION

The operation of the Audit and Risk Committee complies with the

principles applicable to the Supervisory Board committees (see § 3.6.1).

The Audit and Risk Committee meets as many times as necessary and

usually six times per financial year, including once before the approval of

the annual financial statements by the Executive Management and once

before the review of the half-yearly financial statements by the

Supervisory Board.

As part of its responsibilities in terms of social and environmental

responsibility, a meeting dedicated to the presentation of CSR risk

exposure has been held every year since 2021 with the CAG-CSR

Committee. The purpose of this joint meeting is to strengthen

coordination and sharing between the two committees on this related

subject.

The Audit and Risk Committee meets when convened by its Chairwoman,

who sets the agenda of the meeting in writing or verbally, in any location

indicated in the notice of meeting.

Before each Audit and Risk Committee meeting, Committee members are

sent, in good time, with reasonable lead time and subject to

confidentiality requirements, a file containing documentation on items on

the agenda requiring prior analysis and review.

The Executive Vice-President of Corporate Development and Social

Affairs, systematically participates in the meetings of the Audit and Risk

Committee.

The Director of Audit and risk management, is responsible for the

Secretariat under the responsibility of the Chairwoman.

The Statutory Auditors attend the two meetings relating to the review of

the annual and half-year financial statements.

At the first Supervisory Board meeting following a meeting of the Audit

and Risk Committee, the Chairwoman gives an oral report on the

Committee’s work to the members of the Board, a summary of which is

then included in the minutes of the Board meeting.

The Audit and Risk Committee uses the Herboard secure digital platform

(see § 3.5.3.2).

Minutes of Audit and Risk Committee meetings are prepared at the end

of each meeting and sent to all members of the Committee.

3.6.3.4

MAIN DUTIES AND WORK CARRIED OUT IN 2021

In accordance with ArticleL.823-19 of the French Commercial Code

(Code de commerce) and without prejudice to the powers of the

Supervisory Board, which it does not replace, the main duties of the Audit

and Risk Committee performed in 2021 are as follows:

Purpose of duties

Main duties and work

carried out in 2021

Impact of the health crisis be informed of the impact of Covid-19 on the activities of the audit and risk management department.

◆

General conduct a periodic self-assessment of its operation;

◆

approve the revision of the rules of procedure of the Audit and Risk Committee.

Preparation of accounting

and financial information

be informed of the budget for the financial year;

◆

note the consensus of financial analysts on the full-year and interim results;

◆

review and comment on the parent company and consolidated financial statements before they are approved by

Executive Management and presented to the Supervisory Board;

◆

Audit of accounting and

financial information and

the Statutory Auditors

•

issue a recommendation to the Supervisory Board on the Statutory Auditors proposed for appointment or renewal

by the General Meeting [n/a in 2021];

monitor the performance by the Statutory Auditors of their assignment (audit approach, audit conclusions,

presentation of the Board’s fees);

◆

ensure that the Statutory Auditors comply with the independence conditions;

◆

(1) Non-exhaustive list

◆

Annual topics

•

One-off or multi-year topics

◆

be informed of the results of risk management, audit and internal control activities;

◆

be informed of the audit plan;

◆

regularly review exposure to risks such as financial, legal, operational, social and environmental risks and the

actions taken as a result;

be informed, in a joint meeting with the CAG-CSR Committee, of exposure to CSR risks;

◆

be informed of personal data risks and the corresponding action plans;

◆

be informed of operational risk mapping: in 2021, digital and the American subsidiary Hermès Of Paris;

◆

be informed of the Group risk mapping and the corresponding action plans;

◆

be informed annually, on the basis of the risk mapping, of IT risks, in particular cyber risks, and the

corresponding action plans;

proofread chapter4 “Risk factors and management” of the universal registration document;

◆

be informed of the update of the plan to prevent and fight against corruption;

◆

ensure the implementation of a system for the prevention and detection of corruption and influence-peddling and

be informed of changes to the corruption prevention programme;

◆

confidentiality concerns raised by giving information on the

Supervisory Board to a third party;

◆

the relative absence of weak signals raised by previous evaluations;

◆

progress in terms of governance over the last six years;

◆

the small amount of added value expected from an external firm,

particularly given the specific nature of a société en commandite par

actions (partnership limited by shares), which offers few

comparables.

◆

once a year, the Supervisory Board discusses its operation;

◆

a formal evaluation is carried out every three years. It is implemented,

under the direction of the CAG-CSR Committee, with the help of the

Secretary of the Board;

◆

the shareholders are informed each year in the corporate governance

report of the performance of the assessments and, where applicable,

the follow-up given to them.

◆

review the Board’s operating procedures;

◆

check that key issues are properly prepared and discussed;

◆

measure the effective contribution of each Board member to the work

of the Board by virtue of his or her skills and involvement in

discussions.

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EVALUATION OF THE SUPERVISORY BOARD AND COMMITTEES

Purpose of duties

Main duties and work

carried out in 2021

Control of risk exposure and

prevention of corruption

be informed of the security system and receive feedback on incidents in the financial year ended;

◆

be informed of the establishment of a new banking relationship.

•

(1) Non-exhaustive list

◆

Annual topics

•

One-off or multi-year topics

As part of its missions, the Audit and Risk Committee heard from the

Executive Vice-President Finance, both with regard to the accounting

data and treasury data, the Director of Consolidation, the Director of

Audit and risk management, the Director of Group Safety, the Director of

Group IT, the Director of Group Treasury, the Director of Financial

Communication and Investor Relations, the Director of Hermès

Commercial and his team, the Director of Hermès Bijouterie and her

team, the Director of Legal Compliance, the Data Protection Officer and

the Statutory Auditors.

3.7

EVALUATION OF THE SUPERVISORY BOARD AND COMMITTEES

3.7.1

METHODOLOGY

3.7.1.1

WHETHER OR NOT TO USE AN EXTERNAL

ADVISOR

During the formal 2019 assessment, the CAG-CSR Committee considered

it undesirable to call on an outside firm to conduct a formal evaluation of

the Supervisory Board for the following reasons:

3.7.1.2

EVALUATION PROCESS

The assessment is carried out, in accordance with the recommendations

of the Afep Medef Code revised in 2020 (Article10.3), as follows:

3.7.1.3

EVALUATION OBJECTIVES

The evaluation must have three objectives (Article10.2 of the

Afep-Medef Code updated in January2020):

◆

a very positive assessment of the Board’s operations and work;

◆

progress on many points since the last assessment in 2016 for both

the Board and the committees;

◆

all members made satisfactory individual contributions and were

sufficiently available;

◆

the new digital questionnaire is easy to use and well-liked.

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EVALUATION OF THE SUPERVISORY BOARD AND COMMITTEES

3.7.2

CHANGES SINCE THE LAST EVALUATIONS

3.7.2.1

THREE-YEARLY FORMAL EVALUATION IN 2019

The results and areas identified for improvement during the last

three-year formal self-assessment of the Supervisory Board and

committees, which took place in 2019, are detailed in the 2019

universal registration document (pages246 to 248).

The analysis of the results of the last formal evaluation showed:

The improvements requested by the members of the Board during the

previous evaluations have been implemented.

The next formal self-assessment of the Board and committees will take

place in 2022.

3.7.2.2

ANNUAL INFORMAL EVALUATION IN 2020

At the time of the informal annual evaluation in 2020, the Supervisory

Board considered that its operation and that of its committees continued

to be very satisfactory. During the 2021 financial year, a number of

actions were taken to meet the expectations expressed in 2020.

Areas identified for improvement in the evaluation in 2020 Actions taken in 2021

Supervisory Board

Better sharing of all pre- and post-meeting

presentation materials and information on the

subjects dealt with by the Board in previous years.

Signed minutes and presentations made during meetings (except for confidentiality issues)

are systematically distributed on Herboard.

An in-depth study of certain subjects: human

resource challenges, the customer (journey and

store experience), business sector, stock market

experience.

A major annual theme “HR Strategy” was presented to the Board in 2021.

Strengthening of HR challenges monitored by the CAG-CSR Committee (see below).

A major annual theme, “Analysis of customer behaviour and the customer experience”, has

been included in the Board’s agenda for 2022.

Once a year, starting in 2022, a presentation will be made to the Board on the stock market

performance of the Company over the past year, in comparison with its competitors.

The ability to follow additional training courses. All SB members are members of the IFA and can request (via the secretary of the Board) that

they follow one of their training courses.

CAG-CSR Committee

Continue to regularly address the topic of “talent

management” while incorporating other issues such

as the Group’s ability to absorb the growth in its

workforce and the Group’s policy in the areas of

inclusion and diversity.

The CAG-CSR Committee will regularly address the topic of “talent management” while

integrating other HR challenges into the discussions.

In 2021, the Committee was informed in particular of:

◆

Presentations made during meetings (except for confidentiality issues) are systematically

distributed on Herboard.

An analysis of market practices (EY governance overview and the Grand Prix de la

transparence criteria) was presented to the Audit and Risk Committee in 2021.

Financial transactions are discussed when the annual and half-year financial statements are

presented to the Committee.

recruitment issues, employer brand and support for growth;

the Group’s approach to diversity, inclusion and gender equality.

Audit and Risk Committee

Receive more information in advance of meetings,

have comparables with the practices of Audit

Committees and benefit from being able to put

financial operations (M&A) into perspective in the

strategy.

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3.7.3

ANNUAL DISCUSSION IN 2021 ON THE FUNCTIONING OF THE BOARD

3.7.3.1

EVALUATION OF THE SUPERVISORY BOARD

IN 2021

In late 2021, the Chairman of the Supervisory Board met individually with

each member of the Supervisory Board in order to discuss the functioning

of the Board since the last assessment and to assess the individual

contribution of its members.

◆

the general functioning of the Board, the quality of presentations and

reporting, the time allocated to discussions, freedom of expression,

the quality of the information shared, openness to dialogue with

management;

◆

the very high quality of the reports on the work carried out by the

specialised committees;

◆

the quality of the Board files, the improvement in the deadline for

sending documents, the proper delivery of advice under the

conditions imposed by Covid-19 (video/mixed);

◆

they also showed a keen interest in specific presentations dedicated

to in-depth topics as well as site visits, which they consider very

enriching. They would like to see this practice continue.

Positive points:

The summary of these meetings shows a very positive assessment of the

Board’s operations.

The members praised:

◆

continue to set a timetable and distribute it at least one year in

advance;

◆

reorganise the annual programme in order to avoid the review of a

major theme when a Joint Council is held.

Areas identified for improvement:

Some members would like to see changes on the following points, which

the Board has decided to adopt as areas for improvement for the future:

3.7.3.2

EVALUATION OF THE CAG-CSR COMMITTEE

IN 2021

As every year, in 2021 the CAG-CSR Committee discussed its operation.

Positive points:

This self-assessment showed that it was operating satisfactorily.

The Committee members acknowledged that the areas for improvement

identified during the 2020 evaluation of the work of the CAG-CSR

Committee had been taken into account (see § 3.7.2.2).

Areas identified for improvement:

No new areas were identified for improvement.

3.7.3.3

EVALUATION OF THE AUDIT AND RISK

COMMITTEE IN 2021

As every year, in 2021 the Audit and Risk Committee discussed its

operation.

Positive points:

This self-assessment showed that it was operating satisfactorily.

The members of the Committee acknowledged that the areas for

improvement identified during the 2020 evaluation of the work of the

Audit and Risk Committee had been taken into account (see § 3.7.2.2).

Areas

identified for improvement:

No new areas were identified for improvement.

In view of the findings of the above analysis, the Supervisory Board

deemed its functioning and that of its committees to be very

satisfactory overall.

◆

an initial annual ex-ante vote will be taken on the compensation

policy for Corporate Officers (i.e. the Executive Chairmen and

members of the Supervisory Board). This policy must set out the

principles and criteria, aligned with the interests of the Company,

determining the compensation of Corporate Officers. The policy is

binding, which means that compensation paid to Corporate Officers is

confined to that set out in a previously approved compensation policy.

If a new compensation policy is rejected, the most recent approved

policy continues to apply and a revised compensation policy is

submitted to the Company’s next Ordinary General Meeting. In the

absence of a previously approved compensation policy, compensation

is determined in accordance with the compensation granted for the

previous financial year or, in the absence of compensation granted

for the previous financial year, in accordance with existing practices

within the Company.

In exceptional circumstances, it is possible to depart from the

application of the compensation policy if this departure is temporary,

aligned with the corporate interest and necessary to guarantee the

Company’s sustainability or viability;

◆

a second ex-post vote is taken on the content of the corporate

governance report setting out the compensation paid or awarded to

Corporate Officers during the prior financial year, as well as certain

additional information, in particular equity ratios.

Several resolutions must be presented:

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COMPENSATION AND BENEFITS OF CORPORATE OFFICERS

3.8

COMPENSATION AND BENEFITS OF CORPORATE OFFICERS

3.8.1

COMPENSATION POLICY FOR THE EXECUTIVE CHAIRMEN (EXECUTIVE CORPORATE OFFICERS)

AND MEMBERS OF THE SUPERVISORY BOARD (NON-EXECUTIVE CORPORATE OFFICERS)

System applicable since 2020

Order No.2019-1234 of 27November 2019 created a new mechanism

applicable to sociétés en commandite par actions (Partnerships limited

by shares) as regards Corporate Officers compensation.

This text came into force for the Company from the date of the Combined

General Meeting of 24April 2020.

The new system is based on a dual vote by the Ordinary General Meeting

and the Active partner:

•

a resolution (global ex-post vote) relating to the information

referred to in ArticleL.22-10-9,I of the French Commercial Code

(Code de commerce), for all Corporate Officers (i.e. the Executive

Chairmen, the Chairman of the Supervisory Board and the other

members of the Supervisory Board). This information reflects, for

each of these officers, the actual application of the compensation

policy for the past financial year, including details of the

compensation and benefits paid or awarded.

If rejected, a revised compensation policy is submitted to the

Company’s next Ordinary General Meeting. The payment of

compensation to Supervisory Board members for the current

financial year (formerly termed “directors’ fees”) is suspended

until a revised compensation policy is approved. If the revised

compensation policy is rejected, the suspended amounts are not

paid and the compensation of the members of the Supervisory

Board for the current financial year is suspended,

•

a resolution (individual ex-post vote) for each Executive Chairman

and a resolution for the Chairman of the Supervisory Board

concerning the total compensation and benefits of any kind paid

during or awarded in respect of the prior financial year

(Supervisory Board members are not subject to individual votes).

The payment of the variable and exceptional portion of the

compensation of the relevant person is subject to the prior

approval of the resolution concerning him/her.

3.8.1.1

GENERAL PRINCIPLES OF THE COMPENSATION

POLICY FOR CORPORATE OFFICERS

Pursuant to paragraph4 of ArticleL.22-10-76,I of the French

Commercial Code (Code de commerce), resulting from the

aforementioned order, we hereby present the compensation policy for

Corporate Officers (Executive Chairmen and members of the Supervisory

Board).

This policy describes all components of fixed and variable compensation

and explains the decision-making process applied for its determination,

review and implementation.

The operating rules specific to sociétés en commandite par actions

(Partnerships limited by shares) and the Company’s governance

system have resulted in the establishment of the compensation

policy for Senior Executives (Executive Chairmen) and other

Corporate Officers (Supervisory Board members) being entrusted to

the Active partner and the Supervisory Board respectively.

After outlining the general principles applicable to all Corporate Officers,

we will present the specific principles of the compensation policy for the

Executive Chairmen, then the specific principles of the compensation

policy for the members of the Supervisory Board.

In application of Article L. 22-10-77, II of the French Commercial Code

(Code de commerce), the compensation policy for Corporate Officers will

be the subject of two separate resolutions at the General Meeting of

20April 2022: the first will deal with the compensation policy for the

Executive Chairmen and the second with the compensation policy for the

members of the Supervisory Board.

◆

since the Company’s transformation into a société en commandite

par actions (partnership limited by shares), the maximum amount of

variable compensation set by the Articles of Association (“statutory

compensation”) of the Executive Chairmen has been determined by

the Articles of Association (Article17);

◆

the maximum amount of fixed (“additional”) compensation of the

Executive Chairmen and its indexation were determined by the

Ordinary General Meeting of 31May 2001;

◆

the variable compensation is subject in part (10%) to a CSR criterion

reflecting the Group’s firm and ongoing commitments to sustainable

development (for the composition of the CSR criterion, see

§ 3.8.1.2.4);

◆

the composition of compensation is simple and clear – fixed and

variable compensation, without resorting to complex deferred

compensation mechanisms and without guaranteeing a minimum

variable compensation in the event of a poor economic performance

by the Company;

◆

the Executive Management Board of Émile HermèsSAS, Active

partner, sets the actual amount of each Executive Chairman’s annual

compensation as per the Articles of Association (“statutory

compensation”). To this end, it uses the recommendations of the

CAG-CSR Committee and in particular, in addition to the level of

achievement of CSR criteria, takes into account in its decision the

performance achieved by the Group in respect of the previous

financial year, the strategic challenges in respect of the Group’s

medium- and long-term development and the competitive

environment in which it operates.

◆

the principles governing allocation set out in the compensation policy

for members of the Supervisory Board result in amounts being

awarded on the basis of the tasks entrusted to them and their

attendance at meetings;

◆

these principles are periodically reviewed in line with market

practices.

◆

in general, in all the countries where the Company operates, its

employees are paid in line with market standards in terms of their

total compensation;

◆

the Company also offers its employees:

•

employee shareholding plans: such plans have been in place for

many years (the first plan dates back to 1993) and acknowledge

the contribution made by employees to the House’s development,

regardless of their role or geographical location, by providing a

single component of compensation in order to share the benefits

of our growth, enabling employees to identify more closely with

decisions having an impact on Hermès’ long-term growth,

•

incentive schemes involving employees with the development of

locally determined indicators that are relevant with regard to the

activity and environment of each of the French subsidiaries,

notably quality, safety and productivity,

•

a Group profit-sharing agreement giving all employees of

companies in France a share of the Group’s profits in a

harmonised manner,

•

other mechanisms enabling employees of foreign subsidiaries to

benefit from additional compensation adapted to local

performance and practices,

•

lastly, voluntary and supra-legal social protection and pension

plans, set up by the subsidiaries in order to supplement the

employer offer in a comprehensive and competitive manner and to

offer compensation and social protection schemes in the short,

medium and long term.

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3.8.1.1.1 Manner in which the compensation policy respects

the interests of the Company and contributes to the Company’s

commercial strategy and sustainability

(ArticleR.22-10-40,I-1° of the French Commercial Code)

The compensation policies for the Executive Chairmen and Supervisory

Board members are aligned with the corporate interest and contribute to

the Company’s commercial strategy and sustainability for the following

reasons:

As regards the Executive Chairmen:

◆

the compensation of the Executive Chairmen is determined on

the basis of clear, quantifiable criteria (notably growth in

revenue and change in consolidated net income before tax, as

described in § 3.8.1.2.4 below) that are relevant to its business

model and have remained unchanged for a considerable

number of years;

As regards the members of the Supervisory Board:

3.8.1.1.2 Manner in which the conditions of compensation and

employment of the Company’s employees are taken into

account in the decision-making process

(ArticleR.22-10-40,I-3° of the French Commercial Code)

The conditions of compensation and employment of the Group’s

employees are described in chapter2 “Corporate social responsibility”,

§ 2.2.

With regard more specifically to the conditions governing

compensation, Hermès’ economic successes are regularly shared

with all Group employees, both in France and around the world, in

various forms. The aim is to acknowledge the contribution made by

employees to the House’s development, regardless of their role in

the value-creation chain, in order to share the benefits of our

growth over the long term.

The Group’s policy is to allow its employees to benefit from its long-term

growth prospects through various mechanisms:

◆

the maximum amount of variable compensation set by the Articles of

Association (“statutory compensation”) of the Executive Chairmen is

determined by the Articles of Association (Article17);

◆

the maximum amount of fixed (“additional”) compensation of the

Executive Chairmen and its indexation were determined by the

Ordinary General Meeting of 31May 2001;

◆

since its creation on 24March 2010, the CAG-CSR Committee of the

Supervisory Board of Hermès International has been tasked each

year with ensuring that compensation paid to the Executive Chairmen

complies with the provisions of the Articles of Association and the

decisions made by the Active partner;

◆

changes to the two components of the compensation of Executive

Chairmen depend on objective and comprehensible quantifiable

qualitative criteria unaltered for many years, that are public and

predefined by nature, as described in § 3.8.1.2;

◆

when setting the actual amount of each Executive Chairman’s

compensation set by the Articles of Association (“statutory

compensation”), the Executive Management Board of Émile

HermèsSAS uses the recommendations of the CAG-CSR Committee

and takes into account in its decision the performance achieved by

the Group in respect of the prior financial year, the strategic

challenges in respect of the Group’s medium- and long-term

development and the competitive environment in which it operates;

◆

since 2020, the compensation policy for the Executive Chairmen has

been subject to the advisory opinion of the Supervisory Board and the

approval of the General Meeting, and the actual compensation of the

Executive Chairmen is subject to a decision by the Supervisory Board.

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COMPENSATION AND BENEFITS OF CORPORATE OFFICERS

The Group’s employee compensation policy is ambitious and

comprehensive; it incorporates a wide range of compensation tools.

The budget guidelines for wage increases during the annual salary review

take account of inflation and changes in local wage markets. Particular

attention is paid to gender equality and gaps in relation to the market

(internal and external). Specific budgets may be provided if adjustments

are necessary.

The desire to reward both collective and individual performance can also

be seen in the development of variable compensation at both individual

and collective levels in recent years.

3.8.1.1.3 Measures to avoid or manage conflicts of interest

(ArticleR.22-10-40,I-2° of the French Commercial Code)

A number of measures have been implemented to prevent possible

conflicts of interest:

3.8.1.1.4 Disclosure of compensation of Corporate Officers

Pursuant to ArticleR.22-10-40,V of the French Commercial Code (Code

de commerce), the compensation policy for Corporate Officers, together

with the date and result of the last ex-ante vote in the General Meeting, is

disclosed on the Company’s financial website https://finance.hermes.

com/en/corporate-officers on the business day following the date of the

vote.

Pursuant to Article26.1 of the Afep-Medef Code updated in

January2020, all potential or vested compensation of the Executive

Chairmen is disclosed on the Company’s financial website

immediately after the

meeting of the Executive Management Board of Émile HermèsSAS,

Active partner, that approved it.

https://finance.hermes.com/en/corporate-officers

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3.8.1.2

SPECIFIC PRINCIPLES APPLICABLE TO THE COMPENSATION POLICY FOR THE EXECUTIVE CHAIRMEN (EXECUTIVE

CORPORATE OFFICERS)

Decision-making process followed for its determination, review and implementation applicable since the 2020 General Meeting

Active

Partner

Establishment of a draft

compensation policy taking

into account the guidelines

laid down in the Articles

of Association

Supervisory

Board

Advisory opinion on

the draft compensation

policy

Ordinary General

Meeting

“Ex-ante” vote on

compensation policy

COMPENSATION POLICY

FOR EXECUTIVE CHAIRMEN

Active

Partner

Ordinary

General Meeting

“Ex-post” vote

on actual

compensation

CAG-CSR

Committee

Verification that the actual

compensation proposed complies

with the Articles of Association and

the compensation policy. Assessment

of the achievement of CSR criteria

for variable compensation

Supervisory

Board

Decision on actual

compensation

Determination

of the actual

compensation

proposed

ACTUAL COMPENSATION OF

THE EXECUTIVE CHAIRMEN

◆

evaluates the achievement of the indicators comprising the CSR

criterion for Executive Chairmen’s variable compensation;

◆

checks that the actual compensation of the Executive Chairmen

complies with the Articles of Association and the compensation policy.

Decision-making process relating to the establishment of the

Executive Chairmen’s compensation policy (ArticleR.22-10-40,I-2°

of the French Commercial Code)

The components of the Executive Chairmen’s compensation policy are

established by Émile HermèsSAS, Active partner. The decision is made

by taking into account the principles and conditions provided for in

Article17 of the Articles of Association with respect to the variable

compensation set by the Articles of Association (“statutory

compensation”) and, by reference to the Articles of Association, the

decision of the Ordinary General Meeting of 31May 2001 with respect to

fixed (“additional”) compensation.

It is submitted to the Supervisory Board for an advisory opinion.

Since 2020, the compensation policy for the Executive Chairmen is

submitted each year to the Ordinary General Meeting for approval

(ex-ante vote).

3.8.1.2.1 Changes made to the compensation policy

of the Executive Chairmen since the last General Meeting

(ArticleR.22-10-40,I-5° of the French Commercial Code)

The General Meeting of 4May 2021 approved, at 94.12% and without

reservation, the compensation policy for the Executive Chairmen.

Since then, no changes have been made to the compensation policy for

the Executive Chairmen.

Decision-making process followed for the determination of the actual

compensation of the Executive Chairmen (ArticleL.22-10-76 of the

French Commercial Code)

The actual amount of the Executive Chairmen’s compensation is

determined each year by Émile HermèsSAS, Active partner, in

accordance with the approved compensation policy, which is then

submitted to the Supervisory Board for approval.

The CAG-CSR Committee of the Supervisory Board:

Since 2020, the actual overall compensation of Corporate Officers

(including that of the Executive Chairmen) and the actual individual

compensation of each Executive Chairman will be subject, each year, to

approval by the Ordinary General Meeting (ex-post votes).

3.8.1.2.2 Terms of application to newly appointed or

reappointed Executive Chairmen (ArticleR.22-10-40,I-6°

of the French Commercial Code)

The term of office of the Executive Chairmen is indefinite under the terms

of the Articles of Association, and is therefore not subject to renewal.

The compensation policy would apply to newly appointed Executive

Chairmen on a pro rata basis in accordance with their presence during

the first year of their term.

fixed compensation (referred to as “additional compensation” in the

Articles of Association) was introduced by the Ordinary General

Meeting of 31May 2001, which set a limit of €457,347.05, and

provided for it to be indexed upwards only, in accordance with any

increase in consolidated revenue for the previous financial year over

the year prior to that, at constant scope and exchange rates. Fixed

compensation is, therefore, set on an annual basis. In accordance

with this principle and to facilitate understanding of how the

additional compensation of Executive Chairmen is calculated before

indexing, it is referred to as “fixed compensation” by analogy with

market practices;

the calculation of the variable compensation (referred to as

“compensation set by the Articles of Association (“statutory

compensation”)”) – set by Article17 of the Articles of Association –

has remained constant since the IPO on 3June 1993. This

compensation is capped at 0.20% of the consolidated net income

before tax generated in the previous financial year. This mode of

determination naturally leads to a strict variability in the

compensation set by the Articles of Association (“statutory

compensation”) of Executive Chairmen, in a transparent way and

without any guarantee of a minimum amount. With the aim of clarity,

the compensation set by the Articles of Association (“statutory

compensation”) of the Executive Chairmen is referred to as “variable

compensation”, by analogy with market practices.

◆

decoupling between business growth at constant scope and

exchange rates and the evolution of industrial energy consumption

(quantifiable environmental criterion);

◆

actions implemented in favour of the Group’s local integration in

France and throughout the world, excluding major cities (qualitative

societal criterion);

◆

Group initiatives in favour of gender balance (qualitative social

criterion).

◆

target variable compensation as set by the Articles of Association

(“statutory compensation”) is set by applying the strict variability of

the consolidated net income before tax, 10% of which is conditional

on the achievement of the targets making up the CSR criterion (see

above);

◆

fixed (“additional”) compensation is set by applying the strict

variability, upwards only, of revenue to the compensation of the

previous financial year;

◆

the other components of compensation are set in strict application of

the compensation policy for the Executive Chairmen.

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COMPENSATION AND BENEFITS OF CORPORATE OFFICERS

3.8.1.2.3 Exceptions to the application of the compensation

policy (ArticleR.22-10-40,I-7° of the French Commercial

Code)

In the event that exceptional circumstances should arise, the Executive

Management Board of Émile HermèsSAS is authorised, under the

conditions provided for by law, to waive the application of the

compensation policy used to set the variable compensation of the

Executive Chairmen, within the limit authorised by the Articles of

Association, and after the favourable opinion of the Supervisory Board.

3.8.1.2.4 Specific elements comprising the compensation

policy for the Executive Chairmen (ArticleR.22-10-40,II

of the French Commercial Code)

Pursuant to ArticlesL.22-10-76 and R.22-10-40,II of the French

Commercial Code (Code de commerce), we set out below the specific

components comprising the compensation policy for the Executive

Chairmen.

When the office is taken up

No such commitment exists.

During their term of office

The term of office of the Executive Chairmen is open-ended. The

Executive Chairmen may be dismissed by a decision of the Active partner.

Annual fixed and variable compensation and respective importance –

CSR criterion for variable compensation

In accordance with the principles set out in Article17 of the Articles of

Association, each Executive Chairman is entitled to fixed compensation

(referred to as “additional” in the Articles of Association) for which the

maximum amount is determined by the Ordinary General Meeting with

the unanimous approval of the Active partners and, potentially, variable

compensation set by the Articles of Association (“statutory

compensation”):

The variable compensation of the two Executive Chairmen is partially

conditioned (10%) on a “CSR” criterion reflecting the Group’s stated and

constant commitments in respect of sustainable development. The CSR

criterion contributes to the objectives of the Executive Chairmen’s

compensation policy.

This new way of structuring the variable component of compensation was

applied for the first time when evaluating variable compensation owing

for 2019, which was measured and paid in 2020.

The indicators making up the CSR criterion relate to the following:

The Executive Management Board of Émile HermèsSAS, Active partner,

sets the actual amount of the annual compensation of each Executive

Chairman, not exceeding the maximum amount of the approved

compensation policy defined herein, and in accordance with the criteria

and targets set out in § 3.8.1.1 and § 3.8.1.2, as follows:

The two components of the Executive Chairmen’s compensation are

changed according to clear and objective quantifiable criteria,

unaltered for many years, that are publicly available and predefined

by nature, as described in paragraphs

1 and 2 above.

Thus, no minimum variable compensation set by the Articles of

Association (“statutory compensation”) is guaranteed for the Executive

Chairmen.

The quantifiable criteria are paramount in the calculation of the variable

compensation of the Executive Chairmen.

The Executive Management Board of Émile HermèsSAS, Active partner,

relies on the recommendations of the CAG-CSR Committee.

MrHenri-Louis Bauer, the Legal Representative of Émile HermèsSAS

(Executive Chairman), does not personally receive any compensation

from Hermès International. He receives compensation from Émile

HermèsSAS for his functions as Executive Chairman of this company,

which is unrelated to the appointment of Émile HermèsSAS as Executive

Chairman of Hermès International.

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COMPENSATION AND BENEFITS OF CORPORATE OFFICERS

◆

shall count as one-third of the CSR criterion;

◆

has an annual reference period;

◆

is subject to an annual evaluation of their achievement by the

CAG-CSR Committee.

The Executive Chairmen do not receive any compensation or benefits of

any kind from the subsidiaries of Hermès International.

The breakdown of the actual compensation of the Executive Chairmen for

the last two financial years is shown in § 3.8.4.2.

Each year, the CAG-CSR Committee of the Supervisory Board of Hermès

International is tasked with ensuring that the Executive Chairmen’s

compensation is compliant with the Articles of Association and the

compensation policy.

No predetermined weighting is applied with respect to fixed and variable

compensation, which depend on the components described above.

HISTORY OF FIXED AND VARIABLE COMPENSATION PAID TO EXECUTIVE CHAIRMEN OVER THE LAST THREE FINANCIAL YEARS AND RESPECTIVE IMPORTANCE

n/a: not applicable

Methods for assessing the achievement of performance criteria

for variable compensation or share-based compensation

(ArticleR.22-10-40,I-4° of the French Commercial Code)

The variable compensation set by the Articles of Association (“statutory

compensation”) of the Executive Chairmen is evaluated in accordance

with the change in consolidated net income before tax for the prior

financial year compared with the preceding financial year, and

conditioned in the proportion of 10% on the achievement of the CSR

criterion.

The evaluation of the amount of compensation subject to the CSR

criterion is limited to a target of 100%, with no possibility of exceeding

that limit.

Each of the three indices mentioned in § 3.8.1.2.4 “Annual fixed and

variable compensation and respective importance – CSR criterion for

variable compensation”:

Deferred or multi-year variable compensation

The allocation to Executive Chairmen of deferred or multi-year variable

compensation is not provided for.

Exceptional compensation

The allocation of exceptional compensation to the Executive Chairmen is

not provided for.

Share-based compensation (ArticleR.22-10-40,II-2° of the French

Commercial Code)

The current compensation policy does not provide that the Executive

Chairmen are entitled to share-based compensation.

In accordance with Article25.3.3 of the Afep-Medef Code, Executive

Chairmen who are natural persons and who are beneficiaries of stock

options and/or performance-based shares must make a formal

commitment not to hedge their risk on options or on shares resulting from

the exercise of options or on performance-based shares, until the end of

the share retention period.

MrAxel Dumas, the only eligible Executive Chairman, has not received

any stock options or performance-based shares since he was appointed

Executive Chairman.

Émile HermèsSAS, a legal entity, is not eligible for the stock option or

performance-based share plans.

Employment contract

In order to comply with the Afep-Medef Code, MrAxel Dumas decided on

5June 2013 to end his employment contract with immediate effect when

he was appointed Executive Chairman of Hermès International.

Service agreements

No Executive Chairman directly or indirectly invoices services to the

Company.

Compensation of Board members (formerly termed “directors’ fees”) in

the Company and the Group’s subsidiaries

The Executive Chairmen do not receive any compensation as Board

members (formerly termed “directors’ fees”) paid by the Company or by

the subsidiaries of the Group.

MrAxel Dumas 2021

Proportion (not

pre-established) 2020 2019

Fixed compensation (referred to as “additional” in the Articles of Association) €1,623,378 51.01% €1,623,378 €1,623,378

Variable compensation set by the Articles of Association (“statutory

compensation”) awarded in respect of the previous financial year €1,559,319 48.99% €1,780,045 €1,780,045

of which CSR criterion 10.00% n/a

TOTAL €3,182,697 100.00% €3,403,423 €3,403,423

Émile HermèsSAS 2021

Proportion (not

pre-established) 2020 2019

Fixed compensation (referred to as “additional” in the Articles of Association) €551,850 43.15% €551,850 €551,850

Variable compensation set by the Articles of Association (“statutory

compensation”) awarded in respect of the previous financial year €727,153 56.85% €830,083 €830,083

of which CSR criterion 10.00% n/a n/a

TOTAL €1,279,003 100.00% €1,381,933 €1,381,933

(i)

a disability pension at 51% of reference compensation in the case of

Category 1 disability and 85% of reference compensation in the case

of Category 2 or 3 disability. The reference compensation (gross

annual compensation) is capped at 8x the annual social security

ceiling (PASS). The payment of the disability pension is discontinued

when the recipient in question is no longer categorised as having the

disability or permanent impairment and, at the latest, on the day of

the normal or early liquidation of an old age insurance pension from

the mandatory retirement plan, for any reason whatsoever;

(ii)

a death benefit equal to a maximum of 380% of the reference

compensation, capped at 8x PASS, depending on the family situation;

(iii)

contributions paid to the insurer are split between the Company

(1.54% for tranche A, and 1.64% for tranches B and C) and the

beneficiary (1.06% for tranche A and 1.16% for tranches B and C);

(iv)

these contributions are deductible from the corporation tax base,

subject to corporate social contributions at the rate of 8%, and

excluded from the base for social security contributions, within the

limit of an amount equal to the sum of 6% of PASS and 1.5% of

compensation retained within the limit of 12x PASS.

◆

either from a decision taken by MrAxel Dumas by reason of a change

of control over the Company, a change in the Chairman of Émile

HermèsSAS, which is an Executive Chairman of the Company, or a

change in the Company’s strategy; or

◆

from a decision taken by the Company.

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Similarly, note that the Group’s allocation rules specify that the members

of the Executive Committee of Hermès International who are directors in

subsidiaries do not receive compensation in that capacity.

Death and disability plan

MrAxel Dumas is eligible for the mandatory collective death and disability

plan established by the Group for the benefit of all staff of French entities

that have joined this plan (decision taken by the Supervisory Board on

19March 2014).

It provides, as is the case for all employees, the following gross lifetime

benefits:

Benefits of any kind

MrAxel Dumas has a company car constituting his only benefit in kind.

MrAxel Dumas benefits from the mandatory collective healthcare plan

implemented by the Group for the benefit of all staff of French entities

that have joined this plan (decision made by the Supervisory Board on

19March 2014).

Émile HermèsSAS does not receive any benefits in kind.

At the end of the term of office

Severance payment

The Company has pledged to pay MrAxel Dumas compensation in an

amount equal to 24months of total compensation (variable

compensation set by the Articles of Association (“statutory

compensation”) and fixed (“additional”) compensation) in the case of

termination of his appointment as Executive Chairman (decision taken by

the Supervisory Board on 4June 2013 and approved by the General

Meeting of 3June 2014 – tenth resolution “Approval of the commitments

due to MrAxel Dumas on termination of his appointment as Executive

Chairman” – pursuant to ArticleL.225-42-1 of the French Commercial

Code (Code de commerce) applicable at that date).

The payment of a severance payment is subject to the termination of

duties as Executive Chairman resulting:

Given the importance of the Active partner’s role in a société en

commandite par actions (partnership limited by shares) – including the

power to appoint and dismiss any Executive Chairman and, in the case of

a legal entity, its legal representative, it was decided that any termination

of MrAxel Dumas’ duties as Executive Chairman resulting from the

replacement of the Chairman of Émile HermèsSAS should be deemed a

forced departure.

The criteria for granting severance payments are therefore strictly

confined to cases of forced departure.

Moreover, the payment of such compensation is subject to the following

performance conditions, such that the conditions of his departure are in

equilibrium with the situation of the Company: achieving budget targets in

at least four out of the five previous years (with revenue and operating

income growth measured at constant rates), without deterioration in the

Hermès brand image.

The Supervisory Board accordingly considered that the deferred

compensation undertaking made for the benefit of MrAxel Dumas

complied with the requirements of the Afep-Medef Corporate Governance

Code.

No such agreement has been entered into with Émile HermèsSAS.

Non-compete indemnity

MrAxel Dumas is not subject to any non-competition agreement,

therefore no compensation is made in this respect.

No such agreement has been entered into with Émile HermèsSAS.

Supplemental pension plan

Defined-contribution pension plan (Article83 of the French General Tax Code

(Code général des impôts))

MrAxel Dumas is eligible for the supplementary defined-contribution

pension plan established for all employees of the Group’s French

companies that have joined it (decision by the Supervisory Board on

4June 2013 approved by the General Meeting of 3June 2014 – fifth

resolution “Approval of related-party agreements and commitments”).

As with all employees of the Group:

◆

the defined-contribution pension plan is funded as follows: 1.1% for

the reference compensation for an amount of 1x the annual social

security ceiling (hereunder PASS), 3.3% for the reference

compensation between 1x and 2x PASS, and 5.5% on the reference

compensation between 2x and 6x PASS. Reference compensation

means the gross annual compensation in accordance with

ArticleL.242-1 of the French Social Security Code (Code de la

Sécurité sociale);

◆

these premiums are shared between the Company (90.91%) and the

beneficiary (9.09%);

◆

the employer contributions are deductible from the corporation tax

base, subject to corporate social contributions at the rate of 20% and

excluded from the base for social security contributions within the

limit of the higher of the following two values: 5% of the PASS or 5% of

the compensation retained within the limit of 5x PASS (€205,680 in

2021).

◆

the average yearly compensation for the last three years;

◆

a percentage of the reference compensation, ranging from 0.9% to

1.5% per year of service (as at 31December 2019). In accordance

with the regulations, as MrAxel Dumas has seniority exceeding

16years, this percentage is set at 1.50%. It is in any event, below the

legal limit of 3%.

◆

the amount of the annual pension is capped at 8x PASS, i.e.

€329,088 in 2021; and

◆

the sum of (i)pensions accrued in respect of statutory and collective

agreement plans (excluding increases for children raised) including

rights accrued in overseas pension plans, pensions resulting from any

supplementary plan that may be put in place within the Hermès Group

and (ii)the amount of the top-up pension resulting from the

regulations is capped at 70% of the last reference compensation.

◆

with regard to social security contributions, using an irrevocable

option, the Company has chosen to apply the fixed contribution set

out in ArticleL.137-11 of the French Social Security Code (Code de la

Sécurité sociale) concerning the premiums paid to the external

insurance firm at the rate of 24%. The beneficiary must pay – as for

all replacement income – CSG (social security tax) and CRDS (social

security debt repayment tax), in addition to healthcare contributions

and an additional solidarity contribution for autonomy (CASA) on the

amount of the pension. In the specific case of pensions resulting from

defined-benefit pension plans, the beneficiary of the pension must

also pay a social security contribution, at a rate that varies depending

on the amount of the pension and its liquidation date;

◆

with regard to taxation, the premiums paid to the external insurance

firm may be deducted from the tax base for corporation tax.

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Defined-benefit pension plan (Article39 of the French General Tax Code

(Code general des impôts) – ArticleL.137-11 of the French Social Security

Code (Code de la Sécurité sociale))

MrAxel Dumas is also eligible for the supplemental pension plan

established in 1991 for Company Senior Executives (decision by the

Supervisory Board on 4June 2013, approved by the General Meeting of

3June 2014 – fifth resolution “Approval of related-party agreements and

commitments”).

This provision is not limited solely to the Executive Chairmen but also

encompasses a wider group of Senior Executives. It may be withdrawn in

respect of MrAxel Dumas by decision of the Supervisory Board.

In accordance with Order No.2019-697 of 3July 2019 relating to

defined-benefit occupational plans, no new members may join this

scheme from 4July 2019 and no new conditional right to benefits may

be awarded for periods of employment after 31December 2019.

As a fundamental condition of the pension regulations, in order to be

eligible for the scheme, beneficiaries must have reached the end of their

professional career with the Company, have at least ten years of seniority

as evaluated at 4July 2019 given the provisions of the aforementioned

order of 3July 2019, and be eligible to draw pension benefits under the

statutory French social security regime.

Each participant gradually acquires potential rights, calculated each year

on the basis of his or her annual reference compensation, it being

specified that 2019 is the last year taken into account when calculating

such rights (in application of Order No.2019-697 of 3July 2019). These

potential rights represent, depending on the seniority and for each year,

a percentage of the reference compensation ranging between 0.9% and

1.5%.

If all the eligibility conditions are met, the annual pension under this

scheme would be based on:

In addition, the regulation provides for the application of two ceilings to

the final amount of the annual pension:

For information, subject to fulfilling the conditions of the plan at the time

of the liquidation of his pension, the maximum amount of the future

pension, limited by the plan’s regulations to eight times the annual social

security limit, compared with the compensation for financial year 2021 of

the natural person Executive Chairman would represent a replacement

rate (excluding mandatory plans) of 10.34%.

The plan is financed by the Company through a contract taken out with

an external insurance company, and, if necessary, additional provisions

are recorded in the financial statements.

The following income tax and social security charges are currently

applicable to the plan:

Following the freeze on the scheme initially put in place in 1991 and from

which the Executive Chairman potentially benefits, the Group has not

decided on the scheme that could replace this supplemental pension

plan. In the absence of any instructions to date concerning the terms of

transfer of the conditional rights frozen on a vested rights plan, the

Company reserves the right to subsequently assess which pension plan

would be most relevant and most appropriate (including or not a possible

transfer of pension rights set up in 1991).

Émile HermèsSAS, a legal entity, is not eligible for a supplemental

pension plan.

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SUMMARY OF COMPENSATION AND BENEFITS POTENTIALLY OWING TO THE EXECUTIVE CHAIRMAN, MRAXEL DUMAS (A NATURAL PERSON), IN THE EVENT OF HIS DEPARTURE

Method of determination at 31/12/2021

Voluntary departure (excluding

retirement) Forced departure Retirement

Severance payment n/a Subject to the applicable

performance conditions:

24months of compensation (fixed

and variable)

n/a

Non-compete indemnity n/a n/a n/a

Supplementary defined-benefit pension

(Article39 of the French General Tax Code

– ArticleL.137-11 of the French Social

Security Code)

n/a n/a Annual pension amount:

Number of years of seniority x (0.9% to

1.5%) x average yearly compensation

for the last three years

The pension will be capped at 8x PASS

Additional defined-contribution pension

(Article83 of the French General Tax Code)

The annual amount of the pension will be determined by conversion to a pension annuity of savings

established as at the date of liquidation of retirement entitlements.

n/a: not applicable

3.8.1.3

SPECIFIC PRINCIPLES APPLICABLE TO THE COMPENSATION POLICY FOR MEMBERS OF THE SUPERVISORY

BOARD (NON-EXECUTIVE CORPORATE OFFICERS)

Decision-making process followed for its determination, review and implementation applicable since the 2020 General Meeting

Ordinary General

Meeting

Determination of the

maximum annual

total amount

Supervisory

Board

Establishment of a

compensation policy

Ordinary General Meeting

“Ex-ante” vote on

compensation policy

Supervisory

Board

Actual allocation

of compensation

CAG-CSR

Committee

Actual compensation

compliance check

“Ex-post” vote on

actual compensation

Ordinary General Meeting

COMPENSATION POLICY FOR MEMBERS

OF THE SUPERVISORY BOARD

ACTUAL COMPENSATION OF MEMBERS

OF THE SUPERVISORY BOARD

Decision-making process relating to the compensation policy

for members of the Supervisory Board (Article R. 22-10-40, 1-2

of the French Commercial Code (Code de commerce)

The General Meeting sets the maximum annual total amount of

compensation for the Supervisory Board.

The components of the compensation policy for Supervisory Board

members are established by the Supervisory Board.

Since 2020, the compensation policy for members of the Supervisory

Board has been submitted to the Ordinary General Meeting each year for

approval (ex-ante vote).

Decision-making process relating to the actual compensation of

members of the Supervisory Board (Article L. 22-10-76 of the French

Commercial Code (Code de commerce)

The actual annual amount of compensation paid to the members of the

Supervisory Board is determined by the Supervisory Board at the start of

the year in respect of the previous year by applying the compensation

policy and taking into account the individual attendance of each member

during the previous financial year.

The Supervisory Board’s CAG-CSR Committee checks that the actual

compensation of Supervisory Board members complies with the total

amount set by the General Meeting and the compensation policy for the

members of the Supervisory Board.

◆

the maximum amounts that may be allocated to each member are set

out in the table below;

◆

the variable component proportional to the actual attendance at

meetings is preponderant;

◆

employee representatives on the Supervisory Board do not receive

compensation as members of the Supervisory Board;

◆

the variable component proportional to a member’s attendance at

meetings is calculated by applying to the maximum amount of the

variable component the ratio between the number of meetings

attended (in the numerator) and the total number of meetings held

during the last financial year (in the denominator);

◆

no variable component is allocated to the Chairman of the

Supervisory Board or the Chairs of the committees, since they must

chair all meetings, unless they are prevented from doing so;

◆

the fixed and variable components are determined by the Board at its

first meeting of the year following the year for which the

compensation is paid.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL302

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COMPENSATION AND BENEFITS OF CORPORATE OFFICERS

Since 2020, the actual application of the compensation policy (including

the overall actual compensation paid, and/or awarded) of the Corporate

Officers (including that of Supervisory Board members) and the actual

individual compensation of the Chairman of the Supervisory Board will be

submitted each year to the approval of the Ordinary General Meeting

(ex-post vote).

3.8.1.3.1 Changes made to the compensation policy

for members of the Supervisory Board since the last General

Meeting (ArticleR.22-10-40,I-5° of the French Commercial

Code)

The General Meeting of 4May 2021 approved, at 99.99% and without

reservation, the compensation policy for the members of the Supervisory

Board.

Since then, no changes have been made to the compensation policy for

members of the Supervisory Board.

3.8.1.3.2 Terms of application to newly appointed

or reappointed members of the Supervisory Board

(ArticleR.22-10-40,I-6° of the French Commercial Code)

If a member is appointed during the year, the fixed component is shared

between the outgoing member and his or her replacement, and the

variable component is allocated according to attendance at meetings.

The compensation policy applies without interruption to members whose

term of office is renewed.

3.8.1.3.3 Exemptions provided by the Supervisory Board

(ArticleR.22-10-40,I-7° of the French Commercial Code)

There are currently no temporary exceptions from the application of the

compensation policy for the Supervisory Board members subject to the

occurrence of exceptional circumstances.

3.8.1.3.4 Specific components of the compensation policy

for members of the Supervisory Board (ArticleR.22-10-40,II

of the French Commercial Code)

Compensation of Supervisory Board and committee members

Supervisory Board members receive compensation in a total amount that

is approved by the General Meeting and for which the allocation

principles are laid down in the Supervisory Board’s compensation policy.

Compensation paid to members of the Audit and Risk Committee and the

CAG-CSR Committee is deducted from the total amount of compensation

of Supervisory Board members.

The General Meeting of 6June 2017 set the maximum annual amount of

compensation allocated to the Supervisory Board and its committees at

€600,000.

The allocation principles (on a full-year basis) approved by the Board on

6June 2017 and set out in Article5.1 of the Board’s rules of procedure

are as follows:

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COMPENSATION AND BENEFITS OF CORPORATE OFFICERS

◆

disclose any compensation paid or granted by a company in the

scope of consolidation;

◆

enable comparison between (i)the compensation of the Executive

Corporate Officers (i.e. the Executive Chairmen) and the

non-Executive Chairman (i.e. the Chairman of the Supervisory Board)

on the one hand, and (ii)the average and median compensation of

the Company’s employees on the other hand.

Maximum amounts attributable

Fixed

component Proportion

Variable component

proportional to

attendance at meetings Proportion Maximum amounts attributable

SUPERVISORY BOARD

Chairman €140,000 100.00% n/a n/a €140,000 100.00%

Vice-Chairwomen €10,000 35.46% €18,200 64.54% €28,200 100.00%

Members €10,000 35.46% €18,200 64.54% €28,200 100.00%

Employee representative members n/a n/a n/a n/a €0 n/a

CAG-CSR COMMITTEE

Chairwoman €28,000 100.00% n/a 0.00% €28,000 100.00%

Members €5,200 40.00% €7,800 60.00% €13,000 100.00%

AUDIT AND RISK COMMITTEE

Chairwoman €28,000 100.00% n/a 0.00% €28,000 100.00%

Members €5,200 40.00% €7,800 60.00% €13,000 100.00%

n/a: not applicable

The allocation principles include a fixed component (35.46% for the

Board and 40.00% for the committees) and a variable component

proportional to actual attendance at meetings (64.54% for the Board and

60.00% for the specialised committees).

No additional compensation is paid to Board members who are not

resident in France.

Employment contracts

The members of the Supervisory Board of a société en commandite par

actions (partnership limited by shares) may be bound to the Company by

an employment contract with no condition other than that resulting from

the existence of a relationship of subordination with the Company and

the recognition of effective employment.

MsPureza Cardoso (craftswoman/trainer – Maroquinerie de Sayat) and

MrRémy Kroll (Director of Special Sales and Recycling – Hermès

International), Supervisory Board members representing employees since

12November 2019, have employment contracts with the Hermès Group,

and as such receive compensation that has not been granted for the

performance of their duties as Board members. Consequently, and for

reasons of confidentiality, their salaries are not disclosed.

No other member of the Supervisory Board, and in particular MrÉric de

Seynes, Chairman, is bound to the Company by an employment contract.

Options to subscribe for or purchase shares

No options to subscribe for or purchase shares were granted to

Supervisory Board members in 2021, nor were any such options

exercised by them.

Allocation of free shares

No free shares were allocated to members of the Supervisory Board

during the financial year 2021.

3.8.2

OVERVIEW OF COMPENSATION AND BENEFITS OF ALL KINDS FOR CORPORATE OFFICERS

In accordance with the provisions of Article L. 22-10-77 of the French

Commercial Code (Code de commerce), the corporate governance report

must present all compensation and benefits of all kinds paid to Corporate

Officers during the financial year or allocated in respect of their duties in

2021.

The report must also:

This section presents the aforementioned items, which will be subject to

global and individual ex-post votes at the General Meeting of 20April

2022 (see chapter8 “Combined General Meeting of 20April 2022”,

§ 8.2.1 – Explanatory statement to the seventh to tenth resolutions).

3.8.2.1

COMPENSATION PAID TO THE EXECUTIVE

CHAIRMEN OR GRANTED IN RESPECT

OF THE 2021 FINANCIAL YEAR (EXECUTIVE

CORPORATE OFFICERS) (ARTICLEL.22-10-77

OF THE FRENCH COMMERCIAL CODE)

3.8.2.1.1 Compensation paid in 2021

All the fixed, variable and exceptional components comprising the total

compensation and benefits of any kind paid during financial year 2021 to

MrAxel Dumas, on the one hand, and to Émile HermèsSAS, on the other

hand, in respect of their duties as Executive Chairmen, are set out in

chapter8 “Combined General Meeting of 20April 2022”, § 8.2.1 –

Explanatory statement to the eighth and ninth resolutions.

These elements are all consistent with the compensation policy for the

Executive Chairmen presented in § 3.8.1.1 and § 3.8.1.2 above and

approved by the General Meeting of 4May 2021.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL304

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COMPENSATION AND BENEFITS OF CORPORATE OFFICERS

3.8.2.1.2 Compensation awarded in respect of 2021

The variable compensation of the Executive Chairmen that will be

awarded in 2022 in respect of the 2021 financial year must be

submitted to the General Meeting for approval prior to payment.

All the fixed, variable and exceptional components comprising the total

compensation and benefits of any kind allocated in respect of 2021 to

MrAxel Dumas, on the one hand, and to Émile HermèsSAS, on the other

hand, in respect of their duties as Executive Chairmen, are set out in

chapter8 “Combined General Meeting of 20April 2022”, § 8.2.1 –

Explanatory statement to the eighth and ninth resolutions.

These elements are all consistent with the compensation policy for the

Executive Chairmen presented in § 3.8.1.1 and § 3.8.1.2 above and

approved by the General Meeting of 4May 2021.

The CAG-CSR Committee evaluated the level of achievement of the

CSR criterion applicable to 10% of the variable compensation of the

Executive Chairmen at its meeting of 7January 2022 and noted

that the three indicators making up the criterion were fully achieved

(see table below).

Consequently, the 2022 variable compensation, awarded in

respect of financial year 2021, has been calculated by applying the

change in the Company’s consolidated net income before tax for

financial year 2021 compared with 2020, i.e. an increase of

+73.2%, to the variable compensation paid in 2021 in respect of

2020.

CSR criteria indicators Importance Level of achievement and justification

Quantifiable environmental

criterion:

Decoupling between activity

growth at constant scope and

exchange rates and the

evolution of industrial energy

consumption

1/3 100%

Constant efforts and improvements in equipment and industrial energy consumption processes

continued to bear fruit, resulting in a much slower change in energy consumption over the reference

period in comparison with the very significant increase in consolidated revenue.

During the reference period – from 1November 2020 to 31October 2021:

the Group’s consolidated revenue at constant exchange rates grew by +43.3%;

◆

total industrial energy consumption (including potential scope effects) amounted to 161,332MWh,

an increase of +10.6%.

◆

Qualitative societal criterion:

Actions taken to promote the

Group’s local integration in

France and around the world,

outside of major cities

1/3 100%

The House continued its policy and its numerous initiatives to deepen local integration in 2021, both in

France and abroad, notwithstanding the complex context due to the ongoing health crisis.

The vast majority of these actions are part of a medium-long term perspective and are structured within

the entities in ambitious and engaging policies, with the aim of energising and revitalising all the

regions, creating and maintaining quality jobs and developing, through partnerships with external

stakeholders, projects that resonate with the authentic values of its business model.

Our actions promoting strong local integration continued in 2021 with determination and great

success, driven by the House’s commitment to act as a humanist, responsible company that creates

jobs and in particular:

job creation in the House’s various sites outside major cities, which continued to increase, despite

the Covid-19 health crisis, and reached a total of 5,488employees (including 92% in production) at

the end of September2021;

◆

the quality of our social policies employed throughout the country and enabling these job creations

has been recognised with several awards;

◆

in 2021, the House continued its strategic investments in several regional divisions in France;

◆

in the area of employment, the partnership with Pôle Emploi (National Employment Agency), Cap

Emploi and professional reintegration associations continued and are structured by the

implementation of a new selection process, harmonised and rolled out in all local partner agencies

of our regional divisions, making it possible to recruit most of their employees through this channel;

◆

Hermès, a responsible employer, is also committed to transmission and education;

◆

the Group’s disability policy also illustrates the reality of its strong local integration.

◆

•

on the one hand, the average pay on a full-time equivalent basis of

the Company’s employees other than Corporate Officers,

•

on the other hand, the median pay on a full-time equivalent basis

of the Company’s employees other than Corporate Officers;

◆

the notion of full-time equivalent (FTE) reflects a job performed on a

full-time basis, i.e. as per legal working hours. As such, for part-time

employees, compensation has been reconstituted on a full-time basis;

◆

based on the INSEE definition, the median wage is that which splits

the Company’s employees into two equal parts, such that half of the

employees of the company in question earn less and the other half

earn more. It differs from the average wage, which is the average of

all wages in the company in question;

◆

the numerator shows the gross compensation (excluding social

security contributions) paid to each Executive Chairman during the

financial year, i.e.:

•

the fixed (“additional”) compensation paid during the financial year

under review,

•

the variable compensation set by the Articles of Association

(“statutory compensation”) paid during the financial year under

review in respect of the prior year,

•

the exceptional compensation paid, if any, during the financial year

under review,

•

other long-term compensation instruments and multi-year variable

compensation paid, where applicable, during the financial year

under review (taken at their IFRS value);

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 305

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COMPENSATION AND BENEFITS OF CORPORATE OFFICERS

3.8.2.2

COMPENSATION PAID TO THE CHAIRMAN

OF THE SUPERVISORY BOARD IN THE COURSE

OF OR ALLOCATED IN RESPECT OF 2021

All the fixed, variable and exceptional components comprising the total

compensation and benefits in kind paid in the course of or awarded in

respect of 2021 to the Chairman of the Supervisory Board, on which the

shareholders are asked to give a binding ex-post vote, are set out in

chapter8 “Combined General Meeting of 20April 2022”, § 8.2.1 –

Explanatory statement to the tenth resolution.

These elements are all in line with the compensation policy for the

Chairman of the Supervisory Board presented in § 3.8.1.1 and § 3.8.1.3

above and approved by the General Meeting of 4May 2021.

3.8.2.3

RATIOS AND ANNUAL CHANGE

IN COMPENSATION, COMPANY PERFORMANCE,

AVERAGE EMPLOYEE COMPENSATION

AND RATIOS (ARTICLEL.22-10-9-6° AND 7°

OF THE FRENCH COMMERCIAL CODE)

We present below:

◆

the changes over the last five years in the ratios between the level of

compensation of each Executive Chairman and the Chairman of the

Supervisory Board and:

◆

the annual change in the compensation of the Executive Chairmen

and Chairman of the Supervisory Board, the performance of the

Company, the average compensation on a full-time equivalent basis

of Company employees other than Senior Executives, and ratios, over

the past five years.

3.8.2.3.1 Methodology used

The methodology used, in line with the Afep guidelines updated in

February2021, is as follows:

CSR criteria indicators Importance Level of achievement and justification

Qualitative social criterion:

Group initiatives in favour of

gender equality

100%

At all levels of the organisation, equal opportunities, diversity and inclusion in terms of employment,

training, supervision and compensation are at the heart of the Company’s actions, with the aim of

clearly demonstrating its position as a responsible employer.

The Group’s average gender equality index in France was 92/100. In 50% of the entities concerned,

the index exceeded 90/100, in the other entities it was above 80/100.

In 2021, the Group took a number of initiatives, including:

1/3

◆

the launch of a women’s network within the Group in December2021;

the launch of a global Diversity & Inclusion approach aimed at ensuring that each of our employees

has an inclusive, respectful and harmonious working environment that resonates with the local

environment of our subsidiaries;

the launch of a series of e-learning modules for the prevention of sexist behaviour.

◆

the denominator shows the gross compensation (excluding social

security contributions) of employees (continuously present in the year

under review between 1January and 31December) of Hermès

International – paid during the financial year, i.e.:

•

the fixed (“additional”) compensation paid during the financial year

under review,

•

the variable compensation set by the Articles of Association

(“statutory compensation”) paid during the financial year under

review in respect of the prior year,

•

the exceptional compensation paid, if any, during the financial year

under review,

•

other long-term compensation instruments, in particular grants of

free shares, when the rights were allocated or were vesting during

the current financial year; measured at their IFRS value, less an

annual amount depending on the length of the vesting period(s),

•

employee savings: profit-sharing and incentive schemes;

◆

the scope used in the denominator is that provided for by law, i.e.

employees of the listed company Hermès International whose

headcount is representative within the meaning of the law for the

determination of the ratios. It represented 390employees as at

31December 2021. In addition to strict compliance with the legal

requirement, this choice is likely to facilitate understanding of

changes in ratios and the consistency of the calculation basis over

time, which will be less affected by changes in the scope of

consolidation (acquisitions/disposals) within the Group;

◆

the following are excluded from the numerator and denominator:

•

severance payments and non-compete payments, which do not

constitute recurring compensation,

•

the defined-contribution supplemental pension plan (Article83 of

the French General Tax Code (Code général des impôts)), which is

a post-employment benefit,

•

the defined-benefit supplemental pension plan (Article39 of the

French General Tax Code), which cannot be valued insofar as

payment is conditional on the completion of the beneficiary’s

career in the Company,

•

benefits in kind, which represent an insignificant amount of the

compensation of the Executive Chairmen.

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COMPENSATION AND BENEFITS OF CORPORATE OFFICERS

With regard to the Company’s performance, it was decided to use

the consolidated revenue (at constant rates) and the consolidated

income before tax, which serve as a reference for the compensation

of the Executive Chairmen and which are performance indicators

that are particularly relevant to the Group’s business model. In

addition, they are commonly used in results press releases.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 307

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COMPENSATION AND BENEFITS OF CORPORATE OFFICERS

AMOUNT OF COMPENSATION USED WITH REFERENCE TO THE NUMERATOR

3.8.2.3.2 Presentation of ratios and annual change in compensation, the performance of the Company, the average compensation

of employees and ratios

Explanatory notes on the Executive Chairmen

For the reasons set out on page156 of the 2017 registration document,

the compensation for Executive Chairmen was revised in 2017.

Explanatory notes relating to the Chairman of the Supervisory Board

For the reasons mentioned on page156 of the 2017 registration

document, the fixed compensation of the Chairman of the Supervisory

Board was re-evaluated in 2017.

Explanatory notes on the employees

The changes for the five financial years presented in the above tables

take into account the overall change in the total payroll, and for 2018,

changes in scope.

The change in overall employee compensation also reflects (i)a positive

dynamic of salary measures throughout the years presented, as well as

(ii)the impact of allocations under employee shareholding plans.

Depending on the plans and the respective duration of the vesting

periods, the portion relating to these allocations may lead to a certain

variation in the average and median compensation of employees in the

reference scope.

The overall policy, and all of the components of the compensation

awarded to employees of the listed company, and those of other Group

entities in France and abroad, are presented and set out in chapter2

“Corporate social responsibility”, § 2.2.

2021 2020 2019 2018 2017

MR AXEL DUMAS

€3,182,697 €3,403,423 €3,403,423 €3,092,816 €2,774,656

ÉMILE HERMÈS SAS

€1,279,003 €1,381,933 €1,381,933 €1,256,409 €1,256,409

MR ÉRIC DE SEYNES

€140,000 €140,000 €140,000 €140,000 €100,000

MRAXEL DUMAS – EXECUTIVE CHAIRMAN

2021 2020 2019 2018 2017

Change in total compensation paid during the financial year compared

with the previous financial year - 6.5% 0.0% 10.0% 11.5% 8.6%

Ratio compared with the average compensation of employees

Change compared with the previous financial year

0point

-1point

0point

+2points

0point

Ratio compared with the median compensation of employees

Change in % compared with the previous financial year

-3points

-1point

+3points

+1point

ÉMILE HERMÈSSAS – EXECUTIVE CHAIRMAN

2021 2020 2019 2018 2017

Change in total compensation paid during the financial year compared

with the previous financial year -7.4% 0.0% 10.0% 0.0% 0.0%

Ratio compared with the average compensation of employees

Change compared with the previous financial year

0point

-1point

Ratio compared with the median compensation of employees

Change compared with the previous financial year

-1point

0point

+1point

0point

-1 point

MR ÉRIC DE SEYNES – CHAIRMAN OF THE SUPERVISORY BOARD

2021 2020 2019 2018 2017

Change in total compensation paid during the financial year compared

with the previous financial year 0.0% 0.0% 0.0% 0.0% 40.0%

Ratio of average compensation compared with the average

compensation of employees

Change compared with the previous financial year

0point

Ratio compared with the median compensation of employees

Change compared with the previous financial year

-1 point

0point

+1point

EMPLOYEES OF THE LISTED COMPANY

2021 2020 2019 2018 2017

Change in the average compensation compared with the previous

financial year -3.8% 3.4% 10.4% 1.1% 8.3%

GROUP PERFORMANCE

2021 2020 2019 2018 2017

Change in consolidated revenue at constant rates 41.8% -6,0% 12.4% 10.4% 8.6%

Change in consolidated net income before tax 73.2% -12.4% 9.9% 9.7% 14.2%

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL308

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COMPENSATION AND BENEFITS OF CORPORATE OFFICERS

3.8.2.4

COMPENSATION OF THE SUPERVISORY BOARD,

AUDIT AND RISK COMMITTEE AND CAG-CSR

COMMITTEE ALLOCATED IN RESPECT OF 2021

OR PAID IN 2021

entities it controls as defined by ArticleL.233-16 of the French

Commercial Code (Code de commerce) is detailed in § 3.8.4.3. This

compensation constitutes the only elements referred to in

ArticleL.22-10-9,I of the French Commercial Code awarded in respect

of 2021 or paid in 2021. Data relating to the past financial year will be

voted on by the General Meeting in 2022 (“global” ex-post vote), see

chapter8 “Combined General Meeting.

Compensation awarded to and received by members of the Supervisory

Board in the last two financial years by Hermès International and the

3.8.3

ALLOCATION OF FREE SHARES AND STOCK OPTIONS

3.8.3.1

GENERAL POLICIES FOR THE ALLOCATION

OF FREE SHARES AND STOCK OPTIONS

Allocations of stock options and free share awards form part of the

Hermès Group’s long-term compensation and retention policy. Such

allocations have historically been made on a multiyear basis (see

comments below on the plans in force); they are exceptional and their

benefits have always extended beyond the Corporate Officers and Senior

Executives of the Group.

Additional information on free share awards carried out by the Hermès

Group and on the general long-term compensation policy and other

initiatives involving employees in the Group’s performance are described

in chapter2 “Corporate social responsibility”, § 2.2.

3.8.3.2

FREE SHARE ALLOCATION PLANS IN FORCE

In accordance with ArticleL.225-197-4 of the French Commercial Code

(Code de commerce), we hereby report to you on free shares granted in

2021.

Executive Management was authorised by the Extraordinary General

Meetings of 31May 2016 and 24April 2020 to award free shares, on

one or more occasions, to some or all employees and/or Senior

Executives of the Company or of affiliated companies, by granting existing

shares in the Company for no consideration. The conditions of

delegations of authority still in force are shown in § 3.9.4.

The total number of free shares awarded under each of these

delegations and the total number of stock options granted and not yet

exercised are limited to 2% of the number of shares in the Company on

the day of allocation, without taking into account those already granted

under previous delegations.

These delegations of authority were not used in 2021.

Details of free share awards plan terms and conditions (and, in

particular, vesting periods, retention periods and the application of

performance conditions, where applicable) are presented in § 3.8.4.10

and details of the conditional rights to free shares granted to the top 10

employee beneficiaries who are not Corporate Officers in § 3.8.4.11.

In accordance with the provisions of ArticlesL.225-197-1 et seq. of the

French Commercial Code (Code de commerce), these awards are always

contingent on presence conditions and, for certain plans, also on

performance conditions. To harmonise the vesting conditions, the free

shares granted by Executive Management in 2016 (plan [f]) and in 2019

(plans [h] and [i]) were subject to identical vesting periods for Group

employees in France and internationally. In line with its long-term

strategy, the Executive Management has set the vesting periods for

these awards at four and five years respectively. However, as permitted

by applicable law (ArticlesL.225-197-1 et seq. of the French

Commercial Code (Code de commerce)) and in accordance with the

provisions of the fifteenth resolution of the Combined General Meeting of

31May 2016 (see page293 of the 2016 registration document), no

lock-up period was established, leaving each beneficiary employee free

to decide how long to hold the shares acquired.

Free share awards do not dilute the share capital because they consist

exclusively of existing shares in the Company. Their value at the grant

date, calculated according to the method used for the consolidated

financial statements, is shown in chapter5 “Consolidated financial

statements”, § 5.6 (Note5.4).

3.8.3.3

STOCK OPTIONS

The Executive Management was authorised by the Extraordinary General

Meeting to grant stock options to certain employees and Corporate

Officers of the Company and of affiliated companies.

These delegations of authority were not used in 2021.

There were no stock option plans in place at 31December 2021, as

indicated in § 3.8.4.8.

3.8.3.4

OPTIONS TO SUBSCRIBE FOR SHARES

All subscription option plans lapsed in 2009. No authorisation from the

General Meeting allows the Executive Management to grant subscription

options.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 309

CORPORATE GOUVERNANCE

COMPENSATION AND BENEFITS OF CORPORATE OFFICERS

3.8.4

TABLES DRAWN UP IN ACCORDANCE WITH AMF POSITION-RECOMMENDATION DOC 2021-02

(§ 13.3) OF 5JANUARY 2022 ON THE PRESENTATION OF COMPENSATION

The standardised presentation of all the components of compensation provided for in Appendix 2 of position recommendation DOC-2021-02 of

5January 2022 is presented below.

3.8.4.1

TABLE 1

SUMMARY TABLE OF COMPENSATION AND OPTIONS AND SHARES ALLOCATED TO EACH EXECUTIVE CHAIRMAN

not applicablen/a:

(1) In the context of the Covid-19 pandemic, the Executive Chairmen wished to waive the increase, as provided for under the applicable compensation policy, to their

2020 fixed compensation and their 2020 variable compensation awarded in respect of 2019, and therefore received a total amount of compensation in 2020

identical to that received in 2019. The fixed compensation of MrAxel Dumas in 2020 was therefore reduced from €1,824,677 to €1,623,378 and that of Émile

HermèsSAS from €620,279 to €551,850 (actual amounts paid after the waiver).

3.8.4.2

TABLE 2

SUMMARY TABLE OF THE COMPENSATION OF EACH EXECUTIVE CHAIRMAN1

2021 2020

MrAxel Dumas

From 01/01/2021 to

31/12/2021

From 01/01/2020 to

31/12/2020

Compensation awarded in respect of the financial year (detailed in Table2) €3,182,697 €3,403,423

Valuation of multi-year variable compensation awarded during the financial year n/a n/a

Valuation of options granted during the financial year (detailed in Table4) n/a n/a

Valuation of free shares allocated (detailed in Table6) n/a n/a

Valuation of other long-term compensation plans n/a n/a

Total natural person as Executive Chairman €3,182,697 €3,403,423

Émile HermèsSAS

From 01/01/2021 to

31/12/2021

From 01/01/2020 to

31/12/2020

Compensation awarded in respect of the financial year (detailed in Table2) €1,279,003 €1,381,933

Valuation of multi-year variable compensation awarded during the financial year n/a n/a

Valuation of options granted during the financial year (detailed in Table4) n/a n/a

Valuation of free shares allocated (detailed in Table6) n/a n/a

Valuation of other long-term compensation plans n/a n/a

Total legal entity as Executive Chairman €1,279,003 €1,381,933

2021 2020

Gross annual compensation of the Executive Chairmen Amounts awarded Amounts paid Amounts awarded Amounts paid

MrAxel Dumas

Fixed compensation (referred to as “additional” in the Articles

of Association) €1,623,378 €1,623,378 €1,623,378 €1,623,378

Annual variable compensation set by the Articles of

Association (“statutory compensation”)

€1,559,319 €1,559,319 €1,780,045 €1,780,045

Multi-year variable compensation n/a n/a n/a n/a

Exceptional compensation n/a n/a n/a n/a

Total compensation €3,182,697 €3,182,697 €3,403,423

€3,403,423

Compensation allocated on account of the office as member

of the Board n/a n/a n/a n/a

Benefits in kind Representation Representation Representation Representation

Émile HermèsSAS

Fixed compensation (referred to as “additional” in the Articles

of Association) €551,850 €551,850 €551,850 €551,850

Annual variable compensation set by the Articles of

Association (“statutory compensation”)

€727,153 €727,153 €830,083 €830,083

Multi-year variable compensation n/a n/a n/a n/a

Exceptional compensation n/a n/a n/a n/a

Total compensation €1,279,003 €1,279,003 €1,381,933

€1,381,933

Compensation allocated on account of the office as member

of the Board n/a n/a n/a n/a

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL310

CORPORATE GOUVERNANCE

COMPENSATION AND BENEFITS OF CORPORATE OFFICERS

not applicablen/a:

(1) Of which 10% for achieving the CSR criterion.

(2) In the context of the Covid-19 pandemic, the Executive Chairmen wished to waive the increase, as provided for under the applicable compensation policy, to their

2020 fixed compensation and their 2020 variable compensation awarded in respect of 2019, and therefore received a total amount of compensation in 2020

identical to that received in 2019. The fixed compensation of MrAxel Dumas in 2020 was therefore reduced from €1,824,677 to €1,623,378 and that of Émile

HermèsSAS from €620,279 to €551,850 (actual amounts paid after the waiver).

3.8.4.3

TABLE 3

TABLE OF COMPENSATION RECEIVED BY SUPERVISORY BOARD MEMBERS

2021 2020

Gross annual compensation of the Executive Chairmen Amounts awarded Amounts paid Amounts awarded Amounts paid

Benefits in kind n/a n/a n/a n/a

Amounts awarded in

respect of 2021 and

amounts paid in 2022

Amounts awarded in

respect of 2020 and

amounts paid in 2021

Total amount of compensation allocated by the General Meeting of Hermès International €600,000 €600,000

Total amount of compensation actually awarded by Hermès International €560,800 €564,830

MrÉric de Seynes

Compensation as Chairman of the Supervisory Board €140,000 €140,000

Compensation as member of the Hermès Sellier Management Board €3,000

€3,000

MsMonique Cohen

Compensation as member of the Supervisory Board €28,200 €25,925

◆

€10,000 €10,000

◆

Compensation as Chairwoman of the Audit and Risk Committee

MsDominique Senequier

Compensation as member of the Supervisory Board

◆

Compensation as Chairwoman of the CAG-CSR Committee

MsDorothée Altmayer

Compensation as member of the Supervisory Board

◆

Compensation as Director of Comptoir Nouveau de la Parfumerie

MrCharles-Éric Bauer

Compensation as member of the Supervisory Board

◆

Compensation as member of the Audit and Risk Committee

◆

MsEstelle Brachlianoff

Compensation as member of the Supervisory Board

◆

Compensation as member of the Audit and Risk Committee

◆

Compensation of member of the CAG-CSR Committee

◆

fixed component

variable component based on attendance €18,200 €15,925

€28,000 €28,000

€23,000 €23,650

fixed component €10,000 €10,000

variable component based on attendance €13,000 €13,650

€28,000 €28,000

€25,600 €28,200

fixed component €10,000 €10,000

variable component based on attendance €15,600 €18,200

€3,000

€1,500

€28,200 €28,200

fixed component €10,000 €10,000

variable component based on attendance €18,200 €18,200

€13,000 €13,000

fixed component €5,200 €5,200

variable component based on attendance €7,800 €7,800

€25,600 €23,650

fixed component €10,000 €10,000

variable component based on attendance €15,600 €13,650

€10,400 €9,880

fixed component €5,200 €5,200

variable component based on attendance €5,200 €4,680

€10,400 €10,400

fixed component €5,200 €5,200

variable component based on attendance €5,200 €5,200

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 311

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COMPENSATION AND BENEFITS OF CORPORATE OFFICERS

not applicablen/a:

(1) Subject to the decisions of the company Boards concerned.

Amounts awarded in

respect of 2021 and

amounts paid in 2022

Amounts awarded in

respect of 2020 and

amounts paid in 2021

MsPureza Cardoso (employee representative)

Compensation as member of the Supervisory Board n/a n/a

MrMatthieu Dumas

Compensation as member of the Supervisory Board €25,600 €28,200

◆

€10,000 €10,000

◆

Compensation of member of the CAG-CSR Committee

◆

Compensation as Director of Comptoir Nouveau de la Parfumerie

MrBlaise Guerrand

Compensation as member of the Supervisory Board

◆

Compensation as member of the Hermès Sellier Management Board

MsJulie Guerrand

Compensation as member of the Supervisory Board

◆

MsOlympia Guerrand

Compensation as member of the Supervisory Board

◆

Compensation as member of the Hermès Sellier Management Board

MrRémy Kroll (employee representative)

Compensation as member of the Supervisory Board

MrRenaud Momméja

Compensation as member of the Supervisory Board

◆

Compensation as member of the Audit and Risk Committee

◆

Compensation as Director of Comptoir Nouveau de la Parfumerie

MrAlexandre Viros

Compensation as member of the Supervisory Board

◆

Compensation as member of the Audit and Risk Committee

◆

fixed component

variable component based on attendance €15,600 €18,200

€13,000 €13,000

fixed component €5,200 €5,200

variable component based on attendance €7,800 €7,800

€3,000

€28,200 €28,200

fixed component €10,000 €10,000

variable component based on attendance €18,200 €18,200

€1,500

€3,000

€28,200 €28,200

fixed component €10,000 €10,000

variable component based on attendance €18,200 €18,200

€25,600 €25,925

fixed component €10,000 €10,000

variable component based on attendance €15,600 €15,925

€3,000

n/a n/a

€25,600 €28,200

fixed component €10,000 €10,000

variable component based on attendance €15,600 €18,200

€13,000 €13,000

fixed component €5,200 €5,200

variable component based on attendance €7,800 €7,800

€3,000

€28,200 €28,200

fixed component €10,000 €10,000

variable component based on attendance €18,200 €18,200

€13,000 €13,000

fixed component €5,200 €5,200

variable component based on attendance €7,800 €7,800

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL312

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3.8.4.4

TABLE 4

OPTIONS TO SUBSCRIBE FOR OR PURCHASE SHARES GRANTED DURING THE FINANCIAL YEAR TO THE EXECUTIVE CHAIRMEN BY HERMÈS INTERNATIONAL AND BY ANY GROUP

COMPANY

n/a: not applicable

3.8.4.5

TABLE 5

EXERCISE OF OPTIONS TO SUBSCRIBE FOR OR PURCHASE SHARES DURING THE FINANCIAL YEAR BY THE EXECUTIVE CHAIRMEN OF HERMÈS INTERNATIONAL

n/a: not applicable

3.8.4.6

TABLE 6

FREE SHARES ALLOCATED DURING THE FINANCIAL YEAR TO EACH EXECUTIVE CHAIRMAN

n/a: not applicable

3.8.4.7

TABLE 7

FREE SHARES ALLOCATED AND BECOMING AVAILABLE DURING THE FINANCIAL YEAR FOR EACH EXECUTIVE CHAIRMAN

n/a: not applicable

Name of the Executive Corporate Officer

Number and

date of plan

Nature of

options

Valuation of options

according to the method

used for the consolidated

financial statements

Number of options

granted during the

financial year Exercise price

Exercise

period

MrAxel Dumas n/a n/a n/a n/a n/a n/a

TOTAL n/a n/a n/a n/a n/a n/a

Name of the Executive Corporate Officer

Number and date

of plan

Number of options

exercised during the

financial year Exercise price

MrAxel Dumas n/a n/a n/a

TOTAL n/a n/a n/a

Performance-based share distributions awarded by

the Shareholders’ General Meeting during the financial year to

each Corporate Officer by the issuer and by all companies of

the Group (nominative list)

Number and

date of plan

Number of

awarded

during the

financial year

Valuation of shares

according to the

method used for

the consolidated

financial

statements

Vesting

date

Availability

date

Performance

conditions

MrAxel Dumas n/a n/a n/a n/a n/a n/a

TOTAL n/a n/a n/a n/a n/a n/a

Name of the Corporate Officer

Number and date of

plan

Number of shares

acquired during the

financial year Vesting conditions

MrAxel Dumas n/a 0 n/a

TOTAL 0 n/a

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 313

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COMPENSATION AND BENEFITS OF CORPORATE OFFICERS

3.8.4.8

TABLE 8

HISTORY OF ALLOCATION OF OPTIONS TO SUBSCRIBE FOR OR PURCHASE SHARES

INFORMATION ON THE STOCK SUBSCRIPTION OR PURCHASE OPTIONS

3.8.4.9

TABLE 9

OPTIONS TO SUBSCRIBE FOR OR PURCHASE SHARES GRANTED TO THE TOP 10EMPLOYEES (NOT CORPORATE OFFICERS) RECEIVING OPTIONS AND OPTIONS EXERCISED

BY THEM

n/a: not applicable

General Meeting of 25/05/1998 (6thresolution) – Subscription or purchase options Plans 1 to 4 expired

General Meeting of 03/06/2003 (15thresolution) – Purchase options Plans 5 and 6 expired

General Meeting of 06/06/2006 (9thresolution) – Purchase options Plan 7 expired

General Meeting of 02/06/2009 (14thresolution) – Purchase options No plan implemented in 2009, 2010 or 2011

General Meeting of 30/05/2011 (21stresolution) – Purchase options No plan implemented in 2011 or 2012

General Meeting of 29/05/2012 (13thresolution) – Purchase options No plan implemented in 2012 or 2013

General Meeting of 04/06/2013 (18thresolution) – Purchase options No plan implemented in 2013 or 2014

General Meeting of 03/06/2014 (16thresolution) – Purchase options No plan implemented in 2014 or 2015

General Meeting of 02/06/2015 (14thresolution) – Purchase options No plan implemented in 2015 or 2016

General Meeting of 31/05/2016 (14thresolution) – Purchase options No plan implemented from 2016 to 2019

General Meeting of 24/04/2020 (18thresolution) – Purchase options No plan implemented in 2020 or 2021

Total number of shares

granted/shares subscribed

or purchased

Weighted

average

price Plans 1 to 7

Options granted during the financial year by the issuer and any entity within the option

allocation scope to the 10employees of the issuer and any entity within this scope for

whom the number of options thus granted is the highest (overall information) n/a n/a

Plans expired

Options held on the issuer and aforementioned entities exercised during the financial

year by the 10employees of the issuer and these entities, for whom the number of

options thus purchased or subscribed is the highest (overall information) n/a n/a

(1) Details of these commitments can be found in chapter8 “Combined General Meeting of 4May 2021”, § 8.2.1 – Explanatory statement to

the eighth resolution.

(2) Since 5June 2013.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL314

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COMPENSATION AND BENEFITS OF CORPORATE OFFICERS

3.8.4.10

TABLE 10

HISTORY OF FREE SHARE AND PERFORMANCE SHARE ALLOCATION PLANS STILL IN FORCE AS AT 1JANUARY 2021

INFORMATION ON FREE SHARES ALLOCATED

not material; n/a: not applicable.n.m.:

(1) Maximum.

(2) At the end of the employee acceptance period.

(3) Are considered in this table No.10 to be Senior Executives: Executive Chairmen, members of the Supervisory Board (except employee representatives) and members

of the Executive Committee of the issuer on the grant date

(4) On 17February 2021, the CAG-CSR Committee noted that the performance conditions relating to financial year 2020 only had not been achieved.

Including by early release in accordance with the regulations of the plan (death, disability).(5)

3.8.4.11

TABLE NO. 10 BIS (DRAWN UP PURSUANT TO ARTICLEL.225-197-4 OF THE FRENCH COMMERCIAL CODE

(CODE DE COMMERCE)

FREE SHARES AWARDED TO THE TOP 10EMPLOYEES (NOT CORPORATE OFFICERS)

n/a: not applicable

3.8.4.12

TABLE 11

Plan f Plan h Plan i

Date of General Meeting

31/05/2016

(15

resolution)

31/05/2016

(15

resolution)

31/05/2016

(15

resolution)

Date of the decision by the Executive Management 31/05/2016 01/07/2019 01/07/2019

Total number of shares allocated

452,960 310,944

189,600

Shares allocated to Senior Executives

320 192 24,000

Number of Senior Executives

concerned 8 8 8

Share of allocations of shares to Senior Executives as

% of capital n.m. n.m. 0.02%

French tax residents on the grant date 2 tranches of 20shares 2 tranches of 12shares

Vesting period 4/5years 4/5years 4years

Date of transfer of ownership of shares 01/06/2020

01/06/2021

03/07/2023

01/07/2024 03/07/2023

End of the retention period n/a n/a n/a

Tax residents outside France on the grant date 2 tranches of 20shares 2 tranches of 12shares

Vesting period 4/5years 4/5years 4years

Date of transfer of ownership of shares 01/06/2020

01/06/2021

03/07/2023

01/07/2024 03/07/2023

End of the retention period n/a n/a n/a

Performance conditions No No Yes

Number of shares vested

as at 31/12/2021 364,980 408 0

Number of shares lost as at 31/12/2021 87,980 25,824 52,125

Total number of shares

awarded Date of plans

Shares awarded during the financial year to the 10employees of the issuer and any entity

included in this scope for whom the number of shares thus granted is the highest (overall

information) 0 n/a

Senior Executives (natural persons)

Employment

contract

Supplemental

pension plan

Compensation relative

to a non-compete

clause

MrAxel Dumas, Executive Chairman

Date of start of term of office: 05/06/2013

Date of end of term of office: open-ended No

Yes No

Compensation or benefits

due or liable to be due

because of the cessation of

or change in duties

Yes

◆

one of its Executive Chairmen;

◆

one of the members of the Supervisory Board; or

◆

one of its shareholders holding a fraction of the voting rights greater

than 10% or, in the case of a shareholder company, the company

controlling it within the meaning of ArticleL.233-3 of the French

Commercial Code (Code de commerce),

◆

one of its Executive Chairmen; or

◆

one of the members of the Supervisory Board,

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 315

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AUTRES INFORMATIONS

3.9

OTHER INFORMATION

3.9.1

AGREEMENTS

3.9.1.1

RELATED-PARTY AGREEMENTS

AND TRANSACTIONS

Information on the related-party agreements described in the

summary table below and the status of current agreements is

presented in chapter8 “Combined General Meeting of 20April

2022” in the report of the Supervisory Board to the General

Meeting in § 8.3 and in the Statutory Auditors’ special report in

§ 8.4.3.

In application of Articles L. 226-10 and L. 225-38 to L. 225-43 of the

French Commercial Code (Code de commerce), any agreement entered

into directly or through an intermediary between the Company and:

must be subject to the prior authorisation of the Board.

These provisions are applicable to agreements in which one of these

persons has an indirect interest.

Agreements entered into directly or through an intermediary between the

Company and a company are also subject to prior authorisation by the

Supervisory Board if:

is an owner, partner with unlimited liability, Executive Chairman, Director,

Chief Executive Officer, member of the Management Board or member of

the Supervisory Board of the Company.

The foregoing provisions are not applicable either to agreements on

current transactions entered into on an arm’s length basis or to

agreements concluded between two companies in which one holds,

directly or indirectly, the entire share capital of the other, where

applicable, after deduction of the minimum number of shares required by

law. These agreements are communicated by the person concerned to

the Chairman of the Supervisory Board, who communicates the list to the

members of the Board and to the Statutory Auditors.

In accordance with the provisions of ArticleL.225-38 of the French

Commercial Code (Code de commerce), authorisation decisions of the

Supervisory Board since 1August 2014 are all supported by justification.

A review of the related-party agreements entered into during previous

financial years and whose execution has continued over time is carried

out by the Supervisory Board each year in accordance with the provisions

of ArticleL.225-40-1 of the French Commercial Code (Code de

commerce).

Following the review of 2021, the Board had no comments to make.

The approvals and amendments made in 2021 are detailed in the table

below.

Related-party transactions are shown in chapter 5 “Consolidated

financial statements”, § 5.6 (note 13).

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL316

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AUTRES INFORMATIONS

SUMMARY OF RELATED-PARTY AGREEMENTS IN FORCE DESCRIBED IN THE STATUTORY AUDITORS’ SPECIAL REPORT

Nature of the agreement Persons concerned Nature, purpose and terms of the agreement Amount

Service agreement with

Émile HermèsSAS

Émile HermèsSAS,

Executive Chairman of

Hermès International

The Supervisory Board authorised the conclusion of a service

agreement between Hermès International and Émile HermèsSAS

covering ordinary legal and financial assignments.

Date of approval by the Supervisory Board

23March 2005 and 14September 2005 Contract

1September 2007 Amendment No.1

25January 2012 Amendment No.2

30August 2012 Amendment No.3

29July 2021 Downgrading

The Supervisory Board decided to downgrade this agreement on

29July 2021 in view of the adoption of new re-invoicing methods

taking effect retroactively from 1January 2021. This agreement is

now qualified as an ordinary agreement entered into under arm’s

length conditions.

n/a

(downgrading

effective 1January

2021)

Service agreement with

Studio des Fleurs

MrFrédéric Dumas,

member of the Executive

Management Board of

Émile HermèsSAS,

Executive Chairman of

Hermès International

The Supervisory Board authorised the conclusion of a contract

between Hermès International and Studio des Fleurs relating to

services for shots and retouches for e-commerce product pack

shots.

Grounds justifying its interest for the Company

Studio des Fleurs has accepted the following points, which were

fundamental for Hermès International:

obligations of Studio des Fleurs: compliance with very precise

specifications, duty of advice, monitoring of services, quality

control;

◆◆

criteria for monitoring performance indicators;

◆

no guaranteed minimum order;

◆

fixed three-year term followed by indefinite duration;

◆

long notice of termination (18months);

◆

no exclusivity;

◆

undertaking by Studio des Fleurs to take the necessary steps to

preserve its economic independence (notably by broadening and

diversifying its customer base) vis-à-vis the Hermès Group;

◆

confidentiality and prohibition on using Hermès as a reference;

◆

no revision of rates before the expiry of three years, and then

revision possible but capped.

◆

Date of approval by the Supervisory Board

20March 2018 Contract

29July 2021 New commercial conditions

On 29July 2021, the Supervisory Board approved new commercial

conditions applicable to this contract. This agreement provided for

the revision of tariffs following an initial period of three (3) years by

application of an index and a ceiling, with the possibility of the

parties waiving this ceiling if changes in the index or service

provisions justified it. The significant change in tariff practices in

the market and, in particular, the index in question, thus led the

parties to agree on new trading terms and conditions for 2021 and

2022. The Supervisory Board noted that, pursuant to these new

commercial conditions, the increase in prices over the period

covered by the contract is lower than the increase in the index

chosen over the same period and that the new commercial

conditions agreed upon are therefore in the Company’s interest.

For financial year

2021, invoicing for

these services

amounted to

€3,248,687.

https://finance.hermes.com/en/regulated-agreements/

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 317

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AUTRES INFORMATIONS

Nature of the agreement Persons concerned Nature, purpose and terms of the agreement Amount

Service agreement with

MOCE

MrCharles-Éric Bauer,

majority shareholder of

MOCE and member of the

Supervisory Board of

Hermès International

The Supervisory Board authorised the signing of a contract

between Hermès International and MOCE (“EatMe” brand) for fast

food services at Hermès International’s site at 12, rue d’Anjou

(75008).

Grounds justifying its interest for the Company

Hermès International invited bids from a number of providers of

fast food catering services in the context of a consultation. MOCE

was selected on account of its commercial offering. This company

did not propose any fixed charges and planned to develop the

space in harmony with the building.

Date of approval by the Supervisory Board

6June 2017 Contract

28May 2021 End of contract

The Supervisory Board noted the end of this agreement on 28May

2021.

For financial year

2021, invoicing for

these services

amounted to €4,964.

Design mission agreement

with the RDAI architecture

studio

MsSandrine Brekke,

partner with a more than

10% holding in RDAI and

a member of the

Executive Management

Board of Émile

HermèsSAS, Executive

Chairman of Hermès

International

The Supervisory Board authorised a new framework agreement

between Hermès International and all the companies that it

controls either directly or indirectly, and RDAI, defining the outline

of RDAI’s assignment for the exclusive application of the

architectural concept in Hermès projects.

Date of approval by the Supervisory Board

7July 2017 and 13September 2017 Contract

For financial year

2021, invoicing for

these services

amounted to €1,846.

Design mission agreement

with the RDAI architecture

studio

MsSandrine Brekke,

partner with a more than

10% holding in RDAI and

a member of the

Executive Management

Board of Émile

HermèsSAS, Executive

Chairman of Hermès

International

The Supervisory Board authorised:

an agreement between the Company and the RDAI studio for a

design mission for the interior appointments of the offices at

10-12, rue d’Anjou in Paris, which involves several floors and

includes the supply of furniture;

◆◆

an amendment to this contract to entrust RDAI with two

additional studies for: (i)the fitting out of one additional floor

and (ii)a change to the programming and layout of certain

spaces on the other floors. The fees have been set at a firm and

fixed price and account for 8% of the total value of the works,

which is in line with market prices.

◆

Date of approval by the Supervisory Board

3July 2015 Contract

20November 2015 Amendment

18February 2021 End of contract

This agreement has not been implemented for more than three

years.The Supervisory Board noted the end of this agreement on

18February 2021.

For financial year

2021, invoicing for

these services

amounted to €0.

(1) At the time of approval of this agreement, related-party agreements did not need to be justified.

3.9.1.2

AGREEMENTS ENTERED INTO BETWEEN SENIOR

EXECUTIVES OR SHAREHOLDERS

OF THE

COMPANY AND CONTROLLED

COMPANIES (ARTICLEL.225-37-4-2°

OF THE FRENCH COMMERCIAL CODE)

Pursuant to the provisions of ArticleL.225-37-4 of the French

Commercial Code (Code de commerce), this report must disclose any

agreements entered into, directly or through an intermediary, between,

on the one hand, an Executive Chairman, a member of the Supervisory

Board or one of the shareholders holding more than 10% of the voting

rights of the Company and, on the other hand, another company

controlled by said other party within the meaning of ArticleL.233-3 of the

French Commercial Code (Code de commerce).

These are not related-party agreements subject to prior approval by the

Supervisory Board, as Hermès International is not a party to the

agreement. Agreements entered into with a wholly owned subsidiary are

not excluded (Order No.2014-863 of 31July 2014 relating to company

law).

We hereby inform you that no such agreements were entered into during

the financial year ended 31December 2021.

◆

a representative of the legal, corporate law and securities law

department;

◆

a representative of the finance department.

◆

the notion of agreements bearing on ongoing transactions entered

into on an arm’s length basis and transactions deemed to be ongoing

and entered into on an arm’s length basis within the Hermès Group;

◆

the notions of related-party agreement and prohibited agreement;

◆

the roles and responsibilities related to the identification of

related-party agreements and the control and disclosure procedure

applicable to them.

◆

periodicity of the assessment: annual;

◆

nature of the work required to carry out the evaluation;

•

determining each year the scope of the agreements to be

assessed, for example by selecting a category of agreement taking

into account, for example, duration, maturity, importance (in

particular, financial), nature or by adopting a risk-based approach;

•

assessing the relevance of the criteria used to distinguish between

ongoing transactions concluded on an arm’s length basis and

related-party agreements, and their correct application in the

Company;

•

carrying out a review of the terms and conditions applicable to

these agreements in order to ensure, for those that may be

revised or renewed in the coming year, that they still qualify as

ongoing transactions concluded on an arm’s length basis, in

particular in view of the criteria used;

•

carrying out a review of the terms and conditions applicable to

these agreements in order to ensure, for those that may be

revised or renewed in the coming year, that they still qualify as

ongoing transactions concluded on an arm’s length basis, in

particular in view of the criteria used;

•

detecting any anomalies that could make it necessary to

supplement existing internal control procedures;

◆

consequences of the evaluation;

◆

report to the Supervisory Board and follow-up.

◆

voting rights are exercised by the bare owners for all decisions taken

at all General Meetings except for decisions regarding the allocation

of earnings, for which the usufructuary shall exercise the voting rights;

◆

double voting rights are allocated to each registered share after being

held for a period of four consecutive years;

◆

any shareholder who comes to hold 0.5% of the share capital and/or

voting rights, or any multiple of that percentage, must disclose the

crossing of ownership thresholds (Article11 of the Articles of

Association);

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3.9.1.3

PROCEDURE FOR MONITORING ONGOING

AND STANDARD AGREEMENTS

AND IMPLEMENTATION

Pursuant to the provisions of ArticleL.22-10-12 of the French

Commercial Code (Code de commerce), the Company has put in

place a procedure to regularly assess whether agreements relating

to current transactions and concluded under normal conditions

meet these conditions.

3.9.1.3.1 Procedure

This procedure, which applies only to Hermès International and not to its

subsidiaries, was approved by the Supervisory Board on 25February

2020.

Its purpose is to enable Hermès International to periodically assess the

appropriateness of the classification used for ongoing agreements

entered into during the financial year, those that continue over several

years, and any agreements that may have been modified.

A “Current Agreements Committee” tasked with conducting the

evaluation has been established; it comprises the following members as

a minimum:

The procedure first entails the presentation of:

The procedures for the regular evaluation of agreements relating to

ongoing transactions concluded on an arm’s length basis are then

described:

3.9.1.3.2 Implementation

In 2021, the Current Agreements Committee conducted a full review of

the agreements relating to ongoing transactions and entered into on an

arm’s length basis and concluded that all these agreements continue to

meet these two conditions. A report was presented to the Supervisory

Board, which took note of it.

An in-depth annual review will be carried out on significant agreements to

ensure that they continue to meet the criteria for ongoing and normal

agreements.

3.9.2

CAPITAL STRUCTURE AND FACTORS

LIABLE TO AFFECT THE OUTCOME

OF A PUBLIC OFFERING

In accordance with ArticleL.22-10-11 of the French Commercial Code

(Code de commerce), we inform you of the elements likely to have an

impact on a possible public tender or exchange offering for Hermès

International shares.

As a société en commandite par actions (partnership limited by shares),

Hermès International is governed by certain provisions specific to its

legal form, stipulated by law or the Articles of Association, which are

liable to have an effect in the case of a public offering, namely:

3.9.2.1

STRUCTURE OF THE COMPANY’S SHARE

CAPITAL / DIRECT OR INDIRECT AFFILIATES

IN THE SHARE CAPITAL

Information on share capital and shareholding is presented in chapter7

“Information on the Company and its share capital”, § 7.2.2. The control

held by the Hermès family group is likely to have an impact in the event of

a public offering.

3.9.2.2

STATUTORY RESTRICTIONS ON THE EXERCISE

OF VOTING RIGHTS AND SHARE TRANSFERS

Statutory restrictions on the exercise of voting rights and share transfers

are as follows:

◆

Émile HermèsSAS, the Active partner, must retain in its Articles of

Association certain provisions concerning its legal form, corporate

purpose and the conditions to be met to qualify as an Active partner

(see chapter7 “Information on the Company and its share capital”

§ 7.1.1.3 [Article14.3 of the Articles of Association]);

◆

Hermès International may only be converted into a société anonyme

(public limited company) with the consent of the Active partner;

◆

except for decisions falling within their exclusive remit, any decision

taken by the Limited Partners (shareholders) at General Meetings is

only valid if it has been approved by the Active partner no later than

the end of said meeting.

◆

the Executive Chairmen may only be appointed or dismissed by the

Active partner;

◆

the amendment of the Articles of Association is only valid if it has

been approved in advance by the Active partner;

◆

the Executive Management benefits from delegations of authority to

decide on share buybacks and capital increases, which are described

in § 3.9.4.

◆

in the registered securities accounts held for the Company by its

agent BNP Paribas Securities Services; or

◆

in the bearer share accounts held by the financial intermediary with

which your shares are registered.

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3.9.2.3

CONTROL MECHANISMS PROVIDED FOR IN A

POTENTIAL EMPLOYEE SHAREHOLDING SYSTEM

Not applicable.

3.9.2.4

AGREEMENTS BETWEEN SHAREHOLDERS

OF WHICH THE COMPANY IS AWARE AND WHICH

MAY RESULT IN RESTRICTIONS ON THE

TRANSFER OF SHARES AND THE EXERCISE

OF VOTING RIGHTS

A priority right to acquire Hermès International shares, granted by the

members of the Hermès family group, and descendants of these

members, to H51, is explained in chapter7 “Information on the Company

and its share capital”, § 7.2.5.2.

3.9.2.5

RULES APPLICABLE TO THE APPOINTMENT AND

REPLACEMENT OF THE EXECUTIVE CHAIRMEN

AND TO THE AMENDMENT OF THE COMPANY’S

ARTICLES OF ASSOCIATION/POWERS OF THE

EXECUTIVE MANAGEMENT, IN PARTICULAR AS

REGARDS THE ISSUE OR BUYBACK OF SHARES

These rules are as follows:

3.9.2.6

AGREEMENTS ENTERED INTO BY THE COMPANY

THAT ARE AMENDED OR TERMINATED IN THE

EVENT OF A CHANGE OF CONTROL OF THE

COMPANY, UNLESS SUCH DISCLOSURE, EXCEPT

IN THE CASE OF A LEGAL OBLIGATION TO

DISCLOSE, WOULD SERIOUSLY HARM ITS

INTERESTS

A certain number of agreements entered into by the Company provide for

a change of control clause, but none of them are of a nature to be

covered by paragraph9 of ArticleL.22-10-11 of the French Commercial

Code (Code de commerce).

3.9.2.7

AGREEMENTS PROVIDING FOR COMPENSATION

FOR THE EXECUTIVE CHAIRMEN OR

EMPLOYEES, IF THEY RESIGN OR ARE

DISMISSED WITHOUT REAL AND SERIOUS

CAUSE OR IF THEIR EMPLOYMENT IS

TERMINATED DUE TO A PUBLIC OR EXCHANGE

OFFERING

The Company has undertaken to make a severance payment to MrAxel

Dumas under the conditions described in chapter8 “Combined General

Meeting of 20April 2021”, § 8.2.1 – Explanatory statement to the eighth

resolution. Given the importance of the Active partner’s role in a société

en commandite par actions (partnership limited by shares) – including

the power to appoint and dismiss any Executive Chairman – and, in the

case of a legal entity, its legal representative, it was decided that any

termination of MrAxel Dumas’ duties as Executive Chairman resulting

from the replacement of the Chairman of Émile HermèsSAS should be

deemed a forced departure.

3.9.3

SPECIAL CONDITIONS FOR ATTENDING

GENERAL MEETINGS

In accordance with ArticleL.22-10-10 of the French Commercial Code

(Code de commerce), we hereby inform you that General Meetings are

called, except in exceptional circumstances, under the conditions set by

law and Article24 of the Articles of Association (see chapter7

“Information on the Company and its share capital”, § 7.1.1.3).

Any shareholder or shareholder representative has the right to attend the

General Meeting and take part in the deliberations, regardless of the

number of shares. However, shareholders will only be permitted to attend

this meeting, to be represented or to vote by post if they have previously

provided proof of their status by registering their shares in their own

name (or that of the intermediary registered on their behalf if they are not

domiciled in France) on the second business day (= i.e. stock market

trading days) preceding the meeting at midnight (Paris time) [“record

date”]:

◆

attend the General Meeting in person;

◆

by post: vote or be represented by giving proxy to the Chairman of the

General Meeting or to a proxy;

◆

by Internet: vote or be represented by giving proxy to the Chairman of

the General Meeting or a proxy.

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In the event of a sale of shares before this date, the shareholding

certificate will be invalidated and the votes by post or powers sent to the

Company will also be invalidated. In the event of disposal after this date,

the shareholding certificate will remain valid and the votes cast or the

powers given will be taken into account.

Shareholders may choose one of the following three options to attend the

General Meeting:

In accordance with ArticlesL.225-96 and L.225-98 of the French

Commercial Code (Code de commerce), only votes cast by shareholders

present or represented are taken into account in the calculation of the

quorum. The votes cast do not include abstentions, blank votes, invalid

votes, or shareholders who did not take part in the vote for the resolution

in question. Postal voting forms giving no meaning or expressing an

abstention will no longer be considered as negative votes. They will not

be taken into account in the votes cast.

Double voting rights are allocated under the conditions set out in

Article12 of the Articles of Association (see chapter7 “Information on the

Company and its share capital”, § 7.1.1.3).

In the event that a legal (ArticlesL.233-7 of the French Commercial Code

(Code de commerce) and L.433-3 et seq. of the French Monetary and

Financial Code (Code monétaire et financier)) or internal threshold is

crossed (Article11 of the Articles of Association – see chapter7

“Information on the Company and its share capital”, § 7.1.1.3) with

regard to equity and/or voting rights, a declaration in accordance with the

conditions set out in the aforementioned texts must be made, failing

which the shares will be deprived of voting rights at General Meetings.

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3.9.4

SUMMARY TABLE OF THE USE OF FINANCIAL DELEGATIONS OF AUTHORITY

In accordance with the provisions of ArticleL.225-37-4-3° of the French

Commercial Code (Code de commerce), the table below shows all the

delegations of competence and powers granted by the General Meeting

to the Executive Management in financial matters, distinguishing

between delegations that were valid, and delegations used, in the 2021

financial year, as applicable.

Date of General Meeting

Resolution No. Delegations valid in 2021 Limit common to several authorisations Use in 2021

PURCHASE OPTIONS/FREE SHARES

24April 2020

resolution

Authorisation: allocation of stock options

Duration (expiry): 38months (24June 2023)

Individual limit:2%

24April 2020

resolution

Authorisation: allocation of existing free ordinary shares

Duration (expiry): 38months (24June 2023)

Individual limit:2%

BUYBACK/CANCELLATION OF SHARES

None

24April 2020

resolution

Authorisation: share buyback

Duration (expiry): 18months (24October 2021)

Individual limit: 10% of the share capital – maximum amount

of €2billion – maximum price per share: €850

24April 2020

resolution

Authorisation: cancellation of shares

Duration (expiry): 24months (24April 2022)

Individual limit: 10% of the share capital

4May 2021

resolution

Authorisation: share buyback

Duration (expiry): 18months (4November 2022)

Individual limit: 10% of the share capital – maximum amount

of €2.5billion – maximum price per share: €1,200

4May 2021

resolution

Authorisation: cancellation of shares

Duration (expiry): 24months (4May 2023)

Individual limit: 10% of the share capital

EQUITY SECURITIES

See chapter7

“Information on

the Company

and its share

capital”, §

7.2.2.10.1

None

See chapter7

“Information on

the Company

and its share

capital”, §

7.2.2.10.1

None

4June 2019

resolution

Authorisation: capital increase by incorporation of reserves

Duration (expiry): 26months (4August 2021)

Individual limit: 40% of the share capital

n/a

None

4June 2019

resolution

Authorisation: issue with preemptive subscription rights

maintained

Duration (expiry): 26months (4August 2021)

Individual limit: 40% of the share capital

4June 2019

resolution

Authorisation: issue with preemptive rights cancelled

Duration (expiry): 26months (4August 2021)

Individual limit: 40% of the share capital

4June 2019

resolution

Authorisation: capital increase reserved for members

of a company or group savings plan

Duration (expiry): 26months (4August 2021)

Individual limit: 1% of the share capital

4June 2019

resolution

Authorisation: issue by private placement

Duration (expiry): 26months (4August 2021)

Individual limit: 20% of the share capital per year

4June 2019

resolution

Authorisation: issue to compensate contributions in kind

Duration (expiry): 26months (4August 2021)

Individual limit: 10% of the share capital

40%

None

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4May 2021

resolution

Authorisation: issue with preemptive subscription rights

maintained

Duration (term): 26months (4July 2023)

Individual limit: 40% of the share capital

None

4May 2021

resolution

Authorisation: issue with preemptive rights cancelled

Duration (term): 26months (4July 2023)

Individual limit: €1billion

4May 2021

resolution

Authorisation: issue by private placement

Duration (term): 26months (4July 2023)

Individual limit: €1billion

4May 2021

resolution

Authorisation: issue to compensate contributions in kind

Duration (term): 26months (4July 2023)

Individual limit: €1billion

€1billion

None

Date of General Meeting

Resolution No. Delegations valid in 2021 Limit common to several authorisations Use in 2021

4May 2021

resolution

Authorisation: capital increase by incorporation of reserves None

Duration (term): 26months (4July 2023) n/a

Individual limit: 40% of the share capital

Authorisation: issue with preemptive rights cancelled

Duration (term): 26months (4July 2023)

Individual limit: 40% of the share capital

4May 2021

resolution

None

4May 2021

resolution

Authorisation: capital increase reserved for members of a

company or group savings plan

40%

Duration (term): 26months (4July 2023)

Individual limit: 1% of the share capital

None

4May 2021

resolution

Authorisation: issue by private placement None

Duration (term): 26months (4July 2023)

Individual limit: 20% of the share capital per year

4May 2021

resolution

Authorisation: issue to compensate contributions in kind None

Duration (term): 26months (4July 2023)

Individual limit: 10% of the share capital

DEBT SECURITIES

4June 2019

resolution

Authorisation: issue with preemptive subscription rights

maintained

None

Duration (expiry): 26months (4August 2021)

Individual limit: €1billion

4June 2019

resolution

Authorisation: issue with preemptive rights cancelled None

Duration (expiry): 26months (4August 2021)

Individual limit: €1billion

€1billion

4June 2019

resolution

Authorisation: issue by private placement None

Duration (expiry): 26months (4August 2021)

Individual limit: €1billion

4June 2019

resolution

Authorisation: issue to compensate contributions in kind None

Duration (expiry): 26months (4August 2021)

Individual limit: €1billion

4May 2021

resolution

Authorisation: issue with preemptive subscription rights

maintained

None

Duration (term): 26months (4July 2023)

Individual limit: €1billion

(1) These authorisations were cancelled, for the remaining duration and for the unused fraction, by delegations of the same nature authorised by the General Meeting of

4May 2021.

(2) These delegations are intended to be cancelled, for the remaining duration and for the unused fraction, in the case of the adoption of new resolutions concerning new

delegations of the same nature by the General Meeting of 20April 2022 (see chapter8 “Combined General Meeting of 20April 2022”, § 8.2.1 and § 8.2.2 –

Explanatory statement to the sixth and seventeenth resolutions).

◆

share buybacks/cancellations (see chapter8 “Combined General

Meeting of 20April 2022”, § 8.2.1 and § 8.2.2 – Explanatory

statement to the sixth and seventeenth resolutions);

◆

the possibility of granting stock options and allocating existing free

ordinary shares to employees and Senior Executives of the Company

and its subsidiaries.

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Date of General Meeting

Resolution No. Delegations valid in 2021 Limit common to several authorisations Use in 2021

MERGER BY ABSORPTION, SPIN-OFF, PARTIAL CONTRIBUTION OF ASSETS

4May 2021

and 25

resolutions

Authorisation: merger by absorption, spin-off and partial

contribution of assets subject to the legal regime for spin-offs

and resulting capital increase

Duration (term): 26months (4July 2023)

Individual limit: 40% of the share capital

40% (25

resolution) None

It is proposed that the General Meeting of 20April 2022 renew the

financial delegations previously granted to the Executive Management

for:

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OTHER INFORMATION FROM THE EXECUTIVE MANAGEMENT REPORT

3.10

OTHER INFORMATION FROM THE EXECUTIVE MANAGEMENT REPORT

3.10.1

INTERESTS OF CORPORATE OFFICERS AND EXECUTIVE COMMITTEE MEMBERS IN THE SHARE

CAPITAL

In accordance with point 16.1 of Annex 1 to Commission Delegated Regulation (EU) 2019/980, the direct interests of Senior Executives in the

Company’s share capital as at 31December 2021, as reported to the Company, were as follows.

Shares in full ownership or with usufruct

(Ordinary General Meeting votes on the allocation of net income)

Full or bare ownership shares

(other General Meeting votes)

Number of

shares % Number of votes %

Number of

shares % Number of votes %

SHARE CAPITAL AS

AT 31/12/2021 105,569,412 100.00% 177,758,072 100.00% 105,569,412 100.00% 177,758,072 100.00%

Executive Chairmen

Émile HermèsSAS 33,236 0.03% 66,472 0.04% 33,236 0.03% 66,472 0.04%

Axel Dumas 11,768 0.01% 22,166 0.01% 11,768 0.01% 22,166 0.01%

Members of the Supervisory Board

Éric de Seynes 226 0.00% 429 0.00% 511 0.00% 714 0.00%

Dorothée Altmayer 200 0.00% 230 0.00% 200 0.00% 230 0.00%

Charles-Éric Bauer 75,748 0.07% 151,496 0.09% 75,748 0.07% 151,496 0.09%

Estelle Brachlianoff 100 0.00% 100 0.00% 100 0.00% 100 0.00%

Pureza Cardoso 100 0.00% 140 0.00% 100 0.00% 140 0.00%

Monique Cohen 250 0.00% 500 0.00% 250 0.00% 500 0.00%

Matthieu Dumas 1,563 0.00% 1,776 0.00% 1,563 0.00% 1,776 0.00%

Blaise Guerrand 200 0.00% 400 0.00% 200 0.00% 400 0.00%

Julie Guerrand 6,825 0.01% 12,650 0.01% 6,825 0.01% 12,650 0.01%

Olympia Guerrand 600 0.00% 1,200 0.00% 600 0.00% 1,200 0.00%

Rémy Kroll 220 0.00% 270 0.00% 220 0.00% 270 0.00%

Renaud Momméja 149,972 0.14% 299,944 0.17% 89,012 0.08% 178,024 0.10%

Dominique Senequier 200 0.00% 400 0.00% 200 0.00% 400 0.00%

Alexandre Viros 100 0.00% 100 0.00% 100 0.00% 100 0.00%

Executive Committee (excluding Executive Chairmen and members of the Supervisory Board)

Florian Craen 5,100 0.00% 8,140 0.00% 5,100 0.00% 8,140 0.00%

Charlotte David 4,000 0.00% 4,000 0.00% 4,000 0.00% 4,000 0.00%

Pierre-Alexis Dumas 97,187 0.09% 130,314 0.07% 93,064 0.09% 122,068 0.07%

Olivier Fournier 4,195 0.00% 4,350 0.00% 4,195 0.00% 4,350 0.00%

Catherine Fulconis 3,040 0.00% 3,080 0.00% 3,040 0.00% 3,080 0.00%

Wilfried Guerrand 7,885 0.01% 14,010 0.01% 7,885 0.01% 14,010 0.01%

Éric du Halgouët 4,040 0.00% 5,080 0.00% 4,040 0.00% 5,080 0.00%

Guillaume de Seynes 5,355 0.01% 9,670 0.01% 5,640 0.01% 9,955 0.01%

Voting rights that can be exercised in the General Meeting. In accordance with Article12 of the Articles of Association of the Company, the voting right is exercised by(1)

the bare owner for all decisions taken by all General Meetings, except for decisions concerning the allocation of net income, for which the voting right is exercised by

the usufructuary. The procedures for publication and allocation of voting rights are detailed in chapter7 “Information on the Company and its share capital”, §

7.2.1.2.

◆

no Corporate Officer has been convicted of fraud in the last five

years;

◆

no Corporate Officer has been involved in a bankruptcy,

receivership, liquidation or placement of companies under judicial

administration as a member of an administrative, management or

supervisory body or as a Managing Director in the past five years;

◆

no Corporate Officer has been barred by a court from acting as a

member of an administrative, management or supervisory body of a

listed company or from participating in the management or

conducting the business of a listed company in the last five years;

◆

no Corporate Officer has been accused or punished in a court of law

by a statutory or regulatory authority (including designated

professional bodies).

◆

the obligation for Executive Chairmen to hold 1,000shares;

◆

the obligation for members of the Supervisory Board to hold

100shares;

◆

the obligation to abstain (blackout periods) for members of the

Supervisory Board, Executive Chairmen and members of the

Executive Committee as part of the prevention of market abuse;

◆

the priority right of acquisition on Hermès International shares,

granted by the members of the Hermès family group and

descendants of these members for the benefit of the company H51

(see chapter7 “Information on the Company and its share capital”,

§ 7.2.5.2).

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 325

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OTHER INFORMATION FROM THE EXECUTIVE MANAGEMENT REPORT

3.10.2

DECLARATIONS CONCERNING

CORPORATE OFFICERS AND

THE EXECUTIVE COMMITTEE

3.10.2.1

NATURE OF ANY FAMILY TIES BETWEEN

THE ACTIVE PARTNER, THE MEMBERS

OF THE SUPERVISORY BOARD, THE EXECUTIVE

CHAIRMEN AND THE MEMBERS

OF THE EXECUTIVE COMMITTEE

Pursuant to Commission Delegated Regulation (EU) 2019/980 of

14March 2019 (AnnexI, Article12.1), we hereby report to you on family

ties existing between the members of the Supervisory Board, the

Executive Chairmen and members of the Executive Committee.

MsDorothée Altmayer, MrAxel Dumas, MrMatthieu Dumas,

MrPierre-Alexis Dumas, MrHenri-Louis Bauer, MrCharles-Éric Bauer,

MsJulie Guerrand, MrBlaise Guerrand, MsOlympia Guerrand,

MrRenaud Momméja, MrGuillaume de Seynes and MrÉric de Seynes

are all direct descendants of MrÉmile-Maurice Hermès, which gives

them the status of siblings or first cousins, as the case may be.

To the best of the Company’s knowledge, there are no other family ties

between the members of the Supervisory Board, the Executive Chairmen

and members of the Executive Committee.

3.10.2.2

ABSENCE OF CONVICTION OF CORPORATE

OFFICERS AND MEMBERS OF THE EXECUTIVE

COMMITTEE

Pursuant to Commission Delegated Regulation (EU) 2019/980 of

14March 2019 (AnnexI, Article12.1), we hereby inform you that,

according to the sworn statements made to the Company by the

Corporate Officers and members of the Executive Committee:

3.10.2.3

RESTRICTIONS ON THE DISPOSAL OF SHARES

BY CORPORATE OFFICERS

Pursuant to Commission Delegated Regulation (EU) 2019/980 of

14March 2019 (AnnexI, Article12.2), we inform you of the restrictions

on the disposal within a certain period of time of Hermès International

shares by the members of the Supervisory Board, the Executive

Chairmen and the members of the Executive Committee:

To the best of the Company’s knowledge, there are no other restrictions

on the sale of shares by Corporate Officers.

3.10.2.4

SERVICE CONTRACTS PROVIDING FOR

THE GRANTING OF BENEFITS

Pursuant to Commission Delegated Regulation (EU) 2019/980 of

14March 2019 (AnnexI, Article12.2), we hereby inform you that no

service contracts bind the members of the Supervisory Board to the

Company or to any of its subsidiaries whatsoever and provide for the

granting of benefits at the end of such a contract.

4.1.1

Risks related to strategy and operations

330

4.1.2

Industrial risks

335

4.1.3

Legal and regulatory risks

339

4.1.4

Risks related to social, societal and environmental responsibility

340

4.1.5

Financial risks

344

4.2

INSURANCE POLICY AND RISK HEDGING

347

4.3

RISK MANAGEMENT, INTERNAL CONTROL AND INTERNAL AUDIT

348

4.3.1

A demanding control environment

348

4.3.2

Committed parties responsible for risk management and control

348

4.3.3

A controlled risk management system

351

4.3.4

A mature internal control system

352

4.3.5

An agile internal audit system

355

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RISK FACTORS AND MANAGEMENT

AFR

4.1

RISK FACTORS

328

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RISK FACTORS

4.1

RISK FACTORS

In accordance with European regulation (EU) no. 2017/1129 of 14June

2017 (Prospectus) and the ESMA guidelines, the risk factors presented

in this chapter are, as at the date of this universal registration document,

those that the Hermès Group believes could have a material adverse

effect on its activity, results, financial position or prospects.

In the context of the current health crisis, certain risks have been

exacerbated such as the risks of personal safety, supply disruption,

non-continuity of activities, cyberattacks, fraud, etc. The Group quickly

adapted by setting up a crisis management organisation and developing

protocols to protect the health and safety of employees, as well as to

secure sites. Reinforced monitoring has been put in place with the

Group’s suppliers and service providers in order to ensure the continuity

of operations at industrial, commercial and logistical levels.

In general, the Group has put in place a system to anticipate and control

the risks identified. It is periodically updated to take into account

regulatory, legislative, economic, societal, geopolitical and competitive

developments. A detailed description of the management of these risks is

presented in this chapter.

Risk factors are presented in five main categories according to their

nature, the most material risks being presented first. The mapping below

classifies these risk factors according to their potential impact and

probability of occurrence and therefore reflects the Group’s exposure,

after taking into account the control measures implemented. The impact

of the risks identified is assessed using a multi-criteria grid defined at

Group level and shared with the subsidiaries. The analysis criteria

include, as an inseparable whole, financial, reputational and legal

criteria, as well as criteria relating to social, societal and environmental

responsibility. This methodology makes it possible to address a concept

of double materiality by taking into account the impacts on the Group

itself and on its stakeholders.

The Audit and Risk Committee was involved in drawing up this matrix.

● Commercial appeal

● Business disruption

● Fraud

● Health & safety

● Changes in, complexity

and interpretation of

tax regulations

● Bank counterparties

High

Likelihood of occurrence

● Safety

● Compliance with

applicable laws and

regulations in all areas

● Changes in major global

climate and biodiversity

issues

● Intellectual property

and combating

counterfeiting

● Availability and proper

use of natural resources

● Commercial appeal

● Exchange rates

● Management of talent

and savoir-faire

● Image and reputation

● Management

of supplies

● Information systems and

cyberattacks

● Respect for human rights,

fundamental freedoms

and ethics

Impact

High

●

Major external crisis

●

Strategy & operations

●

Industry

●

CSR

●

Regulatory compliance

●

Finance

Expected change in the medium to long term

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RISK FACTORS AND MANAGEMENT

RISK FACTORS

RISK RANKING BY CATEGORY (FROM MOST TO LEAST SIGNIFICANT)

●

4.1.1 Risks related to strategy

and operations

4.1.1.1 Image and reputation Page330

4.1.1.2 Commercial attractiveness Page331

4.1.1.3 Information systems and cyberattacks Page332

4.1.1.4 Major external crisis Page333

4.1.1.5 Management of talent and savoir-faire Page334

● 4.1.2 Industrial risks

4.1.2.1 Supply management Page335

4.1.2.2 Business interruption Page336

4.1.2.3 Health and safety Page337

4.1.2.4 Safety Page338

● 4.1.3 Legal and regulatory risks

4.1.3.1 Compliance with applicable laws and regulations in all areas Page339

4.1.3.2 Intellectual property and the fight against counterfeiting Page340

●

4.1.4 Risks related to social, societal

and environmental responsibility

4.1.4.1 Changes in major global climate and biodiversity issues Page341

4.1.4.2 Availability and proper use of natural resources Page342

4.1.4.3 Respect for human rights, fundamental freedoms and ethics Page343

●

4.1.5 Financial risks

4.1.5.1 Fraud Page344

4.1.5.2 Exchange rate Page345

4.1.5.3 Bank counterparties Page346

4.1.5.4 Changes in, complexity and interpretation of tax regulations Page346

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RISK FACTORS

4.1.1

RISKS RELATED TO STRATEGY AND OPERATIONS

4.1.1.1

IMAGE AND REPUTATION

●

◆

DESCRIPTION OF THE RISK

The Hermès Group’s reputation is based on the quality of its products and services offered to

customers, the savoir-faire of its craftspeople and its unique communication. In a globalised

world and surrounded by the growing influence of social networks, unfavourable media coverage

or individual behaviour contrary to the House’s values of ethics and integrity could affect the

Group’s image and reputation.

●

Strategy & operations Industry

● ●

Regulatory compliance

●

FinanceCSR

●

◆

RISK MANAGEMENT

PROBABILITY

An unfavourable media campaign

could negatively affect the image

of the Group.

IMPACT

Hermès, through its production and distribution entities, has built a robust internal control system for all key processes to protect its tangible and

intangible assets, including its image and reputation.

The Group has rolled out an ethics charter, a code of business conduct and an anti-corruption code of conduct to all employees.

These three documents are sent to all new employees as soon as they join the House and are also made available to them on our HermèSphère

Intranet in the “Our Ethics” section and on the external website https://finance.hermes.com/en/ethics-human-rights-and-diversities/. In addition, a

continuous training module on anti-corruption laws has been rolled out to operational staff.

In order to act in accordance with the House’s ethics principles and values, the Group also ensures the proper conduct of the various third parties

with which it has a business relationship (suppliers, partners). Systems have been set up for managing risks in ethics, CSR, etc. and are detailed in

chapter2 "Corporate social responsibility". Through the structure of its family shareholding, the House remains independent in

the way it

implements its strategy and conducts its activities, which are carried out in line with its values.

The Group has also put in place a permanent monitoring system on the web under the responsibility of the Group communication department.

Hermès also has a crisis management manual which serves to prevent, manage and limit the impacts of undesirable events on the Company.

Note: Hermès’ actions and achievements in the fields of ethics and compliance are described in chapter2.

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RISK FACTORS

●

4.1.1.2

COMMERCIAL ATTRACTIVENESS

◆

DESCRIPTION OF THE RISK

The commercial attractiveness and desirability of the products are based on the Group’s unique

model. The latter is characterised by its radical style, ancestral savoir-faire mainly “Made in

France”, high quality products and services, its openness to local cultures and its unique

communication.

In a constantly changing world, any failure of the Group to take customer expectations into

account, issues with the quality of products or CSR concerns could negatively impact the House’s

appeal.

The attractiveness of products could also be affected by the parallel market and networks of

resellers offering a low-quality customer experience.

◆

RISK MANAGEMENT

PROBABILITY

The loss of commercial appeal

could lead to a gradual loss of

interest from customers.

IMPACT

The creative offering is the responsibility of the artistic department and its many talented employees, who ensure the creative synergies of the

collections while preserving the House’s identity and style. Their mission is to create, innovate, put forward new concepts and collections whose

forms, materials and colours will astound our customers and be enhanced by our craftspeople. The freedom of creation, reinforced by the freedom

of the stores to purchase, is exercised while respecting the harmony and coherence of the collections, expressed through an annual theme.

Absolute product quality has always been a priority. Tests carried out on all products before they are sold ensures their compliance and durability.

The Group has also implemented a support system for its craftspeople and suppliers with a view to developing their savoir-faire in terms of the

expected level of quality.

The Hermès Group has introduced a number of tools, both in-store and online, to enrich the customer experience by raising the level of service to

match the quality of its products. The stores are also regularly renovated, the omnichannel offer is being expanded and customer services, such as

after-sales service, are developing. In line with the current health context, the Group has developed its offer of remote services to better meet their

expectations.

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RISK FACTORS

4.1.1.3

INFORMATION SYSTEMS AND CYBERATTACKS

●

◆

DESCRIPTION OF THE RISK

Information systems are of paramount importance in the smooth running of the

Group’s day-to-day operations. They may concern customers, suppliers or

employees, as well as the processing and storage of data.

●

Strategy & operations Industry

● ●

Regulatory compliance

●

FinanceCSR

●

◆

RISK MANAGEMENT

Personal data protection is a priority for the Group.

IMPACT

PROBABILITY

The partial or total unavailability of certain

information systems could disrupt or paralyse

the processes and the activities concerned.

A breach of information systems, triggered by a

cyberattack, for example, could lead to a data

breach, such as the unauthorised disclosure of

sensitive data.

A global information system governance model clearly defines the roles and responsibilities of the Group’s headquarters and subsidiaries. Common

architecture and urbanisation rules favour a centralised model when technical or regulatory constraints allow. The sovereign functions of the

information systems remain managed by the headquarters.

A cybersecurity community is led by the Group team, which relies on dedicated experts and local contacts. Collaboration between these different

actors is facilitated by the organisation of monthly updates (sharing on current positions and the evolution of threats, monitoring of the roadmap,

reminders of best practices), monthly themed webcasts and the organisation of dedicated bi-annual seminars.

Hermès’ IT spending (investment and operating budget) is reassessed each year to ensure that investments are aligned with the Group’s strategic

challenges. Its objective is to align the technical infrastructures and systems with the growing needs of users while ensuring good operational

performance. They also aim to keep IT risks under control and to develop information systems, in particular for new digital and cloud uses, whilst

being socially and environmentally responsible.

The information systems department adheres to an information technology charter and a set of procedures applicable to all Group companies.

In particular, an information systems security policy (ISSP) is updated annually to adapt to threats. Audits of IT security and compliance with

procedures are carried out periodically in all subsidiaries, in collaboration with the audit and risk management department and with the help of

external service providers. Exercises are carried out on a regular basis to improve incident detection and response capabilities (red team/blue team

system).

In the field of IT risk prevention, IT risk mapping is regularly updated and presented to the Audit and Risk Committee. The work previously initiated

was continued in 2021. This included strengthening the security of central systems, control over workstations, managing the life cycle of identities,

securing internal and external access, preventing data leaks, protecting cloud applications and the physical security of data centres. Improved

backup and fault tolerance arrangements for critical systems were also included to ensure continuity of operation in the event of an incident.

The information systems department has reinforced its capacity to detect and deal with incidents. All computers and servers are equipped with

software to detect anomalies (endpoint detection response – EDR), enable security patches to be installed and conduct investigations in the event

of doubt. Security incidents are dealt with by a dedicated team (Security Operation Centre – SOC) and are closely monitored. Security measures

were strengthened during lockdown periods and systems were created for new uses introduced by teleworking.

New initiatives to raise employee awareness of security issues have taken various forms within the framework of a global programme (conferences,

films, e-learning, escape games, dedicated website in eight languages). Each year, Cybersecurity Month gives special emphasis to these topics.

Intrusion tests on internal, Wi-Fi and external networks were carried out, as well as IT disaster simulations, and corresponding action plans were

formalised. The continuity of IT operations is also tested regularly. Crisis simulation exercises are carried out annually and are followed by feedback

and action plans. In addition to the information systems department, they involve various Group departments (internal communication department,

financial communication and investor relations department, insurance department, audit and risk management department, legal compliance

department and the Data Protection Officer, etc.) as well as a member of the Group Executive Committee.

Furthermore, the Group ensures that it complies with the various standards and regulations applicable to the protection of personal data (GDPR)

and payment card data (PCI-DSS). Compliance with the latter standard is also assessed annually by a third party. The information systems

department accordingly works with other departments in order to reduce the risks of damage to information systems and its impacts in the event

such risks were to materialise.

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RISK FACTORS

●

4.1.1.4

MAJOR EXTERNAL CRISIS

◆

DESCRIPTION OF THE RISK

The Group is exposed to economic, political, social and health developments in the

many countries in which it operates.

◆

RISK MANAGEMENT

PROBABILITY

Geopolitical, economic or social tensions as

well as a pandemic situation could have an

impact on sales. The consequences would

be even more unfavourable in areas where

the Group has a significant presence,

particularly in Asia.

IMPACT

The breakdown of the Group’s revenue by

geographical area is presented in chapter 1

"Presentation of the Group and its results",

§ 1.7.

Hermès holds a unique position in the luxury market. Its broad portfolio of products reduces the risk of dependence on any particular range, while

its distribution is well balanced geographically.

The Group operates 303points of sale under the Hermès banner, including 221branches that generate over 91% of revenue. In addition, the

Group is continuing to develop its online sales activity with the successive deployment of e-commerce platforms in its distribution subsidiaries.

Some Hermès products are also distributed via a network of multi-brand points of sale carefully selected on the basis of qualitative and/or

quantitative criteria. This distribution method concerns in particular perfumes, watches and certain products from the Home universe. Lastly, the

Group also owns other brands that distribute their products directly or through their own selective network. Details of these brands are described in

§ 1.4.1.

In addition, there is little exposure of sales to seasonality.

The policy of opening new points of sale is prudent and aims to spread the risks over several geographical areas. In this respect, the acceleration of

the development of the Americas region aims in particular to reduce the weight of Asia in the Group’s sales.

In addition, a crisis management system is in place to ensure business continuity. In particular, it was successfully implemented since early 2020 in

the context of the Covid-19 pandemic (see § 4.3.4 Crisis management).

◆

DESCRIPTION OF THE RISK

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RISK FACTORS

●

4.1.1.5

MANAGEMENT OF TALENT AND SAVOIR-FAIRE

●

Strategy & operations Industry

● ●

Regulatory compliance

●

FinanceCSR

●

The savoir-faire of craftspeople, and more broadly the development of the potential of

employees, is one of Hermès’ key assets. They are based on preserving, enriching and

passing on this often exclusive savoir-faire in a context of growth for our métiers and our

workforce.

IMPACT

◆

RISK MANAGEMENT

PROBABILITY

A loss of savoir-faire or the disappearance

of exclusive craftsmanship métiers would

have an impact on the Group’s operations

and reputation, thus negatively affecting

its financial results.

The Group human resources department is in charge of identifying and developing talent in order to lay the groundwork for the next generation at all

levels of the organisation. It is based on specific tailor-made courses and offers a training policy for new employees.

Training, along with internal mobility, is one of the major levers to support employees throughout their careers in the House.

The continuous improvement of craftspeople’s skills and savoir-faire is achieved through training and professional qualification programmes carried

out in Hermès internal training schools (École du Cuir, École des Tanneurs or École du Textile, among others), as well as through collaborations with

external training structures. The promotion of crafts métiers and craftsmanship among younger generations is carried out with the support of

partners: schools, training and apprenticeship centres, in order to ensure the knowledge and sustainability of savoir-faire.

True to its family tradition and wishing to involve all employees in its growth, Hermès has set up various measures for sharing economic benefits:

incentive schemes, profit-sharing, employee shareholding plans, etc.

In the context of Covid-19, the House has continued its training by adapting its programmes. Thus, during periods of lockdown, training was held

remotely, with face-to-face sessions resuming as soon as possible.

All initiatives undertaken by the Group relating to the management of talent and the preservation of savoir-faire are presented in chapter2

"Corporate social responsibility".

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RISK FACTORS

4.1.2

INDUSTRIAL RISKS

●

4.1.2.1

SUPPLY MANAGEMENT

◆

DESCRIPTION OF THE RISK

Most of Hermès’ production is integrated, in line with its strategy of preserving unique

savoir-faire and securing supplies.

However, the ability of the Hermès Group to grow is also linked to the development of its

suppliers, whose exceptional savoir-faire and future successes will contribute to those of the

Group.

◆

RISK MANAGEMENT

PROBABILITY

A supply shortage, in terms of volume

or quality, of certain exceptional

materials for the Group could lead to

disruptions in production and

eventually a loss of business.

IMPACT

The Hermès Group makes most of its products in-house, primarily in France. It is not therefore seeking suppliers established in countries at risk.

Hermès has long been committed to a responsible long-term partnership approach with its suppliers. It enters into special partnerships with its

suppliers and producers, based on ethics and trust, by fostering long-term relationships with them. This stable relationship allows for close

collaboration on many subjects over time.

The Group’s approach is based on in-depth knowledge of all its supply chains. A total of 75 supply chains have been analysed since the beginning

of 2020, resulting in the creation of a supply chain brief for each of them, which formalises the Group’s short and medium-term ambitions to ensure

ethical and responsible supply chains.

The Group Purchasing Manager handles supplier risk transversally. Its role is in particular to manage the community of buyers by supporting them

on a daily basis in managing supplier risk, as described in chapter 2 "Corporate social responsibility", § 2.6.

Hermès has developed long-term relationships with its partners and suppliers, thereby better protecting its supplies and critical savoir-faire.

Drawing up supplier risk mapping enables action plans to be determined, assessed and prepared in response to the risks identified, wherever

necessary, in particular in relation to the duty of care (human rights, environment, health and safety). Significant work has also been carried out to

optimise and secure the supply chain.

Committed to providing long-term support for all its partners and maintaining balanced relationships characterised by goodwill and high standards,

Hermès ensures that its partners respect its social, environmental and ethics ambitions. A CSR handbook was formalised in January2021 to set

out the House’s expectations on this subject. Supplier audits, conducted using internal resources as well as independent external firms, serve

notably to check that their operations meet the Group’s expectations.

The Group is strengthening supply protection, implementing a policy of diversification and limitation of supplier dependence, and building up

security inventories. One of the challenges of the “know your supplier” system is ensuring that suppliers have identified the risk areas related to

their activity that could lead to a total or partial stoppage of their production (critical raw materials, equipment, processes, sources of energy or key

people, etc.). The formalisation of backup solutions and their regular testing are recommended. Where appropriate, equity investments may help to

secure these relationships. In line with the current health crisis, the Group has set up close monitoring of its suppliers in order to best support them

and anticipate any difficulties, in a constant spirit of partnership.

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RISK FACTORS

●

4.1.2.2

BUSINESS INTERRUPTION

◆

DESCRIPTION OF THE RISK

Hermès relies on a highly integrated French production method. The vast majority of our objects

(78%) are made in France in exclusive in-house workshops (over 58%). The Group’s ability to

deal with a major industrial accident at one of its production, distribution or logistics sites (fire,

flood), a natural disaster (tsunami, earthquake) or a major health crisis, is a key issue for

Hermès.

●

Strategy & operations Industry

● ●

Regulatory compliance

●

FinanceCSR

●

◆

RISK MANAGEMENT

PROBABILITY

The occurrence of such events

on the production chain would

impact the conduct of activities

and would have consequences

on the Group’s commercial and

financial performance.

IMPACT

The management of industrial risks is carried out by the Group’s industrial affairs department. It is based on EHS networks in both the Group and

internally within the métiers, as described in chapter2 "Corporate social responsibility".

The production sites are spread across the country and comply with French regulations, some of the most demanding in the world, thus reducing

the risk of a complete shutdown.

Hermès implements initiatives designed to protect its manufacturing assets, employees and the environment on all of the House’s production sites.

The Group’s industrial affairs department relies on the métiers’ industrial departments and Site Managers to carry out internal diagnostics. Audits

conducted by external specialists enable operational improvement plans to be drawn up. The recommendations resulting from these analyses in the

areas of organisation, procedures, training or investment are subject to careful follow-up. Safety-related expenditures and investments are

considered to be a priority when making budget choices. In particular, in the current health context, adjustments have been made to the various

sites to allow the activity to continue while respecting the health recommendations.

Two studies were carried out in collaboration with the Group’s insurer in order to quantify the financial exposures related to production and storage

sites as well as strategic suppliers for the Leather and Silk métiers. These analyses identified the sites, subcontractors and critical suppliers on

which the Group should target its actions in order to ensure activity continuity. The Leather study was updated in 2020 and the Silk update was

started in 2021.

During its audits, the audit and risk management department ensures that activity continuity plans are formalised and tested on the Group’s

various sites and, where appropriate, issues recommendations. At the end of 2021, a centralised review of plans for the entire Group was initiated.

In addition, the Group safety department, in collaboration with internal experts, coordinates regular site visits. Dedicated action plans are

implemented and monitored operationally by the sites concerned.

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RISK FACTORS

●

4.1.2.3

HEALTH AND SAFETY

◆

DESCRIPTION OF THE RISK

The Group ensures respect for human rights, fundamental freedoms, health and safety of

people, whether they are customers, employees, suppliers or subcontractors. The Hermès

Group is committed to respecting local regulations in the countries in which it operates. The

quality of the products sold and their compliance with the strictest regulations on personal

safety are priorities for the Group.

◆

RISK MANAGEMENT

PROBABILITY

Any damage to the health and

safety of employees, customers or

third-parties working at Hermès

sites, resulting from the activity of

the Hermès Group or that of its

sub-contractors or suppliers, and

any non-compliance with the

quality and safety standards of

the products sold, could give rise

to litigation and undermine the

Group’s reputation.

IMPACT

The Group’s policy is to integrate health, safety and well-being challenges in its operational strategy as a priority, in particular for its manufacturing

activities. In accordance with law no. 2017-399 of 27March 2017 on the duty of care of parent companies and contractors, the Hermès Group has

drawn up a vigilance plan. It aims to identify the risks and prevent violations of human rights and fundamental freedoms, the health and safety of

people and the environment, resulting from its activities, as well as those of its subcontractors or suppliers (see chapter 2 "Corporate social

responsibility", § 2.6).

Moreover, the industrial affairs department leads a health, safety and environment (EHS) network comprising EHS managers from the House’s

different métiers. With around 20members, it meets several times a year to set targets, share results and learn about best practices in each of the

métiers.

The main initiatives of the House’s various métiers are described in chapter2. In most cases, they go beyond simple regulatory compliance to

achieve true well-being at work. Each métier has its specific needs as regards working conditions, so it is logical for each one to develop its own

arrangements.

Assessments of risks at employee workstations are carried out by the occupational health and hygiene division of the Group safety department for

the stores and by the métiers for each of the production sites. They are updated annually.

In the current health context, health protocols have been implemented and specific personal protective equipment has been made available to

employees to protect the health and safety of people. A psychological support unit is mobilised to provide anonymous and confidential support to

employees who might need it.

Hermès products are regularly tested throughout the supply and production chains. Tests on finished products are also carried out by independent

laboratories in Europe, Asia and the United States, to verify their compliance with the most stringent regulations in force, as well as their safety.

Monitoring is carried out to analyse permanent changes in regulations and modify product specifications.

The mitigation and prevention mechanisms for these risks are addressed specifically in chapter 2.Note:

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RISK FACTORS

●

4.1.2.4

SAFETY

◆

DESCRIPTION OF THE RISK

The safety of property means all measures and means for combating threats and

malicious acts. The main threats identified are: physical damage to property, people and

infrastructure, and damage to savoir-faire and intangible property.

●

Strategy & operations Industry

● ●

Regulatory compliance

●

FinanceCSR

●

◆

RISK MANAGEMENT

•

safety governance is set out in a safety policy covering all the Group’s activities and sites;

•

since 2020, the procedures specific to transportation safety have been rolled out and adapted to the health situation;

•

in the case of a serious event, a crisis management process is implemented. This provides for the setting up of a crisis unit with dedicated

resources made available. Crisis management exercises are regularly conducted.

PROBABILITY

Such breaches could cause damage to

property and people working at the

Group’s sites (production, distribution,

logistics or offices) or at events on

external sites.

IMPACT

Moreover, they could expose craftspeople

and sales staff to risks, causing moral

and psychological damage to all Group

employees.

In addition to direct financial losses, they

could harm the Group’s image.

The following actions have been taken:

Hermès is organised to take account of these risks on a daily basis: a central monitoring station, operating round the clock, is connected to the 70

production and distribution sites in France and Switzerland. The Group took the decision to employ 60 agents in its internal safety division, to which

external service providers are added.

Experts within the Group safety department regularly travel to the various sites and during events in France and abroad to ensure compliance with

Group safety procedures. A questionnaire on industrial safety is also completed during site visits or audits. Furthermore, the Group safety

department has an advisory role to the métiers and subsidiaries.

A computerised safety and crisis management tool was rolled out in March2021 on sites in the Paris region. In particular, it makes it possible to

standardise operational procedures between the various teams of the Group safety department, while promoting real-time and consolidated

information sharing. It also has specific crisis management functionalities. It will gradually be rolled out to other Group sites over the coming years,

depending on the level of risk identified at each site.

This system is also backed by partnerships set up through agreements signed with the police force and the Ministry for Europe and Foreign Affairs.

Safety incidents are reported in a specific database and are regularly reported to the Group Safety Committee and the Audit and Risk Committee.

They are analysed in detail, contributing to the continuous improvement of the system.

In line with the health situation, safety measures were reinforced during lockdown and closed sites were subject to particular vigilance.

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RISK FACTORS

4.1.3

LEGAL AND REGULATORY RISKS

●

4.1.3.1

COMPLIANCE WITH APPLICABLE LAWS AND REGULATIONS IN ALL AREAS

◆

DESCRIPTION OF THE RISK

The Hermès Group is committed to complying with the laws and regulations to which it is subject

in France and internationally. These laws and regulations are increasingly numerous and

complex.

◆

RISK MANAGEMENT

•

internally, given the increasing complexity of each legal matter, the legal department is organised into specialised divisions, with departments or

divisions specialising in one area of law (corporate and securities law, real estate law, mergers and acquisitions law, anti-counterfeiting).

Business divisions with generalist teams in charge of the various métiers and regional divisions with legal teams in China, Japan, Singapore,

South Korea and the United States, complete this organisation. The compliance department, which includes the experts in personal data

protection law also reports to it. Employment and tax matters are respectively handled by the Group’s human resources and finance

departments, which work in conjunction with the legal department;

•

externally, in each of the regions where the Group develops its activity, Hermès is advised by specialised local law firms. The Group continues to

be involved in ongoing litigation, but there are no pending settlements that are expected to have an impact on its activity or on its financial

results. The Company is not aware of any other pending or potential governmental, legal or arbitration proceedings that may have, or that over

the last 12months have had, a significant impact on the Group’s financial position or profitability.

PROBABILITY

Regulatory non-compliance could

have a negative impact on the

Group’s operations, tarnish its

reputation and give rise to

financial penalties.

IMPACT

The Group keeps abreast of developments in regulations and case law in all relevant areas to ensure that it maintain compliance both in France

and internationally. This monitoring is carried out in-house and by external firms:

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RISK FACTORS

●

4.1.3.2

INTELLECTUAL PROPERTY AND THE FIGHT AGAINST COUNTERFEITING

◆

DESCRIPTION OF THE RISK

The Group is very committed to the protection and defence of its intellectual property rights. It is

very active in the fight against counterfeiting, particularly on the Internet.

●

Strategy & operations Industry

● ●

Regulatory compliance

●

FinanceCSR

●

IMPACT

◆

RISK MANAGEMENT

◆

teams;

◆

savoir-faire;

◆

raw materials;

◆

environment;

◆

suppliers and partners;

◆

stakeholders.

◆

risks related to changes in major global issues regarding climate and biodiversity;

◆

risks related to availability and judicious use of natural resources (water, energy, raw materials, waste management and recycling);

◆

risks related to human rights and fundamental freedoms, and in particular, as regards the ethics aspect of our relations and more broadly the

well-being of our employees.

PROBABILITY

Infringements of the Group’s

intellectual property rights could

have a negative impact on its

revenue and damage its brand

image.

The Group has a particularly comprehensive portfolio of brands, models, patents and domain names, which is regularly expanding.

Within each métier legal division, teams are specifically dedicated to these issues and ensure that the Group’s creations are protected effectively.

Finally, the Group ensures that its rights are respected and pursues an active anti-counterfeiting policy involving both preventive measures (training)

and coercive measures (administrative, civil and criminal proceedings) across the world and particularly on the Internet. The anti-counterfeiting

department undertakes these actions with the support of external consultants and in collaboration with the competent local authorities. They are

carried out both in traditional markets and on the Internet (Metaverse, online sales platforms, social networks, retail websites, instant messaging,

etc.).

These actions make it possible to seize and destroy several hundred thousand potentially dangerous counterfeit products each year (in compliance

with CSR rules), to trace the source of the production chain for these products and ensure the Group’s rights are recognised. Where applicable, the

payment of damages compensates for the prejudice suffered and is reinvested in the fight against counterfeiting.

4.1.4

RISKS RELATED TO SOCIAL, SOCIETAL AND ENVIRONMENTAL RESPONSIBILITY

The Group’s social, societal and environmental responsibility challenges are described in detail in chapter2 "Corporate social responsibility", and are

articulated around the Hermès Group’s six strategic sustainable development pillars:

In 2021, Hermès updated the analysis of its priority CSR issues in order to guide its actions and facilitate understanding of its strategy. This materiality

analysis was conducted by interviewing a panel made up of internal stakeholders who are experts in the subject, internal stakeholders outside France,

and external stakeholders identified for their knowledge of the sector, the House and its functioning. Details of the method followed and the materiality

matrix thus constructed are presented in chapter 2. This study confirms and sets out the analysis conducted more widely at Group level in 2019 on

three main themes:

More details by type of risk, and the mitigation and prevention mechanisms for these risks are addressed specifically in chapter2. CSR topics are also

part of the impact assessment criteria for each of the risk factors.

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RISK FACTORS

●

4.1.4.1

CHANGES IN MAJOR GLOBAL CLIMATE AND BIODIVERSITY ISSUES

◆

DESCRIPTION OF THE RISK

Climate change causes disruption (heat, rising water levels, extreme events) and impacts on

biodiversity and ecosystems.

It also involves operational, regulatory and political transition issues (taxation, restriction of

operations).

The loss of biodiversity and the degradation of ecosystems threaten the sustainability of the

natural resources from which the House’s materials are sourced, weaken the planet and

disrupt the living conditions of populations.

◆

RISK MANAGEMENT

1. governance at the highest level (Executive Committee);

2. a strategy aligned with the Paris Agreements and validated by SBTi (Science Based Targets initiative) as being in line with a trajectory limiting

global warming to 1.5 °C:

•

defossilisation: 100% renewable energy in our direct operations by 2030,

•

a reduction in greenhouse gas emissions of 50.4% in absolute value for scopes1 and 2, and by 58.1% in relative value for scope 3 by 2030;

•

taking the subject into account in the updated risk mapping within the Group,

•

the implementation of a prospective analysis of climate risks for our main activities by 2030 (leather goods, textiles),

•

specific risk analysis for certain sectors (cashmere, silk, etc.);

•

train all employees in biodiversity by 2025;

•

collaborate with recognised external stakeholders (WWF France, ICFA, SAOBC);

•

measure the Group’s biodiversity footprint (IPBES pressures) and its supply chains (leather, silk, cashmere, wood, cotton) by 2025;

•

act through action plans commensurate with the issues and pursue positive actions beyond the Group’s activities (Livelihoods, Fondation

d’entreprise).

PROBABILITY

Rapid changes could impact our

supply chains, manufacturing

operations, logistics or distribution,

as well as the behaviour of our

customers.

IMPACT

Hermès’ French craftsmanship model, through its presence across France, reduces its vulnerability to extreme events already experienced in

certain parts of the world.

In accordance with the recommendations of the TCFD (Taskforce on Climate-related Financial Disclosures), the Group’s work to reduce risk is

organised around four axes:

3. operational risk management by:

4. monitoring of results and alignment with objectives, with a Carbon Assessment drawn up on the three scopes each year and the gradual

implementation of indicators within the métiers and subsidiaries. As a reminder, 10% of the Executive Chairmen’s variable compensation is subject

to CSR criteria, including industrial energy consumption (scopes1 and 2 GHG emission performance).

In addition, it is committed to an active policy of offsetting its greenhouse gas emissions (scopes1 and 2).

A biodiversity strategy, formalised in 2018, was launched and updated in 2020 as part of the commitment to Act4Nature international. It has been

reviewed by external organisations. It is divided into four areas:

The content of these action plans is detailed in chapter2 "Corporate social responsibility".

◆

DESCRIPTION OF THE RISK

◆

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RISK FACTORS

●

4.1.4.2

AVAILABILITY AND PROPER USE OF NATURAL RESOURCES

●

Strategy & operations Industry

● ●

Regulatory compliance

●

FinanceCSR

●

1. control the entire value chain with operational traceability and long-term partnerships with suppliers, partners and NGOs;

2. contribute to the development of the most demanding standards for responsible and sustainable management of supply chains:

•

environmental footprint: biodiversity, water, energy, carbon,

•

social: working conditions, ethics, corruption,

•

societal: link with communities;

3. support regenerative agriculture that is more respectful of nature;

4. set the highest standards in terms of animal welfare and ethics in our relationship with living organisms: a dedicated committee has been in

place since 2019 and a policy was formalised in 2021;

5. create circularity: a committee, which includes all métiers, has been leading projects to innovate, reuse and recycle materials in order to prolong

their life since 2020.

The Group seeks to secure quality supplies of natural and renewable materials, obtained while

fully respecting biodiversity. The risk relates to access and availability of materials, as well as the

conditions under which they are obtained: social and environmental impact and their societal

acceptability (animal welfare).

IMPACT

◆

RISK MANAGEMENT

PROBABILITY

Decrease in the quality and

volumes of exceptional natural

raw materials, increase in costs.

Loss of some customers who

choose not to purchase leather.

The Group works in each of its métiers, under the coordination and control of the industrial affairs department, to gain a better understanding of the

supply chains and develop operational practices in order to jointly build the resilience of these channels. This entire system is described in § 2.4.2

of chapter2 "Corporate social responsibility". The approach undertaken aims to:

Audits supplement this system and are carried out regularly with specialised service providers, or on certain channels with the WWF, in order to best

manage risks.

With a view to continuous improvement, these processes are reviewed on a regular basis and action plans are implemented.

The content of these action plans is detailed in chapter2.

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RISK FACTORS

●

4.1.4.3

RESPECT FOR HUMAN RIGHTS, FUNDAMENTAL FREEDOMS AND ETHICS

◆

DESCRIPTION OF THE RISK

The risks of infringement of human rights, fundamental freedoms, our ethics values and the

health and safety of people mainly concern our external activities. Over 60% of the workforce is

in France and is therefore subject to strict regulations. The multiple nature of our métiers and

supply chains, combined with our desire to use exceptional raw materials, means that we work

in partnership with suppliers from all over the world. These partnerships require constant

vigilance to ensure respect of these rights and ethics throughout our value chain.

◆

RISK MANAGEMENT

•

an ethics charter that defines the Hermès Group’s fundamental principles,

•

a code of business conduct that gives them a practical framework in terms of ethics,

•

an anti-corruption code of conduct that sets out the rules to be followed in terms of integrity and probity,

•

commitment handbooks, signed by suppliers and commercial partners, that explicitly address these subjects.

2. in accordance with law no. 2017-399 of 27March 2017 on the duty of care of parent companies and contractors, the Hermès Group has drawn

up a vigilance plan. It aims to identify the risks and prevent violations of human rights and fundamental freedoms, the health and safety of people

and the environment, resulting from its activities, as well as those of its subcontractors or suppliers. Systems for identifying, mitigating and

preventing these risks have been put in place for employees, suppliers and subcontractors;

3. risk analyses and procedures for the regular assessment of the situation of suppliers and subcontractors as well as audits make it possible to

verify in situ the reality of the commitments made by our suppliers. These relate to human rights and fundamental freedoms, health and safety and

compliance with environmental regulations (see § 2.6.1.1);

4. an internal and external whistleblowing system is available to report any breaches or situations contrary to ethics, social and environmental

principles (see § 2.8.2.3.3).

PROBABILITY

A violation of human rights,

fundamental freedoms, health and

safety or a breach of the Group’s

ethics rules would damage its

reputation and image.

IMPACT

The Group promotes a demanding ethics culture and does not tolerate any breaches of probity. The approach is structured around a specific

governance, supported at the highest level of the organisation. Documents formalising our commitments and tools for identifying, assessing, raising

awareness, preventing and detecting these risks complete the control systems (see chapter 2 "Corporate social responsibility", § 2.8):

1. the Group has written its ethics values and its commitment to respect human rights and fundamental freedoms into the following documents:

These documents, which are regularly updated, are in line with fundamental principles such as the Universal Declaration of Human Rights, ILO

rules, the OECD guidelines and the United Nations Global Compact as regards sustainable development;

The content of these action plans is detailed in chapter2.

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RISK FACTORS

4.1.5

FINANCIAL RISKS

The Group has put in place an organisational structure which allows financial risks related to its business to be managed centrally. As the Group has a

positive cash position, it is not exposed to liquidity risk and applies a conservative policy in managing counterparty risks.

●

4.1.5.1

FRAUD

◆

DESCRIPTION OF THE RISK

The Group’s exposure to the risk of fraud is due in particular to its growing visibility in many

countries and its increasing digital presence. The inventiveness and adaptability of external fraud

attempts on defence systems seen on the market also represent threats.

●

Strategy & operations Industry

● ●

Regulatory compliance

●

FinanceCSR

●

◆

RISK MANAGEMENT

PROBABILITY

Any case of fraud could cause

financial losses to the Group and

tarnish its reputation.

IMPACT

The management of payment transactions is centralised by the Group’s treasury department and governed by precise validation and control rules.

The Middle & Back-Office department ensures administrative management and operational control, notably via the use of integrated cash flow

software.

The Treasury Security Committee regularly checks that these procedures have been applied and that any risks identified have been addressed.

The audit and risk management department oversees proper compliance with risk monitoring and management procedures. As part of the

coordination of internal control, it regularly creates awareness among the network of internal control officers about the risk of fraud and restates the

specific fraud prevention procedures, in particular as regards the purchase and payment process. External audits are also regularly carried out to

identify and correct any vulnerabilities. Audits in subsidiaries to verify the proper application of procedures complement this system. At store level, a

specific fraud prevention tool, developed on a data mining platform, was rolled out in 2021.

The Group’s risk mapping, as well as the risk mapping applied to the métiers and the main subsidiaries, address this risk and the corresponding

action plans.

Accordingly, awareness-raising campaigns in the functions most at risk of fraud are conducted on a regular basis. Awareness-raising, identified as

an effective fraud prevention tool, is rolled out and adapted to the types of fraud (risk of system intrusion, “CEO fraud”, etc.). In addition, an ad hoc

security system has been put in place and is monitored by the Group safety department. In addition, a corruption risk map was drawn up with the

assistance of a specialist external consultant and in collaboration with the Director of Legal Compliance (see chapter 2 "Corporate social

responsibility", § 2.8.2.3.1). This was updated in 2020.

The system put in place by the Group to protect itself against IT intrusion is the subject of a dedicated risk mapping (see § 4.1.1.3).

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RISK FACTORS

●

4.1.5.2

EXCHANGE RATES

◆

DESCRIPTION OF THE RISK

The Group is naturally exposed to foreign exchange risk because the bulk of its production is

located in the eurozone, but the majority of its sales revenue is received in currencies other than

the euro (American dollars, Japanese yen and other Asian currencies, etc.).

As at 31December 2021, 79% of the Group’s sales were made in a currency other than the

euro.

◆

RISK MANAGEMENT

•

distribution subsidiaries are invoiced in their currency by production subsidiaries. The latter apply an annual exchange rate to the scales

established in euros. So, the distribution subsidiaries concentrate most of the foreign exchange risk;

•

the Group’s foreign exchange risk is systematically hedged by Hermès International on an annual basis. This basis is calculated using future

internal cash flows from operations between Group companies;

•

no speculative transactions in the economic meaning of the term are authorised;

•

these hedges are provided through firm foreign exchange transactions and/or optional transactions eligible for hedge accounting;

•

other non-operating transactions are hedged against foreign exchange risk as soon as their commitment is firm and final. They include financial

risks arising from intragroup loans and dividends in foreign currencies.

PROBABILITY

Financial losses.

IMPACT

This exposure is hedged in order to minimise and anticipate the impact of currency fluctuations on the Group’s profits.

The Group’s foreign exchange risk exposure management policy is based on the following principles:

The Executive Committee approved these management rules, which were then endorsed by the Supervisory Board.

The Middle & Back-Office department ensures administrative management and operational control, notably via the use of integrated cash flow

software. In addition, Hermès International’s audit and risk management department ascertains compliance with procedures and the control of

risks.

Finance general management validates management decisions within these rules.

The Group’s foreign exchange risk is hedged annually by Hermès International in accordance with the policy described above. It is based on highly

probable future cash flows derived from budget forecasts. In practical terms, as at 31December, the hedging of internal transactions in currencies

for the following year is close to 100%.

As such, the Group uses purchases and sales of put and call options as well as currency swaps and forward currency agreements.

Quantitative information on foreign exchange risk impacts is provided in chapter 1 "Presentation of the Group and its results", § 10.2 of the

consolidated financial statements.

The treasury department constantly monitors changes in legal regulations with regard to derivative transactions to ensure that the Group remains

compliant. Furthermore, the finance department adjusts its procedures and tools on an ongoing basis to accommodate changes in its environment.

Thanks to the exchange rate hedging policy, the impacts are pre-empted. The price increases determined by region offset all or part of any losses.

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RISK FACTORS

●

4.1.5.3

BANK COUNTERPARTIES

◆

DESCRIPTION OF THE RISK

As the Group has a positive cash position and because of its other banking transactions

(exc

Financial losses.

RISK MANAGEMENT

The Group only deals with leading banks and financial institutions that have signed FBF and ISDA agreements relating to transactions on forward

financial instruments. In addition, Hermès International’s treasury department continuously monitors counterparty risks on financial transactions.

Finally, the Group breaks down investment transactions, foreign exchange risk hedge transactions and deposits transactions in the selected banks

within defined limits of amount and maturity.

Moreover, the impact of the credit risk as recommended by IFRS13 in the fair value of derivatives is close to zero for the Group, given that all of the

derivatives have a maturity of less than 12months.

The Group follows a cautious investment policy, which aims to avoid any risk of capital loss and prioritise liquidity, thus enabling independent and

responsive strategic developments.

Available cash is invested, mainly in money-market mutual funds offered by leading financial institutions, in term deposits and in deposit certificates

issued by top-rated banks, for the short term with very low sensitivity.

Quantitative information on interest rate risk impacts is provided in chapter 1 "Presentation of the Group and its results", § 10.3 of the consolidated

financial statements.

The treasury department constantly monitors changes in legal regulations with regard to investment transactions to ensure that the Group remains

compliant. Furthermore, the finance department adjusts its procedures and tools on an ongoing basis to adapt to changes in its environment.

hange rate hedging), the Group is exposed to counterparty risk that is mainly banking-related

and is appropriately monitored.

◆

POTENTIAL IMPACTS ON THE GROUP

●

Strategy & operations Industry

● ●

Regulatory compliance

●

FinanceCSR

●

◆

POTENTIAL IMPACTS ON THE GROUP

PROBABILITY

IMPACT

◆

●

4.1.5.4

CHANGES IN, COMPLEXITY AND INTERPRETATION OF TAX REGULATIONS

◆

DESCRIPTION OF THE RISK

The Group is exposed to financial risks related to changes in tax regulations or their

interpretation in the countries where it operates.

◆

RISK MANAGEMENT

PROBABILITY

Any change in tax regulations

involving and increasing taxes

and duties, mainly income taxes,

custom duties, withholding taxes,

particularly concerning goods

and financial flows (interests,

dividends), could penalise the

Group’s results.

IMPACT

The Group provides regulatory oversight and defines its tax policy by relying on a team of tax experts, assisted by external advisers if necessary. The

Group is committed to respecting all applicable laws and regulations in each of the countries where it operates. It relies on transparent and simple

organisation. The Group’s tax policy is not based on any tax optimisation or evasion scheme and complies with the principles laid down by the

OECD. In the case of a dispute or differences in interpretation, the Group may have to challenge reassessments with the tax authorities and to seek

redress using the means available to it for its defence.

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INSURANCE POLICY AND RISK HEDGING

4.2

INSURANCE POLICY AND RISK HEDGING

Since January2020, the prevention and insurance department joined the audit and risk management department, demonstrating the desire to further

strengthen synergies between risk and insurance.

In line with the Group risk analysis, the Hermès Group’s policy regarding insurance is to transfer any exposure that is liable to produce a material impact

on profits to the insurance market. The Group insurance programmes represent most of the insurance coverage for the subsidiaries. They are placed

via the intermediary of brokers who are amongst the 10 largest French brokers and with first-rate insurance companies. The main international

insurance programmes cover:

Other contracts have been subscribed to fulfil specific requirements,

particularly in the context of building operations (new work or renovation)

carried out as project managers.

The Corporate Officer liability and cyber risk policies were taken out for a

period of one year from 1January 2021, with AIG and Zurich respectively,

as well as other well-known insurers. These cyber risk policies cover data

recovery, business interruption related to a security incident, civil liability,

and costs, including in particular defence and notification costs. In 2021,

a cybersecurity risk valuation study was carried out to confirm the

adequacy of the risk coverage.

In 2021, the Group did not suffer any significant damage.

In addition, in 2021, prevention visits by the property and casualty

insurer were able to resume physically. 62 visits were carried out this

year.

Type of insurance Guarantees and limits of the main policies taken out

Property damage and business interruption

◆

FM Global “All risks except” policy

Coverage of all Group sites: production, logistics, distribution, various premises and goods in all

locations

Policy renewed for 2021 with the same coverage limit of €500m and the same insurer

General civil liability (operations and products) Policies subscribed for a period of two years from 1January 2021 with AIG and Liberty Mutual, in

the amount of €100m

Covers civil liability for damages to persons, property and intangibles caused to third parties in the

conduct of business operations or by products

Transportation Policy taken out with Chubb and renewed for 2021 with coverage of €6m per event, all cover

combined

Liability for environmental damage This policy was taken out with AIG Europe on 1January 2019 for a period of 36months

Coverage limit of €15m per claim and €25m for the period

◆

the ethics charter promotes respect for the broad fundamental

principles. It is intended as an instrument of progress and dialogue,

and encourages employees to discuss with their line managers in

cases where the principles are difficult to apply or are open to

misunderstanding;

◆

the purpose of the code of business conduct is to raise employees’

awareness about ethics risks and to instil behavioural and alert

reflexes.

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RISK MANAGEMENT, INTERNAL CONTROL AND INTERNAL AUDIT

4.3

RISK MANAGEMENT, INTERNAL CONTROL AND INTERNAL AUDIT

4.3.1

A DEMANDING CONTROL ENVIRONMENT

While Hermès has attained the stature of an international group, it

remains a company with family values, dedicated to a culture and spirit of

craftsmanship and seeks to cultivate strong values among its employees.

At the forefront of these values is the demand for quality, the very

essence of Hermès’ actvity. The Group’s commitment to quality applies

not only to its products and services, but also to its management

methods. Hermès attaches great importance to its Senior Executives’

managerial skills. Induction programmes for new managers and specific

training sessions forge the Hermès culture. Everyone can thus

understand their place in the organisation and integrate the House’s

rules of conduct and integrity. The demanding quality-oriented values and

commitment shared by employees also serve as a solid foundation to

underpin behaviours and observance of stringent internal control policies

and procedures. The culture of risk management and control, the

management style and ethics of the Company ensure the demonstration

and balance of these values.

In this respect, an ethics charter has been in place and has been

distributed to employees since 2009. The code of business conduct,

which specifies the behaviour expected of the Group’s employees, has

been supplementing it since 2012. These two documents, translated into

12 languages, were updated in 2016 and again in 2018. They are the

foundation of Hermès Group integrity and ethics:

In addition, an anti-corruption code of conduct, including concrete

illustrations, has been distributed to all employees since 2019. It is

translated into 18 languages (see chapter 2 "Corporate social

responsibility", § 2.8.2.3.2 on the corruption prevention system). This

anti-corruption code of conduct has been accompanied since 2021 by an

anti-corruption e-learning module translated into 11 languages.

These documents are available on the Company intranet under

acknowledgement of receipt when given to employees. Additional training

on anti-corruption laws and human rights is organised for operational

staff, thus strengthening the Group’s ethics culture. Actions relating to

ethics and compliance are presented in chapter2, § 2.8.

4.3.2

COMMITTED PARTIES RESPONSIBLE FOR RISK MANAGEMENT AND CONTROL

The risk management and internal control systems are applicable to the parent company and to the controlled subsidiaries. They are presented in the

notes to the consolidated financial statements.

GROUP

MANAGEMENT

SUPERVISORY

BOARD

AUDIT AND RISK

MANAGEMENT DEPARTMENT

SPECIALISED COMMITTEES

AUDIT AND RISK

COMMITTEE

THE GROUP’S

OPERATIONAL STAFF

THE NETWORK OF INTERNAL

CONTROL OFFICERS

“Our Ethics” and on the website (https://finance.hermes.com/en/ethics-

human-rights-and-diversities/), and are subject to formal

◆

it identifies and analyses risks and ensures the implementation of

action plans;

◆

it conducts internal audits and monitors the implementation of the

recommendations;

◆

it ensures the deployment of internal controls adapted to Group’s

concerns.

◆

carrying out a continuous improvement initiative as regards the

internal control and risk management systems;

◆

working alongside the Group’s various departments in order to

promote the upstream handling of the main risks, as well as emerging

risks, and running the risk mapping approach of the main businesses,

distribution subsidiaries, support functions and cross-cutting

subjects. The risk mapping methodology is regularly reviewed: in

2017 and in 2020, specialised external firms supported this

continuous improvement process. The audit and risk management

department thus ensures that it has a relevant, effective and

motivating methodology for its contacts. The risk mapping programme

for 2021 was conducted in full, for the most part remotely in the

current healthcare context. The action plans resulting from the risk

mapping are monitored each year by the network of internal control

officers;

◆

coordinating a network of around 70 internal control officers, in

France and abroad, within the métiers, distribution subsidiaries and

support activities. In 2020 and 2021, given the specific

circumstances related to Covid-19, internal control was stepped up,

in particular through increased use of digital channels. Four virtual

meetings were held in 2021, enabling more than 80 participants,

bringing together internal control officers, as well as Chief Financial

Officers and representatives of the Group’s central departments, to

connect.

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RISK MANAGEMENT, INTERNAL CONTROL AND INTERNAL AUDIT

Group Management

The Group Management designs risk management and internal control

procedures commensurate with the Company’s size, business

operations, geographical footprint and organisation. In addition to

establishing procedures for delegating authority established at different

hierarchical levels, Group Management has responsibility for

guaranteeing the quality and effectiveness of the risk management and

internal control systems. It thus ensures their adequacy for meeting the

Group’s strategy objectives.

To this end, Group Management is provided with audit reports and the

risk mapping of subsidiaries, métiers and support functions, and regularly

meets with the audit and risk management department. It therefore

oversees the system as a whole to safeguard its integrity and, where

applicable, initiate any corrective measures needed.

Audit and Risk Committee

The Audit and Risk Committee was established in 2005 within the

Supervisory Board pursuant to ArticleL.823-19 of the French

Commercial Code (Code de commerce), and without prejudice to the

powers of this Board, which it does not supersede.

The roles and duties of the Audit and Risk Committee were formally

documented in rules of procedure drawn up by the Supervisory Board in

2010 and regularly updated. The latest version is available at

approval to the Audit and Risk Committee in 2021.

Each meeting of the Audit and Risk Committee gives rise to written

minutes that are approved. At each meeting of the Supervisory Board, the

Chairwoman of the Audit and Risk Committee gives the Board a report of

the work of the Audit and Risk Committee.

The functioning and work of the Audit and Risk Committee were

evaluated in late 2019 as part of the three-year formal self-assessment

of the Supervisory Board. This was supplemented in 2020 by a

self-assessment conducted by the Chairwoman of the Audit and Risk

Committee. The self-assessment action plan continued in 2021 (see

chapter 3 “Corporate governance”, § 3.7).

As part of its oversight of the risk management and internal control

system, the Audit and Risk Committee has access to information relating

to internal audit, internal control and risk management. The risk mapping

of Group entities and the corresponding action plans are regularly

presented to it. A list of the work carried by the Audit and Risk Committee

is provided in § 3.6.3.4.

Audit and risk management department

The audit and risk management department reports to the Group’s

Executive Vice-President of Corporate Development and Social Affairs,

which guarantees its independence, and has unlimited authority to

review any matter at their discretion.

The audit and risk management department consists of a core team of

experienced auditors, and runs a decentralised network of internal

control officers. It performs a threefold mission for the Group:

The prevention and insurance department joined the audit and risk

management department on 1January 2020 in order to increase

synergies in terms of risk identification and management. Risk mapping

now includes an insurance section in order to look at risks alongside the

corresponding insurance coverage.

The duties of the audit and risk management department also consist of:

An audit charter has formalised the duties and responsibilities of the

internal auditors and their professional conduct. It sets out the way in

which their audit engagements are conducted. A risk charter, setting out

the principles and rules for risk management, and an internal control

charter, formalising the roles and responsibilities of its players, complete

the system. These charters are reviewed regularly.

Lastly, the Director of Audit and risk management attends Audit and Risk

Committee meetings. She meets with this committee six times a year,

including once without the presence of third parties. This meeting is

dedicated to the presentation of the audit and risk management

department’s activity report, and to discussions on its work and the

resources at its disposal. In 2021, the audits were mainly carried out in

accordance with the audit plan (see § 4.3.5 “Audit plan”), remotely or on

site.

https://finance.hermes.com/en/governing-bodies-rules-procedure-articles-

association/. The rules of procedure were amended and submitted for

◆

identify major risks and adapt the organisation of internal control

accordingly;

◆

verify the implementation of Group procedures in accordance with the

activity and local regulations;

◆

participate in self-assessment of internal control work;

◆

spread the culture of internal control to all employees;

◆

monitor the risk mapping action plans;

◆

follow up on the audit recommendations of the audit and risk

management department;

◆

in general, contribute in all their actions to improving risk

management.

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Internal control officers

Internal control officers oversee the implementation of the internal

control system within their scope, métiers, distribution subsidiaries or

support functions. They report locally to the Chief Financial Officer of their

entity, and functionally to the audit and risk management department.

They work according to an annual plan, shared with their department and

the audit and risk management department, taking into account the

Group’s internal control priorities and the risks specific to their scope.

Their main duties are as follows:

In 2020 and 2021, they were the main contacts to ensure the proper

implementation of health measures at Hermès premises. They are also

the contacts responsible for the rollout of systems to prevent corruption

and cybersecurity risk.

Specialised committees

Treasury Safety

Committee

Transportation

Safety

Committee

Group

Safety

Committee

IT Safety

Committee

Compliance and

Vigilance

Committee

The Hermès Group has deployed specific processes to monitor certain

risks through specialised committees or working groups. These

committees meet on a regular basis.

For example, committees focusing on safety, IT risks, treasury risks and

compliance risks analyse the issues, and study the appropriate corrective

measures so that they can be implemented in the entities. They also

check that existing control systems comply with Group procedures. The

main operational contacts involved participate in these committees with

the audit and risk management department. Its role is to facilitate the

identification of risks and the associated action plans.

Every two months, the Information Systems Security Committee brings

together the main players, namely the Director of Group Cybersecurity,

the information systems department, the audit and risk management

department, the Group safety department and the digital projects and

e-commerce department, as well as a member of the Group Executive

Committee. Its purpose is to detail the progress of the action plans and

to draw lessons from any incidents in terms of cyber risks.

A Hermès Product Transportation Safety Committee, made up of the

Group safety department, the transportation department, the insurance

department and the departments of the relevant métiers, meets regularly

to define the necessary actions. Its objective is to improve transportation

safety, in a practical way according to the risks specific to the products

transported and any difficulties encountered. The committee meeting

held in April2021 made it possible to take stock of the actions taken in

2020, in the context of the health crisis, and to strengthen the support of

operational staff in 2021.

The Compliance and Vigilance Committee is made up of representatives

from the legal department, including compliance, the sustainable

development department, the industrial affairs department, the audit and

risk management department, the commercial department, the finance

department and the labour law department. It participates in, monitors

and oversees the implementation, effectiveness and control of

compliance programmes. Its duties are detailed in chapter 2 "Corporate

social responsibility", § 2.8.1.2.2.

The Group Safety Committee makes decisions on cross-functional safety

issues identified during the specialised committee meetings. It also

reviews the main safety incidents in order to adapt the overall system.

This committee is composed of the Executive Vice-President of Corporate

Development and Social Affairs, the Director of Human Resources, the

General Counsel, the Director of Group Safety, the Director of Group

Cybersecurity, the Managing Director of Hermès Group Services and the

Director of Audit and risk management. If necessary, it can call on

experts on specific issues.

The Group’s operational staff

The Senior Executives, the major functional and operating departments,

and members of the Management Committees of the Group’s various

entities are responsible for internal control and risk management; as the

main beneficiaries and also key contributors to its proper application.

The control activities carried out at the level of each entity are the joint

responsibility of the Managing Director and the Chief Financial Officer.

A letter of confirmation relating to Hermès’ internal control objectives and

the quality of the controls in place within the entity is signed annually.

This letter includes the results of an annual self-assessment

questionnaire on the implementation of internal control.

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4.3.3

A CONTROLLED RISK MANAGEMENT

SYSTEM

◆

awareness-raising campaigns for the functions most exposed to the

risk of fraud are conducted on a regular basis. Awareness-raising,

identified as an effective fraud prevention tool, is rolled out and

adapted to the types of fraud (risk of system intrusion, “CEO fraud”,

etc.). Information on safety is regularly reported to the Group Safety

Committee, as well as to the Audit and Risk Committee. An ad hoc

security system has also been introduced and is monitored by the

Group safety department;

◆

the corruption risk mapping was updated in 2020 with the help of a

specialist external firm and with the collaboration of the legal

compliance department, which is responsible for its management, as

described in chapter 2 "Corporate social responsibility", § 2.8.2.3.1.

The Group’s risk management process is based upon the preparation of

risk mappings as well as a range of complementary tools that facilitate

identification of risks and definition of actions to better control them.

In order to better anticipate changes in issues relating to companies,

technologies, the environment, the economy and governance, the audit

and risk management department actively monitors emerging risks

externally and has initiated prospective studies since 2019.

Set up in 2004, the mapping initiative has been rolled out to the main

entities, and also to cross-functional areas, under the supervision of the

audit and risk management department. The methodology applied is

regularly updated and enables a precise assessment of the risks specific

to the Group.

These mappings serve to identify, evaluate and systematically rank the

main risks. They are an operational awareness-raising and management

tool and are a lever for improving performance. They contribute to

effective management by providing a summary and shared vision of risks

and defining operational action plans and the responsibilities of each

person.

A mapping monitoring tool is being developed at Group level with the help

of an external firm. It will make it possible to formalise, on a continuous

and shared basis, the monitoring of the action plans identified. Each

company periodically updates its risk mapping, under the supervision of

the audit and risk management department. Each year, between 5 and

10 risk mappings are carried out at the level of the distribution

subsidiaries, métiers or cross-functional areas in the Group.

The internal control officers within the entities are the local relays for the

mapping initiative. They participate in the initial risk analysis, while

updating and monitoring the action plans.

The consolidated Group risk mapping is prepared every three years and

was updated in 2020. The risk mappings of subsidiaries, métiers and

cross-functional areas, as well as individual assessments by Executive

Committee members, feed into it. This mapping is the subject of a

specific Executive Committee workshop. It is also shared with the Audit

and Risk Committee. The Group risk mapping is also used as a starting

point for the audit and risk management department’s audit plan.

In the areas of fraud and corruption:

The audit and risk management department can modify its audit

programme and carry out ad hoc assignments in order to deal with new

risks, particularly in the event of an alert issued by a Group division.

Cross-functional audits can thus be carried out.

Finally, an IT platform for the sharing of incidents enables assessment of

changes in certain risks and early detection of any signs of potential

weakness. This prevention tool contributes to the continuous

improvement of the control system, as closely as possible to reality.

Several times a year an analysis of the incidents reported by the

subsidiaries and métiers is carried out by the audit and risk management

department. It is communicated to the Group’s internal control officers

and internal control departments, including incident statistics for the

period and a reminder of the Group’s procedures and related best

practices.

Risk

ranking

Risk re-

assessment

Major risk

identification

Risk

management

system at

Hermès

International

Management

of main risks

Definition of

a risk control

strategy

◆

compliance with laws and regulations;

◆

proper observance of instructions and strategy directions given by the

Group Management;

◆

operating efficiency of the Company’s internal procedures, particularly

those that help to protect its assets, as well as the safety and security

of property and persons;

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4.3.4

A MATURE INTERNAL CONTROL SYSTEM

4.3.4.1

GENERAL ORGANISATION

Internal control objectives

Internal control systems rely on ongoing, recurring actions that are

integrated into the Company’s operating processes. They apply to all

functions and processes, including those associated with the preparation

of financial and accounting information.

The Hermès internal control objectives include:

Internal control system monitoring

The monitoring system includes three levels of control:

◆

the reliability of financial information and, in general, control over its

activities, efficiency of its operations and optimisation of the use of its

resources.

Organisation

The Company’s management, organised into an Executive Committee

and several specialised committees, ensures the strategic alignment and

distribution of information. Detailed organisational charts and

memoranda outlining strategic directions give staff members a thorough

understanding of their role in the organisation and a way to periodically

evaluate their performance by comparing it with targets. The Group’s

organisation is based on an approach designed to foster a high level of

accountability among local managers, whose duties and responsibilities

are clearly defined.

Regarding human resources processes, Hermès has established hiring,

training and skills development programmes, enabling each individual to

perform their current and future duties effectively. Within Hermès

International, the finance department has primary responsibility for the

preparation and control of financial information.

Carried out by

the audit and risk

management department

PERIODIC INSPECTIONPERMANENT CONTROL

LEVEL 3

Assessment of the functioning

of the system and contribution

to its improvement

LEVEL 2

Carried out by

internal controllers or

cross-functional departments

Regular verification through sampling

LEVEL 1

Carried out by

operational staff

Daily checks of activities

This network, made up of around 70 internal control officers, enables the

presence of local contacts in the Group’s main entities. As part of its role

Regular reviews are carried out by internal control officers at a local level

and are supplemented by the audit and risk management department

depending on the issues at stake in each entity. The network of internal

control officers is responsible for ensuring that the principal risks related

to distribution and production operations, as well as to support functions,

are covered by suitable controls, notably regarding the security and

traceability of assets.

of coordinating the network of internal control officers, the audit and risk

management department is involved in their appointment, reviews the

subsidiaries’ annual internal control plans and disseminates best

practices. It relies in particular on a social and collaborative

information-sharing platform, identifies internal control priorities and

promotes the sharing of experience between all members of the network.

It also publishes a quarterly newsletter.

Audit assignments represent the third level of control. They are explained

in § 4.3.5 “An agile internal audit system” below.

◆

a treasury management procedure that defines the roles and

responsibilities between Group treasury and the subsidiaries;

◆

rules for opening and operating bank accounts, called “prudential

rules”, for each of the Group’s companies, which are constantly

updated and include among others the monitoring of authorised

signatories;

◆

an exchange rate policy approved by the Group’s Supervisory Board

(this policy presents all the authorised financial instruments, the

horizon and the hedging ratios);

◆

a foreign exchange risk management agreement signed with each

relevant subsidiary, which structures the relationships between the

Hermès Group and its subsidiaries, sets out policy and management

rules applicable to financial flows, and defines the terms and

conditions for calculating and applying the annual guaranteed

exchange rates;

◆

a Group cash management policy, approved by the Hermès

International Supervisory Board, which sets out the authorised

investment vehicles and all the criteria for managing liquidity and

counterparty risk.

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Self-assessment of internal control

The self-assessment of internal control, which began in 2005, is now a

mature process within the Group. It is based on questionnaires

completed by all controlled subsidiaries. This system contributes to the

dissemination of the internal control culture within the Group. It also

provides support for assessing the level of internal control and assessing

the extent to which operational and functional risks are properly

addressed. If the control processes are found to be ineffective, the

subsidiaries are required to draw up an action plan to remedy the

situation.

The subsidiaries self-assess each year using four questionnaires

available on the intranet in the dedicated “CHIC” IT tool (Check your

Hermès Internal Control). They are administered by the audit and risk

management department. The self-assessment is based on a general

internal control questionnaire (CHIC Practices), the guidelines for which

are drawn up in line with the AMF “Reference Framework”.

A questionnaire specific to cash management (CHIC Trésorerie) and a

questionnaire on operational procedures in the retail network (CHIC

Boutique) are also part of the system. Finally, a questionnaire on the

operational procedures governing online sales (CHIC E-commerce) was

launched in 2021 thanks to the joint work of several internal control

officers.

These questionnaires are updated on an annual basis, in order to include

any new risks and controls identified as key at Group level. The results

are reported in a dedicated IT tool where they are centralised and

analysed by the audit and risk management department, in order to

identify areas for improvement and internal control priorities for the

following year. They are shared with the departments concerned in order

to define action plans for all the Group’s subsidiaries.

The internal control officers are involved in the self-assessment, and are

in charge of monitoring the action plans. The audit and risk management

department checks and compares the responses given by subsidiaries to

the questionnaires with its own assessment when performing audits. It

ensures that the controls have been correctly undertaken, and that

corrective action plans have been implemented.

Internal control procedures

The internal control processes are described in the Group procedures.

They are defined at Group level, then rolled out and adapted by each

division to the specific contexts and local regulations. All Group

employees have access to them via a secure intranet website.

Group procedures cover the Company’s main cycles (purchases, sales,

treasury, inventory management, fixed assets, human resources,

information systems, safety and security, closing of financial statements,

compliance, etc.). The audit and risk management department updates

them regularly, in collaboration with the experts in their respective fields

and the internal control officers. In particular, in 2020 and 2021,

procedures relating to distance selling and e-commerce, boosted by

successive lockdowns, have been strengthened.

More specifically, extremely stringent cash management procedures

have been put in place. The treasury security rules manual details the

following procedures:

External firms regularly conduct audits on technical issues related to

payment security. In 2021, a global audit of the cash management

system complemented the usual audits by the audit and risk

management department.

Information systems

The use of tools adapted to Hermès’ needs facilitates the preparation

and control of information. The consistency of information system

urbanisation and architecture is managed at Group level. The projects

follow a methodology that includes mandatory milestones, in particular

that of the Architecture Committee, which ensures the coherence

and

CHIC Questionnaires Number of themes* Examples of themes addressed

Practices 11

Finance, Human resources, Control environment, Information systems,

Communication, Ethics and compliance, etc.

E-commerce 9

Sales, Shipping and deliveries, Returns and refunds, Storage,

Customer data, etc.

Boutique 7

Customer relationship management, Checkout closing, Stock-taking,

Safety/security, etc.

Trésorerie 6

Management of bank accounts, Processes and payment means,

Regulatory compliance, E-payments, etc.

* The themes are then sub-divided into several questions addressing all related procedures in an exhaustive manner.

◆

general IT controls in subsidiaries and centrally;

◆

IT projects;

◆

the cybersecurity system.

◆

compliance with accounting regulations and the proper application of

the principles used for the preparation of the financial statements;

◆

the prevention and identification of any accounting or financial fraud

or inconsistencies, as far as possible;

◆

the reliability of the information circulated and used in-house by

Group Management for steering purposes;

◆

the reliability of the published accounts and of other information

reported to investors.

◆

Group Management, which is carried out by the Executive Committee,

led by the Executive Management. As part of the closing of the annual

and consolidated financial statements, the Executive Management

obtains all the information it deems useful. It analyses the

subsidiaries’ accounts on a regular basis and meets with their Senior

Executives from time to time, particularly during the budget

preparation and account closing periods;

◆

the Supervisory Board, which exercises ongoing control over the

Company’s management. By consulting Group Management, the

Board can verify that oversight and control systems are sufficient to

ensure that the financial information published by the Company is

reliable;

◆

the Audit and Risk Committee, whose roles and missions are

described in § 4.3.2;

◆

the Executive Vice-President of Corporate Development and Social

Affairs, member of the Executive Committee, who ensures the

implementation of appropriate methods (organisation, skilled

resources, tools) and oversees the audit and risk management

department responsible for the risk management system and internal

control coordination;

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compliance of projects, including with regard to security (compliance with

the Group process of integration of security in projects – ISP).

Integrated applications are used to facilitate centralisation of data reported

to Hermès International by the subsidiaries, consolidation of accounts and

cash management. Managers have access to data generated by the

management systems on a weekly and monthly basis, giving them the

information they need to manage business operations effectively, to

monitor performance consistently, and to identify any irregularities.

The information systems are designed to ensure that, in particular, the

accounting and financial information produced complies with security,

reliability, availability and relevance criteria. Specific rules on the

organisation and operation of all IT systems have been defined, applying

to access, validation of processing and closing procedures, data

archiving and record verification.

Furthermore, procedures and controls have been set up to ensure the

quality and security of operations, maintenance and upgrading of

accounting and management systems as well as all systems that send

data to them.

In addition to the detailed reviews carried out by the information systems

department in the main subsidiaries, the audit and risk management

department organises a review of second-level IT controls through a

self-assessment questionnaire completed by the subsidiaries, and of

third-level controls via audits on:

For third-level controls, the audit plan was considerably enhanced in

2020 and 2021, and is conducted with the assistance of specialists in

each of the subjects audited.

Crisis management

Since 28February 2020, in response to the health crisis linked to

Covid-19, a monitoring unit has been set up to coordinate the necessary

actions within the Group and the exchange of information. Committees by

type of activity and geographical area are regularly organised to maintain

close contact with the Group’s entities. They make it possible to address

operational issues in terms of employee protection, business continuity

and adaptation of the internal control system.

The crisis unit comprises members of the audit and risk management

department, the Group safety department and the Group human

resources department, including in particular the directors of internal

communication and labour relations. This crisis unit reports to the

Executive Committee, via the Executive Vice-President of Corporate

Development and Social Affairs, on matters requiring a collective

decision.

Throughout 2021, the unit remained committed to assisting the

subsidiaries meet their needs, reported during the various meetings or

directly via a dedicated “Covid watch” email address. A crisis

management exercise, designed with the support of an external firm, was

conducted in December2021. This exercise made it possible to test the

reaction and communication of the various stakeholders of the crisis unit

around various scenarios such as a cyberattack, a fire or a pollution

incident. Initial feedback was provided at the end of the financial year

and a second will be conducted in early 2022. The aim is to identify ways

of improving the crisis management system, particularly in terms of

responsiveness, organisation and communication.

4.3.4.2

PREPARATION AND PROCESSING

OF ACCOUNTING AND FINANCIAL INFORMATION

Definition, objectives and scope

The processes relating to the preparation and processing of accounting

and financial information are at the heart of the Group’s internal control

system. They ensure stringent financial oversight of the Company’s

activities and all processes involved in producing and reporting

accounting and financial information for the parent company and the

companies integrated into the consolidated financial statements.

The processes are designed to meet the following objectives:

Hermès has set up an organised and documented system that ensures

the consistency of consolidated and reported accounting and financial

data. It is based on a Group Management manual, strict segregation of

duties, and strong control by Hermès International over the information

produced by the subsidiaries.

Actors in the accounting and financial internal control process

The internal control process for accounting and financial information

involves the following stakeholders:

◆

the Executive Vice-President Finance, member of the Executive

Committee. He relies on dedicated teams of specialists in the

consolidation, tax and management control department, the financial

management department, the treasury department and the financial

communication department to support the system:

•

consolidation of financial information in accordance with IFRS

accounting standards,

•

monitoring and coordination of activity during regular reviews

(year-end and half-year accounts closure, forecast updates and

budgets),

•

accounting and financial internal control within the operational

entities,

•

strict compliance with tax regulations,

•

hedging foreign exchange risk,

•

external communication of financial information in accordance with

regulations;

◆

the Managing Directors and Chief Financial Officers of the

subsidiaries, who have primary responsibility for the quality of the

financial information preparation processes and internal control

applied by the entities they oversee. They are also responsible for

circulating procedures drawn up and issued by Hermès International

and for ensuring that these are properly applied.

◆

checking of consolidation packages prior to integration (compliance

with Group accounting standards and practices and verification of

consistency, etc.);

◆

analysis of the financial statements of consolidated subsidiaries;

◆

the proper elimination of internal transactions;

◆

the proper application of IFRS;

◆

verification of consolidation transactions;

◆

analysis and validation of all items in the consolidated financial

statements;

◆

the reliability of the financial information.

◆

the compliance of activities and operations with the Group’s internal

control rules and procedures, as well as the regulatory provisions in

force;

◆

the relevance of the risk control processes implemented by

operational staff;

◆

the implementation of the Group’s strategic orientations through the

consistency of the operational actions of the entities and the use of

resources in relation to the actions undertaken;

◆

more generally, the likelihood, severity and level of control of risks

that could have a significant impact on the Group’s strategy.

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Group standards

The Group has adopted a body of accounting rules and policies, in

accordance with IFRS, the framework for consolidated financial

statements. The application of these standards is mandatory for all

consolidated subsidiaries in order to provide consistent and reliable

financial information. The chart of accounts applies to all subsidiaries

and the income statement is common to management and accounting.

These rules and policies are presented in Group management manuals,

which are regularly updated by the consolidation department to take into

account changes in regulations and accounting standards.

Financial and accounting information production systems

The management of the information flows of the financial functions is

mainly carried out through the SAP integrated information system used in

almost all the Group’s subsidiaries.

The production of the annual and half-yearly consolidated financial

statements, as well as the reporting of all the financial information used

to manage and control the activity of the operational units, is carried out

through a unified and centrally managed consolidation software package

(SAP/Business Objects Financial Consolidation).

These systems allow the accounting entries to be traced and a strict

separation of duties.

Procedures for preparing published accounting and financial

information

The Group’s organisation, which is based on reporting issued by each

subsidiary and sent by the countries directly to the parent company,

without any intermediate aggregates, ensures that Hermès International

exercises strong control over the financial information produced by the

subsidiaries.

The Managing Director and Chief Financial Officer of each subsidiary

jointly undertake to ensure the quality, reliability and comprehensiveness

of the accounting and financial information that they have prepared and

sent to the Group finance department, by means of a letter of

confirmation they sign jointly at the closing of the half-yearly and annual

financial statements.

The accounts closing process is governed by precise instructions and is

based on a detailed timetable, which is circulated to all subsidiaries in

order to ensure respect of the deadlines and consistency in the

preparation of financial statements. Throughout the year, the

consolidation department validates the main accounting estimates used

by the subsidiaries and central functions and, where applicable,

simulates complex transactions in the consolidation software. The Group

has implemented two closings in May and November to better anticipate

half-yearly and annual closings and to have shorter closing deadlines.

For the preparation of the consolidated financial statements, control

procedures apply at each stage of the information reporting and

processing process and are intended to ensure:

Lastly, in the context of these audits, the audit and risk management

department coordinates its work on internal control with the Statutory

Auditors.

4.3.5

AN AGILE INTERNAL AUDIT SYSTEM

Duties

The role of the audit and risk management department is to provide the

Hermès Group’s Management with reasonable assurance regarding the

level of control over operations in the various entities. It fulfils this role in

particular by carrying out audit missions, the purpose of which is to

assess:

◆

audit of distribution subsidiaries including the audit of stores;

◆

audit of production sites and métiers;

◆

audit of support departments for upstream or downstream flows;

◆

special audits conducted with the help of external firms, in particular

on information systems;

◆

support for affiliates in the setting up of the internal control system.

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There are several types of audits including:

Upon completion of the audits, reports are prepared detailing the audit

findings and risks identified, and recommending solutions to remedy

them. Proper implementation of the recommendations is verified during

follow-up audits. The audit reports are sent to the managers of the

audited subsidiaries or departments and to Group Management.

Since 2020, the audit and risk management department uses an

analysis tool for accounting entries in its audits. This tool improves the

relevance of certain tests undertaken, by facilitating the identification of

atypical transactions. In addition, a data analysis tool using artificial

intelligence algorithms was introduced in 2021. Initially developed for

internal control officers, it enables continuous control of in-store

operations. It allows the automatic identification, using 29 indicators, of

any non-compliance with Group procedures. This tool is also used by the

audit and risk management department for the selection of tests

performed during audits.

Audit plan

The auditors work on the basis of an annual audit plan, validated by the

Executive Management and the Audit and Risk Committee, which is

adapted every six months, if necessary. An overall analysis of risks, in

particular financial, operational and compliance risks, feeds into the

audit plan. This is also supplemented by proposals from the Executive

Committee and by audit follow-ups. It must allow a regular review of all

Group entities and processes, with a frequency appropriate to the

magnitude of the risks and the relative weight of each entity.

The audit and risk management department also carries out support

assignments for the internal control roll-out within newly acquired

entities. For specialised audits, it may use external service providers and

data analysis tools, particularly in the context of fraud prevention.

In addition, it regularly performs integrated audits with the Group’s

experts: IT security, safety, compliance, insurance, etc.

In connection with the lockdowns that persisted in 2021 and borders

that remained closed, audits in subsidiaries continued to be carried out

remotely. The 2021 audit plan has been adapted to the current context,

notably with an increase in e-commerce audits and remote sales as well

as increased security audits of the IT environment. Most of the IT audits

have been entrusted to a firm that has the dual advantage of expertise

and geographical location, making it possible to carry out face-to-face

interviews.

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RISK FACTORS AND MANAGEMENT

RISK MANAGEMENT, INTERNAL CONTROL AND INTERNAL AUDIT

5.1

CONSOLIDATED INCOME STATEMENT

360

5.2

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

360

5.3

CONSOLIDATED BALANCE SHEET

361

5.4

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

362

5.5

CONSOLIDATED STATEMENT OF CASH FLOWS

363

5.6

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

364

5.7

STATUTORY AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL

STATEMENTS

404

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 359

CONSOLIDATED FINANCIAL

STATEMENTS

AFR

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CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED INCOME STATEMENT

Comments on the consolidated financial statements are set out in chapter1 "Presentation of the Group and its results", § 1.8.

5.1

CONSOLIDATED INCOME STATEMENT

5.2

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Transferable through profit or loss.(1)

(2) Net of tax.

In millions of euros

Notes 2021 2020

Revenue 3 and 4 8,982 6,389

Cost of sales 4 (2,580) (2,013)

Gross margin 6,402 4,376

Sales and administrative expenses 4.2 (2,137) (1,699)

Other income and expenses 4.3 (734) (696)

Recurring operating income 3 3,530 1,981

Other non-recurring income and expenses 4.4 - 91

Operating income 3 3,530 2,073

Net financial income 9.1 (96) (86)

Net income before tax 3,435 1,986

Income tax 6 (1,015) (613)

Net income from associates 8 34 16

CONSOLIDATED NET INCOME 2,454 1,390

Non-controlling interests (8) (4)

NET INCOME ATTRIBUTABLE TO OWNERS OF THE PARENT 2,445 1,385

Basic earnings per share (in euros) 11.6 23.37 13.27

Diluted earnings per share (in euros) 11.6 23.30 13.21

In millions of euros

Notes 2021 2020

Consolidated net income 2,454 1,390

Changes in foreign currency adjustments

141 (103)

Hedges of future cash flows in foreign currencies

11.5 (110) 55

◆

11.5 (87) 36

◆

Assets at fair value

Employee benefit obligations: change in value linked to actuarial gains and losses

Net comprehensive income

◆

change in fair value

recycling through profit or loss (23) 18

11.5 87 -

11.5 9 (2)

2,582 1,339

attributable to owners of the parent 2,573 1337

attributable to non-controlling interests 9 2

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 361

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEET

5.3

CONSOLIDATED BALANCE SHEET

ASSETS

In millions of euros

Notes 31/12/2021 31/12/2020

Goodwill 7.1 42 42

Intangible assets 7.2 258 221

Right-of-use assets 7.3 1,517 1,446

Property, plant and equipment 7.2 1,881 1,646

Investment property 7.4 9 73

Financial assets 9.2 617 368

Investments in associates 8 51 49

Loans and deposits 59 56

Deferred tax assets 6.3 546 475

Other non-current assets 4.5 22 24

Non-current assets 5,002 4,401

Inventories and work-in-progress 4.5 1,449 1,289

Trade and other receivables 4.5 333 250

Current tax receivables 4.5 58 63

Other current assets 4.5 257 193

Financial derivatives 10 53 121

Cash and cash equivalents 9.3 6,696 4,733

Current assets 8,845 6,650

TOTAL ASSETS 13,847 11,051

LIABILITIES

In millions of euros

Notes 31/12/2021 31/12/2020

Share capital 11 54 54

Share premium 50 50

Treasury shares 11 (551) (464)

Reserves 7,142 6,212

Foreign currency adjustments 11.5 178 38

Revaluation adjustments 11.5 83 106

Net income attributable to owners of the parent 2,445 1,385

Equity attributable to owners of the parent 9,400 7,380

Non-controlling interests 12 11

Equity 9,412 7,391

Borrowings and financial liabilities due in more than one year 9 24 18

Lease liabilities due in more than one year 7.3 1,529 1,447

Non-current provisions 12 26 22

Post-employment and other employee benefit obligations due in more than one year 5.3 220 275

Deferred tax liabilities 6.3 15 22

Other non-current liabilities 4.5 45 36

Non-current liabilities 1,860 1,821

Borrowings and financial liabilities due in less than one year 9 1 25

Lease liabilities due in less than one year 7.3 248 196

Current provisions 12 115 100

Post-employment and other employee benefit obligations due in less than one year 5.3 40 28

Trade and other payables 6.5 535 448

Financial derivatives 10 122 29

Current tax liabilities 4.5 347 218

Other current liabilities 4.5 1,168 795

Current liabilities 2,575 1,839

TOTAL EQUITY AND LIABILITIES 13,847 11,051

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL362

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

5.4

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Revaluation adjustments

In millions of euros

Number of

capital

premium

Treasury

Consolidated

reserves

and net

income

attributable

to owners of

the parent

Actuarial

gains

and

losses

Foreign

currency

adjustments

Hedges of

future cash

flows in

foreign

currencies

Equity

attributable

to owners

of the

parent

Non-

controlling

interests Equity

Notes 11 11 11 11.5 11.5 11.5 11

(49)

(110)

(105)

Financial

investments

11.5

As at 1January 2020 105,569,412 54 50 (509) 6,917 (133) 139 100 6,568 8 6,576

Net income - - - - 1,385 - - - 1,385 4 1,390

Other comprehensive income - - - - - (2) (101) - (48) (2) (50)

Comprehensive income - - - - 1,385 (2) (101) - 1,337 2 1,339

Change in share capital and

share premiums - - - - - - - - - - -

Purchase or sale of treasury

shares - - - 45 (166) - - - (121) - (121)

Share-based payments - - - - 79 - - - 79 - 79

Dividends paid - - - - (485) - - - (485) (4) (490)

Other - - - - 2 - - - 2 5 8

As at 31December 2020 105,569,412 54 50 (464) 7,732 (135) 38 100 7,380 11 7,391

Net income - - - - 2,445 - - - 2,445 8 2,454

Other comprehensive income - - - - - 9 141 87 127 0 128

Comprehensive income - - - - 2,445 9 141 87 2,573 9 2,582

Change in share capital and

share premiums - - - - - - - - - - -

Purchase or sale of treasury

shares - - - (88) (69) - - - (157) - (157)

Share-based payments - - - - 59 - - - 59 - 59

Dividends paid - - - - (485) - - - (485) (5) (490)

Other - - - - 30 - - - 30 (2) 28

AS AT 31DECEMBER 2021 105,569,412 54 50 (551) 9,712 (125) 178 188 9,400 12 9,412

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 363

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF CASH FLOWS

5.5

CONSOLIDATED STATEMENT OF CASH FLOWS

In millions of euros

Notes 2021 2020

CASH FLOWS RELATED TO OPERATING ACTIVITIES

Net income attributable to owners of the parent 2,445 1,385

Depreciation and amortisation of fixed assets 7.2 and 7.4 312 271

Depreciation of right-of-use assets 7.3 251 243

Impairment losses 7.5 65 54

Mark-to-Market financial instruments (1) 1

Foreign exchange gains/(losses) on fair value adjustments (46) 30

Change in provisions 28 26

Net income from associates (34) (16)

Net income attributable to non-controlling interests 8 4

Capital gains or losses on disposals and impact of changes in scope of consolidation (4) (90)

Deferred tax expense (15) 5

Accrued expenses and income related to share-based payments 59 79

Dividend income (10) (0)

Other (0) (0)

Operating cash flows 3,060 1,993

Change in working capital requirements 4.5 346 (350)

Change in net cash position related to operating activities (A) 3,405 1,642

CASH FLOWS RELATED TO INVESTING ACTIVITIES

Operating investments 7.2 (532) (448)

Acquisitions of consolidated shares (0) (72)

Acquisitions of other financial assets 9.2 (198) (36)

Disposals of operating assets 7.2 3 0

Disposals of consolidated shares and impact of losses of control - 81

Disposals of other financial assets 9.2 6 10

Change in payables and receivables related to investing activities 4.5 6 11

Dividends received 47 21

Change in net cash position related to investing activities (B) (669) (432)

CASH FLOWS RELATED TO FINANCING ACTIVITIES

Dividends paid (490) (490)

Repayment of lease liabilities 7.3 (212) (199)

Treasury share buybacks net of disposals (158) (122)

Borrowing subscriptions -8

Repayment of borrowings (8) (8)

Change in net cash position related to financing activities (C) (869) (810)

Foreign currency translation adjustment (D) 110 (55)

CHANGE IN NET CASH POSITION (A) + (B) + (C) + (D) 9.3 1,978 345

Net cash position at the beginning of the period 9.3 4,717 4,372

Net cash position at the end of the period 9.3 6,695 4,717

CHANGE IN NET CASH POSITION 9.3 1,978 345

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL364

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

5.6

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DETAILED CONTENTS

NOTE 1 ACCOUNTING PRINCIPLES AND POLICIES 365

NOTE 2 ALTERNATIVE PERFORMANCE MEASURES 367

NOTE 3 SEGMENT INFORMATION 368

NOTE4 ITEMS RELATING TO OPERATING ACTIVITIES 370

NOTE5 HEADCOUNT, PERSONNEL COSTS AND EMPLOYEE BENEFITS 374

NOTE 6 INCOME TAX 378

NOTE7 GOODWILL, PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS, AND LEASES 380

NOTE 8 INVESTMENTS IN ASSOCIATES 387

NOTE9 FINANCIAL ASSETS AND LIABILITIES – NET CASH POSITION 387

NOTE10 MANAGEMENT OF MARKET RISKS AND DERIVATIVES 391

NOTE11 EQUITY – EARNINGS PER SHARE 397

NOTE12 PROVISIONS FOR RISKS AND EXPENSES AND OFF-BALANCE SHEET COMMITMENTS 399

NOTE 13 RELATED-PARTY TRANSACTIONS 400

NOTE 14 EVENTS AFTER THE REPORTING PERIOD 401

NOTE15 STATUTORY AUDITORS’ FEES 401

NOTE 16 SCOPE OF CONSOLIDATION 402

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 365

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1

ACCOUNTING PRINCIPLES AND POLICIES

1.1

Basis of preparation

The consolidated financial statements of Hermès International and its

subsidiaries (the “Group”), published for financial year 2021, are

prepared in accordance with IFRS, the International Financial Reporting

Standards, as adopted in the European Union as at 31December 2021.

The Group’s consolidated financial statements were approved by the

Executive Management on 17February 2022 and will be submitted for

approval to the General Meeting on 20April 2022. The Audit and Risk

Committee, which met on 16February 2022, also examined the

consolidated financial statements.

The consolidated financial statements and notes to the consolidated

financial statements are presented in euros. Unless otherwise stated, the

values shown in the tables are expressed in millions of euros and

rounded to the nearest million. As a result, in certain cases, the effects of

rounding up/down can lead to a non-significant difference in the totals or

changes. In addition, the ratios and differences are calculated on the

basis of the underlying amounts and not on the basis of rounded

amounts.

1.2

New accounting principles applicable

to the Hermès Group

The IAS Board has validated the April2021 IFRIC decision relating to

IAS19, which modifies the calculation of the obligations relating to

certain defined-benefit plans. The new calculation methodology consists

in no longer spreading the acquisition of rights over the entire career of

the employee/beneficiary in the plan, but over the period necessary to

obtain the capped rights prior to retirement age. Following this decision,

the Hermès Group changed the calculation method for its retirement

benefit plans (see Note5.3). The impact of this change, which is not

significant, consists of a reduction in the commitment of €45million. It

was posted through equity for €34million net of deferred tax at

1January 2021.

As part of the second phase of the benchmark interest rate reform, the

IASB published amendments to IFRS9 and IFRS7standards relating to

financial instruments, applicable from 1January 2021. Due to the

absence of borrowings and interest rate hedging instruments within the

Group at 31December 2021, the application of these amendments has

no impact on the consolidated financial statements.

The Group is currently studying the impacts and practical consequences

of the IFRIC’s final decision taken in the first half of 2021 concerning the

recognition of the costs of configuration and customisation of software

made available in the cloud as part of a SaaS (Software as a service)

contract. A qualitative and quantitative review of the IT tools liable to be

affected is under way, in order to assess the impacts of the

interpretation.

1.3

Use of estimates

The preparation of the consolidated financial statements under IFRS

sometimes requires the Group to make estimates in valuing assets and

liabilities and income and expenses recognised during the financial year.

The Group bases these estimates on historical experience and on a

variety of assumptions, which it deems to be the most reasonable and

probable in the current economic environment.

Name or other means of identification of the reporting entity Hermès International

Explanation of changes in the name or other means of identification of

the reporting entity since the end of the previous reporting period

n/a

Domicile of the entity 24, rue du Faubourg Saint-Honoré, 75008 Paris (France)

Legal form of the entity Société en commandite par actions (partnership limited by shares)

Country of incorporation France

Address of the entity’s registered office 24, rue du Faubourg Saint-Honoré, 75008 Paris (France)

Principal place of business 24, rue du Faubourg Saint-Honoré, 75008 Paris (France)

Description of the nature of the entity’s operations and its principal

activities

Hermès is an independent, family-owned craftsmanship House that

manufactures and distributes its objects through a dynamic network of

stores around the world.

Name of parent entity Hermès International

Name of ultimate parent of the Group Hermès International

◆

items in the balance sheet are converted at the year-end exchange

rate for each currency;

◆

items in the income statement are converted at the average annual

exchange rate for each currency.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL366

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The main financial statement items that require assessments and estimates are as follows:

Given its activity and geographical location, the Hermès Group has not, at

this stage, identified any major impact from climate change on the

assumptions on which its financial statements are based.

Hermès climate commitments in terms of reducing greenhouse gases are

reflected in particular in the Group’s financial statements through its real

estate investments and operating expenses.

1.4

Scope and methods of consolidation

The consolidated financial statements include the financial statements of

Hermès International and subsidiaries and associates over which the

parent company directly or indirectly exerts control or significant

influence.

They are prepared on the basis of annual financial statements for the

period ended 31December, and are expressed in euros.

The list of the main companies included in the scope of consolidation at

31December 2021 is presented in Note16.

The financial statements of controlled companies are fully consolidated.

This method is used, following elimination of internal transactions and

results, in order to fully integrate assets, liabilities, income and expenses.

Equity and net income attributable to minority shareholders are identified

separately as non-controlling interests in the consolidated balance sheet

and the consolidated income statement.

The financial statements of other companies, known as associates, over

which the Group exercises significant influence, are accounted for using

the equity method (see Note8).

Financial statements expressed in foreign currencies are converted in

accordance with the following principles:

This results in a translation difference (attributable to owners of the

parent), which is shown separately in consolidated equity. The principle is

the same for non-controlling interests.

Notes

Depreciation period for property, plant and equipment and intangible assets 7.2

Leases 7.3

Impairment of inventories 4.5

Financial instruments 10

Provisions 12

Post-employment and other employee benefit obligations 5.3

Share-based payments 5.4

Income tax 6

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 367

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

◆

Net cash position: includes cash and cash equivalents presented

under balance sheet assets, less bank overdrafts which appear under

short-term borrowings and financial liabilities on the liabilities side.

Lease liabilities recognised in accordance with IFRS16 are excluded

from net cash position.

◆

Restated net cash position: corresponds to net cash position plus

cash investments that do not meet the IFRS criteria for cash

equivalents due in particular to their original maturity of more than

three months, less borrowings and financial liabilities.

NOTE 2

ALTERNATIVE PERFORMANCE MEASURES

This note aims to present the main alternative performance measures (“APM”) followed by the Group Management, and their reconciliation, where

appropriate, with the aggregates of the IFRS consolidated financial statements.

2.1

Revenue growth at constant exchange rates

◆

Revenue growth at constant exchange rates: calculated by applying, for each currency, the average exchange rates of the previous period to the

revenue for the period.

2.2

Recurring operating income

◆

Recurring operating income: operating income exclusive of non-recurring items with a significant impact that may affect understanding of the

Group’s economic performance.

2.3

Net cash position and restated net cash position

Borrowings and financial liabilities on the balance sheet break down as follows:

The reconciliation of the net cash position and restated net cash position indicators with the consolidated balance sheet is presented below:

2021 at current

rates

2021 at

constant rates 2020

Change at current

exchange rates

Change at constant

exchange rates Currency effect

Revenue

in millions of euros 2,592 2,671 (78) 8,982 9,060 6,389

Change

in % 41% 42% (1)%

In millions of euros

31/12/2021 31/12/2020

Bank overdrafts 1 16

Other financial liabilities 0 8

Commitments to buy out minority interests 24 18

BORROWINGS AND FINANCIAL LIABILITIES ON THE BALANCE SHEET 25 43

In millions of euros

31/12/2021 31/12/2020

Cash and cash equivalents 6,696 4,733

Restatement of mark-to-market on liquidities - 1

Bank overdrafts (1) (16)

NET CASH POSITION 6,695 4,717

Cash investments with maturity at outset of over 3months 375 195

Financial liabilities (0) (8)

RESTATED NET CASH POSITION 7,070 4,904

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL368

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2.4

Adjusted free cash flow

For management purposes, the Hermès Group sees all lease payments

as items affecting operating activities. IFRS16 considers fixed lease

payments as the sum of the repayment of the principal portion of the

lease liability and the payment of financial interests. Consequently, the

Group follows the following APM:

◆

adjusted free cash flow: corresponds to the cash flows related to

operating activities, less operating investments and the repayment of

lease liabilities recognised in accordance with IFRS16 (aggregates in

the consolidated statement of cash flows).

The reconciliation of this indicator with the Group’s statement of consolidated cash flows presented in section5.5 is as follows:

NOTE 3

SEGMENT INFORMATION

Accounting principles

Given the Group’s current structure, organised into geographical areas

placed under the responsibility of operational Senior Executives in

charge of applying the strategy defined by the Executive Committee

(the principal operational decision-maker), the Group has determined

that the geographical areas constitute the operating segments with

reference to the fundamental principle of IFRS8.

Segment information is presented after eliminations and

restatements.

Revenue by destination geographical area breaks down as follows:

Asia-Pacific

(excl. Japan)

€4,251M

Americas

€1 458M

Other

€156M

France

€838M

Europe

(excl. France)

€1,303M

Japan

€977M

In millions of euros

2021 2020

Operating cash flows 3,060 1,993

+ Change in working capital requirements 346 (350)

- Operating investments (532) (448)

- Repayment of lease liabilities (212) (199)

ADJUSTED FREE CASH FLOW 2,661 995

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 369

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Non-current assets and liabilities other than deferred tax assets and liabilities.(1)

Since 2021, “unallocated” includes expenses related to free share plans as well as unallocated central costs and internal billings.

Non-current assets and liabilities other than deferred tax assets and liabilities.(1)

2021

In millions of euros

France

Europe

(excl. France) Japan

Asia-Pacific

(excl. Japan) Americas Other Unallocated Total

Revenue 838 1,303 977 4,251 1,458 156 - 8,982

Recurring operating income 285 372 380 1,980 520 44 (50) 3,530

Recurring operating profitability 34% 29% 39% 47% 36% 28% - 39%

Other non-recurring income and expenses - - - - - - - -

Operating income 285 372 380 1,980 520 44 (50) 3,530

Operating investments 234 38 22 105 77 - 56 532

Non-current assets

886 454 253 916 752 33 1,162 4,456

Non-current liabilities

206 364 113 561 562 - 40 1,845

2020

In millions of euros

France

Europe

(excl. France) Japan

Asia-Pacific

(excl. Japan) Americas Other Holding Total

Revenue 620 953 834 2,915 959 108 - 6,389

Recurring operating income 159 195 292 1,290 229 25 (208) 1,981

Recurring operating profitability 26% 21% 35% 44% 24% 23% - 31%

Other non-recurring income and expenses - - - - - - 91 91

Operating income 159 195 292 1,290 229 25 (117) 2,073

Operating investments 221 39 30 69 43 - 46 448

Non-current assets

814 465 253 801 656 31 907 3,926

Non-current liabilities

228 379 111 505 500 - 76 1,799

◆

revenues mainly include retail sales in the Group’s stores, which

are recognised at the time of purchase by customers;

◆

Wholesale distribution to store concessionaires, distributors in the

Perfume and Beauty activity and sales to producers (textile

printing, tanning, metal parts, etc.) are recorded when control of

the goods is transferred, which generally occurs at the time of

shipping. Distributors and concessionaires therefore take control

of products until sale to the final customer and thus act as the

principal under the provisions of IFRS15.

◆

depreciation and amortisation of fixed assets and right-of-use

assets, with the exception of charges relating to items allocated to

production, which are classified as “Cost of sales”;

◆

the cost of pension plans and other long-term benefits (see

Note5.3);

◆

expenses related to free share allocation plans (see Note5.4);

◆

changes in provisions (see Note12);

◆

impairment losses (see Note7.5);

◆

donations and sponsorship expenses.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL370

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE4

ITEMS RELATING TO OPERATING ACTIVITIES

Accounting principles

Revenue

Revenue consists essentially of sales of goods and services

produced by the Group’s main operating activities:

Any contractual or implicit take-backs of inventories are recorded as a

deduction from revenue.

Cost of sales

The cost of sales mainly comprises purchases of raw materials, the

cost of production labour, indirect production costs, variable selling

expenses, as well as impairment of inventories.

Sales and administrative expenses

Communication

Communication expenses include expenses designed to promote

brands and products to customers. These expenses are recognised as

expenses in the financial year in which they are incurred.

Other sales and administrative expenses

Other sales and administrative expenses include costs usually borne

by the Company in the course of its operations and which are not

related to production. These mainly include expenses for sales staff

and support functions, variable rent expenses and other

administrative expenses (fees, insurance, travel, etc.).

Other income and expenses

Other income and expenses mainly include:

Other non-recurring income and expenses

This item enables the separate presentation of major non-recurring

events that occurred during the financial year, whose financial impact

was material and whose presentation under recurring operating

income could affect the understanding of the Group’s economic

performance.

4.1

Revenue by métier

Silk and Textiles

€669M

Ready-to-wear

and Accessories

€2,219M

Other Hermès

sectors

€1,001M

Perfume

and Beauty

€385M

Watches

€337M

Other products

€279M

Leather Goods

& Saddlery

€4,091M

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 371

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

4.2

Sales and administrative expenses

4.3

Other income and expenses

In 2021 and in 2020, other expenses include donations of respectively

€7million and €20million to AP-HP (the Parisian public hospital system).

Total depreciation and amortisation of fixed assets included in operating

expenses (“Other income and expenses” and “Cost of sales”) amounted

to €312million in 2021, compared with €271million in 2020.

Total amortisation of rights-of-use included in operating expenses (“Other

income and expenses” and “Cost of sales”) amounted to €251million in

2021, compared with €243million in 2020.

4.4

Other non-recurring income and expenses

In 2020, other non-recurring income corresponded to the income resulting from the deconsolidation of Shang Xia for €91million.

In millions of euros

2021 2020

Change at current

exchange rate

Change at constant

exchange rates

Leather Goods & Saddlery 4,091 3,209 27% 29%

Ready-to-wear and Accessories 2,219 1,409 58% 59%

Silk and Textiles 669 452 48% 49%

Other Hermès sectors 1,001 643 56% 57%

Perfume and Beauty 385 263 46% 47%

Watches 337 196 72% 73%

Other products 279 218 28% 29%

REVENUE 8,982 6,389 41% 42%

In millions of euros

2021 2020

Communication (421) (279)

Other sales and administrative expenses (1,715) (1,420)

TOTAL (2,137) (1,699)

In millions of euros

Note 2021 2020

Depreciation and amortisation of fixed assets (263) (227)

Amortisation of right-of-use assets (249) (241)

Depreciation and amortisation (512) (468)

Net change in provisions (19) (16)

Cost of pension plans and other long-term benefits 5.3 (18) (18)

Sub-total (37) (33)

Impairment losses (65) (54)

Expenses related to free share allocation plans and similar expenses 5.4 (122) (118)

Other expenses (26) (76)

Other products 28 52

Sub-total (186) (195)

TOTAL (734) (696)

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL372

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

◆

cost is generally calculated at weighted average cost or standard

cost adjusted for variances, according to each category of

inventory. The cost of inventories includes all costs of purchase,

processing and all other costs incurred in bringing the inventories

to their present location and condition, as specified by IAS2

Inventories;

◆

net realisable value is the estimated selling price in the ordinary

course of business less the estimated costs of completion and the

estimated costs necessary to make the sale.

4.5

Working capital requirements

Accounting principles

Inventories and work-in-progress

Inventories and work-in-progress held by Group companies are valued

at the lower of cost (including indirect production costs) or net

realisable value:

Impairment is booked to reduce inventories to net realisable value if

this is lower than the carrying amount. Impairment is established for

each category of inventory (raw materials, work-in-progress,

intermediate products, finished products and merchandise), if the

products concerned are damaged or obsolete (season or collection

terminated, for example) or based on expected turnover. These

impairments are included in the cost of sales.

Trade receivables

Trade receivables are recognised on the balance sheet at their par

value, which corresponds to their fair value.

Credit risk arises from the potential inability of customers to meet their

payment obligations. Expected losses linked to credit risk on trade

receivables are assessed as soon as they arise and reviewed at each

closing (see Note9). They are recognized in “Other income and

expenses”.

Other receivables and payables

The “Other receivables and payables” item of the change in working

capital requirement mainly includes tax and social security receivables

and payables.

Transactions in foreign currencies

Transactions in foreign currencies are recorded on initial recognition in

euros, by using the applicable exchange rate at the date of the

transaction (historical rate). Monetary assets and liabilities

denominated in foreign currencies are converted using the closing

rate. Foreign currency adjustments are recognised in income or

expenses.

4.5.1 INVENTORIES AND WORK-IN-PROGRESS

31/12/2021 31/12/2020

No inventories were pledged as collateral to secure financial liabilities.

4.5.2 TRADE RECEIVABLES AND OTHER CURRENT ASSETS

In millions of euros

Gross Impairment Net Gross Impairment Net

Retail, intermediate and finished goods 1,442 483 959 1,355 517 837

Raw materials and work-in-progress 803 314 489 750 298 452

TOTAL 2,246 797 1,449 2,104 815 1,289

Net impairment gain/(loss) on retail, intermediate

and finished goods inventories - 49 - - (85) -

Net impairment gain/(loss) on impairment

of raw materials and work-in-progress - (15) - - (32) -

31/12/2021 31/12/2020

In millions of euros

Gross Impairment Net Net

Trade and other receivables 337 3 333 250

◆

222 - 222 136

◆

Current tax receivables

not yet due

past due

Of which:

114 3 111 113

58 - 58 64

Other current assets 259 0 257 193

Other non-current assets 22 0 22 24

TOTAL 675 3 670 530

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 373

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The amount of trade and other receivables due breaks down as follows:

With the exception of other non-current assets, all receivables are due

within one year. There were no significant payment deferrals that would

justify the discounting of receivables.

the expected risk of non-recovery is low, as evidenced by the level of

impairment of trade receivables, which amounted to 1% of the gross

value at the end of 2021 (2% at end of 2020). There is no significant

concentration of credit risk.

The Group’s policy is to recommend that insurance be taken out covering

accounts receivable

inasmuch as local conditions permit. Consequently, Customer risk was not significantly affected by the health crisis.

4.5.3 TRADE PAYABLES AND OTHER LIABILITIES

4.5.4 CHANGE IN WORKING CAPITAL REQUIREMENTS

31/12/2021 31/12/2020

Gross Impairment Net Net

Under 3months 108 0 108 106

Between 3 and 6months 2 0 2 3

Over 6months 5 3 2 5

TOTAL 114 3 111 113

In millions of euros

31/12/2021 31/12/2020

Trade payable 450 373

Amounts payable to fixed asset suppliers 85 76

Trade and other payables 535 448

Current tax liabilities 347 218

Other current liabilities 1,168 795

Other non-current liabilities 45 36

TRADE PAYABLES AND OTHER LIABILITIES 2,094 1,497

In millions of euros

2021 2020

Inventories and work-in-progress (116) (158)

Trade and other receivables (30) 38

Trade and other payables 71 (24)

Other receivables and payables 421 (207)

TOTAL 346 (350)

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL374

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE5

HEADCOUNT, PERSONNEL COSTS AND EMPLOYEE BENEFITS

5.1

Headcount by geographical area and sector

Support

16%

Sales

36%

Production

48%

France

62%

Japan

Americas

Asia-Pacific

(excl. Japan)

15%

Europe

(excl. France)

11%

◆

benefits in the event of departure or end of career, mainly in

France, Japan and Italy. These obligations are partially or entirely

externalised depending on the country;

◆

supplemental pension plans in France or abroad, notably in

Switzerland.

5.2

Personnel costs

Employee expenses in 2021 totalled €1,489million, compared with €1,297million in 2020.

5.3

Post-employment and other employee benefit obligations

General and accounting principles

Post-employment benefit plans

Defined-contribution plans

Under these plans, regular payments are made to outside

organisations, which are responsible for their administrative and

financial management. The Group is not committed beyond the

contributions paid and these are therefore recognised as expenses by

destination in the various lines of the consolidated income statement.

Defined-benefit plans

The Hermès Group’s defined-benefit plans include:

The Group’s obligations are calculated annually by an independent

actuary using the projected unit credit method. This method is based

on actuarial assumptions and takes into account the employee’s

probable future length of service, future salary and life expectancy as

well as staff turnover and the inflation rate. Actuarial assumptions are

reviewed annually.

The present value of the obligation is calculated by applying an

appropriate discount rate for each country where the obligations are

located. The discount rates applied are obtained by reference to the

yield on investment grade (AA) corporate bonds with the same maturity

as that of the obligation.

Production Sales Support Total

31/12/2021 % 31/12/2020 31/12/2021 % 31/12/2020 31/12/2021 % 31/12/2020 31/12/2021 % 31/12/2020

France 7,633 1,37690% 7,162 22% 1,356 10,96970% 1,865 62% 10,383

1,977

978

802

748

5,861

1,960

Asia-Pacific (excl.

Japan) 74 1% 83 2,287 36% 314 11% 315 2,675 15% 2,375

Europe (excl. France) 711 8% 699 995 16% 254 9% 261 1,960 11% 1,938

Americas 68 1% 76 868 14% 213 8% 199 1,149 7% 1,077

Japan 0 0% 0 766 12% 76 3% 79 842 5% 827

TOTAL 8,486 100% 8,020 6,292 100% 2,817 100% 2,719 17,595 100% 16,600

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 375

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

◆

jubilees in France: these awards provide compensation for

long-standing services;

◆

long-service awards, mainly in Japan, China and countries in South

Asia.

When benefits are funded in advance through external funds, the

assets held are measured at fair value, and taken into account in the

assessment of the net provision. In accordance with IAS19 revised,

rates of return on assets are determined by reference to discount

rates on the obligations.

In the consolidated income statement, the expense is presented under

“Other income and expenses”.

Changes in actuarial assumptions and experience effects give rise to

actuarial gains and losses, the total of which is recorded under “Other

comprehensive income” over the period during which they were

recognised.

Other long-term benefits

The Hermès Group’s other long-term benefits include:

5.3

Retirement and other employee benefit obligations

5.3.1 INFORMATION BY TYPE OF PLAN AND GEOGRAPHICAL AREA

The provision shown in the balance sheet includes post-employment defined-benefit plans and other long-term benefits:

The present value of the obligations and the fair value of the plan assets broken down by geographical area are as follows:

5.3.2 ACTUARIAL ASSUMPTIONS

For 2021, the following actuarial assumptions were used for the countries to which the Hermès Group’s main commitments apply:

Rates according to the duration of the plans.(1)

In millions of euros

31/12/2021 31/12/2020

Defined-benefit plans 243 288

Other long-term benefits 17 16

PROVISIONS AT END OF PERIOD 260 304

31/12/2021 31/12/2020

In millions of euros

Value Breakdown Value Breakdown

France 187 57% 227 62%

Japan 52 16% 51 14%

Other 92 28% 90 24%

Present value of obligations 331 100% 368 100%

France 16 23% 16 24%

Other 55 77% 49 76%

Fair value of plan assets 71 100% 65 100%

France 171 66% 211 70%

Japan 52 20% 51 17%

Other 37 14% 41 13%

PROVISIONS FOR RETIREMENT AND SIMILAR BENEFIT OBLIGATIONS 260 100% 304 100%

France Italy Japan Switzerland

Discount rate 0.49% – 0.84%

0.84% 0.40% 0.25%

Increase in salaries 3.0% 1.8% 2.5% 2.0%

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL376

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Reminder of the assumptions in 2020:

Rates according to the duration of the plans.(1)

A 0.50point increase or decrease in the discount rate would lead to a €17million decrease or a €19million increase in the Hermès Group’s pension

provision respectively, with the balancing entry recognised in equity.

5.3.3 RECONCILIATION OF RETIREMENT AND OTHER EMPLOYEE BENEFIT OBLIGATIONS

Following the IFRIC decision of April2021 relating to IAS19, the Hermès Group modified the method used to allocate the cost of services rendered in

the calculation of commitments relating to its retirement benefit plans (see Note1.2). The impact of this change was recognized at 1January 2021 on

the line “Change in service cost allocation method at 1January” as a counterparty to equity.

5.4

Share-based payments

Accounting principles

Free share allocation plans are recognised as expenses at fair value in

the “Other income and expenses” section, with a corresponding

increase in equity. This fair value is spread over the vesting period.

The estimate of the fair value is calculated on the basis of the share

price on the date that the corresponding decision is made by

Executive Management, subject to the deduction of the amount of the

advance dividends over the vesting period, taking into account the

assumption of a turnover rate for beneficiaries.

In some countries, these share-based payments are subject to social

security charges due upon delivery to employees. These expenses are

then spread over the vesting period and recognised under “Other

income and expenses”.

2021 2020

In millions of euros

Value of

obligations Plan assets

Provisioned

obligations

Value of

obligations Plan assets

Provisioned

obligations

Provisions as at 1January 368 (65) 304 351 (63) 288

Change in service cost allocation method

as at 1January (45) - (45) - - -

Expense for the financial year 21 0 21 18 0 18

Benefits paid (8) 5 (3) (5) 9 4

Employer contributions - (5) (5) - (8) (8)

Employee contributions 2 (2) - 2 (2) -

Actuarial gains and losses recognised in other

comprehensive income (9) (2) (12) 3 (1) 2

Change in scope - - - 2 (0) 2

Foreign currency adjustments 2 (2) 0 (2) (0) (2)

Other movements - - - (0) - (0)

PROVISIONS AS AT DECEMBER 31 331 (71) 260 368 (65) 304

France Italy Japan Switzerland

Discount rate 0.56% – 0.31%

0.56% 0.40% 0.00%

Increase in salaries 3.0% 1.0% 2.5% 2.0%

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 377

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The expense recognised in 2021 in respect of free share allocation plans totalled €122million, compared with €118million at end-2020. The shares

outstanding changed as follows during the financial year:

Information on the free share allocation plans is provided in chapter 3 "Corporate governance", § 3.8.3.2.

5.5

Senior Executive compensation

The breakdown of total compensation paid to members of the Executive Committee and the Supervisory Board, in respect of their functions within the

Group, is as follows:

Short-term benefits include compensation and bonuses paid to Executive

Committee members during the financial year, as well as directors’ fees

paid to members of the Supervisory Board.

Share-based payments correspond to the amounts expensed in the year.

In shares

2021 2020

Outstanding as at 1January 671,368 1,255,800

Issued --

Exercised (178,956) (560,772)

Forfeited or cancelled (70,225) (23,660)

OUTSTANDINGAS AT 31DECEMBER 422,187 671,368

In millions of euros

2021 2020

Short-term benefits 20 21

Post-employment benefits 3 3

Other long-term benefits 0 0

Share-based payments 3 4

TOTAL 26 27

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL378

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6

INCOME TAX

Accounting principles

Income tax

The income tax expense includes the current tax due for the financial

year by fully consolidated companies and deferred taxes.

The Group’s companies are regularly audited by the tax authorities of

the countries in which they operate. Appropriate liabilities are

recorded in respect of any uncertain tax positions, the amounts of

which are reviewed in accordance with the criteria of IAS12 and

IFRIC23.

Tax consolidation regimes

The French tax consolidation regime allows certain French companies

in the Group to offset their taxable income for the purpose of

determining the overall income tax expense, for which only the parent

company, Hermès International, remains liable.

Furthermore, there is another tax consolidation regime outside France.

Deferred taxes

Deferred taxes are calculated on all timing differences existing at

financial year-end at the tax rate in force on that date, or at the

enacted tax rate (or nearly enacted rate) for the subsequent financial

year. Previous deferred taxes are revalued using the same method

(liability method). The restatement of assets and liabilities related to

leases also gives rise to the recognition of deferred taxes.

Deferred tax assets are recorded to the extent that their future use is

probable given the expected taxable profits. If a non-recovery risk

arises on some or all of a deferred tax asset, an impairment is

recorded.

6.1

Breakdown of income tax

6.2

Rationalisation of the income tax expense

The effective tax rate was 29.5% as at 31December 2021, compared with 30.9% as at 31December 2020.

The difference between the theoretical income tax expense and the net actual income tax expense is explained as follows:

The tax rate applicable in France in 2021 is the basic rate of 27.50% increased by the social contribution of 3.3%, i.e. a total of 28.41%.

“Permanent differences and other” include income and expenses that will never be deductible or taxable, the impact of tax loss carryforwards that have

not been activated, tax adjustments for prior years and any risks and uncertain tax positions.

In millions of euros

2021 2020

Current tax (1,029) (618)

Deferred taxes 14 5

TOTAL (1,015) (613)

In millions of euros

2021 2020

Net income attributable to owners of the parent 2,445 1,385

Net income from associates 34 16

Net income attributable to non-controlling interests (8) (4)

Income tax expense (1,015) (613)

Net income before tax 3,435 1,986

Effective tax rate 29.5% 30.9%

Current tax rate in France 28.4% 32.0%

Theoretical income tax expense (976) (636)

Reconciliation items:

◆

36 56

◆

TOTAL

differences relating to foreign taxation (primarily the tax rate)

permanent differences and other (75) (33)

(1,015) (613)

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 379

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

◆

revaluations recognised in equity (investments and financial investments and hedging of future cash flows);

◆

actuarial gains and losses on employee benefit obligations;

◆

the change in service cost allocation method in the calculation of post-employment benefit obligations (see Note1.2).

6.3

Deferred taxes

The net change in deferred tax assets and liabilities breaks down as follows:

The impact on equity mainly concerns the change in deferred taxes related to:

These movements had no impact on net income for the year (see Note11.5).

Deferred taxes mainly relate to the following adjustments:

Deferred tax

assets linked to tax loss carry-forwards were not material as at 31December 2021 and 2020.

As at 31December 2021, tax loss carry-forwards that did not lead to the recognition of deferred tax assets represented potential tax savings of

€40million (compared with €46million in 2020).

In millions of euros

2021 2020

Deferred tax assets at 1January 475 511

Deferred tax liabilities at 1January 22 25

Net deferred tax assets at 1January 453 486

Income statement impact 14 5

Scope impact - (1)

Exchange rate impact 15 (15)

Equity impact 49 (21)

Net deferred tax assets as at 31December 531 453

Balance of deferred tax assets at the end of the period 546 475

Balance of deferred tax liabilities at the end of the period 15 22

In millions of euros

31/12/2021 31/12/2020

Internal margins on inventories and provisions for inventories 325 334

Employee benefits 61 84

Derivatives 19 (38)

Impairment losses 35 29

Regulated provisions (17) (34)

Other 109 77

TOTAL 531 453

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL380

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

◆

the consideration transferred (acquisition cost) is measured at the

fair value of the assets delivered and liabilities incurred at the date

of the exchange;

◆

the identifiable assets and liabilities of the Company acquired are

measured at fair value on the acquisition date;

◆

the costs that can be directly attributed to the acquisition are

recorded as an expense.

◆

buildings: 20 to 50years;

◆

fixtures and furnishings: between 10 and 20years depending on

the expected useful life of the asset in question, and within the

limit of the lease term, in the case of fixtures installed at the time

of leasing in stores for which the Group is a tenant;

◆

industrial machinery, plant and equipment: 10 to 20years;

◆

other: 3 to 10years maximum.

NOTE7

GOODWILL, PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS, AND LEASES

7.1

Goodwill

Accounting principles

Business combinations, carried out in the event that the Group gains

control over one or several other activities, are accounted for using the

acquisition method:

This valuation is carried out within no more than a year following the

date of acquisition and in the currency of the acquired entity. The

resulting valuation adjustments are recognised under the related

assets and liabilities, including the share attributable to

non-controlling interests. The residual difference, which is the

difference between the transferred counterparty and the share of net

assets and liabilities measured at fair value, is recognised under

goodwill.

Any goodwill and any fair value adjustments arising on the acquisition

of a foreign entity are considered to be assets and liabilities of that

foreign entity. Therefore, they are expressed in the entity’s functional

currency and converted at closing rates.

Any previous investment held in the acquired company before a

takeover is remeasured at its fair value at the acquisition date and the

corresponding income or loss is recognised in the income statement

under “Other income and expenses”.

The goodwill is not amortised but must be subject to an impairment

test, the principles of which are presented in Note7.5. Any resulting

impairment losses are recognised in “Other income and expenses” in

operating income. They are not reversible.

The goodwill is allocated by cash-generating units, which are presented in Note7.5.

7.2

Intangible assets and property, plant and equipment

Accounting principles

Intangible assets

Intangible assets mainly comprise acquired software (including their

implementation costs), as well as the Group’s e-commerce website

development costs. They are amortised on a straight-line basis over

their probable useful life, generally between three and five years.

It is specified that internally generated brands and items that are

similar in substance are not recognised under intangible assets, in

accordance with IAS38.

Property, plant and equipment

Property, plant and equipment are recorded at historical acquisition

cost, less accumulated depreciation and recognised impairment

losses. They are depreciated, generally using the straight-line method,

over the following average estimated useful lives:

Where property, plant and equipment is made up of components with

different useful lives, these are recorded as separate items.

Gains or losses on disposals of property, plant and equipment

represent the difference between the sale proceeds and the net

carrying amount of the divested asset, and are included in “Other

income and expenses”.

Accounting principles relating to the impairment losses on property,

plant and equipment and intangible assets are presented in Note7.5.

31/12/2020 Increases Decreases

Exchange rate

impact 31/12/2021

Metal parts CGU 27 - - - 27

Retail Japan CGU 15 - - (0) 15

TOTAL NET VALUES 42 - - (0) 42

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 381

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2,500

2,200

1,900

1,600

1,300

In millions of euros

1,867

Net values as

at 31/12/2020

Purchase Amortisation

and impairment

Decreases OtherExchange

rate impact

Net values as

at 31/12/2021

(362)

(2)

2,140

532

■

Increase

■

Decrease

■ Total

7.2.1 INTANGIBLE ASSETS

In 2021, changes in intangible assets were as follows:

In 2020, changes in intangible assets were as follows:

In millions of euros

31/12/2020 Increases Decreases

Exchange

rate impact Other 31/12/2021

Software, licences, e-commerce website and patents 451 87 (3) 1 24 560

Other intangible assets 134 11 (6) 1 3 143

Fixed assets under construction 37 28 - 0 (27) 38

TOTAL GROSS VALUES 622 127 (9) 2 0 741

Amortisation of software, licences, e-commerce website

and patents 276 79 (3) 0 1 354

Amortisation of other intangible assets 102 8 (3) 1 8 116

Impairment losses 23 3 (4) 0 (9) 14

TOTAL AMORTISATION AND IMPAIRMENT 401 90 (9) 2 (0) 483

TOTAL NET VALUES 221 37 (0) (0) 0 258

In millions of euros

31/12/2019 Increases Decreases

Exchange

rate impact Other 31/12/2020

Software, licences, e-commerce website and patents 356 74 (0) (1) 22 451

Other intangible assets 136 6 (0) (6) (2) 134

Fixed assets under construction 33 29 (0) (0) (25) 37

TOTAL GROSS VALUES 525 109 (0) (6) (5) 622

Amortisation of software, licences, e-commerce website

and patents 218 60 (0) (1) (0) 276

Amortisation of other intangible assets 103 6 (0) (5) (2) 102

Impairment losses 20 2 - (0) 1 23

TOTAL AMORTISATION AND IMPAIRMENT 341 68 (0) (6) (2) 401

TOTAL NET VALUES 184 41 (0) (1) (3) 221

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL382

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

7.2.2 PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment changed as follows during the last financial year:

In 2020, changes in property, plant and equipment were as follows:

Investments made in 2021 and 2020 concern mainly the opening and

renovation of stores and capital expenditure to expand production

capacity.

Impairment losses relate to production lines and stores deemed not to be

sufficiently profitable. It is noted that the cash-generating units on which

impairment losses have been recognised are not individually material

when compared with the Group’s overall business.

No item of property, plant or equipment were pledged as collateral to

secure financial liabilities. Furthermore, the amount of property, plant

and equipment assets in temporary use is not material when compared

with their total value.

In millions of euros

31/12/2020 Increases Decreases

Exchange

rate impact Other 31/12/2021

Land 172 2 - (2) 27 199

Buildings 1,011 25 (4) 12 86 1,130

Industrial machinery, plant and equipment 424 26 (9) 4 26 471

Store fixtures and furnishings 1,044 94 (52) 57 81 1,225

Other property, plant and equipment assets 443 44 (9) 4 19 502

Fixed assets under construction 176 214 (0) 6 (148) 248

TOTAL GROSS VALUES 3,270 405 (73) 82 91 3,775

Depreciation of buildings 395 42 (2) 3 28 467

Depreciation of machinery, plant, and equipment assets 257 33 (8) 2 6 289

Depreciation of store fixtures and furnishings 574 107 (51) 32 2 664

Depreciation of other property, plant and equipment 278 41 (8) 3 (5) 309

Impairment losses 119 49 (2) 3 (4) 165

TOTAL DEPRECIATION AND IMPAIRMENT 1,624 272 (71) 42 27 1,894

TOTAL NET VALUES 1,646 133 (2) 40 65 1,881

In millions of euros

31/12/2019 Increases Decreases

Exchange rate

impact Other 31/12/2020

Land 164 4 - (4) 8 172

Buildings 956 47 (17) (15) 40 1,011

Industrial machinery, plant and equipment 363 24 (9) (3) 48 424

Store fixtures and furnishings 1,013 95 (43) (50) 30 1,044

Other property, plant and equipment assets 408 36 (7) (5) 12 443

Fixed assets under construction 136 134 (1) (4) (90) 176

TOTAL GROSS VALUES 3,040 340 (76) (80) 47 3,270

Depreciation of buildings 373 39 (17) (7) 8 395

Depreciation of machinery, plant, and

equipment assets 215 28 (8) (1) 24 257

Depreciation of store fixtures and furnishings 548 98 (43) (24) (5) 574

Depreciation of other property, plant and

equipment 254 39 (6) (3) (5) 278

Impairment losses 109 16 (0) (2) (3) 119

TOTAL DEPRECIATION AND IMPAIRMENT 1,498 219 (75) (38) 19 1,624

TOTAL NET VALUES 1,542 121 (2) (42) 28 1,646

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 383

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

7.3

Leases

Accounting principles

Balance sheet

The Hermès Group owns almost all of its manufacturing facilities and

is tenant of most of the stores and offices in the cities where it

operates. Real estate leases with fixed rents are recognised in assets

through a right-of-use and in liabilities through a lease liability

corresponding to the present value of future payments. Right-of-use

assets are equal to the amount of the lease liability adjusted for the

amount of prepaid rent, incentives received from the lessors, initial

direct costs incurred in securing the lease and, where applicable,

restoration costs, at the contract’s commencement date.

Rights-of-use are amortised on a straight-line basis over the term of

the lease.

The lease liability is increased by the amount of interest expenses

determined by applying the discount rate and reduced by the amount

of payments made.

Furthermore, the liability may be re-assessed in the event of a review

of the lease term, or the rates and indices on which rents are based.

Income statement

Amortisation of right-of-use assets is presented in “Other income and

expenses”, except for any allocations relative to right-of-use assets

used for production, which are included in “Cost of sales”.

Interest expense is recognised in net financial income (see Note9.1).

The gain or loss resulting from the early termination of a contract is

determined by the difference between the net carrying amount of the

right-of-use and the value of the lease liability and included in “Other

income and expenses”.

Statement of cash flows

In the statement of cash flows, repayments of principal and payment

of interest on lease liabilities are presented under the same heading

“Repayment of lease liabilities” in cash flows related to financing

activities.

Lease term

The lease term is determined contract by contract.

The Group takes into account the renewal options on the effective

date of the contract, provided that the total duration of the contract

thus calculated is consistent with the duration of the investment plan.

In France, in the case of 3-6-9-type commercial leases, the lease term

used is nine years, except in special cases. In the event that only

Hermès has an option to terminate a lease, the Group assesses, at

the date the contract comes into effect, all the facts and

circumstances providing economic incentives not to exercise this

option, taking into account criteria such as the actual nature of the

asset, all costs related to termination, and the duration of the

investment plan.

Discount rate

The standard provides that the discount rate for each contract is

determined by reference to the incremental borrowing rate of the

contracting subsidiary. In practice, given the Group’s financing

structure, this rate is determined on the basis of the local currency

swap interest rate, with a maturity in line with the average duration of

the contracts in the country. It is adjusted for credit risk by taking into

account the Group’s credit default swap. The rates thus determined

apply on the start date of each contract.

Simplification measure

Leases corresponding to assets with a low unit value or to leases with

a term of less than 12months are recognised directly as expenses.

The variable portion of rents is recognised as an expense over the

period in which the conditions triggering payment are achieved. At

Hermès, this variable portion mainly concerns rents indexed to

revenue.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL384

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

7.3.1 RIGHT-OF-USE ASSETS

The breakdown of right-of-use assets by nature of the underlying asset is as follows:

The change in right-of-use assets during the financial year is as follows:

2,100

1,900

1,700

1,500

1,300

In millions of euros

1,446

Net values as

at 31/12/2020

New

contracts

Amortisation

and impairment

Expiry

of contract

Exchange

rate impact

Other Net values

as at 31/12/2021

(266)

(7)

1,517

267

■

Increase

■

Decrease

■

Total

In millions of euros

Gross

Amortisation and

impairment 31/12/2021 net 31/12/2020 net

Stores 2,107 (788) 1,319 1,231

Offices and other 382 (184) 198 215

TOTAL 2,489 (972) 1,517 1,446

31/12/2021 31/12/2020

In millions of euros

Stores Offices and other Total Total

Gross amount as at 1January 1,915 361 2,276 1,732

Implementation of new leases and revisions 229 38 267 877

Expiry and early termination of leases (154) (22) (176) (217)

Exchange rate impact 116 5 121 (112)

Other movements and reclassifications 1 0 1 (5)

GROSS VALUEAS AT 31DECEMBER 2,107 382 2,489 2,276

current Madison Avenue store will remain open until the inauguration of

the new address, scheduled for 2022.

31/12/2021

In financial year 2020, the “Implementation of new leases” line included

in particular a new commercial lease for a building located at 706

Madison Avenue in New York. It will house the new Maison Hermès. The

In millions of euros

Offices and other

31/12/2020

Total

Amortisation and impairment losses as at 1January (778)

(277)

183

(830)

Total

(830)

(266)

169

(45)

(972)

Stores

(684)

(216)

151

(43)

(788)

(146)

Amortisation and impairment (50)

Expiry and early termination of leases 18

Exchange rate impact (2)

Other movements and reclassifications (4)

AMORTISATION AND IMPAIRMENT LOSSES AS AT 31DECEMBER (184)

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 385

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

7.3.2 LEASE LIABILITIES

The maturities of the lease liabilities are as follows:

1 to 5 years

> 5 years

€248M €843M €687M

TOTAL 31/12/2021

€1,777M

(31/12/2020: €1,643M)

< 1 year

The breakdown of changes in liabilities over the financial year is as follows:

At the end of December2021, the rents resulting from non-capitalised

leases correspond to:

◆

store rents, for which variable payments amounted to €376million for

the financial year (compared to €260million for financial year 2020);

7.4

Investment property

◆

exempted rents (leases corresponding to assets with a low unit value

or a term of less than 12months) in the amount of €7million

(compared with €5million in 2020).

Financial expenses relating to lease liabilities are presented in Note9.1.

Accounting principles

Real estate held by the Group to earn rental income is recognised

under “Investment property”. This revenue and the associated

expenses are recognised in “Other income and expenses”.

As for property, plant and equipment, investment property is

recognised at its historical acquisition cost less accumulated

depreciation. The depreciation periods are identical to those of other

property, plant and equipment (see Note7.2).

In the fourth quarter of 2021, the Group took over the lease for an

investment property that it plans to operate directly by installing one of its

stores in the building. At that date, the net carrying amount of this asset

was reclassified from investment property to property, plant and

equipment. The impact of this reclassification is presented in the “Other”

column.

The net

rental proceeds from investment properties totalled €5million in

the financial year (compared with €7million in 2020).

In millions of euros

< 1year 1 to 5years > 5years 31/12/2021 31/12/2020

TOTAL LEASE LIABILITIES 248 843 687 1,777 1,643

In millions of euros

31/12/2021 31/12/2020

Lease liabilities as at 1January 1,643 1,092

Implementation of new leases and revisions 269 893

Expiry and early termination of leases (8) (48)

Repayments (212) (199)

Exchange rate impact 91 (84)

Other movements and reclassifications (5) (10)

LEASE LIABILITIES AS AT 31DECEMBER 1,777 1,643

In millions of euros

31/12/2020 Increases Decreases

Exchange rate

impact Other 31/12/2021

Land 29 - - 1 (27) 3

Buildings 72 - - 3 (64) 10

TOTAL GROSS VALUES 101 - - 4 (91) 14

Depreciation 28 2 - 1 (26) 5

TOTAL NET VALUES 73 (2) - 3 (66) 9

◆

Hermès sales units (retail branches), which are treated

independently from one another;

◆

production units (leather goods, Textiles, Perfume and Beauty,

Watches, Tanneries and Precious Leathers, Metal parts, etc.);

◆

other Group brands (Saint-Louis, John Lobb, etc.);

◆

investment property;

◆

associates.

◆

after tax cash flow figures are derived from a medium-term

(five-year) business plan developed by the relevant entity;

◆

the after-tax discount rate is determined on the basis of the

Group’s weighted average cost of capital (8.29% in 2021,

compared with 8.10% in 2020), adjusted by a risk premium, if

necessary, according to the geographical area and activity of the

entity concerned;

◆

the recoverable amount is calculated as the sum of cash flows

generated each year during the budget period and the terminal

value, which is determined based on normative cash flows by

applying a growth rate to infinity. The assumptions used in terms of

business growth and terminal values are reasonable and

consistent with available market data.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL386

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

7.5

Monitoring the value of fixed assets

Accounting principles

In accordance with IAS36, impairment tests on assets with an

indefinite useful life are carried out annually during the budget period

or more regularly if events or changes in the market environment show

signs of impairment. For assets with a finite useful life, tests are

carried out if there is an indication of impairment. These impairment

tests consist of comparing the net carrying amount with the

recoverable amount of all property, plant and equipment and/or

intangible assets of each cash-generating unit (CGU). The Hermès

Group has defined the following CGUs or groups of CGUs:

The recoverable amount of each CGU is determined using the

Discounted Cash Flow (DCF) method, applying the following principles:

If the recoverable amount is lower than the net carrying amount, an

impairment loss equal to the difference between these two amounts is

recognised.

The amount of any impairment losses relating to the various fixed assets is shown in Notes7.1, 7.2 and 7.3.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 387

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

◆

share of the Group’s income in these companies;

◆

any provisions for risk. If the Group’s share in the losses of an

associate exceeds the carrying amount of its holding in the

Company, then the Group will no longer recognise its share in

subsequent losses. When the share reaches zero, additional

losses are only the subject of a provision when the Group has a

legal or implicit obligation in this respect, or has made payments

on behalf of the associate.

◆

financial assets and liabilities at fair value through profit or loss;

◆

financial assets recorded at amortised cost;

◆

financial assets at fair value through non-recyclable equity.

NOTE 8

INVESTMENTS IN ASSOCIATES

Accounting principles

On the balance sheet, on the acquisition of securities of

equity-accounted companies, goodwill is included in the carrying

amount of securities recognised in “Investments in associates”. Any

impairment losses relating to this goodwill are reversible (see

Note7.5).

The item “Net income from associates” shown in the income

statement includes the following:

The “Other” line includes, where appropriate, the reclassification to “Provisions” of the Group share in the losses of equity-accounted associates, when

this exceeds the carrying amount of the investments concerned.

NOTE9

FINANCIAL ASSETS AND LIABILITIES – NET CASH POSITION

Accounting principles

Financial assets and liabilities

Financial assets include financial fixed assets (financial investments,

liquidity contract, non-consolidated and other investment securities),

loans and financial receivables, and the positive fair value of financial

derivatives.

Financial liabilities include borrowings and debt, bank lines of credit

and the negative fair value of financial derivatives. They do not include

the liability associated with employee profit-sharing, which is included

in “Other liabilities”.

Financial assets and liabilities are presented in the balance sheet

under current or non-current assets or liabilities, depending on

whether they fall due within one year or more, with the exception of

trading derivatives, which are recorded under current assets or

liabilities.

Operating payables and receivables and cash and cash equivalents

fall within the scope of IFRS9 Financial Instruments and are

presented separately in the balance sheet.

Classification of financial assets and liabilities

and valuation methods

In accordance with IFRS9, Hermès Group financial assets and

liabilities are classified and valued upon their recognition in the

balance sheet according to following categories determined on the

basis of the management model and the characteristics of the

contractual cash flows:

Financial assets and liabilities at fair value through profit or loss

These assets are initially recognised at acquisition cost excluding

incidental acquisition expenses. At each closing date, they are

measured at fair value. Changes in fair value are recorded in the

income statement under “Other financial income and expenses”.

Dividends and interest received on these assets are also recognised

in the income statement under “Other financial income and

expenses”.

In millions of euros

2021 2020

Investments in associates as at 1January 49 79

Impact of consolidation scope changes - (29)

Net income from associates 34 16

Dividends paid (37) (21)

Exchange rate impact 1 (2)

Other 3 6

INVESTMENTS IN ASSOCIATES AS AT 31DECEMBER 51 49

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL388

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Financial assets at amortised cost

Financial assets representing interest or capital repayments at

determined dates, which are managed with the intention of collecting

cash flows, are classified in this category.

These are fixed-term financial assets that the Group acquired with the

intention and the capacity to hold until their maturity as well as loans

and financial receivables.

These instruments are recognised at amortised cost less any

impairment. Interest is calculated at the effective interest rate and

recorded in the income statement under “Other financial income and

expenses”.

Financial assets at fair value through non-recyclable equity

Financial assets at fair value through non-recyclable equity include

investment securities in non-consolidated companies that are not held

for trading. This classification is determined irreversibly at origin for

each security in question.

They are recognised at the date of closing at their fair value and

unrealised gains or losses on these financial assets are recorded in

other comprehensive income in “Revaluation adjustments”. Only any

dividends received are recognised in the income statement.

Financial liabilities

Financial liabilities are initially recorded at fair value (excluding any

transaction cost), then according to the amortised cost method with

separation of any embedded derivatives.

Interest is calculated at the effective interest rate and recorded in the

income statement under “Gross borrowing cost” over the duration of

the financial liability.

Bank overdrafts, which are treated as financing, are presented under

“Current borrowings and financial liabilities”.

Financial derivatives

See Note10.

Cash and cash equivalents

The items recognised by the Group as “Cash and cash equivalents”

meet the qualification criteria defined by IAS7 Statement of cash

flows and the AMF recommendations applicable at the closing date.

Cash and cash equivalents consist of highly liquid investments and

short term investments readily convertible to a known amount of cash,

with maturity of three months or less from the date of acquisition and

subject to an insignificant risk of changes in value.

Thus, investments in listed shares, investments for a term of over

three months that are not redeemable before the maturity date and

bank accounts covered by restrictions (frozen accounts) other than

restrictions due to country- or sector-specific regulations (e.g. currency

controls) are excluded from cash and cash equivalents.

Shares in funds held for the short term and classified as “Cash

equivalents” are recorded at fair value, with changes in fair value

recorded in the income statement.

Impairment of financial assets

Financial assets at fair value through non-recyclable equity are not

subject to impairment, in accordance with IFRS9.

Financial assets measured at amortised cost as well as trade

receivables are impaired according to an impairment model based on

expected losses. The Group applies the provisions of IFRS9 relating to

the simplified model of the original provision over the maturity of the

instrument.

Credit risk is assessed upon recognition in the balance sheet at each

closing date taking into account reasonable and justifiable information

available as well as the insurance policy coverage put in place by the

Group for the “Wholesale” activity.

Due to the nature of the financial assets concerned, the Group

determines that the historical rate of loss on the receivables is a

reasonable approximation of the rate of expected loss.

Changes in impairment losses are recognised according to the

category of the asset. For financial assets recognised at amortised

cost, any impairment loss is included in the income statement under

“Other financial income and expenses”. If the impairment loss

decreases in a subsequent period, it is reversed and recorded as

income.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 389

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

9.1

Net financial income

9.2

Financial assets

The increase in financial investments corresponds to cash investments

that do not meet the criteria for cash equivalents, notably on account of

their original maturity of more than three months.

9.3

Net cash position

The Hermès Group’s policy is to maintain a positive treasury position and

to have cash available in order to be able to finance its growth strategy

independently.

The Group’s treasury surpluses and needs are directly managed or

overseen by Hermès International’s treasury department in accordance

with a conservative policy designed to avoid the risk of capital loss and to

maintain a satisfactory liquidity position.

Changes in the value of financial assets measured at fair value through

equity, which are recorded under “Revaluation adjustments” in equity,

are shown in the “Other” column.

Classification and fair value measurement of these financial assets is

presented in Note10.5.

Cash surpluses are invested mainly in money-market mutual funds and

cash equivalents (term accounts, term deposits) with a sensitivity of less

than 0.5% and a recommended investment period of less than three

months.

In millions of euros

2021 2020

Income from cash and cash equivalents 12 11

Gross borrowing cost 1 (4)

◆

1 (2)

Net borrowing cost

Interest expense on lease liabilities

Other financial income and expenses

◆

TOTAL

of which net income/(loss) on interest and exchange rate hedging instruments

13 7

(32) (29)

(76) (64)

of which cost of cash flow hedges (80) (73)

of which ineffective portion of cash flow hedges (1) 12

(96) (86)

In millions of euros

31/12/2020 Increases Decreases

Exchange rate

impact Other 31/12/2021

Financial investments and accrued interest 339 180 (0) - 60 578

Liquidity contract 14 5 - - - 19

Other financial assets 64 13 (2) 0 (1) 73

TOTAL GROSS VALUES 416 198 (2) 0 59 671

Impairment 49 5 (0) 0 - 54

TOTAL NET VALUES 368 193 (2) 0 59 617

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL390

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(1) The gains and losses generated through disposal of marketable securities during the financial year and recorded through profit or loss amounted to -€0.4million.

Unrealised gains or losses as at 31December 2021 stood at -€2.3million.

(2) Excluding commitments to buy out non-controlling interests (see Note9.4).

(1) The gains and losses generated through disposal of marketable securities during the financial year and recorded through profit or loss amounted to -€1.1million.

Unrealised gains or losses as at 31December 2020stood at -€0.4million.

(2) Excluding commitments to buy out non-controlling interests (see Note9.4).

(3) Mainly corresponds to a short-term fixed-rate loan contracted by Hermès Japan.

(4) Corresponds mainly to bank overdrafts of foreign subsidiaries.

◆

as a deduction from the “Non-controlling interests”, equal to the

carrying amount of the securities subject to the put option;

◆

for the balance, as a deduction against the “Equity attributable to

owners of the parent”.

The breakdown of net cash restated by maturity and rate type is as follows:

In millions of euros

As at 31/12/2021

< 1year 1 to 5years > 5years Total Floating rate Fixed rate

Financial assets 6,761 310 - 7,071 3,439 3,632

Liquidities 1,925 - - 1,925 1,824 102

Marketable securities

4,771 - - 4,771 1,240 3,531

Cash investments with maturity over three months from

the date of acquisition 65 310 375 375 -

Financial liabilities

1 0 -1 1 -

Medium and long-term financial liabilities 0 0 - 0 0 -

Bank overdrafts 1 - - 1 1 -

Current accounts in debit 0 - - 0 0 -

RESTATED NET CASH POSITION 6,760 310 - 7,070 3,437 3,632

In millions of euros

As at 31/12/2020

< 1year 1 to 5years > 5years Total Floating rate Fixed rate

Financial assets 4,748 180 - 4,928 1,718 3,211

Liquidities 1,313 - 1,313 1,203 110

Marketable securities

3,420 - - 3,420 319 3,101

Restatement of Mark-to-Market on liquidities 1 - - 1 1 -

Cash investments with maturity over three months from

the date of acquisition 15 180 - 195 195 -

Financial liabilities

25 0 - 25 17 8

Medium and long-term financial liabilities

8 0 -8 0 8

Bank overdrafts

16 - - 16 16 -

RESTATED NET CASH POSITION 4,724 180 - 4,904 1,701 3,203

9.4

Put options granted to holders of non-controlling interests

In compliance with IAS32 Financial instruments: presentation, when

holders of non-controlling interests have put options to sell their

interests to the Group, a financial liability is recognised corresponding

to the exercise price of the option. This debt is posted through equity:

This entry is adjusted at the end of each period in accordance with

change in the exercise price of the options and the carrying amount of

the non-controlling interests. Changes in fair value are recognised

directly in equity.

Put options granted to holders of non-controlling interests amounted to €24million as at 31December 2021, compared to €18million as at

31December 2020.

owners of the parent”.

◆

the hedging transaction must be supported by appropriate

documentation of the hedging relationship from the time of its

implementation;

◆

an economic relationship exists between the hedged item and the

hedging instrument;

◆

the constraints of effectiveness of the hedging relationship are

met: the hedge ratio does not show any imbalance between the

hedged element and the hedging instrument generating an hedge

ineffectiveness.

◆

the production subsidiaries apply an annual exchange rate to the grid

established in euros and invoice the distribution subsidiaries in their

currency. So, the distribution subsidiaries concentrate most of the

foreign exchange risk;

◆

the Group’s foreign exchange risk is systematically hedged by Hermès

International on an annual basis, based on budget forecasts of future

internal operating cash flows between the companies in the Group. In

practical terms, as at 31December, the hedging of internal

transactions in currencies for the following year is close to 100%;

◆

no speculative transactions in the economic meaning of the term are

authorised;

◆

Hermès International’s treasury department carries out these hedges

with firm foreign exchange transactions (currency swaps and forward

currency contracts) and/or purchases and sales of options eligible for

hedge accounting (call and put options);

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 391

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE10

MANAGEMENT OF MARKET RISKS AND DERIVATIVES

Accounting principles

Scope

The Group defines the scope of financial derivatives in accordance

with the provisions and principles introduced by IFRS9 Financial

Instruments. In this respect, the Group analyses all its contracts,

focusing on both financial and non-financial liabilities, to identify the

existence of any “embedded” derivatives. Any component of a contract

that affects the cash flows of a given contract in the same way as a

stand-alone derivative corresponds to the definition of an embedded

derivative.

If they meet the conditions set out by IFRS9, embedded derivatives

are accounted for separately from the “host” contract at the inception

date.

According to Group rules, consolidated subsidiaries may not take any

speculative financial positions.

Recognition and measurement

Financial derivatives are initially recorded at fair value.

Changes in the fair value of these derivatives are recorded in the

income statement, unless they are classified as cash flow hedges, as

described below. In this latter case, the effective portion of the

changes in fair value of derivative instruments is recognised directly in

other comprehensive income in the item “Revaluation adjustments”.

These changes in fair value include the portion linked to forward points

of forward currency agreements as well as the time value (premium) of

currency options qualified as cash flow hedges. The ineffective portion

of the changes in the fair value corresponds to the excess of changes

in fair value of the hedging instrument compared with the changes in

fair value of the hedged item.

When the hedged cash flows materialise, the amounts previously

recorded in equity are reclassified to the income statement

symmetrically with the flows of the related hedged item. The reversal

of the effective portion of the hedge is recognised in the operating

income statement. The forward points and the time value of the

options that make up the cost of hedging are recognised under “Other

financial income and expenses” with, where applicable, the ineffective

portion of hedges.

Financial derivatives classified as hedges

The Group uses derivatives to hedge its foreign exchange risks.

Hedge accounting is applicable when the following conditions are met:

10.1

Counterparty risk

Pursuant to the applicable internal control procedures, the Group only

deals with leading banks and financial institutions that have signed FBF

and ISDA agreements on trading in forward financial instruments, and it

is not exposed to any material counterparty risk. Counterparty risks on

financial transactions are monitored on an ongoing basis by Hermès

International’s treasury department. Finally, the Group breaks down

investment transactions, foreign exchange risk hedging transactions and

deposits transactions in the selected banks within defined limits of

amount and maturity. Moreover, the impact of the credit risk as

recommended by IFRS13 in the fair value of derivatives is close to 0 for

the Group, given that all of the derivatives have a maturity of less than

12months.

10.2

Foreign exchange risk

10.2.1 FOREIGN EXCHANGE POLICY

The Group is naturally exposed to foreign exchange risk because the bulk

of its production is located in the Eurozone, while the majority of its sales

revenue is received in currencies other than the euro (American dollar,

Japanese yen and other Asian currencies, etc.). This exposure is hedged

in order to minimise and anticipate the impact of currency fluctuations on

the Group’s profits.

The Group’s foreign exchange risk exposure management policy is based

on the following principles:

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL392

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

◆

other non-operating transactions are hedged against foreign

exchange risk as soon as their commitment is firm and final. They

include financial risks arising from intragroup loans and dividends in

foreign currencies.

These management rules have been validated by the Executive

Committee and the Supervisory Board has endorsed them. The Executive

Committee validates management decisions within this set of rules, via a

Treasury Safety Committee that meets on a regular basis.

The administrative management is carried out using integrated

treasury software. These operations are monitored by the Middle &

Back-Office and internal control departments of Hermès International.

In addition, the audit and risk management department ensures

compliance with the risk control and management procedures.

10.2.2 NET CURRENCY POSITION

Monetary assets are comprised of receivables and loans as well as bank balances, investments and cash equivalents whose date of maturity is less than three(1)

months from the date of acquisition. Monetary liabilities are composed of financial liabilities as well as operating liabilities and miscellaneous liabilities.

(2) Purchase/(Sale).

(3) Euro foreign exchange rate risk for subsidiaries that have a different functional currency. Exceptionally, this may also include internal transactions in euros, excluding

sales of goods, with subsidiaries that have a different functional currency.

Monetary assets are comprised of receivables and loans as well as bank balances, investments and cash equivalents whose date of maturity is less than three(1)

months from the date of acquisition. Monetary liabilities are composed of financial liabilities as well as operating liabilities and miscellaneous liabilities.

(2) Purchase/(Sale).

(3) Euro foreign exchange rate risk for subsidiaries that have a different functional currency. Exceptionally, this may also include internal transactions in euros, excluding

sales of goods, with subsidiaries that have a different functional currency.

As at 31December 2021

In millions of euros

Future cash

flows

Net position before

hedging

Net position

after hedging Hedge ratio

Chinese yuan 1,068 1,365 (31) 102%

Monetary

assets/(liabilities)

512

439

394

156

124

111

123

3,566

Derivatives

297 (1,397)

US dollar (167) 679 (501) 12 98%

Japanese yen 32 407 (433) 6 99%

Singapore dollar 19 375 (381) 13 97%

Pound sterling 25 131 (160) (4) 103%

Australian dollar 23 101 (119) 5 96%

Hong Kong dollar (273) 384 (116) (5) 105%

Euro

9 68 (83) (6) 108%

Swiss franc 49 40 (80) 9 90%

Canadian dollar 11 66 (76) 2 98%

Thai baht 6 53 (61) (1) 102%

Russian rouble 3 35 (38) 0 99%

Other currencies 23 100 (120) 3 98%

SUMMARY 57 3,508 (3,564) 2 100%

As at 31December 2020

In millions of euros

Future cash

flows

Net position before

hedging

Net position

after hedging Hedge ratio

Chinese yuan 665 960 17 98%

Monetary

assets/(liabilities)

461

345

320

245

146

101

123

2,960

Derivatives

295 (943)

US dollar 51 410 (469) (8) 102%

Japanese yen 22 322 (348) (3) 101%

Hong Kong dollar 74 246 (326) (6) 102%

Singapore dollar (18) 263 (246) (1) 100%

Pound sterling 17 129 (150) (4) 103%

Australian dollar 49 52 (89) 12 88%

Swiss franc 37 36 (76) (4) 106%

Canadian dollar 18 52 (70) 0 100%

Euro

16 58 (74) (0) 100%

Thai baht 2 40 (40) 2 96%

Other currencies 33 90 (121) 2 98%

SUMMARY 596 2,364 (2,953) 7 100%

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 393

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(1) Gain/(Loss).

(2) Purchase/(Sale).

(3) Euro foreign exchange rate risk for subsidiaries that have a different functional currency. Exceptionally, this may also include internal transactions in euros, excluding

sales of goods, with subsidiaries that have a different functional currency.

10.2.3 BREAKDOWN OF FOREIGN EXCHANGE CONTRACTS

In millions of euros

Nominal amounts

of derivatives

Nominal amounts of

derivatives used to hedge

foreign exchange risk

Market value of the contracts as at 31December 2021

Fair value

hedge

Options purchased

Chinese yuan puts 99 99 1 - - 1

Chinese yuan collars 296 296 (3) - - (3)

US dollar puts 65 65 0 - - 0

US dollar collars 259 259 (2) - - (2)

Singapore dollar puts 57 57 0 - - 0

Singapore dollar collars 227 227 (1) - - (1)

Hong Kong dollar puts 48 48 0 - - 0

Hong Kong dollar collars 193 193 (1) - - (1)

Japanese yen puts 38 38 1 - - 1

Japanese yen collars 191 191 3 - - 3

1,472 1,472 (1) -

(15) (0)

- (1)

0 (15)

Forward currency agreements

US dollar 369 369

Euro

68 68 4 - (0) 4

Chinese yuan 671 671 (46) - (0) (46)

Singapore dollar 91 91 (5) - - (5)

Hong Kong dollar 143 143 (11) - (0) (11)

Pound sterling 131 131 (4) - - (4)

Japanese yen 178 178 0 - - 0

Swiss franc 39 40 (2) - 0 (2)

Canadian dollar 66 66 (2) - - (2)

Australian dollar 101 101 5 - (0) 5

Thai baht 53 53 2 - - 2

Other currencies 146 146 0 - 0 0

2,058 2,059 (73)

(0)

(74)

Currency swaps

US dollar (193) (192)

Chinese yuan 330 294 (1) - (0) (1)

Singapore dollar 6 6 (0) - (0) (0)

Hong Kong dollar (268) (270) 3 - 0 3

Swiss franc 41 41 (0) - (0) (0)

Pound sterling 29 25 (0) - (0) (0)

Japanese yen 26 26 0 - 0 0

Other currencies 62 56 (0) - 0 0

TOTAL

3,564

(14)

3,517

(69)

(0)

(70)

Cash flow

hedge Unallocated Total

(1) Gain/(Loss).

(2) Purchase/(Sale).

(3) Euro foreign exchange rate risk for subsidiaries that have a different functional currency. Exceptionally, this may also include internal transactions in euros, excluding

sales of goods, with subsidiaries that have a different functional currency.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL394

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

In millions of euros

Nominal amounts

of derivatives

Nominal amounts of

derivatives used to hedge

foreign exchange risk

Market value of the contracts as at 31December 2020

Fair value

hedge

Options purchased

Chinese yuan puts 94 94 3 - - 3

Chinese yuan collars 227 227 8 - - 8

US dollar puts 69 69 5 - - 5

US dollar collars 146 146 14 - - 14

Singapore dollar puts 67 67 2 - - 2

Singapore dollar collars 145 145 6 - - 6

Japanese yen puts 49 49 2 - - 2

Japanese yen collars 156 156 8 - - 8

Hong Kong dollar puts 51 51 4 - - 4

Hong Kong dollar collars 111 111 10 - - 10

1,115 1,115 64 - - 64

Forward currency agreements

US dollar 206 211 15 1 1 16

Euro

58 58 (2) - (0) (2)

Chinese yuan 395 395 (0) - - (0)

Singapore dollar 50 50 (0) - 0 (0)

Hong Kong dollar 101 105 10 - 0 10

Pound sterling 130 129 1 - - 1

Japanese yen 115 118 6 - 0 6

Swiss franc 36 36 0 - (0) 0

Canadian dollar 55 55 1 - - 1

Australian dollar 52 52 (5) - - (5)

Thai baht 40 40 (0) - - (0)

Other currencies 100 100 2 - 0 2

1,338 1,349 27 1 1 28

Currency swaps

US dollar 47 35 0 - 0 0

Chinese yuan 228 229 (0) - 0 0

Singapore dollar (17) (17) 0 - (0) 0

Hong Kong dollar 63 52 0 - 0 0

Japanese yen 28 20 0 - 0 0

Australian dollar 37 38 (1) - 0 (1)

Swiss franc 41 37 0 - (0) 0

Other currencies 72 65 (0) - (0) (0)

499 459 0

0 0

TOTAL 2,953 2,923 1 92

Cash flow

hedge Unallocated Total

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 395

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(1) Excluding commitments to buy-out non-controlling interests (€18million as at 31December 2020).

(2) Mainly consists of a short-term fixed rate loan contracted by Hermès Japan and bank overdrafts of foreign subsidiaries.

10.2.4 SENSITIVITY TO EXCHANGE RATE FLUCTUATIONS

The sensitivity of equity to foreign exchange risk is analysed for the cash

flow hedge reserve. The impact on equity corresponds to the change in

the market value of derivatives designated as cash flow hedges

generated by the current variance in exchange rates, ceteris paribus.

A 10% appreciation in the currencies to which the Group is exposed at

the closing date would result in a -€312million decrease in equity

(before tax) in the fair value reserve. A 10% depreciation would have an

impact of +€253million (before tax). Moreover, a 10% appreciation in

the currencies to which the Group is exposed would lead to an impact of

+€0.2million on net income at the closing date. A depreciation by the

same magnitude would have an impact of -€0.1million.

10.3

Interest rate and liquidity risk

10.3.1 INTEREST RATE AND LIQUIDITY POLICY

The Group may use financial instruments interest rate derivatives such

as swaps to hedge part of its payables and receivables against interest

rate fluctuations.

The risk control and management procedures are identical to those

applied to foreign exchange transactions.

The following interest rate risks involve only items in the net cash

position. Moreover, the interest rate risks are not material as concerns

the financial assets and liabilities not included in the net cash position.

Excluding commitments to buy-out non-controlling interests (€24million as at 31December 2021).(1)

10.3.2 SENSITIVITY TO INTEREST RATE FLUCTUATIONS

A uniform 1 percentage point increase in interest rates would have had a positive impact of €34 million on the consolidated net income before tax

(€17million in 2020).

As at 31/12/2021

In millions of euros

< 1year 1 to 5years > 5years Total Floating rate Fixed rate

Financial assets 6,761 310 - 7,071 3,439 3,632

Euro 4,839 310 - 5,149 2,764 2,385

Chinese yuan 713 - - 713 29 684

US dollar 557 - - 557 186 371

Singapore dollar 131 - - 131 49 82

Hong Kong dollar 31 - - 31 31 -

Other currencies 490 - - 490 380 111

Financial liabilities

1 0 -1 1 -

Euro 1 0 - 1 1 -

Other currencies 0 - - 0 0 -

RESTATED NET CASH POSITION 6,760 310 - 7,070 3,437 3,632

As at 31/12/2020

In millions of euros

< 1year 1 to 5years > 5years Total Floating rate Fixed rate

Financial assets 4,748 180 - 4,928 1,717 3,211

Euro 3,484 180 - 3,664 1,239 2,425

US dollar 473 - - 473 188 285

Chinese yuan 449 - - 449 17 432

Singapore dollar 56 - - 56 53 3

Hong Kong dollar 43 - - 43 43 -

Other currencies 243 - - 243 177 66

Financial liabilities

25 0 - 25 17 8

Euro 16 0 - 16 16 0

Other currencies

9- -9 1 8

RESTATED NET CASH POSITION 4,724 180 - 4,904 1,701 3,203

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL396

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

◆

level1: prices listed on an active market. If listed prices in an active

market are available, they are used as a priority in order to determine

market value;

◆

level2: internal model with parameters observable using internal

valuation techniques. These techniques involve usual mathematical

calculation methods that include observable market data (future

prices, yield curve, etc.). The calculation of most financial derivatives

traded on markets is performed on the basis of models that are

commonly used by participants in order to evaluate these financial

instruments;

◆

level3: internal model with non-observable parameters.

10.4

Equity risk

Investments in listed equities are not material at Group level. As such,

the Group has no exposure to equity risk.

10.5

Fair value and hierarchy by level of fair value

of financial assets and liabilities

The assets and liabilities recorded at fair value are classified according

to the following three fair value levels:

For financial years 2021 and 2020, there were no transfers between

levels1 and 2 for financial assets and liabilities recognised at fair value.

2021

(1) Classification in the category “Assets at fair value through profit or loss” is imposed in accordance with IFRS9 depending on the business model for these assets.

(2) Before hedge accounting.

(3) Comprised of EMTNs and term deposits not meeting the criteria of cash and cash equivalents.

(4) Excluding commitments to buy-out non-controlling interests (€24million as at 31December 2021).

In millions of euros

Note

Financial

assets at

amortised

cost

Financial

assets at

fair value

through

non-

recyclable

equity

Liabilities

amortised

cost

Net

carrying

amount

Fair

value

Evaluation

level

Interest

rate

Effective

interest

rate

Financial investments 345

203 - 578 578 2

Assets at

fair value

through

profit or

loss

1-2

Liabilities

at fair

value

30 -

Liquidity contract 19 - - - - 19 19 1

Other financial assets 0 - 20 - - 20 20 2

Financial assets 9.2 49 345 223 - - 617 617

Loans and deposits - 59 - - - 59 59 2

Trade receivables and other current assets 4.5.2 - 670 - - - 670 670

Foreign currency derivative assets 10.2 53 - - - - 53 53 2

Cash and cash equivalents 9.3 3,055 3,641 - - - 6,696 6,696 1

Bank overdrafts 9.3 - - - - 1 1 1

Other borrowings 9.3 - - - - 0 0 0

Financial liabilities

-- --1 1 1

Trade payables and other liabilities 4.5.3 - - - - (2,094) (2,094) (2,094)

Foreign currency derivative liabilities 10.2 - - - (122) - (122) (122) 2

◆

buyback of 142,131shares for €162million, excluding movements

under the liquidity contract;

◆

sale of 4,815shares as part of the liquidity contract;

◆

delivery of 178,956 free shares awarded to Hermès Group

employees.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 397

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Classification in the category “Assets at fair value through profit or loss” is imposed in accordance with IFRS9 depending on the business model for these assets.(1)

(2) Before hedge accounting.

(3) Comprised of EMTNs and term deposits not meeting the criteria of cash and cash equivalents.

(4) Interest rates correspond to floating rates.

(5) Excluding commitments to buy-out non-controlling interests (€18million as at 31December 2020).

NOTE11

EQUITY – EARNINGS PER SHARE

11.1

Share capital

As at 31December 2021, Hermès International’s share capital

consisted of 105,569,412 fully paid-up shares with a par value of €0.51

each, of which 925,153 treasury shares.

11.3

Treasury shares

11.2

Capital management

The Group’s objectives, policies and procedures in the area of capital

management are in keeping with sound management principles designed

to ensure that operations are well-balanced financially and to minimise

the use of debt. As its surplus cash position gives it some flexibility, the

Group does not use prudential ratios such as “return on equity” in its

capital management. During the current year, the Group made no change

in its capital management policy and objectives.

Accounting principles

Treasury shares are recorded at acquisition cost and deducted from equity. Gains or losses on the disposal of these shares are recognised

directly in equity, with no impact on profit or loss.

In financial year 2021, the following treasury share movements occurred:

It is specified that no shares are reserved for issuance under options or

agreements to sell shares.

2020

In millions of euros

Note

Financial

assets at

amortised

cost

Financial

assets at

fair value

through

non-recyclable

equity

Liabilities

amortised

cost

Net

carrying

amount

Fair

value

Evaluation

level

Interest

rate

Effective

interest

rate

Financial investments 180

144 - 339 339 2

Assets at

fair value

through

profit or

loss

1-2

Liabilities

at fair

value

15 -

Liquidity contract 14 - - - - 14 14 1

Other financial assets 2 - 13 - - 15 15 2

Financial assets 9.2 31 180 157 - - 368 368

Loans and deposits - 56 - - - 56 56 2

Trade receivables and other current assets 4.5.2 - 530 - - - 530 530

Foreign currency derivative assets 10.2 121 - - - - 121 121 2

Cash and cash equivalents 9.3 1,522 3,211 - - - 4,733 4,733 1

Bank overdrafts 9.3 - - - - 16 16 16

Japan loan - - - - 8 8 8 0.2% 0.2%

Other borrowings 9.3 - - - - 0 0 0 1.2% 1.2%

Financial liabilities

- - - - 25 25 25

Trade payables and other liabilities 4.5.3 - - - - (1,497) (1,497) (1,497)

Foreign currency derivative liabilities

10.2

- - - (29) - (29) (29) 2

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL398

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

11.4

Dividends

The General Meeting of 4May 2021, called to approve the financial

statements for the year ended 31December 2020, approved payment of

an ordinary dividend of €4.55 per share for the financial year, i.e. an

identical distribution to that of the previous year.

Taking into account the interim cash dividend of €1.50 per share paid on

4March 2021, a balance of €3.05 was paid in cash on 10May 2021.

The total amount of the ordinary dividend paid was accordingly

€476million.

11.5

Income and expenses recognised in comprehensive income

Income and expenses recognised directly in other comprehensive income in 2021 are as follows:

For 2020:

2021 movements in derivatives (cash flow hedges in foreign currencies) and financial investments break down as follows (after tax):

11.6

Earnings per share

Accounting principles

Basic earnings per share are calculated by dividing the net income

attributable to owners of the parent by the weighted average number

of ordinary shares outstanding during the financial year, less the

average number of shares held by Hermès International (treasury

shares).

Diluted earnings per share corresponds to the ratio between the net

income attributable to owners of the parent and the weighted average

number of shares outstanding during the financial year, excluding the

shares held by Hermès International (treasury shares), adjusted for

the dilutive effect generated by the allocation of free shares.

In millions of euros

Note Gross impact Tax impact Net impact

Actuarial gains and losses 5.3.3 12 (2) 9

Foreign currency adjustments 141 - 141

Revaluation adjustments (85) 62 (23)

TOTAL 128

In millions of euros

2021 2020

Revaluation adjustments as at 1January 105 51

Amount transferred to equity in the year in respect of derivatives (38) 35

Revaluation of derivatives (87) 36

Revaluation of financial investments 87 -

Other deferred foreign exchange gains/(losses) recognised in comprehensive income 15 (17)

REVALUATION ADJUSTMENTS AS AT 31DECEMBER 83 105

In millions of euros

Note Gross impact Tax impact Net impact

Actuarial gains and losses 5.3.3 (2) 1 (2)

Foreign currency adjustments (103) - (103)

Revaluation adjustments 77 (22) 55

TOTAL (50)

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 399

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The calculation and reconciliation of basic earnings per share and diluted earnings per share is as follows:

NOTE12

PROVISIONS FOR RISKS AND EXPENSES AND OFF-BALANCE SHEET COMMITMENTS

Accounting principles

A provision is a liability of uncertain timing or amount. It is recognised

when the Group has a present obligation (legal or constructive) as a

result of a past event, and it is probable that an outflow of resources

will be required to settle the obligation. In addition, a reliable estimate

of the amount of the obligation is made based on the information

available to the Group when the consolidated financial statements are

prepared.

12.1

Provisions

Of which €13million reversed and used.(1)

(2) Corresponds essentially to provisions for restoration costs, established or revised during the financial year in return for the right-of-use asset, which is amortised over

the term of the leases (see Note8.4).

Current provisions concern provisions for risks, disputes and litigation, as

well as provisions to cover the share of the negative position of

equity-accounted associates (see Note8).

Non-current provisions mainly include provisions for restoration.

12.2

Off-balance sheet commitments, contingent assets and liabilities

12.2.1 FINANCIAL COMMITMENTS

Financial commitments were discounted using a rate of 8.29% in 2021 (8.10% in 2020).

2021 2020

Numerator

(in millions of euros)

Net income attributable to owners of the parent 2,445 1,385

Denominator

(in number of shares)

Average number of shares outstanding during the financial year 105,569,412 105,569,412

Average number of treasury shares during the financial year (946,082) (1,138,640)

Average number of shares before dilution 104,623,330 104,430,772

Basic earnings per share

(in euros)

23.37 13.27

Dilutive effect of free share allocation plans 341,071 457,739

Average number of shares after dilution 104,964,401 104,888,511

Diluted earnings per share

(in euros)

23.30 13.21

Average share price €1,191 €729

In millions of euros

31/12/2020 Allocations

Exchange rate

impact 31/12/2021

Current provisions 100 32 1 115

Reversals

Other and

reclassifications

(22) 3

Non-current provisions 22 0 (3) 1 7 26

TOTAL 122 33 (25) 2 10 141

In millions of euros

< 1year 1 to 5years > 5years 31/12/2021 31/12/2020

Bank guarantees given 5 6 3 13 13

Bank guarantees received 12 2 1 14 13

Commitments to purchase financial assets 2 - 10 13 25

Other commitments 206 21 19 246 121

◆

RDAI studio: the RDAI architecture studio was appointed to carry out

exclusive design work on the internal layout of all Hermès Group

stores. The fees paid by the Group amounted to €9.9million

excluding tax in 2021. RDAI is considered to be a related party to the

extent that a member of the Executive Management Board of Émile

HermèsSAS has personal interests in this company and exercises

significant influence;

◆

Émile HermèsSAS, Active Partner (see chapter3 “Corporate

governance” § 3.3.1): each year, Hermès International pays the

Active partner an amount equal to 0.67% of its distributable profits. In

addition, Hermès International charges Émile HermèsSAS for certain

services provided and expenses incurred. Hermès International

charged back €0.7million in this respect in 2021 (including

€0.5million in respect of services provided);

◆

Studio des Fleurs: Studio des Fleurs offers photography and

retouching services for packshots of e-commerce products. The

amounts paid in 2021 came to €3.2million. Studio des Fleurs is

considered a related party to the extent that a member of the

Executive Management Board of Émile HermèsSAS has personal

interests therein and exercises significant influence upon it;

◆

Ardian Holding: as part of the diversification of its investments,

Hermès International has a 12.10% equity interest in the company

Ardian Holding, in which a member of the Supervisory Board has

responsibilities. This commitment had been assumed prior to this

person’s appointment.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL400

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

12.2.2 OTHER OFF-BALANCE SHEET COMMITMENTS

The Group has no knowledge of any commitments other than those mentioned herein and that are not reflected in the financial statements for the year

ended 31December 2021. To date, there is no exceptional event or dispute that would be liable to have a likely and material impact on the Group’s

financial position.

Furthermore, in the normal course of its business operations, the Group is involved in legal actions and is subject to controls. A provision is recorded

when a risk is identified and when its cost can be estimated.

NOTE 13

RELATED-PARTY TRANSACTIONS

13.1

Transactions with equity-accounted

associates

Transactions with equity-accounted associates were not material in the

financial year.

13.2

Transactions with other related parties

Relationships with other related parties, within the meaning of IAS24

Related Party Disclosures can be summarised as follows:

Certain of the above transactions constitute related-party agreements

according to the definition contained in the French Commercial Code

(Code de commerce). For more details, refer to chapter3 “Corporate

governance”, § 3.9.1.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 401

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(1) Of which €0.8million invoiced by PricewaterhouseCoopers Audit, Statutory Auditor of the Company and its French subsidiaries.

(2) Of which €0.1million invoiced by PricewaterhouseCoopers Audit, Statutory Auditor of the Company and its French subsidiaries. These services mainly concern the

work performed by the independent third party on social, societal and environmental information, compliance work relating to non-financial data and taxation for the

Group’s foreign subsidiaries, as well as various certifications.

13.3

Lease agreements with related parties

Total net value of right-of-use assets for the above-mentioned leases,

calculated in accordance with IFRS16, stood at €48million in 2021

(versus €53million in 2020), given the assumptions made relating to

lease terms and discount rates.

Amortisation of these right-of-use assets amounted to €10million in

2021 (compared with €10million in 2020).

All of the transactions described were carried out on an arm’s length

basis, i.e. on terms that would apply if the transactions had occurred

between unrelated parties.

NOTE 14

EVENTS AFTER THE REPORTING PERIOD

No significant events have occurred since the closing date of 31December 2021.

NOTE15

STATUTORY AUDITORS’ FEES

The fees paid to the Statutory Auditors and members of their networks in respect of the 2021 financial year, were as follows:

In millions of euros

PricewaterhouseCoopers

2021 2020

Certification of financial statements

1.9 83% 1.8 78%

Services other than certification of financial statements

0.4 17% 0.5 22%

TOTAL 2.3 100% 2.3 100%

In millions of euros

Grant Thornton Audit

2021 2020

Certification of financial statements

1.1 99% 1.0 99%

Services other than certification of financial statements 0.0 1% 0.0 1%

TOTAL 1.1 100% 1.0 100%

(1) Including €0.7million invoiced by Grant Thornton Audit, Statutory Auditor of the Company and its French subsidiaries.

ADDRESS

Lessor Lessee Lease type

Contractual

term Start End

Security

deposit

Share of the building 28/30/32,

rue du Faubourg Saint-Honoré SAS SIFAH

Hermès

International

Commercial

lease 9years 01/01/17 31/12/25 3months

Share of the building 28/30/32,

rue du Faubourg Saint-Honoré SAS SIFAH

Hermès

Sellier

Commercial

lease 9years 01/01/17 31/12/25 3months

Building 26, rue du Faubourg Saint-Honoré SAS SIFAH

Hermès

International

Commercial

lease 9years 01/01/14 31/12/22 3months

Building 26, rue du Faubourg Saint-Honoré SAS SIFAH

Hermès

International

Commercial

lease 9years 01/01/17 31/12/25 3months

Building 23, rue Boissy d’Anglas SAS SIFAH

Hermès

Sellier

Commercial

lease 9years 01/01/18 31/12/26 3months

Building 74, rue du Faubourg Saint-Antoine

S.C. Auguste

Hollande

Hermès

Sellier

Commercial

lease 9years 01/07/17 30/06/26 3months

4, rue du Pont-Vert

27400 Le Vaudreuil

Briand

VilliersI

Comptoir

Nouveau de

la Parfumerie

Commercial

lease 9years firm 01/07/14 30/06/23 3months

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL402

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 16

SCOPE OF CONSOLIDATION

List of the main consolidated companies as at 31December 2021 (distribution subsidiaries and holding companies of the divisions, for the major part):

Percentage 2021

Company

Office

Control Interest Method*

Registered no.

(French SIREN)

Hermès International 24, rue du Faubourg Saint-Honoré, 75008 Paris Parent Parent Parent 572 076 396

Boissy Les Mûriers 23, rue Boissy d’Anglas, 75008 Paris FC 100 351 649 504

100

99.67

100

54.21

100

51.01

100

Boissy Retail 1 Marina Boulevard, #28-00, Singapore 018989 (Singapore) 100 FC -

Castille Investissements 24, rue du Faubourg Saint-Honoré, 75008 Paris 100 FC 352 565 451

CHP2 23, rue Boissy d’Anglas, 75008 Paris 100 FC 789 925 534

CHP3 23, rue Boissy d’Anglas, 75008 Paris 100 FC 480 011 535

Compagnie Hermès de Participations 23, rue Boissy d’Anglas, 75008 Paris 100 FC 413 818 147

Compagnie des Cristalleries de

Saint-Louis Saint-Louis-lès-Bitche, 57620 Lemberg 100 FC 353 438 708

Comptoir Nouveau de la Parfumerie 23, rue Boissy d’Anglas, 75008 Paris 99.67 FC 542 053 285

Financière Saint-Honoré 1, rue Robert Céard, 1204 Geneva (Switzerland) 100 FC -

Faubourg Guam

96910331 Tumon Sands Plaza

1082 Pale San Vitores Rd

Tumon Guam 96913 (United States) 100 FC -

Grafton Immobilier 23, rue Boissy d’Anglas, 75008 Paris 100 FC 440 256 444

Hermès Argentina

Avenida Alvear 1901 Planta Baja, Unidad 1,

1129 Buenos Aires (Argentina) 100 FC -

Hermès Asia-Pacific

25/F Chinachem Leighton Plaza,

29 Leighton Road, Causeway Bay (Hong Kong) 100 FC -

Hermès Australia

Level11, 70 Castlereagh Street

Sydney NSW 2000 (Australia) 100 FC -

Hermès Benelux Nordics

10, rue de Brederode

Brussels 1000 (Belgium) 100 FC -

Hermès Canada

130 Bloor Street West

Toronto, Ontario M5S 1R1 (Canada) 100 FC -

Hermès China

Room 130, Plaza 66, No.1266 West Nanjing Road, Jingan

District, 20 041 Shanghai (China) 100 FC -

Hermès China Trading

Building No.12, No.211, 213, 215 and 227, Middle Huahai

Road, 200021 Shanghai (China) 100 FC -

Hermès Cuirs Précieux 3, avenue Hoche, 75008 Paris 100 FC 398 142 695

Hermès Denmark Højbro Plads 4, 1112 Copenhagen K (Denmark) 100 FC -

Hermès de Paris Mexico

Calle Montes Urales 715, Oficina 502

Col. Lomas de Chapultepec

11000 CDMX Mexico D.F. (Mexico) 54.21 FC -

Hermès Do Brasil Industria E

ComercioLtda

Avenida Magalhaes de Castro, n° 12.000, Loja 32, Piso

Terreo, Jardim Panarama, Sao Paolo CEP 05502-01 (Brazil) 100 FC -

Hermès E-MESA 1 Marina Boulevard, #28-00, Singapore 018989 (Singapore) 100 FC -

Hermès GB 8 Hinde Street, London, W1U 3BQ (United Kingdom) 100 FC -

HermèsGmbH Maximilianstrasse 8, 80539 Munich (Germany) 100 FC -

Hermès Grèce

Stadiou 4 and Voukourestiou 1, City Link,

10564 Syntagma, Athens (Greece) 100 FC -

Hermès Holding GB 8 Hinde Street, London, W1U 3BQ (United Kingdom) 100 FC -

Hermès Iberica Paseo de la Castellana no. 28, 28046 Madrid (Spain) 100 FC -

Hermès Immobilier Genève 1, rue Robert Céard, 1204 Geneva (Switzerland) 100 FC -

Hermès India Retail and Distributors

C/o IFCCI, DLTA Complex, RK Khanna Stadium, 1stFloor

(Gate3), 1, Africa Avenue, New Delhi – 110 029 (India) 51.01 FC -

Hermès Internacional Portugal Largo do Chiado 9, 1200-108 Lisbon (Portugal) 100 FC -

Hermès Istanbul

Ünalan Mahallesi, Libadiye Caddesi, Dış Kapı No:82F İç Kapı

No:9 Üsküdar/İstanbul (Turkey) 100 FC -

Hermès Italie Via G. Serbelloni 1Gastone Pisoni 2, 20121 Milan (Italy) 100 FC -

Hermès Japan

4-1, Ginza 5-Chome, Chuo-Ku,

Tokyo 104-0061 (Japan) 100 FC -

Hermès Korea

630-26 Shinsa-Dong Gangnam-gu,

Seoul 135-895 (South Korea) 100 FC -

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 403

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Percentage 2021

Company

Office

Control Interest Method*

Registered no.

(French SIREN)

Hermès Middle East South Asia

One Marina Boulevard, #28-00,

Singapore 018989 (Singapore) 100 FC -

99.98

100

99.77

100

96.71

100

Hermès Monte-Carlo

11-13-15, avenue de Monte-Carlo, 98000 Monaco

(Principality of Monaco) 99.98 FC -

Hermès Norway

C/o Advokatfirma DLA Piper Norway DA,

Bryggegata 6 0250 Oslo (Norway) 100 FC -

Hermès Of Paris 55 East, 59

Street, 10022 New York (United States) 100 FC -

Hermès Poland Krakowskie Przedmieście 13, 00-071 Warszawa (Poland) 100 FC -

Hermès Prague Parizska 12/120, 11000 Prague (Czech Republic) 100 FC -

Hermès Retail Malaysia

Level6, Menara 1 Dutamas, Solaris Dutmas, n° 1 Jalan

Dutamas 2, 50480 Kuala Lumpur (Malaysia) 100 FC -

Hermès Rus AO

4, Nizhny Kiselny Sidestreet,

Floor 5, Premises 1, Room 15, 107031 Moscow (Russia) 100 FC -

Hermès Sellier 24, rue du Faubourg Saint-Honoré, 75008 Paris 99.77 FC 696 520 410

Hermès Singapore Retail 1 Marina Boulevard, #28-00, Singapore 018989 (Singapore) 100 FC -

Hermès Suisse 1, rue Robert Céard, 1204 Geneva (Switzerland) 100 FC -

Hermès Sweden NK 243, 111 77 Stockholm (Sweden) 100 FC -

Hermès Travel Retail Asia 1 Marina Boulevard, #28-00, Singapore 018989 (Singapore) 100 FC -

Holding Textile Hermès 16, chemin des Mûriers, 69310 Pierre-Bénite 96.71 FC 592 028 542

Honossy 23, rue Boissy d’Anglas, 75008 Paris 100 FC 393 178 025

Immauger 23, rue Boissy d’Anglas, 75008 Paris 100 FC 377 672 159

Immobilière de Montereau 23, rue Boissy d’Anglas, 75008 Paris 100 FC 812 935 005

Immobilière du 5 rue de Furstemberg 23, rue Boissy d’Anglas, 75008 Paris 100 FC 440 252 849

Immobilière Hermès France 23, rue Boissy d’Anglas, 75008 Paris 100 FC 834 021 586

Immobilière Maroquinerie de Guyenne 23, rue Boissy d’Anglas, 75008 Paris 100 FC 789 928 611

J3L 35, rue Benoît Frachon, 94500 Champigny-sur-Marne 100 FC 453 233 812

J.L. & Company Limited

Westminster Works, 1 Oliver Street,

Northampton NN2 7JL (United Kingdom) 100 FC -

John Lobb 23, rue Boissy d’Anglas, 75008 Paris 100 FC 582 094 371

La Maroquinerie du Sud-Ouest

Route de Saint-Martin-le-Pin, Bâtiment administratif,

24300 Nontron 100 FC 403 230 436

La Montre Hermès Erlenstrasse 31 A, 2555 Brügg (Switzerland) 100 FC -

Les Manufactures d’Auvergne Route de Volvic, Bâtiment administratif, 63530 Sayat 100 FC 411 795 859

Les Manufactures de Franche-Comté 18, rue de la Côte, Bâtiment administratif, 25230 Seloncourt 100 FC 407 836 329

Les Maroquineries des Alpes

Lieu-dit Netrin Ouest rue Victor Hugo,

38490 Les Abrêts-en-Dauphiné (Bâtiment administratif) 100 FC 480 011 451

Maroquinerie de Guyenne 1, avenue de l’Étang, 33440 Saint-Vincent-de-Paul 100 FC 812 935 013

Maroquinerie de Montereau 23, rue Boissy d’Anglas, 75008 Paris 100 FC 812 935 021

Maroquinerie de Normandie 2, rue Sainte Marguerite 27100 Val-de-Reuil 100 FC 789 926 334

Maroquinerie de Saint-Antoine

74, rue du Faubourg St Antoine and 59, rue de Charenton,

75012 Paris 100 FC 409 209 202

Maroquinerie des Ardennes Avenue des Marguerites, 08120 Bogny-sur-Meuse 100 FC 428 113 518

Motsch GeorgeV 23, rue Boissy d’Anglas, 75008 Paris 100 FC 440 252 476

Saint-Honoré (Bangkok)

Unit 1201 12thFloor Park Venture Ecoplex 57 Wireless Road,

Lumpini Pathumwan

Bangkok 10330 (Thailand) 90 FC -

SCI Auger Hoche 12-22, rue Auger, 93500 Pantin 100 FC 335 161 071

SCI EdouardVII 23, rue Boissy d’Anglas, 75008 Paris 100 FC 393 882 170

SCI Les Capucines 23, rue Boissy d’Anglas, 75008 Paris 100 FC 408 602 050

* Consolidation method: FC: fully consolidated.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL404

CONSOLIDATED FINANCIAL STATEMENTS

STATUTORY AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS

5.7

STATUTORY AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL

STATEMENTS

(For the year ended 31December2021)

This is a free translation into English of the Statutory Auditors’ report issued in French and is provided solely for the convenience of English-speaking

readers. This report includes information specifically required by European regulations or French law, such as information about the appointment of

Statutory Auditors. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards

applicable in France.

To the Shareholders,

OPINION

In compliance with the engagement entrusted to us by your General Meeting, we have audited the accompanying consolidated financial statements of

Hermès International for the year ended 31December2021.

In our opinion, the consolidated financial statements give a true and fair view of the assets and liabilities and of the financial position of the Group at

31December2021, and of the results of its operations for the year then ended in accordance with International Financial Reporting Standards as

adopted by the European Union.

The audit opinion expressed above is consistent with our report to the Audit and Risk Committee.

BASIS FOR OPINION

Audit framework

We conducted our audit in accordance with professional standards applicable in France. We believe that the audit evidence we have obtained is

sufficient and appropriate to provide a basis for our opinion.

Our responsibilities under these standards are further described in the “Responsibilities of the Statutory Auditors relating to the audit of the

consolidated financial statements” section of our report.

Independence

We conducted our audit engagement in compliance with the independence rules provided for in the French Commercial Code (Code de commerce) and

the French Code of Ethics (Code de déontologie) for Statutory Auditors for the period from 1January2021 to the date of our report, and, in particular,

we did not provide any non-audit services prohibited by article5(1) of Regulation (EU) No.537/2014.

JUSTIFICATION OF ASSESSMENTS – KEY AUDIT MATTERS

Due to the global crisis related to the Covid-19 pandemic, the financial statements of this period have been prepared and audited under specific

conditions. Indeed, this crisis and the exceptional measures taken in the context of the state of sanitary emergency have had numerous consequences

for companies, particularly on their operations and their financing, and have led to greater uncertainties on their future prospects. Those measures,

such as travel restrictions and remote working, have also had an impact on the companies’ internal organisation and the performance of the audits.

It is in this complex and evolving context that, in accordance with the requirements of articlesL.823-9 and R.823-7 of the French Commercial Code

relating to the justification of our assessments, we inform you of the key audit matters relating to the risks of material misstatement that, in our

professional judgement, were the most significant in our audit of the consolidated financial statements, as well as how we addressed those risks.

These matters were addressed as part of our audit of the consolidated financial statements as a whole, and therefore contributed to the opinion we

formed as expressed above. We do not provide a separate opinion on specific items of the consolidated financial statements.

◆

the condition of the inventories and their obsolescence (for example, past seasons or collections);

◆

the estimated projected turnover of the inventories on the various markets.

◆

examining the inventory measurement and impairment methods and ensuring that those methods were applied consistently;

◆

performing a critical review of management’s methodology for recognising inventory impairment based on our knowledge of the Group’s business

segments and historical inventory turnover;

◆

assessing the level of impairment with regard to projected turnover and the age of the inventories.

◆

verified the existence, completeness and accuracy of the Group’s portfolio of financial instruments by making confirmation requests to banking

institutions;

◆

recalculated the fair value of a representative sample of instruments to assess the accuracy of their measurement;

◆

verified the relationship between hedges and the related commercial transactions on a selection of hedging operations and performed a critical

review of the documentation for the associated effectiveness tests to assess their eligibility for hedge accounting under IFRS 9;

◆

examined the appropriateness of the disclosures relating to the hedging operations provided in the notes to the consolidated financial statements.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 405

CONSOLIDATED FINANCIAL STATEMENTS

STATUTORY AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS

Measurement of inventories and work-in-progress – Note4.5 to the consolidated financial statements

Description of risk

At 31December2021, the Group’s inventories and work-in-progress were recognised in the balance sheet at a gross value of €2,246million and a net

value of €1,449million.

It is the responsibility of Hermès International’s management to determine the amount of any impairment required to reduce inventories to net

realisable value if the latter is lower than their carrying amount. Impairment is calculated for each category of inventory according to:

We deemed the measurement of inventories and work-in-progress to be a key audit matter given the materiality of inventories and because the

aforementioned criteria and the resulting impairment are dependent on assumptions, estimates and assessments made by management.

In addition, as a large number of subsidiaries hold inventories, the elimination of internal margins in the consolidated financial statements is particularly

important since it has an impact on the gross value of the Group’s inventories and the resulting impairment.

How our audit addressed this risk

Our work consisted in:

Our work also consisted in verifying, on a sample basis, the consistency between the internal margins eliminated in the consolidated financial

statements, in particular by examining the margin levels generated by production subsidiaries with the different distribution subsidiaries.

Recognition of currency hedges – Note10 to the consolidated financial statements

Description of risk

Hermès International is naturally exposed to currency risks because almost all of its production is located in the euro zone, while the majority of its sales

are denominated in foreign currencies (US dollars, Japanese yen, Chinese yuan and other currencies).

The production subsidiaries apply an annual exchange rate to scales established in euros and invoice the distribution subsidiaries in their local

currency. As a result, the distribution subsidiaries bear most of the exchange rate risk.

To hedge the risk and minimise the impact of currency fluctuations on its earnings, Hermès International uses fixed and optional currency hedges, with

the objective of hedging its net internal exposure on an annual basis. At 31December2021, close to 100% of internal currency transactions for the

following year were hedged.

We deemed the recognition of currency hedges to be a key audit matter given the impact of currency fluctuations on the Group’s operating margin,

which is an indicator used by the Group in its financial communication.

How our audit addressed this risk

As part of our work, with the assistance of our financial instruments experts, we:

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL406

CONSOLIDATED FINANCIAL STATEMENTS

STATUTORY AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS

SPECIFIC VERIFICATIONS

As required by legal and regulatory provisions and in accordance with professional standards applicable in France, we have also performed the specific

verifications on the information pertaining to the Group presented in the management report prepared by Executive Management.

We have no matters to report as to its fair presentation and its consistency with the consolidated financial statements.

We attest that the information pertaining to the Group presented in the management report includes the consolidated non-financial performance

statement required under articleL.225-102-1 of the French Commercial Code. However, in accordance with articleL.823-10 of the French Commercial

Code, we have not verified the fair presentation and consistency with the consolidated financial statements of the information given in that statement,

which will be the subject of a report by an independent third party.

OTHER VERIFICATIONS AND INFORMATION PURSUANT TO LEGAL AND REGULATORY REQUIREMENTS

Presentation of the consolidated financial statements to be included in the annual financial report

In accordance with professional standards applicable to the Statutory Auditors’ procedures for annual and consolidated financial statements presented

according to the European single electronic reporting format, we have verified that the presentation of the consolidated financial statements to be

included in the annual financial report referred to in paragraphI of articleL.451-1-2 of the French Monetary and Financial Code (Code monétaire et

financier) and prepared under Executive Management’s responsibility, complies with this format, as defined by European Delegated Regulation

No.2019/815 of 17December2018. As it relates to the consolidated financial statements, our work included verifying that the markups in the

financial statements comply with the format defined by the aforementioned Regulation.

On the basis of our work, we conclude that the presentation of the consolidated financial statements to be included in the annual financial report

complies, in all material respects, with the European single electronic reporting format.

It is not our responsibility to ensure that the consolidated financial statements to be included by the Company in the annual financial report filed with

the AMF correspond to those on which we carried out our work.

Appointment of the Statutory Auditors

We were appointed Statutory Auditors of Hermès International by the General Meetings held on 30May2011 for PricewaterhouseCoopers Audit and on

31May1999 for Didier Kling & Associés, now Grant Thornton Audit.

At 31December2021, PricewaterhouseCoopers Audit and Grant Thornton Audit were in the eleventh and the twenty-third consecutive year of their

engagement, respectively.

◆

identify and assess the risks of material misstatement in the consolidated financial statements, whether due to fraud or error, design and perform

audit procedures in response to those risks, and obtain audit evidence considered to be sufficient and appropriate to provide a basis for their

opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve

collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;

◆

obtain an understanding of the internal control procedures relevant to the audit in order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control;

◆

evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management and the related

disclosures in the notes to the consolidated financial statements;

◆

assess the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a

material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern.

This assessment is based on the audit evidence obtained up to the date of the audit report. However, future events or conditions may cause the

Company to cease to continue as a going concern. If the Statutory Auditors conclude that a material uncertainty exists, they are required to draw

attention in the audit report to the related disclosures in the consolidated financial statements or, if such disclosures are not provided or are

inadequate, to issue a qualified opinion or a disclaimer of opinion;

◆

evaluate the overall presentation of the consolidated financial statements and assess whether these statements represent the underlying

transactions and events in a manner that achieves fair presentation;

◆

obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an

opinion on the consolidated financial statements. The Statutory Auditors are responsible for the management, supervision and performance of the

audit of the consolidated financial statements and for the opinion expressed thereon.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 407

CONSOLIDATED FINANCIAL STATEMENTS

STATUTORY AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS

RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE CONSOLIDATED

FINANCIAL STATEMENTS

Management is responsible for preparing consolidated financial statements giving a true and fair view in accordance with International Financial

Reporting Standards as adopted by the European Union and for implementing the internal control procedures it deems necessary for the preparation of

consolidated financial statements that are free of material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to continue as a going concern,

disclosing, as applicable, matters related to going concern, and using the going concern basis of accounting, unless it expects to liquidate the Company

or to cease operations.

The Audit and Risk Committee is responsible for monitoring the financial reporting process and the effectiveness of internal control and risk

management systems, as well as, where applicable, any internal audit systems, relating to accounting and financial reporting procedures.

The consolidated financial statements were approved by Executive Management.

RESPONSIBILITIES OF THE STATUTORY AUDITORS RELATING TO THE AUDIT OF THE CONSOLIDATED

FINANCIAL STATEMENTS

Objective and audit approach

Our role is to issue a report on the consolidated financial statements. Our objective is to obtain reasonable assurance about whether the consolidated

financial statements as a whole are free of material misstatement. Reasonable assurance is a high level of assurance, but is not a guarantee that an

audit conducted in accordance with professional standards will always detect a material misstatement when it exists. Misstatements can arise from

fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions

taken by users on the basis of these consolidated financial statements.

As specified in articleL.823-10-1 of the French Commercial Code, our audit does not include assurance on the viability or quality of the Company’s

management.

As part of an audit conducted in accordance with professional standards applicable in France, the Statutory Auditors exercise professional judgement

throughout the audit. They also:

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL408

CONSOLIDATED FINANCIAL STATEMENTS

STATUTORY AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS

Report to the Audit and Risk Committee

We submit a report to the Audit and Risk Committee which includes, in particular, a description of the scope of the audit and the audit programme

implemented, as well as the results of our audit. We also report any, significant deficiencies in internal control that we have identified regarding the

accounting and financial reporting procedures.

Our report to the Audit and Risk Committee includes the risks of material misstatement that, in our professional judgement, were the most significant for

the audit of the consolidated financial statements and which constitute the key audit matters that we are required to describe in this report.

We also provide the Audit and Risk Committee with the declaration provided for in article6 of Regulation(EU) No.537/2014, confirming our

independence within the meaning of the rules applicable in France, as defined in particular in articlesL.822-10 to L.822-14 of the French Commercial

Code and in the French Code of Ethics for Statutory Auditors. Where appropriate, we discuss any risks to our independence and the related safeguard

measures with the Audit and Risk Committee.

Neuilly-sur-Seine, 3March2022

The Statutory Auditors

PricewaterhouseCoopers

Olivier Auberty

Grant Thornton Audit

Vincent Frambourt

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 409

CONSOLIDATED FINANCIAL STATEMENTS

STATUTORY AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS

6.1

INCOME STATEMENT

412

6.2

BALANCE SHEET

413

6.3

CHANGE IN EQUITY

414

6.4

STATEMENT OF CASH FLOWS

414

6.5

NOTES TO THE FINANCIAL STATEMENTS

415

6.6

TABLE OF RESULTS OVER THE LAST FIVE YEARS

430

6.7

INFORMATION ON PAYMENT TERMS

431

6.8

OTHER INFORMATION ON THE PARENT COMPANY FINANCIAL

STATEMENTS

432

6.8.1

Information on branches

432

6.8.2

Information on the amount of inter-company loans

432

6.8.3

Equity investments in companies having their registered office in France (Article

L.233-6 of the French Commercial Code (Code de commerce))

432

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 411

PARENT COMPANY FINANCIAL

STATEMENTS

AFR

6.9

STATUTORY AUDITORS’ REPORT ON THE FINANCIAL STATEMENTS

433

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL412

PARENT COMPANY FINANCIAL STATEMENTS

INCOME STATEMENT

6.1

INCOME STATEMENT

In millions of euros

Note 2021 2020

Operating income 2.1 443 405

Revenue 396 318

Other products 1 4

Reversals of provisions and expenses reclassified 47 84

Operating expenses 2.2 (364) (371)

Other purchases and external expenses (158) (142)

Tax and duties (14) (19)

Compensation and other personnel costs 3.2 (113) (108)

Depreciation, amortisation and provisions 6/10.1 (77) (98)

Other expenses (2) (4)

Operating income 79 34

Income from subsidiaries and affiliates 7.3 1,246 1,328

Net additions/(reversals) of provisions (137) (78)

Other elements 7.1 (11) (3)

Net financial income 1,099 1,247

Recurring income before tax 1,178 1,282

Extraordinary income 4 6 44

Employee profit-sharing (6) (4)

Income tax 5 (13) 22

NET INCOME 1,165 1,343

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 413

PARENT COMPANY FINANCIAL STATEMENTS

BALANCE SHEET

6.2

BALANCE SHEET

ASSETS

LIABILITIES

In millions of euros

Note 31/12/2021 31/12/2020

Non-current assets 1,149 962

Intangible assets 6 46 37

Property, plant and equipment 6 31 24

Financial assets 7.2 1,072 901

Current assets 6,453 5,358

Operating receivables 2.3 141 155

Other receivables 2.3 684 1,104

Marketable securities 7.4 4,424 3,340

Derivatives 49 46

Cash at bank and in hand 7.5 1,156 713

Prepayments and accruals 2.3 7 5

TOTAL ASSETS 7,608 6,325

In millions of euros

Note 31/12/2021 31/12/2020

Equity 6,160 5,549

Share capital 9 54 54

Share, merger or contribution premiums 50 50

Other reserves 2,503 2,002

Legal reserve 6 6

Retained earnings 2,383 2,094

Net income for the financial year 1,165 1,343

Regulated provisions 0 0

Provisions for risks and expenses 10.1 264 185

Liabilities 1,173 584

Financial liabilities 7.6 26 27

Derivatives 6 7

Operating liabilities 2.4 76 54

Other payables 2.4 1,064 497

Prepayments and accruals 11 6

TOTAL EQUITY AND LIABILITIES 7,608 6,325

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL414

PARENT COMPANY FINANCIAL STATEMENTS

CHANGE IN EQUITY

6.3

CHANGE IN EQUITY

6.4

STATEMENT OF CASH FLOWS

In millions of euros

Note 2021 2020

Net income 1,165 1,343

Depreciation and amortisation 22 16

Change in provisions and impairment 121 (19)

Capital gains/(losses) on disposals 73 166

Operating cash flows 1,381 1,506

Change in trade and other receivables 503 (555)

Change in trade and other payables 591 (97)

Change in working capital requirements 1,094 (652)

Net cash flows from operating activities 2,475 855

Acquisitions of property, plant and equipment and intangible assets 6 (37) (30)

Acquisitions of investment securities 7.2 (180) (53)

Acquisitions of other financial assets 7.2 (185) (27)

Disposals of property, plant and equipment and intangible assets 0 -

Proceeds from disposal of investment securities 4 -

Proceeds from disposal of other financial assets 7.2 0 10

Change in receivables and payables related to fixed assets - -

Net cash flows from investing activities (398) (100)

Dividends paid (485) (485)

Treasury share buybacks net of disposals (157) (121)

Net cash flows from financing activities (642) (606)

CHANGE IN NET CASH POSITION 1,435 149

Net cash at the beginning of the period 7.5 3,615 3,466

Net cash at the end of the period 7.5 5,050 3,615

CHANGE IN NET CASH POSITION 1,435 149

In millions of euros

Number of

outstanding

capital

Share,

merger or

contribution

premiums

Legal reserve,

other reserves,

and retained

earnings

Net income for

the financial year

Regulated

provisions Equity

Note 9 9

Balance as at 31December 2019

before allocation of net income 105,569,412 54 50 2,934 1,653 0 4,691

Allocation of net income 2019 - - - 1,653 (1,653) - -

Dividends paid in respect of the financial year - - - (485) - - (485)

Net income for financial year 2020 - - - - 1,343 - 1,343

Other changes - - - - - (0) (0)

Balance as at 31December 2020

before allocation of net income 105,569,412 54 50 4,102 1,343 0 5,549

Allocation of net income 2020 - - - 1,343 (1,343) - -

Dividends paid in respect of the financial year - - - (485) - - (485)

Net income for financial year 2021 - - - - 1,165 - 1,165

Other changes (see Note1) - - - (69) - 0 (69)

Balance as at 31December 2021

before allocation of net income 105,569,412 54 50 4,891 1,165 0 6,160

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 415

PARENT COMPANY FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

6.5

NOTES TO THE FINANCIAL STATEMENTS

The 12-month financial year covers the period from 1January through 31December 2021.

The following notes are an integral part of the annual financial statements.

The annual financial statements and notes to the financial statements are presented in euros. Unless otherwise stated, the values shown in the tables

are expressed in millions of euros and rounded to the nearest million. As a result, in certain cases, the effects of rounding up/down can lead to a

non-significant difference in the totals or changes. In addition, the ratios and differences are calculated on the basis of the underlying amounts and not

on the basis of rounded amounts.

The Company’s annual financial statements are prepared in accordance with the French General Accounting Plan (PCG) as described by ANC regulation

No.2014-03 and updated in accordance with all regulations that have subsequently modified it.

DETAILED CONTENTS

NOTE1 CHANGE IN METHOD 416

NOTE2 OPERATING ITEMS 416

NOTE3 HEADCOUNT, PERSONNEL COSTS AND EMPLOYEE BENEFITS 418

NOTE 4 EXTRAORDINARY INCOME 419

NOTE 5 INCOME TAX 420

NOTE6 PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS 421

NOTE7 FINANCIAL ASSETS AND LIABILITIES – NET CASH POSITION 422

NOTE8 MANAGEMENT OF MARKET RISKS AND DERIVATIVES 425

NOTE 9 SHARE CAPITAL 428

NOTE10 PROVISIONS FOR RISKS AND EXPENSES – OFF-BALANCE SHEET COMMITMENTS 428

NOTE 11 RELATED-PARTY TRANSACTIONS 429

NOTE 12 EVENTS AFTER THE REPORTING PERIOD 429

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL416

PARENT COMPANY FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

NOTE1

CHANGE IN METHOD

Hermès International has applied the option introduced by the

amendment made to recommendation No.2013-R02 on the rules for

measuring and recognising post-employment obligations (published on

17November 2021 by the French Accounting Standards Authority (ANC)),

which results in entitlement to benefits being spread only over the period

leading up to the ceiling and preceding the departure date for

defined-benefit plans. The first application of this option was treated as a

change in accounting policy linked to a change in regulations, in

accordance with the provisions of the amendment. As a result, the impact

was recognised as retained earnings at 1January 2021 for a total

amount of €7million as an increase to equity and offset by the item

“provisions for expenses”.

The Company also decided to change the method for recognising

actuarial gains and losses relating to pension commitments, previously

recognised under the corridor method, by opting for immediate

recognition in the income statement. This voluntary change in method,

processed in accordance with the provisions of the PCG, aims to provide

more relevant information on Hermès International’s assets and financial

position and makes it possible to present a commitment amount similar

to that shown in the Group’s consolidated financial statements under

IFRS. The impact, amounting to a total of €76million, was also

recognised as retained earnings as at 1January 2021 as a decrease to

equity and offset by the item “provisions for expenses”.

NOTE2

OPERATING ITEMS

2.1

Operating income

Accounting principles

Revenue consists of royalties from brands and the provision of

services. Royalties are calculated based on the production

subsidiaries’ revenue. Services are primarily amounts charged back to

subsidiaries for advertising and public relations costs, rent, staff

provided on secondment, insurance and professional fees.

Expense transfers correspond mainly to the costs of free share plans

allocated and re-invoiced to employees of subsidiaries (see Note3.4).

2.2

Operating expenses

In millions of euros

2021 2020

Revenue 396 318

Other products 1 4

Reversals of provisions 1 13

Expense transfers 46 70

OPERATING INCOME 443 405

In millions of euros

Note 2021 2020

Other purchases and external expenses (158) (142)

Tax and duties (14) (19)

Compensation and other personnel costs 3.2 (113) (108)

Depreciation, amortisation and provisions 6/10.1 (77) (98)

Other expenses (2) (4)

OPERATING EXPENSES (364) (371)

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 417

PARENT COMPANY FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

2.3

Operating receivables

Accounting principles

Receivables are recorded at par value. A provision for impairment is recognised where there is a risk of non-recovery.

Operating receivables break down according to the following maturities:

31/12/2021 31/12/2020

Current assets include a gross amount of €827million in receivables due from related companies.

Other receivables mainly correspond to the financial current accounts of subsidiaries.

Impairment movements for the year can be analysed as follows:

2.4

Liabilities from operations

Liabilities from operations break down according to the following maturities:

31/12/2021 31/12/2020

< 1year

Between

1 and 5years Net amount Net amount

Other payables correspond mainly to financial current accounts of the subsidiaries amounting to €1,034million.

In millions of euros

< 1year

Between

1 and 5years

Gross

amount Impairment Net amount Net amount

Current assets 841 64 905 (81) 824 1,259

Trade and other receivables 61 8 69 - 69 46

Other operating receivables 15 56 71 - 71 108

Other receivables 764 - 764 (81) 684 1,104

Prepayments and accruals 7 - 7 - 7 5

Leases 5 - 5 - 5 3

Other 2 - 2 - 2 1

TOTAL 848 64 912 (81) 831 1,263

Reversals

In millions of euros

31/12/2020 Allocations Provisions used

Unused

provisions 31/12/2021

Impairment of other receivables 155 81 (155) 81

In millions of euros

Operating liabilities 67 10 76 54

Trade and other payables 17 - 17 11

Tax and social-security liabilities 50 10 59 43

Other payables 1,047 17 1,064 497

Amounts payable to fixed asset suppliers 2 - 2 2

Other 1,044 17 1,062 495

TOTAL 1,113 27 1,140 551

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL418

PARENT COMPANY FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

◆

the service cost, which reflects the increase in obligations arising

from the vesting of one additional year of benefits; and

◆

the interest expense, which reflects the increase in the present

value of the obligations during the period;

◆

actuarial gains and losses for the period.

NOTE3

HEADCOUNT, PERSONNEL COSTS AND EMPLOYEE BENEFITS

3.1

Average number of employees

3.2

Compensation and other personnel costs

3.3

Post-employment obligations and other employee benefits

Accounting principles

For basic pension and other defined-contribution plans, Hermès

International recognises contributions to be paid as expenses when

they come due and no provision is accrued in this respect, as the

Company has no obligation other than the contributions paid.

Hermès International’s obligations in relation to retirement benefits

and long-service awards are calculated annually by an independent

actuary using the projected unit credit method. This method is based

on actuarial assumptions and takes into account the employee’s

probable future length of service, future salary and life expectancy as

well as staff turnover. The present value of the obligation is calculated

by applying an appropriate discount rate. It is recognised on a basis

pro-rated to the employee’s years of service.

Benefits are partly funded in advance by external funds (insurance

companies). Assets held in this way are measured at fair value.

The expense recognised in the income statement is the sum of:

As indicated in the note on changes in policies for the year (see

Note1), actuarial gains and losses are immediately recognised in

profit or loss.

As at 31December 2021, the commitment in terms of retirement

benefits and long-service awards amounted to €126million pre-financed

in the amount of €6million with an insurance company.

The net amount of the commitment of €120million is recognised in

provisions for risks and expenses in the liabilities of Hermès

International.

For the 2020 and 2021 financial years, the following actuarial assumptions were used:

31/12/2021 31/12/2020

Executives and managers 475 453

Non-management staff 49 44

TOTAL 524 497

In millions of euros

Note 2021 2020

Compensation (78) (71)

2016 free share plans 3.4 (0) (5)

2019 free share plans 3.4 (4) (6)

Social security charges on compensation and free share plans (31) (27)

COMPENSATION AND OTHER PERSONNEL COSTS (113) (108)

2021 2020

◆

retirement age 62 to 65years 62 to 65years

◆

increase in salaries 3to4% 3to4%

◆

discount rate 0.5% to 0.8% 0.3% to 0.6%

◆

expected rate of return/asset 1.75% to 2.5% 1.75% to 2.5%

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 419

PARENT COMPANY FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

3.4

Free share plans

Expenses recognised in operating income in respect of free share plans

only concern employees of Hermès International (see Note 3.2).

Costs relating to other employee beneficiaries of Group subsidiaries are

presented in extraordinary income or loss and are transferred via an

expense transfer account (see Note4).

When the shares are delivered to employees, the loss corresponding to

the net carrying amount of the treasury shares is recognised as

extraordinary expenses in Hermès International’s financial statements.

Income from re-invoicing to subsidiaries is presented as extraordinary

income (see Note4).

After taking income and expenses relating to the French and foreign

subsidiaries into account, the net impact of the free share plans

including social security expenses on net income before tax was an

expense of €2million in 2021, compared with income of €24million in

2020.

The information relating to the free share plans is provided in chapter 3

"Corporate governance", § 5.5 (Table9.1).

3.5

Compensation of Corporate Officers

Gross aggregate compensation paid to Corporate Officers in respect of financial year 2021 amounted to €5million, including €1million related to the

compensation of members of the Supervisory Board.

NOTE 4

EXTRAORDINARY INCOME

In millions of euros

Note 2021 2020

Extraordinary income 125 283

Free share plans 3.4 119 266

Reversals of provisions for tax depreciation 0 0

Disposals of property, plant and equipment and financial assets 5 11

Other extraordinary income 5

Extraordinary expenses (119) (239)

Free share plans 3.4 (111) (226)

Provisions for tax depreciation (0) (0)

Net value of fixed assets sold (8) (10)

Other extraordinary expenses (0) (3)

EXTRAORDINARY INCOME 6 44

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL420

PARENT COMPANY FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

NOTE 5

INCOME TAX

Accounting principles

The Company has opted for the French tax regime for company

groups.

Under the terms of an agreement between the parent company and

the subsidiaries included in the tax consolidation group, the French

subsidiaries included in the tax consolidation scope recognise, in their

financial statements, an income tax expense on the basis of their own

tax results. Hermès International, the head of the tax consolidation

group, recognises the difference between the sum of the taxes of

subsidiaries and the tax due on the overall income as a tax credit due

to tax consolidation.

The savings in corporate income tax and additional contributions

resulting from the application of the group tax regime are in principle

definitively acquired by Hermès International.

The tax consolidation scope includes 61 companies.

5.1

Breakdown of income tax

Hermès International recognised an income tax expense of €13million in

2021, compared with an income tax credit of €22million in 2020. In

addition, Hermès International is liable for payment of the tax of the

fiscally consolidated group, which amounted to €347million in 2021

compared with €199million in 2020.

Hermès International’s income tax expense only includes applicable

exemptions under the terms of the parent-subsidiary regime for income

from investments in subsidiaries and affiliates. The tax credit resulting

from the tax consolidation takes into account the effect of the

consolidation regime mainly related to the loss-making results of certain

subsidiaries.

5.2

Increases or decreases in future tax liability

As at 31December 2021, the future tax receivable was equal to €47million, versus €26million as at 31December 2020. This mainly consists of

temporarily non-deductible expenses, in particular retirement provisions.

In millions of euros

2021 2020

Net income before tax and employee profit-sharing 1,184 1,325

Employee profit-sharing (6) (4)

Net income before tax 1,178 1,321

Income tax (13) 22

Tax (parent company only) (41) (30)

o/w tax on extraordinary income 1 1

o/w tax on other items (42) (31)

Tax arising from tax consolidation 28 52

NET INCOME 1,165 1,343

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 421

PARENT COMPANY FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

◆

buildings: straight-line over 30years;

◆

building fixtures and fittings: straight-line method over 10 to

40years;

◆

office furniture and equipment: straight-line or declining-balance

method over 4 to 10years;

◆

IT equipment: straight-line or declining balance over one to five

years;

◆

vehicles: straight-line method over 4years.

NOTE6

PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS

Accounting principles

Intangible assets include software and the cost of websites, which are

amortised on a straight-line basis over a period of up to four years.

Property, plant and equipment are valued at their acquisition cost.

Depreciation is calculated using the straight-line or declining balance

method:

In millions of euros

31/12/2020 Increases Decreases Other 31/12/2021

Intangible assets 75 26 (0) (0) 101

Software 53 19 - 0 72

Other intangible assets 23 7 (0) (0) 29

Property, plant and equipment 58 11 (0) 0 69

Land 0 0

Buildings 0 0

Fittings 31 6 (0) 6 43

Other property, plant and equipment assets 27 5 (0) (6) 25

Total gross values 134 37 (0) 0 170

Amortisation of intangible assets (38) (18) 0 - (55)

Software (22) (14) (36)

Other intangible assets (15) (4) 0 (19)

Depreciation of property, plant and equipment (34) (4) 0 - (38)

Buildings (0) (0)

Fittings (22) (2) (24)

Other property, plant and equipment assets (12) (2) 0 (14)

Total depreciation and amortisation (72) (22) 0 - (93)

Impairment - -

Total impairment -----

TOTAL NET VALUES 62 15 (0) 0 77

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL422

PARENT COMPANY FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

NOTE7

FINANCIAL ASSETS AND LIABILITIES – NET CASH POSITION

7.1

Other elements of net financial income

Foreign exchange gains and losses are detailed in a specific note (see Note8) on market risk management and derivatives.

7.2

Financial assets

Accounting principles

Investment securities are shown in the balance sheet at acquisition

cost. The Company has opted for the recognition of ancillary costs at

the time of acquisition. Where the balance sheet value at the closing

date is lower than the carrying amount, a provision for impairment is

recorded for the difference.

This value is estimated at the proportionate share of net assets, which

may be corrected, if need be, based on the profitability outlook for the

concerned subsidiary.

If the subsidiary’s net position is negative, an impairment for

receivables due and a provision for risks and expenses may also be

recognised (see Note10.1).

The increase in shareholdings over the financial year mainly concerns the

recapitalisation of certain subsidiaries.

As at 31December 2021, Hermès International held 78,373 treasury

shares (liquidity contract and unallocated shares intended for external

growth operations). These shares were valued on the basis of their

The breakdown of other financial assets by maturity is as follows:

acquisition price. The average price of treasury shares as at

31December 2021 was €282.91.

Impairment in the amount of €928 million is made up of the cumulative

amount of impairment on investment securities.

In millions of euros

2021 2020

Interest and similar income 5 10

Foreign exchange gains and losses (10) (8)

Interest and similar expenses (6) (3)

Net income from disposals of marketable securities (0) (1)

OTHER ELEMENTS OF NET FINANCIAL INCOME (11) (3)

In millions of euros

Note 31/12/2020 Increases Decreases Other 31/12/2021

Affiliates 7.3 1,402 180 (8) - 1,575

Other financial assets 265 185 (4) - 446

Financial investments 233 185 (0) 418

Treasury shares (including liquidity contract) 26 (4) 22

Deposits and guarantees 6 0 (0) 7

Other long-term investments 3 0 (0) - 3

Total gross values 1,670 365 (12) - 2,024

Impairment (770) (928) 746 - (952)

TOTAL NET VALUES 901 (563) 734 - 1,072

31/12/2021 31/12/2020

In millions of euros

< 1year

Between

1 and 5years

Gross

amount Impairment Net amount Net amount

Other financial assets 35 411 446 (24) 423 242

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 423

PARENT COMPANY FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

7.3

Table of subsidiaries and affiliates

7.3.1 DETAILED INFORMATION ON SUBSIDIARIES IN WHICH THE GROSS VALUE OF SECURITIES HELD EXCEEDS 5% OF THE SHARE

CAPITAL OF HERMÈS INTERNATIONAL

7.3.2 TOTAL EQUITY AND NET INCOME OF SUBSIDIARIES

In millions of euros

Number

of shares

Share of

capital held

in %

Gross value of

securities held

Net value of

securities held

Dividends

received over the

financial year

Subsidiaries (at least 50% owned by the Company)

Castille Investissements 9,650,000 100% 309 -

CHP3 50,050,000 100% 50 39

Compagnie Hermès de Participations 4,200,000 100% 42 42

Comptoir Nouveau de la Parfumerie 756,000 99.67% 27 27 3

Grafton Immobilier 5,174,500 100% 83 83

Herlee 65,000,000 76.92% 20 20 386

Hermès Argentina 1,367,096 99.85% 7 2

Hermès Asia-Pacific 315,000,000 100% 43 43

Hermès Australia 6,500,000 100% 4 4

Hermès Benelux Nordics 57,975 99.99% 3 3 5

Hermès Brazil 43,404,647 99.99% 13 -

Hermès Cuirs Précieux 6,400,000 100% 382 -

HermèsGmbH 1 100% 7 7 9

Hermès Holding GB 7,359,655 100% 11 11

Hermès Iberica 69,312 100% 5 5

Hermès Immobilier Genève 70,000 100% 44 44

Hermès Istanbul 260,000 100% 3 3 2

Hermès Italy 458,000 100% 25 25

Hermès Japan 4,400 100% 14 14 153

Hermès Of Paris 114,180 100% 11 11

Hermès Sellier 311,000 99.77% 5 5 481

Holding Textile Hermès 46,686,464 96.71% 91 75

Immobilière de la Maroquinerie de Guyenne 10,000 100% 9 -

John Lobb 3,773,590 100% 29 -

Manufactures d’Auvergne 500,000 100% 21 -

Manufactures de Franche-Comté 500,000 100% 32 8

Maroquinerie de Montereau 500,000 100% 10 -

Maroquinerie de Normandie 500,000 100% 19 -

Maroquinerie de Saint-Antoine 500,000 100% 15 0

Maroquinerie des Alpes 500,000 100% 30 -

Maroquinerie des Ardennes 284,063 100% 11 6

Maroquinerie du Sud-Ouest 500,000 100% 29 -

SCI Honossy 210,100 99.99% 3 3

SCI Auger-Hoche 126,946,400 99.99% 131 131

Subsidiaries subtotal 1,539 610 1,039

TOTAL FOR ALL SUBSIDIARIES AND AFFILIATES 1,573 644 1,246

In millions of euros

Total equity of foreign subsidiaries (net income excluded) 918

Total net income of foreign subsidiaries 1,597

Total equity of French subsidiaries (net income excluded) 541

Total net income of French subsidiaries 740

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL424

PARENT COMPANY FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

Borrowings and financial liabilities correspond to funds held in trust for employees under the statutory employee profit-sharing plan.Borrowings and financial liabilities correspond to funds held in trust for employees under the statutory employee profit-sharing plan.

7.4

Marketable securities

Accounting principles

The gross value of marketable securities is their acquisition cost less

incidental expenses. Marketable securities are valued at the lower of

acquisition cost or market value, calculated separately for each

category of securities.

In the event that part of a line of securities is sold, proceeds on

disposals are calculated using the First-In, First-Out method (FIFO).

Treasury shares that are specifically allocated to covering employee

share plans or stock options are recorded under marketable

securities.

An impairment is accrued in an amount representing the difference

between the purchase price of the shares and the option exercise

price, if the purchase price is more than the exercise price.

In the event of a decrease in the stock market price, a provision for

impairment is recognised for treasury shares that are not specifically

allocated. It is calculated as the difference between the net carrying

amount of the shares and the average stock market price for the

month immediately preceding the closing date, weighted by the

exchanged volumes.

In addition, financial instruments are used in connection with the

management of the Company’s treasury investments. Gains and

losses on interest rate differentials and any corresponding premiums

are recognised on an accrual basis.

Treasury shares correspond to 846,780 Hermès International shares

held under free share allocation plans for employees (compared with

883,605shares as at 31December 2020).

These shares were valued on the basis of their acquisition price. The

average price of treasury shares as at 31December 2021 was €625.10.

During 2021, Hermès International acquired 142,131shares for an

amount of €162million and granted 178,956 free shares to employees

for an amount of €70million.

7.5

Net cash position

Treasury shares are excluded from the marketable securities presented in net cash position.

7.6

Financial liabilities

The breakdown of financial liabilities by maturity is as follows:

In millions of euros

31/12/2021 31/12/2020

Open-ended investment companies (SICAVs) and mutual funds 1,242 319

Negotiable debt securities 2,655 2,585

Treasury shares 529 437

Total gross values 4,426 3,341

Impairment (3) (0)

TOTAL NET VALUES 4,424 3,340

In millions of euros

2021 2020

Marketable securities (excluding treasury shares) 3,894 2,903

Cash at bank and in hand 1,156 713

Bank overdrafts 0 (1)

NET CASH POSITION 5,050 3,615

31/12/2021 31/12/2020

In millions of euros

< 1year

Between

1 and 5years Net amount Net amount

Bank borrowings 0 - 0 1

Miscellaneous borrowings and financial liabilities 4 22 26 26

FINANCIAL LIABILITIES 4 22 26 27

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 425

PARENT COMPANY FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

NOTE8

MANAGEMENT OF MARKET RISKS AND DERIVATIVES

Most of the Company’s foreign exchange risk exposure comes from the

sales of its production subsidiaries denominated in foreign currencies.

This risk is generally fully hedged, based on highly probable future cash

flows, using forward currency sales or options that are eligible for hedge

accounting.

8.1

Treasury and foreign exchange transactions

Accounting principles

Income and expense items expressed in foreign currencies are

converted into euros at the hedged exchange rate. Payables,

receivables, and cash expressed in currencies outside of the euro

zone are shown on the balance sheet at the hedged exchange rate or

at the closing rate if they are not hedged. In this case, differences

arising from the reconversion of payables and receivables at the

closing rate are recorded in the balance sheet. A provision for

contingencies is established for the entire value of unrealised foreign

exchange losses. Premiums on foreign currency options are recorded

through profit or loss on the maturity date.

8.2

Net currency position

In millions of euros

Monetary

assets/(liabilities)

Future cash

flows

Net position

before

hedging Derivatives

Net position

after

hedging

Hedging

ratio

Sensitivity

of 10%

As at 31/12/2021

Hong Kong dollar (321) 2 (319) 319 0 100% 0

US dollar (228) 12 (216) 219 3 101% 0

Swiss franc 46 10 57 (56) 1 99% 0

Chinese yuan 18 15 33 (41) (7) 122% (1)

Singapore dollar (32) 6 (26) 27 0 102% 0

Australian dollar 46 10 57 (56) 1 99% 0

Pound sterling 17 1 17 (17) 0 99% 0

Japanese yen (0) 5 5 (5) (0) 105% (0)

Other (9) (7) (16) 16 (0) 98% (0)

SUMMARY (463) 55 (408) 405 (3) 99% (0)

As at 31/12/2020

Australian dollar 45 2 47 (48) (1) 102% (0)

Swiss franc 36 8 44 (44) (0) 100% (0)

Hong Kong dollar 38 4 42 (48) (6) 114% (1)

Singapore dollar (37) 7 (30) 30 (0) 100% (0)

Chinese yuan 15 12 26 (26) 1 96% 0

Japanese yen 0 9 10 (9) 0 98% 0

US dollar (19) 15 (3) 2 (1) 75% (0)

Other 45 4 49 (48) 1 98% 0

SUMMARY 123 61 184 (189) (5) 103% (1)

Purchase/(Sale).(1)

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL426

PARENT COMPANY FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

(1) Gain/(Loss).

(2) (Purchase)/Sale.

8.3

Breakdown of foreign exchange contracts

Hedging operations are performed over-the-counter, exclusively with leading banks. The Company therefore does not incur any significant counterparty

risk.

In millions of euros

Nominal amounts

of derivatives

Nominal amounts of derivatives

used to hedge foreign

exchange risk

Market value of contracts

as at31/12/2021

Options purchased

Chinese yuan puts 99 99 1

Chinese yuan collars 296 296 (3)

US dollar puts 65 65 0

US dollar collars 259 259 (2)

Singapore dollar puts 57 57 0

Singapore dollar collars 227 227 (1)

Hong Kong dollar puts 48 48 0

Hong Kong dollar collars 193 193 (1)

Japanese yen puts 38 38 1

Japanese yen collars 191 191 3

1,472 1,472 (1)

Forward foreign exchange contracts

Chinese yuan (380) (380) 32

US dollar (312) (312) 17

Singapore dollar (278) (278) 14

Hong Kong dollar (238) (240) 12

Japanese yen (224) (224) 1

Other 25 25 (1)

(1,406) (1,408) 74

Currency swaps

Hong Kong dollar (322) (323) 3

US dollar (231) (230) 4

Singapore dollar (32) (32) 0

Chinese yuan 25 (11) (0)

Swiss franc 46 46 (0)

Japanese yen 0 0 0

Other 43 33 (0)

(470) (518) 6

TOTAL (405) (455) 79

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 427

PARENT COMPANY FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

(1) Gain/(Loss).

(2) (Purchase)/Sale.

In millions of euros

Nominal amounts

of derivatives

Nominal amounts of derivatives

used to hedge foreign

exchange risk

Market value of contracts

as at31/12/2020

Options purchased

US dollar puts 69 69 5

US dollar collars 146 146 14

Hong Kong dollar puts 51 51 4

Hong Kong dollar collars 111 111 10

Chinese yuan puts 94 94 3

Chinese yuan collars 227 227 8

Japanese yen puts 49 49 2

Japanese yen collars 156 156 8

Singapore dollar puts 67 67 2

Singapore dollar collars 145 145 6

1,115 1,115 64

Forward foreign exchange contracts

Chinese yuan (308) (308) 2

Singapore dollar (206) (206) (4)

US dollar (200) (203) (13)

Japanese yen (195) (192) (8)

Hong Kong dollar (158) (162) (10)

Other 24 24 0

(1,044) (1,048) (34)

Currency swaps

Australian dollar 46 47 (1)

Hong Kong dollar 44 33 0

Singapore dollar (37) (37) 0

US dollar (18) (22) (0)

Chinese yuan 14 15 (0)

Japanese yen 0 (8) 0

Other 70 59 (0)

118 86 (1)

TOTAL 189 153 29

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL428

PARENT COMPANY FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

NOTE 9

SHARE CAPITAL

As at 31December 2021, Hermès International’s share capital amounted to €53,840,400.12, made up of 105,569,412shares with a par value of

€0.51 each, unchanged from 31December 2020.

NOTE10

PROVISIONS FOR RISKS AND EXPENSES – OFF-BALANCE SHEET COMMITMENTS

Accounting principles

Provisions for risks and expenses include retirement costs and the

cost of free shares for all Group employees; they are recognised in

operating income for the employees of Hermès International, and are

transferred to extraordinary income for the other employee

beneficiaries of subsidiaries.

10.1

Provisions for risks and expenses

Other provisions for liabilities and expenses mainly include net pre-financing commitments for retirement benefits and long-service awards for an

amount of €120million as at 31December 2021 (see Note3.3). The change in “Other” corresponds to the change in method made during the

financial year (see Note1).

10.2

Off-balance sheet commitments

The bank guarantees subscribed on behalf of the subsidiaries are the

subject of commissions that are re-invoiced to them.

The other commitments concern real estate leases signed or guaranteed

by Hermès International.

Moreover, two sureties have been granted to the HSBC and BNP Paribas

banks for a maximum amount of €75million and €100million to give

subsidiaries designated by Hermès International access to an aggregate

group banking facility. The amounts drawn by the subsidiaries are

re-invoiced on the basis of market conditions. As at 31December 2021,

the amounts drawn on these credit facilities amounted to €14million and

€15million, respectively.

Reversals

In millions of euros

Note 31/12/2020 Allocations

Provisions

used

Unused

provisions Other

31/12/2021

Free share plans 3.4 126 (70) 101

185

Net negative position of subsidiaries 31 (5) 31

Other provisions for risks and expenses 10 (1) (0) 69 133

PROVISIONS FOR RISKS AND EXPENSES 86 (71) (5) 69 264

In millions of euros

31/12/2021 31/12/2020

Bank guarantees given 2 2

Irrevocable commitments to purchase financial assets 9 21

Other commitments 149 183

TOTAL 160 206

◆

Émile HermèsSAS, Active partner (see chapter 3 "Corporate

governance", § 3.3.1): each year, Hermès International pays 0.67% of

its distributable profit for the financial year to the Active partner.

In addition, Hermès International charges Émile HermèsSAS for

certain service provisions and expenses incurred. Hermès

International charged back €0.7million in this respect in 2021

(including €0.5million in respect of services provided);

◆

trademark license agreements: Hermès International receives brand

royalties from Hermès Sellier (€211million), Comptoir Nouveau de la

Parfumerie (€20million) and La Montre Hermès (€9million);

◆

Studio des Fleurs: Studio des Fleurs offers photography and

retouching services for packshots of e-commerce products. The

amounts paid in 2021 came to €3.2million.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 429

PARENT COMPANY FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

NOTE 11

RELATED-PARTY TRANSACTIONS

Related-party transactions were not material during financial year 2021

in comparison with the overall activities of Hermès International.

The companies mentioned below are considered related parties insofar

as certain members of management of the Company or certain members

of the Supervisory Board or Executive Management Board of Émile

HermèsSAS have personal interests therein and exercise significant

influence.

The most significant relationships with related parties are summarised as

follows:

NOTE 12

EVENTS AFTER THE REPORTING PERIOD

None.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL430

PARENT COMPANY FINANCIAL STATEMENTS

TABLE OF RESULTS OVER THE LAST FIVE YEARS

6.6

TABLE OF RESULTS OVER THE LAST FIVE YEARS

Subject to the decisions of the Ordinary General Meeting of 20 April 2022. A dividend of €8.00 will be proposed, including an interim payment of €2.50 paid in(1)

February 2022.

(2) Including an extraordinary dividend of €5.00.

(3) Since 2017, the expenses included in this figure, relating to free share plans, are limited to Company employees (see § 6.5, Note 3.2).

2021 2020 2019 2018 2017

Share capital at the end of the financial year

Share capital

(in millions of euros)

54 54 54 54 54

Number of shares outstanding 105,569,412 105,569,412 105,569,412 105,569,412 105,569,412

Comprehensive income from operations

(in millions of euros)

Revenue excluding taxes 396 318 315 248 217

Net income before tax, employee profit-sharing, depreciation,

amortisation, provisions and impairment 1,350 1,417 1,755 1,338 843

Income tax (13) 22 (7) 7 24

Employee profit-sharing (6) (4) (5) (5) (5)

Net income after tax, employee profit-sharing, depreciation,

amortisation, provisions and impairment 1,165 1,343 1,653 1,239 778

Distributed income (including treasury shares) 852 489 539 489 966

Earnings per share

(in euros)

Net income after tax and employee profit-sharing but before

depreciation, amortisation, provisions and impairment 12.61 13.60 16.51 12.69 8.17

Net income after tax, employee profit-sharing, depreciation,

amortisation, provisions and impairment 11.04 12.72 15.66 11.73 7.37

Net dividend paid per share 8.00

4.55

4.55 4.55 9.10

Employees

Number of employees

(average workforce)

524 497 448 414 399

Total payroll

(in millions of euros)

(78) (71) (63) (54) (49)

Employee benefits paid in the year

(in millions of euros)

(35)

(37)

(38)

(31)

(29)

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 431

PARENT COMPANY FINANCIAL STATEMENTS

INFORMATION ON PAYMENT TERMS

6.7

INFORMATION ON PAYMENT TERMS

Invoices received, due but not paid at year-end closing date (table provided for under I of Article

D.441-6 of the French Commercial Code (Code de commerce)

Article D. 441-6, I. 1 of the French Commercial Code (Code de commerce): Invoices received,

due but not paid at year-end closing date

Invoices issued, due but not paid at year-end closing date (table provided for under I of Article

D.441-6 of the French Commercial Code (Code de commerce)

Article D.441-6, I. 2: of the French Commercial Code (Code de commerce): Invoices issued, due

but not paid at year-end closing date

0 days

(indicative) 1 to 30 days 31 to 90 days 91 days and over

Total

(1 day and over)

(A) Late payment tranches

Number of invoices involved 4

Total amount of invoices involved excluding tax

(in millions of euros) 0 0 0 0

Percentage of the total amount of purchases excluding

tax

for the financial year 0% 0% 0% 0%

Percentage of revenue excluding tax for the financial year

(B) Invoices excluded from (A) in connection with doubtful payables and receivables that are disputed or not recognised

Number of invoices excluded

Total amount of excluded invoices

(C) Reference payment deadlines used (contractual or statutory deadline – Article L.441-6 or Article L.443-1 of the French Commercial Code

(Code de commerce))

Reference payment deadlines used for calculating late

payments Legal deadline

0 days

(indicative) 1 to 30 days 31 to 90 days 91 days and over

Total

(1 day and over)

(A) Late payment tranches

Number of invoices involved 343

Total amount of invoices involved excluding tax

(in millions of euros) 2 6 16 24

Percentage of the total amount of purchases excluding tax for the financial year

Percentage of revenue excluding tax for the financial

year 0% 1% 4% 6%

(B) Invoices excluded from (A) in connection with doubtful payables and receivables that are disputed or not recognised

Number of invoices excluded

Total amount of excluded invoices

(C) Reference payment deadlines used (contractual or statutory deadline – Article L.441-6 or Article L.443-1 of the French Commercial Code

(Code de commerce))

Reference payment deadlines used for calculating late payments Legal deadline

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL432

PARENT COMPANY FINANCIAL STATEMENTS

OTHER INFORMATION ON THE PARENT COMPANY FINANCIAL STATEMENTS

6.8

OTHER INFORMATION ON THE PARENT COMPANY

FINANCIAL STATEMENTS

6.8.1

INFORMATION ON BRANCHES

In application of Article L.232-1 of the French Commercial Code (Code de commerce), the following list details branches (secondary establishments)

of the Company as at 31December 2021:

6.8.2

INFORMATION ON THE AMOUNT OF INTER-COMPANY LOANS

Hermès International did not grant any inter-company loans (loans of less than two years granted to micro-companies or small and medium-sized

companies with which Hermès International has economic links) in 2021.

6.8.3

EQUITY INVESTMENTS IN COMPANIES HAVING THEIR REGISTERED OFFICE IN FRANCE

(ARTICLE L.233-6 OF THE FRENCH COMMERCIAL CODE (CODE DE COMMERCE))

In 2021, Hermès International did not make any equity investments in companies with their registered office in France.

Address SIRET

Paris

13-15, rue de la Ville-l’Évêque 75008 Paris 572 076 396 00173

10-12, rue d’Anjou 75008 Paris 572 076 396 00215

51, rue François 1

75008 Paris 572 076 396 00132

20, rue de la Ville-l’Évêque 75008 Paris 572 076 396 00090

27, rue de la Ville-l’Évêque 75008 Paris 572 076 396 00181

8, rue de Penthièvre 75008 Paris 572 076 396 00231

Pantin

48, rue Auger 93500 Pantin 572 076 396 00223

110 B, avenue du Général-Leclerc 93500 Pantin 572 076 396 00207

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 433

PARENT COMPANY FINANCIAL STATEMENTS

STATUTORY AUDITORS’ REPORT ON THE FINANCIAL STATEMENTS

6.9

STATUTORY AUDITORS’ REPORT ON THE FINANCIAL STATEMENTS

(For the year ended 31December2021)

This is a free translation into English of the Statutory Auditors’ report issued in French and is provided solely for the convenience of English-speaking

readers. This report includes information specifically required by European regulations or French law, such as information about the appointment of

Statutory Auditors. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards

applicable in France.

To the Shareholders,

OPINION

In compliance with the engagement entrusted to us by your General Meeting, we have audited the accompanying financial statements of Hermès

International for the year ended 31December2021.

In our opinion, the financial statements give a true and fair view of the assets and liabilities and of the financial position of the Company at

31December2021 and of the results of its operations for the year then ended in accordance with French accounting principles.

The audit opinion expressed above is consistent with our report to the Audit and Risk Committee.

BASIS FOR OPINION

Audit framework

We conducted our audit in accordance with professional standards applicable in France. We believe that the audit evidence we have obtained is

sufficient and appropriate to provide a basis for our opinion.

Our responsibilities under these standards are further described in the “Responsibilities of the Statutory Auditors relating to the audit of the financial

statements” section of our report.

Independence

We conducted our audit engagement in compliance with the independence rules provided for in the French Commercial Code (Code de commerce) and

the French Code of Ethics (Code de déontologie) for Statutory Auditors for the period from 1January2021 to the date of our report, and, in particular,

we did not provide any non-audit services prohibited by article5(1) of Regulation (EU) No.537/2014.

Emphasis of matter

Without qualifying our opinion, we draw your attention to the matter set out in Note1 to the financial statements, which describes the change of

accounting policy regarding the recognition of retirement benefit obligations.

JUSTIFICATION OF ASSESSMENTS – KEY AUDIT MATTERS

Due to the global crisis related to the Covid-19 pandemic, the financial statements of this period have been prepared and audited under specific

conditions. Indeed, this crisis and the exceptional measures taken in the context of the state of sanitary emergency have had numerous consequences

for companies, particularly on their operations and their financing, and have led to greater uncertainties on their future prospects. Those measures,

such as travel restrictions and remote working, have also had an impact on the companies’ internal organisation and the performance of the audits.

It is in this complex and evolving context that, in accordance with the requirements of articlesL.823-9 and R.823-7 of the French Commercial Code

relating to the justification of our assessments, we inform you of the key audit matters relating to the risks of material misstatement that, in our

professional judgement, were the most significant in our audit of the financial statements, as well as how we addressed those risks.

These matters were addressed as part of our audit of the financial statements as a whole, and therefore contributed to the opinion we formed as

expressed above. We do not provide a separate opinion on specific items of the financial statements.

◆

assessing the process used by the Company to determine the balance sheet value of equity investments;

◆

verifying that the criteria applied by management to determine the balance sheet value are appropriate and that any impairment calculated based

on those values is correct;

◆

verifying that the equity values used are consistent with the consolidation packages of the entities concerned, in particular for measurements based

on historical data.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL434

PARENT COMPANY FINANCIAL STATEMENTS

STATUTORY AUDITORS’ REPORT ON THE FINANCIAL STATEMENTS

Measurement of equity investments – Note7.2 to the financial statements

Description of risk

At 31December2021, equity investments were recognised in the balance sheet at a gross value of €1,575million and a net value of €647million.

They are carried at acquisition cost, excluding incidental expenses.

As indicated in Note7.2 “Financial assets” to the financial statements, the balance sheet value is estimated based on the proportionate share of net

assets, which may be corrected, if need be, based on the profitability outlook for the concerned subsidiary. If the subsidiary’s net position is negative,

an impairment for receivables due and a provision for risks and expenses may also be recognised.

Given the materiality of equity investments in the balance sheet, the significant judgement exercised by management to estimate the balance sheet

value and the sensitivity to changes in the assumptions underlying the estimated values, we deemed the measurement of the balance sheet value of

equity investments to be a key audit matter.

How our audit addressed this risk

Based on the information provided to us, our work consisted primarily in:

In addition to assessing the balance sheet value of equity investments, our work also consisted in verifying, where applicable, the recognition of

impairment for receivables due, and a provision for risks in cases where the Company is liable for the losses of a subsidiary with negative equity.

SPECIFIC VERIFICATIONS

In accordance with professional standards applicable in France, we have also performed the specific verifications required by French legal and

regulatory provisions.

Information given in the management report and in the other documents provided to the shareholders with respect to the

Company’s financial position and the financial statements

We have no matters to report as to the fair presentation and the consistency with the financial statements of the information given in the management

report prepared by Executive Management and in the other documents provided to the shareholders with respect to the Company’s financial position

and the financial statements.

We attest to the fair presentation and the consistency with the financial statements of the information about payment terms referred to in

articleD.441-6 of the French Commercial Code.

Report on corporate governance

We attest that Executive Management’s report on corporate governance sets out the information required by articlesL.225-37-4, L.22-10-10 and

L.22-10-9 of the French Commercial Code.

Concerning the information given in accordance with the requirements of articleL.22-10-9 of the French Commercial Code relating to remuneration and

benefits paid or awarded to corporate officers and any other commitments made in their favour, we have verified its consistency with the financial

statements or with the underlying information used to prepare these financial statements, and, where applicable, with the information obtained by the

Company from controlled companies within its scope of consolidation. Based on this work, we attest to the accuracy and fair presentation of this

information.

Concerning the information given in accordance with the requirements of articleL.22-10-11 of the French Commercial Code relating to those items the

Company has deemed liable to have an impact in the event of a takeover bid or exchange offer, we have verified its consistency with the underlying

documents that were disclosed to us. Based on this work, we have no matters to report with regard to this information.

Other information

In accordance with French law, we have verified that the required information concerning the identity of the shareholders and holders of the voting

rights has been properly disclosed in the management report.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 435

PARENT COMPANY FINANCIAL STATEMENTS

STATUTORY AUDITORS’ REPORT ON THE FINANCIAL STATEMENTS

OTHER VERIFICATIONS AND INFORMATION PURSUANT TO LEGAL AND REGULATORY REQUIREMENTS

Presentation of the financial statements to be included in the annual financial report

In accordance with professional standards applicable to the Statutory Auditors’ procedures for annual and consolidated financial statements presented

according to the European single electronic reporting format, we have verified that the presentation of the financial statements to be included in the

annual financial report referred to in paragraphI of articleL.451-1-2 of the French Monetary and Financial Code (Code monétaire et financier) and

prepared under Executive Management’s responsibility, complies with this format, as defined by European Delegated Regulation No.2019/815 of

17December2018.

On the basis of our work, we conclude that the presentation of the financial statements to be included in the annual financial report complies, in all

material respects, with the European single electronic reporting format.

It is not our responsibility to ensure that the financial statements to be included by the Company in the annual financial report filed with the AMF

correspond to those on which we carried out our work.

Appointment of the Statutory Auditors

We were appointed Statutory Auditors of Hermès International by the General Meetings held on 30May2011 for PricewaterhouseCoopers Audit and on

31May1999 for Didier Kling & Associés, now Grant Thornton Audit.

At 31December2021, PricewaterhouseCoopers Audit and Grant Thornton Audit were in the eleventh and the twenty-third consecutive year of their

engagement, respectively.

RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE FINANCIAL

STATEMENTS

Management is responsible for preparing financial statements giving a true and fair view in accordance with French accounting principles, and for

implementing the internal control procedures it deems necessary for the preparation of financial statements that are free of material misstatement,

whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as

applicable, matters related to going concern, and using the going concern basis of accounting, unless it expects to liquidate the Company or to cease

operations.

The Audit and Risk Committee is responsible for monitoring the financial reporting process and the effectiveness of internal control and risk

management systems, as well as, where applicable, any internal audit systems, relating to accounting and financial reporting procedures.

The financial statements were approved by Executive Management.

RESPONSIBILITIES OF THE STATUTORY AUDITORS RELATING TO THE AUDIT OF THE FINANCIAL

STATEMENTS

Objective and audit approach

Our role is to issue a report on the financial statements. Our objective is to obtain reasonable assurance about whether the financial statements as a

whole are free of material misstatement. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in

accordance with professional standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are

considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions taken by users on the

basis of these financial statements.

As specified in articleL.823-10-1 of the French Commercial Code, our audit does not include assurance on the viability or quality of the Company’s

management.

◆

identify and assess the risks of material misstatement in the financial statements, whether due to fraud or error, design and perform audit

procedures in response to those risks, and obtain audit evidence considered to be sufficient and appropriate to provide a basis for their opinion.

The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,

forgery, intentional omissions, misrepresentations, or the override of internal control;

◆

obtain an understanding of the internal control procedures relevant to the audit in order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control;

◆

evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management and the related

disclosures in the notes to the financial statements;

◆

assess the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a

material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern.

This assessment is based on the audit evidence obtained up to the date of the audit report. However, future events or conditions may cause the

Company to cease to continue as a going concern. If the Statutory Auditors conclude that a material uncertainty exists, they are required to draw

attention in the audit report to the related disclosures in the financial statements or, if such disclosures are not provided or are inadequate, to issue

a qualified opinion or a disclaimer of opinion;

◆

evaluate the overall presentation of the financial statements and assess whether these statements represent the underlying transactions and

events in a manner that achieves fair presentation.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL436

PARENT COMPANY FINANCIAL STATEMENTS

STATUTORY AUDITORS’ REPORT ON THE FINANCIAL STATEMENTS

As part of an audit conducted in accordance with professional standards applicable in France, the Statutory Auditors exercise professional judgement

throughout the audit. They also:

Report to the Audit and Risk Committee

We submit a report to the Audit and Risks Committee which includes, in particular, a description of the scope of the audit and the audit programme

implemented, as well as the results of our audit. We also report any, significant deficiencies in internal control that we have identified regarding the

accounting and financial reporting procedures.

Our report to the Audit and Risks Committee includes the risks of material misstatement that, in our professional judgement, were the most significant

for the audit of the financial statements and which constitute the key audit matters that we are required to describe in this report.

We also provide the Audit and Risk Committee with the declaration provided for in article6 of Regulation (EU) No.537/2014, confirming our

independence within the meaning of the rules applicable in France, as defined in particular in articlesL.822-10 to L.822-14 of the French Commercial

Code and in the French Code of Ethics for Statutory Auditors. Where appropriate, we discuss any risks to our independence and the related safeguard

measures with the Audit and Risk Committee.

Neuilly-sur-Seine, 3March2022

The Statutory Auditors

PricewaterhouseCoopers

Olivier Auberty

Grant Thornton Audit

Vincent Frambourt

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 437

PARENT COMPANY FINANCIAL STATEMENTS

STATUTORY AUDITORS’ REPORT ON THE FINANCIAL STATEMENTS

7.1.1

General information about Hermès International

440

7.1.2

Role of Hermès International

440

7.1.3

Commented Articles of Association of Hermès International

440

7.1.4

Simplified organisation chart and main subsidiaries

448

7.1.5

Principal flows between Hermès International and the main subsidiaries

449

7.1.6

Hermès Group tax policy

449

7.1.7

Investments

449

7.2.1

Information on share capital

450

7.2.2

Information on shareholders

450

7.2.3

Transactions performed by Corporate Officers and those close to them on the

shares of the Company

457

7.2.4

Stock Market Ethics Code

458

7.2.5

Material contracts, shareholder pacts and agreements

459

7.3.1

Principles

461

7.3.2

Proposal submitted to the 2022 General Meeting

461

7.4.1

Summary of stock market information

462

7.4.2

History of monthly transactions

462

7.4.3

Hermès share price history

463

7.4.4

Elements liable to have an impact in the event of a public offering

465

7.5.1

Relations with shareholders

466

7.5.2

Securities Service

466

7.5.3

Documents available to the public

466

7.5.4

Becoming a Hermès International shareholder

466

7.5.5

Dialogue with shareholders and the financial community in 2021

467

7.5.6

Financial calendar for 2022

468

7.5.7

Regulated information

468

7.5.8

Obligations of declaration of threshold crossings and nominative registration

468

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 439

INFORMATION ON THE COMPANY

AND ITS SHARE CAPITAL

7.1

PRESENTATION OF HERMÈS INTERNATIONAL

440

AFR

7.2

INFORMATION ON SHARE CAPITAL AND SHAREHOLDERS

450

7.3

DIVIDEND POLICY

461

7.4

STOCK MARKET INFORMATION

462

7.5

SHAREHOLDER INFORMATION

466

◆

to define the Group’s strategy and its focuses for development and

diversification;

◆

to oversee the operations of its subsidiaries and to provide corporate,

financial, legal and commercial assistance;

◆

to manage the Group’s real estate assets;

◆

to protect and defend its trademarks, designs, models, and patents;

◆

to maintain a documentation centre and make it available to the

subsidiaries;

◆

to ascertain that the style and image of each brand name is

consistent throughout the world and, for this purpose, to design and

orchestrate advertising campaigns, actions and publications to

support the various business activities;

◆

to provide guidance in design activities and to ensure that the

Hermès spirit is consistently applied in each métier. It derives its

funds from:

•

dividends received from subsidiaries,

•

royalties from trademarks, licensed exclusively to Group

subsidiaries, namely, Hermès Sellier, Le Comptoir Nouveau de la

Parfumerie and La Montre Hermès.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL440

INFORMATION ON THE COMPANY AND ITS SHARE CAPITAL

PRESENTATION OF HERMÈS INTERNATIONAL

7.1

PRESENTATION OF HERMÈS INTERNATIONAL

7.1.1

GENERAL INFORMATION ABOUT HERMÈS

INTERNATIONAL

Applicable legislation

French legislation.

Date of incorporation and expiry

The Company was incorporated on 1June 1938 and its duration is set to

expire as at 31December 2090.

Trade and Companies Register – LEI

The company Hermès International is registered with the Paris Trade and

Companies Register under number572076396, APE code 7010Z.

The LEI number of the Company is 969500Y4IJGHJE2MTJ13.

Financial year

The financial year begins on 1January and ends on 31December of the

same year.

Registered office - Principal, administrative headquarters

The registered office of Hermès International is located at 24, rue du

Faubourg Saint-Honoré, 75008 Paris, France.

The Company’s principal administrative headquarters and its legal

department are located at 13-15, rue de la Ville-l’Évêque, 75008 Paris,

France.

Website

The Company’s website can be accessed at the following address:

The information on this site does not form part of this universal

registration document unless it is incorporated by reference (see

chapter9 “Additional Information”, § 9.4).

Date of initial public offering

The company Hermès International was taken public on the Second

Marché of the Paris Stock Market on 3June 1993. It has been listed on

the Eurolist by Euronext (Compartment A) since 2005.

Hermès International was listed on the CAC40 index on18June 2018

and the EURO STOXX 50 index on 20December 2021.

Legal form

The company Hermès International was converted into a société

en commandite par actions (partnership limited by shares) by a

decision of the Extraordinary General Meeting held on

27December 1990, in order to preserve its identity and culture

and thus ensure its sustainability over the long term, in the

interests of the Group and all shareholders.

A presentation of this legal form and its governance can be found in

chapter3 “Corporate governance”, § 3.2.

7.1.2

ROLE OF HERMÈS INTERNATIONAL

Hermès International is the Group’s parent company. Its purpose is:

Hermès brands, which belong to Hermès International, are protected by

trademarks in many countries, for all categories of products in each of

the Group’s business sectors.

Hermès International’s scope of consolidation encompasses

133subsidiaries. A brief presentation of the Group can be found in

chapter1 “Presentation of the Group and its results”, in § 1.4.1.

7.1.3

COMMENTED ARTICLES OF ASSOCIATION

OF HERMÈS INTERNATIONAL

The texts of the rules of procedure of the Supervisory Board and its

committees, as well as the Articles of Association of the Company are

made available at each update, in English and French, and in full, at

Additional information is provided in insets in italics.

The Combined General Meeting of 4May 2021 amended

Articles1, 6.2, 14.3, 17, 19.2, 20.4 and 21.1 of the Articles of

Association to take into account the change in legal form of

Émile Hermès fromSARL toSAS. This change was part of the

transformation of Émile Hermès SARL – Active partner of

Hermès International – into a société par actions simplifiée

(simplified joint-stock company,SAS).

https://finance.hermes.com/en/

https://finance.hermes.com/en/governing-bodies-rules-procedure-

articles-association/.

◆

its Limited Partners; and

◆

its Active partner, Émile HermèsSAS with its registered office located

at 23, rue Boissy-d’Anglas in Paris (75008). The Company is

governed by the laws and regulations applicable to sociétés en

commandite par actions (partnership limited by shares) and by these

Articles of Association.

◆

the Active partner or Partners are jointly and severally liable for

all the Company’s debts, for an indefinite period of time;

◆

the Limited Partners (or shareholders), who contribute capital,

are liable in this capacity as shareholders only up to the amount

of their contribution;

◆

the same party may be both an Active partner and a Limited

Partner;

◆

one or more Executive Chairmen, selected from among the

Active partners or from outside the Company, are chosen to

manage the Company;

◆

the Supervisory Board is appointed by the Ordinary General

Meeting of Shareholders (the Active partners, even Limited

Partners, cannot participate in their appointment): it assumes

permanent control of the management of the Company and has

the same powers for this purpose as the Statutory Auditors.

◆

to acquire, hold, manage, and potentially sell direct or indirect equity

interests in any legal entity engaged in the creation, production

and/or sale of quality products and/or services, and, in particular, in

companies belonging to the Hermès Group;

◆

to provide guidance to the Group it controls, in particular by providing

technical assistance services in the legal, financial, corporate, and

administrative areas;

◆

to develop, manage and defend all rights it holds to trademarks,

patents, designs, models, and other intellectual or industrial property,

and in this respect, to acquire, sell or license such rights;

◆

to participate in promoting the products and/or services distributed

by the Hermès Group;

◆

to purchase, sell and manage all property and rights needed for the

Hermès Group’s business operations and/or for asset and cash

management purposes; and

◆

more generally, to engage in any business transaction of any kind

whatsoever in furtherance of the corporate purpose.

◆

to any other location in the same department, by a decision of the

Executive Management, subject to ratification of such decision at the

next Ordinary General Meeting; and

◆

to any other location, by a decision of the Extraordinary General

Meeting.

7.1 – The share capital may be increased either by the issuance of

ordinary shares or preference shares, or by increasing the par value of

existing equity securities.

7.2 – The General Meeting, voting in accordance with the quorum and

majority requirements stipulated by law, has the authority to decide to

increase the share capital. It may delegate this authority to the Executive

Management. The General Meeting that decides to effect a capital

increase may also delegate the power to determine the terms and

conditions of the issue to the Executive Management.

7.3 – In the event of a capital increase effected by capitalisation of sums

in the share premiums, reserves or retained earnings accounts, the

shares created to evidence the relevant capital increase shall be

distributed only among the existing shareholders, in proportion to their

rights to the share capital.

7.4 – In the event of a capital increase for cash, the existing share

capital must first be fully paid up. The shareholders have preemptive

subscription rights, which may be waived under the conditions stipulated

by law.

7.5 – Any contributions in kind or stipulation of special advantages made

at the time of a capital increase are subject to the approval and

verification procedures applicable to such contributions and instituted by

law.

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1 – Form

The Company is a société en commandite par actions (partnership

limited by shares) between:

The rules governing the operation of a société en commandite par

actions are the following:

2 – Purpose

The Company’s purpose, in France and in other countries, is:

3 – Company name

The Company’s name is “Hermès International”.

4 – Registered office

The Company’s registered office is located at 24, rue du Faubourg

Saint-Honoré, 75008 Paris, France.

It may be transferred:

5 – Duration

The Company will be dissolved automatically on 31December 2090,

unless it is dissolved previously or unless its duration is extended.

6 – Share capital – Contributions

6.1 – The share capital is €53,840,400.12.

It is made up of 105,569,412 shares, all of them fully paid up, which are

apportioned among the shareholders in proportion to their rights in the

Company.

6.2 – The Active partner, Émile HermèsSAS, has transferred its business

know-how to the Company, in consideration for its share of the profits.”

The par value of one share is €0.51, after two three-for-one

splits since the initial public offering, on 6June 1997 and

10June 2006.

7 – Increase and reduction of capital

7.6 – The Shareholders’ Extraordinary General Meeting, or the Executive

Management when granted special authority for this purpose, and

subject to protecting the rights of creditors, may also decide to reduce

the share capital. In no event shall such a capital reduction infringe upon

the principle of equal treatment of shareholders.

7.7 – The Executive Management has all powers to amend the Articles of

Association as a result of a capital increase or reduction and to

undertake all formalities in connection therewith.

8.1 – Payment in consideration for newly created shares may be made in

cash, including by set-off against liquid claims due by the Company; by

contributions in kind; by capitalisation of reserves, earnings or share

premiums; or as the result of a merger or demerger.

8.2 – Within the framework of resolutions adopted by the General

Meeting, the Executive Chairman calls the funds required to pay for the

shares.

12.1 – The shares are indivisible with regard to the Company. Co-owners

of undivided shares must be represented with regard to the Company

and at General Meetings by one of them only or by a single

representative. In the event of a disagreement, their representative shall

be appointed by the Court at the request of the co-owner who takes the

initiative to refer this matter to the Court.

12.2 – Each share shall give the holder the right to cast one vote at

General Meetings of shareholders.

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8 – Payment for shares

Any late payment of amounts due for the shares shall automatically bear

interest payable to the Company at the legal interest rate plus three

percentage points, and no legal action or formal notice shall be required

to collect such interest.

9 – Form of the shares

9.1 – All shares issued by the Company are in registered form until they

have been fully paid up. Fully-paid up shares maybe in registered or

bearer form, at the shareholder’s discretion. They are registered on a

securities account under the terms and conditions provided by law.

The General Meeting of 29May 2012 established the

requirement for holding shareholdings in registered form when

they exceed the 0.5% threshold; non-compliance with this

obligation to be sanctioned by the loss of voting rights.

9.2 – The Company may, at any time, in accordance with the applicable

laws and regulations, request communication from the central custodian

or any securities clearing organisation or authorised intermediary to

enable it to identify the owners of securities giving immediate or future

rights to vote at General Meetings, as well as the number of securities

held by each such owner and any restrictions that may apply to the

securities.

Clearing and settlement of the shares in France are carried out

by Euroclear.

Hermès International ordinarily exercises this option once a

year, as at 31December.

10 – Transfer of shares

Shares are freely transferable. Transfers are effected under the terms

and conditions provided by law.

11 – Crossing of threshold disclosures

Any natural person or legal entity, acting alone and/or jointly, coming into

possession, in any manner whatsoever, within the meaning of

ArticlesL.233-7 et seq. of the French Commercial Code (Code de

commerce), of a number of shares representing 0.5% of the share capital

and/or of the voting rights in General Meetings (or any multiple of this

percentage), at any time, even after attaining one of the thresholds

provided for by ArticlesL.233-7 et seq. of the French Commercial Code,

must, within five stock market trading days from the date this threshold is

exceeded, request the registration of their shares in nominative form.

This nominative registration requirement applies to all shares already

owned, as well as any that come into ownership beyond this threshold. A

copy of the nominative registration application, sent by registered post

with acknowledgement of receipt to the registered office within 10stock

market trading days from the date on which the threshold is attained,

shall constitute a declaration of attaining the ownership threshold in

question. The registration requirement for securities also applies to any

natural person or legal entity, acting alone and/or jointly, coming into

possession, in any manner whatsoever according to the meaning of

ArticlesL.233-7 et seq. of the French Commercial Code, of a number of

shares representing 0.5% of the share capital and/or of the voting rights

in General Meetings. These persons are given a period of 20stock

market trading days after the General Meeting on 29May 2012 to

comply with this obligation.

In the event of failure to comply with the above requirements, the shares

that exceed the threshold subject to disclosure or having been subject to

disclosure shall be disqualified from voting rights.

In the event of an adjustment, the corresponding voting rights can only be

exercised once the period stipulated by law and current regulations has

expired. Unless one of the thresholds covered by the aforementioned

ArticleL.233-7 is exceeded, this sanction shall be applied only at the

request of one or several shareholders individually or collectively holding

at least 0.5% of the Company’s share capital and/or voting rights and

duly recorded in the minutes of the General Meeting.

12 – Rights and obligations attached to the shares

However, double voting rights are allocated to:

◆

any fully-paid up registered share which has been duly recorded on

the books in the name of the same shareholder for a period of at

least four years from the date of the first General Meeting following

the fourth anniversary of the date when the share was registered on

the books; and

12.4 – Ownership of a share automatically entails compliance with the

Company’s Articles of Association and with resolutions duly adopted by

the Shareholders’ General Meeting.

12.5 – Whenever ownership of a certain number of shares is required in

order to exercise any right whatsoever, owners of single shares, or with

an insufficient number of shares, may only exercise such rights if they

personally arrange to consolidate their shares, or arrange for the

purchase or sale of a sufficient number of shares.

◆

shareholders, who are “Limited Partners”;

◆

Active partners.

14.1 – Active partners are jointly and severally liable for all the

Company’s debts, for an indefinite period of time.

14.2 – Each Active partner has the power to appoint and revoke the

appointment of any Executive Chairman, acting on the Supervisory

Board’s reasoned opinion under the conditions provided in the Article

entitled “Executive Management”.

•

strategic options,

•

consolidated operating and investment budgets, and

•

decide on any proposal submitted to the General Meeting

pertaining to the appropriation of share premiums, reserves or

retained earnings;

◆

may formulate recommendations to the Executive Management on all

issues of general interest to the Group;

◆

authorise any loans of Hermès International whenever the amount of

such loans exceeds 10% of the amount of the consolidated net worth

of the Hermès Group, as determined based on the consolidated

financial statements drawn up from the latest approved accounts (the

“Net Worth”);

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◆

any registered share allotted for no consideration to a shareholder, in

the event of a capital increase effected by capitalisation of sums in

the share premiums, reserves or retained earnings accounts, in

proportion to any existing shares which carry double voting rights.

The double voting right automatically ceases to exist in the conditions

stipulated by law.

Double voting rights were instituted by the Extraordinary General

Meeting of 27December 1990.

Voting rights attached to the shares are exercised by the bare owners at

all General Meetings (ordinary, extraordinary or special meetings), save

for decisions regarding the allocation of net income, in which case the

usufructuary shall exercise the voting rights.

This allocation was approved by the Extraordinary General

Meeting of 6June 2006.

12.3 – Each share gives the holder a right of ownership in the Company’s

assets, its profits, and any winding-up surplus, in proportion to the

percentage of ownership it represents.

All shares are of equal par value and are identical in all respects, except

with respect to the date on which they are eligible for the dividend.

13 – Death. Legal prohibition. Personal bankruptcy. Insolvency.

Receivership or compulsory liquidation of a partner

The Company has two classes of partners:

Since 1April 2006, there has been only one Active partner:

Émile HermèsSAS.

13.1 – Shareholders

The Company shall not be dissolved in the case of the death, legal

prohibition or personal bankruptcy of a shareholder, or due to the

initiation of insolvency, receivership or compulsory liquidation

proceedings against that shareholder.

13.2 – Active partner

13.2.1 – In the event that an Active partner should be prohibited by law

from engaging in a business profession, or in the case of personal

bankruptcy, or insolvency, receivership or compulsory liquidation

proceedings should be initiated against them, such Active partner shall

automatically lose their status as Active partner ipso jure; the Company

shall not be dissolved. Neither shall the Company be dissolved if an

Active partner who is a natural person and who was appointed Executive

Chairman ceases to hold this office.

If, as a result of this loss of status, the Company no longer has any Active

partners, a Shareholders’ Extraordinary General Meeting must be called

forthwith, either to appoint one or more new Active partners, or to change

the legal form of the Company. Such change does not entail the creation

of a new legal entity.

If an Active partner loses their status as such, they shall have the right to

receive their share of the Company’s profits, pro-rated until the day such

status is lost, in full settlement of all amounts due.

13.2.2 – The Company shall not be dissolved in the event of the death of

an Active partner. If, as a result of this death, the Company no longer has

any Active partners, a Shareholders’ Extraordinary General Meeting must

be called forthwith, either to appoint one or more new Active partners, or

to change the legal form of the Company. Such change does not entail

the creation of a new legal entity.

This also applies if the Company has only one Active partner and if that

Active partner loses their status as such for any reason whatsoever.

The beneficiaries, heirs, or the surviving spouse, if any, of the deceased

Active partner shall have the right to receive the deceased Active

partner’s share of the Company’s profits, pro-rated until the day such

status is lost, in full settlement of all amounts due.

14 – Responsibility and powers of the Active partner

Acting by unanimous consent, the Active partners:

◆

take the following decisions for the Group, on the Supervisory Board’s

recommendation:

◆

authorise any sureties, endorsements or guarantees and any pledges

of collateral and encumbrances on the Company’s property, whenever

the claims guaranteed amount to more than 10% of the Net Worth;

◆

authorise the creation of any company or the acquisition of an

interest in any commercial, industrial or financial operation, movable

or immovable property, or any other operation, in any form

whatsoever, whenever the amount of the investment in question

amounts to more than 10% of the Net Worth.

◆

the legal form of Émile HermèsSAS is that of a société par actions

simplifiée (simplified joint stock company) à capital variable (with

variable capital);

◆

the exclusive purpose of Émile HermèsSAS is:

•

to serve as Active partner and, if applicable, as Executive

Chairman of Hermès International,

•

potentially to own an equity interest in Hermès International, and

•

to carry out all transactions in view of pursuing and accomplishing

these activities and to ensure that any liquid assets it may hold are

appropriately managed;

◆

only the following may be partners in Émile HermèsSAS, or, more

generally, hold securities allowing them to become partners in Émile

HermèsSAS:

•

descendants of MrÉmile-Maurice Hermès and his wife, born Julie

Hollande, and

•

their spouses, but only as usufructuaries of the shares; and

14.4 – Any Active partner who is a natural person and who has been

appointed to the office of Executive Chairman shall automatically lose

their status as Active partner immediately upon termination of their office

of Executive Chairman for any reason whatsoever.

14.5 – All decisions of the Active partners are recorded in minutes, which

are entered in a special register.

◆

MrAxel Dumas, appointed by decision of the Active partner,

after receipt of the reasoned opinion of the Supervisory Board,

on 4June 2013 (effective 5June 2013);

◆

Émile HermèsSAS, which was appointed by a resolution,

approved by the Active partners, with the reasoned opinion of

the Supervisory Board, dated 14February 2006 (appointment

effective as of 1April 2006).

15.2 – The Executive Chairman’s term of office is open-ended. During

the Company’s lifetime, the power to appoint an Executive Chairman is

exclusively reserved for the Active partners, acting on the Supervisory

Board’s recommendation. Each Active partner may act separately in this

respect.

15.3 – The appointment of an Executive Chairman is terminated in the

case of death, disability, legal prohibition, or due to the initiation of

insolvency, receivership or compulsory liquidation proceedings against

that Executive Chairman; if the appointment is revoked; if the Executive

Chairman resigns; or when the Executive Chairman reaches the age of 75.

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14.3 – In order to maintain its status of Active partner, and failing which

it will automatically lose such status ipso jure, Émile HermèsSAS must

maintain in its Articles of Association clauses that, in their original

wording or in any new wording as may be approved by the Supervisory

Board of the present Company by a three-quarters majority of the votes

of members present or represented, stipulating the following:

◆

each partner of Émile HermèsSAS must have deposited, or arrange

to have deposited, shares in the present company in the corporate

accounts of Émile HermèsSAS in order to be a partner of this

company.

15 – Executive Management

15.1 – The Company is administered by one or two Executive Chairmen,

who may be, but are not required to be, Active partners in the Company.

If there are two Executive Chairmen, any provision of these Articles of

Association mentioning “the Executive Chairman” shall apply to each

Executive Chairman. The Executive Chairmen may act jointly or

separately.

The Executive Chairman may be a natural person or a legal entity, which

may be but is not required to be an Active partner.

At this time, the Company is administered by two Executive

Chairmen:

The Company shall not be dissolved in the event of the termination of

duties of an Executive Chairman for any reason whatsoever. An Executive

Chairman who wishes to resign must notify the Active partners and the

Supervisory Board thereof at least six months in advance, by registered

post, unless each of the Active partners, after soliciting the opinion of the

Supervisory Board, has agreed to reduce this notice period.

An Executive Chairman’s appointment can be revoked only by an Active

partner, acting on the Supervisory Board’s reasoned opinion. In the event

that the Supervisory Board recommends against revocation, the Active

partner in question must suspend its decision for a period of at least six

months. At the end of this period, if it persists in its wish to revoke the

appointment of the Executive Chairman in question, that Active partner

must again solicit the opinion of the Supervisory Board, and once it has

obtained a favourable recommendation from the Board, it may revoke the

appointment of that Executive Chairman.

16 – Authority of the Executive Management

16.1 – Relationships with third parties

Each Executive Chairman is invested with the broadest of powers to act

on the Company’s behalf, in all circumstances. They shall exercise these

powers within the scope of the corporate purpose and subject to those

powers expressly granted by law to the Supervisory Board and to

Shareholders’ General Meetings.

16.2 – Relationships among the partners

In relationships among partners, the Executive Management holds the

broadest of powers to undertake all management acts, but only if such

acts are in the Company’s interests and subject to those powers granted

to the Active partners and to the Supervisory Board by these Articles of

Association.

16.3 – Delegations

The Executive Chairmen may, under their responsibility, delegate all

powers as they see fit and as required for the proper operation of the

Company and its Group.

18.3 – No person over the age of 75 shall be appointed to the

Supervisory Board if, as a result of such appointment, more than

one-third of the Board members would be over that age.

18.4 – The appointments of Supervisory Board members can be revoked

by a resolution adopted by the Ordinary General Meeting only for cause,

on the joint recommendation of the Active partners, acting by unanimous

consent, and the Supervisory Board.

18.5 – In the event of a vacancy or vacancies caused by the death or

resignation of one or more Supervisory Board members, the Supervisory

Board may appoint an interim replacement member within three months

as from the effective date of the vacancy.

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They may issue a limited or unlimited blanket delegation of powers to one

or more Executives of the Company, who then take on the title of

Managing Director.

17 – Compensation of the Executive Management

The Executive Chairman (or, where there is more than one, each

Executive Chairman) shall have the right to receive compensation set by

the Articles of Association (“statutory compensation”) and, potentially,

additional compensation, the maximum amount of which shall be

determined by the Ordinary General Meeting, with the approval of the

Active partner or, if there are several Active partners, with their

unanimous approval.

The gross annual compensation set by the Articles of Association

(“statutory compensation”) of the Executive Chairman (or, where there is

more than one, of each Executive Chairman) for the financial year shall

not be more than 0.20% of the Company’s consolidated income before

tax for the previous financial year.

However, if there are more than two Executive Chairmen, the combined

total gross annual compensation set by the Articles of Association

(”statutory compensation”) of all Executive Chairmen shall not be more

than 0.40% of the Company’s consolidated income before tax for the

previous financial year.

Within the maximum amounts set forth herein, the Executive Management

Board of the Active partner, Émile HermèsSAS, shall determine the

effective amount of the annual compensation set by the Articles of

Association (”statutory compensation”) of the Executive Chairman (or,

where there is more than one, of each Executive Chairman).

Details on the compensation policy for Executive Chairmen are

presented in the Supervisory Board report on corporate

governance (see chapter3 “Corporate governance”, § 3.8.1.1

and § 3.8.1.2).

18 – Supervisory Board

The composition of the Supervisory Board is described in the

Supervisory Board’s report on corporate governance (see

chapter3 “Corporate governance”, § 3.4.5). The provisions of

ArticleL.226-4-1 of the French Commercial Code (Code de

commerce) (by reference to ArticleL.22-70-74 of the same

code), which require that the proportion of members of the

Supervisory Board of each gender must not be below 40% and

that when the Board comprises a maximum of eight members,

the difference between the number of members of each gender

may not be higher than two, apply to and are followed by the

Company.

18.1 – The Company is governed by a Supervisory Board consisting of

three to 15members (not including employee representative members

appointed pursuant to the conditions of Article18.6 below), selected

from amongst shareholders who are neither Active partners, nor legal

representatives of an Active partner, nor the Executive Chairman. When

appointments to the Supervisory Board come up for renewal, the number

of Supervisory Board members is fixed by a decision adopted by the

Active partners by unanimous vote.

In a decision dated 23September 2019, the Active partner

increased the number of Supervisory Board members to 14

(including employee representatives) with effect from

12November 2019.

Supervisory Board members may be natural persons or legal entities.

At the time of their appointment, legal entities must designate a

Permanent Representative who is subject to the same terms, conditions

and obligations and incurs the same liabilities as if they were a

Supervisory Board member in their own name, without prejudice to the

joint and several liability of the legal entity they represent. The Permanent

Representative serves for the same term of office as the legal entity they

represent.

If the legal entity revokes its representative’s appointment, it is required

to notify the Company thereof forthwith by registered post, and to state

the identity of its new Permanent Representative. This requirement also

applies in the event the Permanent Representative should die, resign, or

become incapacitated for an extended period of time.

18.2 – Supervisory Board members are appointed or their terms are

renewed by the Shareholders’ Ordinary General Meeting. The Active

partners may, at any time, propose that one or more new Supervisory

Board member(s) be nominated.

Supervisory Board members are appointed for a term of three years. As

an exception to this rule, in order to ensure that one-third of the

Supervisory Board members will stand for re-election each year, the

General Meeting may decide to appoint one or more Board members for

one or two years, and who may be designated by drawing lots, as

necessary.

The General Meeting of 2June 2009 approved a provision

calling for one-third of Supervisory Board members to stand for

re-election each year.

However, if no more than two Supervisory Board members remain in

office, the member or members in office, or, in their absence, the

Executive Chairman, or in their absence, the Statutory Auditor or Auditors,

shall immediately call a Shareholders’ Ordinary General Meeting for the

purpose of filling the vacancies to bring the number of Board members

up to the required minimum.

18.6 – Where the provisions of ArticleL.225-79-2 of the French

Commercial Code (Code de commerce) are applicable to the Company, one

or more members, natural persons, representing the Group’s employees

◆

on the nomination and dismissal of any Executive Chairman of the

Company; and

◆

in the case of the Executive Chairman’s resignation, on reducing the

notice period.

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must be appointed under the conditions set by the above-mentioned

article. The number of Supervisory Board members taken into account,

when determining the number of employee representatives to be

appointed to the Supervisory Board, is assessed on the date of

appointment of the employee representatives. Neither the Supervisory

Board members elected by the employees under ArticleL.225-27 of the

French Commercial Code, nor the employee shareholder Supervisory Board

members appointed in accordance with ArticleL.225-23 of the French

Commercial are therefore taken into account.

The term of office for employee representative Supervisory Board

members is indicated in Article18.2 of the present Articles of

Association.

A reduction in the number of Supervisory Board members, within the

framework of the application of the provisions of ArticleL.225-79-2 of

the French Commercial Code (Code de commerce), will have no effect on

the term of all Supervisory Board members representing employees,

which will come to an end upon its normal expiry.

Employee representative Supervisory Board members are appointed by

the Company’s Group Works Council. Employee representative

Supervisory Board members must be in possession of an employment

contract, for at least the past two years, with the Company or one of its

direct or indirect subsidiaries having its registered office in France or

abroad. Notwithstanding the rule contained in Article18.1 of the present

Articles of Association, employee representative Supervisory Board

members are not required to be shareholders.

18.7 – All Supervisory Board members must comply with the Supervisory

Board rules of procedure.

The Combined General Meetings of 3June 2014 and 24April

2020 amended Article18 of the Articles of Association in order

to introduce procedures for appointing members of the

Supervisory Board representing employees, and to take into

account the strengthening of the employee representation on

the Supervisory Board provided for by law No.2019-486 of

22May 2019 on the growth and transformation of companies

(“Pacte” law).

19 – Deliberations of the Supervisory Board

The Supervisory Board’s operations are described in chapter 3

“Corporate governance”, § 3.5.

19.1 – The Supervisory Board elects a Chairman, who is a natural

person, and two Vice-Chairmen, from among its members.

It appoints a secretary who may be, but is not required to be, a

Supervisory Board member.

If the Chairman is absent, the older of the two Vice-Chairmen acts as

Chairman.

19.2 – The Supervisory Board meets when convened by its Chairman or

by the Executive Management, whenever required for the Company’s

best interest but no less than twice per year, at the Company’s registered

office or at any other place specified in the notice of meeting.

Notices are served by any means providing legally valid proof in business

matters, at least seven business days before the meeting. This period of

time may be shortened by unanimous approval of the Chairman or a

Vice-Chairman of the Supervisory Board, the Active partners and the

Executive Management.

Any member of the Supervisory Board may give a proxy to one of their

colleagues to represent them at a Board meeting, by any means

providing legally valid proof in business matters. Each member may hold

only one proxy during a given meeting. These provisions are applicable to

the Permanent Representative of a legal entity that is a member of the

Supervisory Board.

The Supervisory Board is duly convened only if a quorum consisting of at

least half of its members is present or represented.

Resolutions are adopted by a majority of the votes of members present

or represented. However, the Supervisory Board must approve or reject

any proposed new wording of certain clauses of the Articles of

Association of Émile HermèsSAS by a three-quarters majority of

members present or represented, in accordance with the stipulations of

the Article entitled “Responsibilities and Powers of the Active partners.”

Supervisory Board members who participate in the meeting by

video-conferencing or telecommunications means that enable them to be

identified and effectively to participate in the meeting through the use of

technology providing for continuous and simultaneous transmission of

discussions are deemed to be present for purposes of calculating the

quorum and majority, except at Supervisory Board meetings convened for

the review and verification of the annual report and consolidated and

parent company financial statements. The Supervisory Board defines the

conditions and procedures for using video-conferencing or other

telecommunications means when applicable. The Executive Management

must be convened to Supervisory Board meetings and may attend such

meetings, but it does not have the right to participate in the discussion

and to vote.

19.3 – The deliberations of the Supervisory Board are recorded in

minutes, which are entered in a special initialled register and signed by

the Chairman and the secretary.

20 – Authority of the Supervisory Board

20.1 – The Supervisory Board exercises ongoing control over the

Company’s management.

For this purpose, it has the same powers as the Statutory Auditors and

receives the same documents as they do, at the same time. In addition,

the Executive Management must submit a detailed report to the

Supervisory Board on the Company’s operations at least once a year.

20.2 – The Supervisory Board submits to the Active partners its reasoned

opinion:

20.3 – Each year, the Supervisory Board determines the proposed

allocation of profits to be submitted to the General Meeting.

20.4 – The Supervisory Board approves or rejects any proposed new

wording of certain clauses of the Articles of Association of Émile

HermèsSAS in accordance with the stipulations of the Article entitled

“Responsibilities and Powers of the Active partners”.

20.5 – The Active partners must consult the Supervisory Board prior to

taking any decisions concerning:

◆

strategic options;

◆

consolidated operating and investment budgets; and

◆

proposals to the General Meeting pertaining to the appropriation of

share premiums, reserves or retained earnings.

21.1 – The Executive Management of the Company or the Chairman of

the Company’s Supervisory Board shall convene a Joint Council meeting

of the Supervisory Board and of the Active partners whenever it is

deemed necessary; for the purposes of this Council, Émile HermèsSAS is

represented by its Executive Management Board. Notices are served by

any means providing legally valid proof in business matters, at least

seven business days before the meeting. This period of time may be

shortened by unanimous approval of the Chairman or a Vice-Chairman of

the Supervisory Board and the Executive Chairman.

21.2 – The Joint Council meets at the place indicated in the notice of

meeting. It is chaired by the Chairman of the Company’s Supervisory

Board, or, in their absence, by one of the Vice-Chairmen of the

Company’s Supervisory Board, or, in their absence, by the oldest

Supervisory Board member present. The Executive Chairman or, if the

Executive Chairman is a legal entity, its legal representative or

representatives, is convened to meetings of the Joint Council.

21.3 – The Joint Council has knowledge of all matters that it addresses

or that are submitted thereto by the party who convened the Joint Council

meeting, but does not, in the decision-making process, have the right to

act as a substitute for those bodies to which such powers are ascribed

by law or by the Articles of Association of the Company and of the Active

partner that is a legal entity.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 447

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PRESENTATION OF HERMÈS INTERNATIONAL

20.6 – Each year, the Supervisory Board presents a report to the

Shareholders’ Annual Ordinary General Meeting in which it comments on

the Company’s management and draws attention to any inconsistencies

or inaccuracies identified in the financial statements for the year.

The Supervisory Board’s report for the financial year ended on

31December 2021 is presented in chapter8 “Combined

General Meeting of 20April 2022”, § 8.3.

This report, together with the Company’s balance sheet and a list of its

assets and liabilities, is made available to the shareholders and may be

consulted at the Company’s registered office as from the date of the

notice of the General Meeting.

The Supervisory Board may convene a Shareholders’ General Meeting

whenever it deems this appropriate.

The functions exercised by the Supervisory Board do not entail any

interference with the Executive Management, or any liability arising from

the management’s actions or from the results of such actions.

21 – Joint Council of the Supervisory Board and Executive

Management Board of the Active partner

At their discretion, the Supervisory Board and Active partners may make

all decisions or issue all recommendations within their jurisdiction in a

Joint Council meeting.

22 – Compensation of the Supervisory Board

Supervisory Board members may receive annual compensation, the

amount of which is determined by the Shareholders’ Ordinary General

Meeting and shall remain unchanged until such time as a new resolution

is adopted by that General Meeting.

The Board distributes this compensation among its members in the

proportions it deems appropriate.

Details of the compensation policy for members of the

Supervisory Board are presented in the Supervisory Board’s

report on corporate governance (see chapter3 “Corporate

governance”, § 3.8.1.1 and § 3.8.1.3).

23 – Statutory Auditors

The Company’s financial statements are audited by one or more

Statutory Auditors, under the terms and conditions provided by law.

24 – Shareholders’ General Meetings

24.1 – General Meetings are convened under the conditions set by law.

They are held at the registered office or at any other place specified in

the notice of meeting.

24.2 – The right to participate in General Meetings is subordinated to

registered shares being entered in the Company’s register or bearer

shares being registered in a securities account opened with an

authorised financial intermediary, no later than two business days before

the date of the meeting before midnight, Paris time. Shareholders owning

bearer shares must obtain a shareholding certificate from the authorised

financial intermediary evidencing the registration of their shares, which is

attached to the postal vote or proxy form. All shareholders may cast their

votes remotely or by proxy, under the conditions set forth in the

applicable regulations.

On the Executive Management’s decision, shareholders may vote by any

telecommunication or remote transmission means, in accordance with

the regulations applicable at the time of the decision. This option shall be

indicated in the notice of meeting published in the Bulletin des Annonces

Légales Obligatoires (BALO). Votes cast by shareholders using the

electronic ballot form provided on the website created by the meeting

coordinator for this purpose are counted in the same way as votes cast

by shareholders present or represented. The electronic ballot may be

completed and signed directly on this site by any procedure approved by

Executive Management and that complies with the conditions defined by

ArticleL.1316-4 of the French Civil Code (Code civil), since repealed

pursuant to the Order of 10February 2016, becoming Article1367 of the

French Civil Code, in the first sentence of sub-paragraph2 (namely, by

using a reliable identification procedure that guarantees that the

signature is linked to the form), which may consist, inter alia of a login

name and a password. Any proxies given or votes cast via this electronic

means before the General Meeting, and the acknowledgements of

receipt sent in response, will be deemed to be irrevocable instructions

that are enforceable in every way, it being specified that in the event that

shares are sold before the second business day preceding the

General

24.3 – Meetings are chaired by the Chairman of the Supervisory Board

or, failing that, by one of the Vice-Chairmen of the Board, or in their

absence, by the Executive Chairman.

24.4 – The Ordinary and Extraordinary General Meetings, duly convened

in accordance with the conditions specified by law, carry out their

responsibilities in accordance with the law.

24.5 – Except for resolutions pertaining to the nomination and revocation

of Supervisory Board members, the nomination and revocation of the

Statutory Auditors, the distribution of profits for the year and the approval

of related-party agreements that are subject to shareholders’ approval,

no resolution adopted by the General Meeting shall be valid unless it is

approved by the Active partners no later than at the end of the General

Meeting that voted on the relevant resolution. The Company’s Executive

Management has all powers to record such approval.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL448

INFORMATION ON THE COMPANY AND ITS SHARE CAPITAL

PRESENTATION OF HERMÈS INTERNATIONAL

Meeting, at midnight, Paris time, the Company will accordingly void or

amend any proxy or voting instructions sent before that date. Persons

invited by the Executive Chairman or by the Chairman of the Supervisory

Board may also attend General Meetings. The Active partners may attend

Shareholders’ General Meetings. Active partners that are legal entities

are represented by a legal representative or by any person, shareholder

or otherwise, designated thereby.

The General Meeting of 7June 2010 amended Article24.2 of

the Articles of Association to allow the Executive Management to

set up an electronic balloting system applicable to all future

General Meetings.

The General Meeting of 2June 2015 amended Article24.2 of

the Articles of Association to bring it into compliance with

ArticleR.225-85 of the French Commercial Code (Code de

commerce) resulting from Decree No.2014-1466 of

8December 2014, changing the method for determining the

“record date” for participation in General Meetings.

25 – Financial statements

Each financial year consists of 12months, commencing on 1January

and ending on 31December.

26 – Allocation and distribution of profits

The General Meeting approves the financial statements for the past year

and duly notes the amount of distributable profits.

The Company pays 0.67% of the distributable profits to the Active

partners, at the time and place designated by the Executive

Management, within nine months at most after the end of the financial

year.

The Active partners distribute this amount amongst themselves as they

see fit.

The remaining distributable profits revert to the shareholders. Their

allocation is decided by the Ordinary General Meeting, on the Supervisory

Board’s recommendation. On the Supervisory Board’s recommendation,

the General Meeting may grant to each shareholder an option to receive

payment for all or part of the dividend or interim dividend in cash or in

shares, under the conditions set by law.

On the Supervisory Board’s recommendation, the General Meeting may

decide to draw from the balance of profits reverting to the shareholders

the sums it deems appropriate to be allocated to shareholders’ retained

earnings or to be appropriated to one or more extraordinary, general or

special reserve funds, which do not bear interest, and to which the Active

partners as such have no rights.

On the unanimous recommendation of the Active partners, the reserve

fund or funds may, subject to approval by the Ordinary General Meeting,

be distributed to the shareholders or allocated to the partial or total

depreciation of the shares. Fully depreciated shares shall be replaced by

entitlement shares with the same rights as the existing shares, with the

exception of the right to reimbursement of capital.

The reserve fund or funds may also be incorporated into the share

capital.

Dividends are payable at the times and places determined by the

Executive Management within a maximum of nine months from the end of

the financial year, unless this time period is extended by a court of law.

27 – Dissolution of the Company

At the end of the Company’s lifetime or in the event of early dissolution,

the General Meeting decides on the winding-up procedure and appoints

one or several liquidators, whose powers are defined by the meeting and

who carry out their responsibilities in accordance with the applicable

laws.

Any liquidation proceeds (boni de liquidation) shall be distributed

amongst the shareholders.

7.1.4

SIMPLIFIED ORGANISATION CHART

AND MAIN SUBSIDIARIES

7.1.4.1

SIMPLIFIED ORGANISATIONAL CHART

A brief description of the Group as at 31December 2021 is presented in

chapter1, “Presentation of the Group and its results”, § 1.4.1.

MAIN SUBSIDIARIES

7.1.4.2

The main companies consolidated as at 31December 2021 (mainly

distribution subsidiaries and divisional holding companies), are detailed

in chapter5 “Consolidated financial statements”, Note16.

Detailed information on subsidiaries in which the gross value of shares

held exceeds 5% of Hermès International’s share capital can be found in

chapter6 “Parent company financial statements”, Note 7, § 7.3.1.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 449

INFORMATION ON THE COMPANY AND ITS SHARE CAPITAL

PRESENTATION OF HERMÈS INTERNATIONAL

7.1.5

PRINCIPAL FLOWS BETWEEN HERMÈS

INTERNATIONAL AND THE MAIN

SUBSIDIARIES

As stated in §7.1.2, Hermès International is the Group’s parent company.

The main flows between Hermès International and the Group’s

subsidiaries are presented in chapter6 “Parent company financial

statements”. They cover mainly the following areas:

7.1.5.1

PROVISION OF SERVICES

Services are primarily amounts charged back to subsidiaries for

advertising and public relations services, rent, staff provided on

secondment, insurance and professional fees. These services are

detailed in chapter6 “Parent company financial statements”, Note2.1

“Operating income”.

7.1.5.2

TRADEMARK ROYALTIES

Hermès International receives royalties from trademarks, licensed

exclusively to Group subsidiaries, namely, Hermès Sellier, Le Comptoir

Nouveau de la Parfumerie and La Montre Hermès. Royalties are

calculated based on the production subsidiaries’ revenue. These fees are

detailed in chapter6 “Parent company financial statements”, Note2.1

“Operating income”.

7.1.6

HERMÈS GROUP TAX POLICY

The Hermès Group’s tax policy is described in chapter2 “Corporate

social responsibility”, § 2.7.2.1.1.

7.1.7

INVESTMENTS

The main investments made during the year are described in chapter1

“Presentation of the Group and its results”, § 1.8.2.

◆

any fully-paid up registered share that has been duly recorded on the

books in the name of the same shareholder for a period of at least

four years from the date of the first General Meeting following the

fourth anniversary of the date when the share was registered on the

books; and

◆

any registered share allotted for no consideration to a shareholder, in

the event of a capital increase effected by capitalisation of sums in

the share premiums, reserves or retained earnings accounts, in

proportion to any existing shares that carry double voting rights.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL450

INFORMATION ON THE COMPANY AND ITS SHARE CAPITAL

INFORMATION ON SHARE CAPITAL AND SHAREHOLDERS

AFR

7.2

INFORMATION ON SHARE CAPITAL AND SHAREHOLDERS

7.2.1

INFORMATION ON SHARE CAPITAL

7.2.1.1

SHARE CAPITAL

The shares are fully paid-up.

7.2.1.2

VOTING RIGHTS

By the 15

day of each month at the latest, the Company issues a report

on the total number of voting rights and shares that makes up the share

capital on the last day of the previous month and publishes it on

As at 28February 2022, the total number of voting rights (including

shares deprived of voting rights) was 179,387,343. Each share gives the

holder the right to at least one vote in the Shareholders’ General

Meetings, except for treasury shares held by the Company, which have

no voting rights.

Ownership of certain shares is split between a usufructuary and a bare

owner. In accordance with the Articles of Association, voting rights

attached to shares are exercised by the bare owners at all General

Meetings (ordinary, extraordinary or special meetings), save for decisions

regarding the allocation of net income, in which case the usufructuary

exercises the voting rights.

Furthermore, double voting rights are allocated to:

Double voting rights cease automatically under the conditions specified

by the law and notably for any share that was the subject of a conversion

to bearer or a transfer, excluding any “registered to registered” transfer

following succession, liquidation of community of property between

spouses or family donation.

Failure to disclose attainment of certain ownership thresholds as

provided by law or by the Articles of Association may disqualify the

shares for voting purposes (see Article11 of the Articles of

Association, in chapter7 “Information on the Company and its

share capital”, § 7.1.2).

7.2.1.3

CHANGES IN SHARE CAPITAL OVER THE LAST

THREE FINANCIAL YEARS

No change in capital occurred over the last three financial years.

7.2.1.4

DELEGATIONS OF POWERS BY THE GENERAL

MEETING

Authorisations and delegations for capital increases currently in force,

granted by the General Meeting to the Executive Management, are

summarised in chapter3 “Corporate governance”, § 3.9.4. These

delegations were not used during the 2021 financial year, and have not

been used at the date of filing of this universal registration document.

Authorisations granted to the Executive Management by the 18thand

resolutions of the General Meeting of 24April 2020 to grant stock

options and the allocation of existing free ordinary shares, respectively,

have not been used since they were granted (see chapter3 “Corporate

governance”, § 3.8.4.10). It is proposed that the General Meeting of

20April 2022 renew these two authorisations (see chapter8 “Combined

General Meeting of 20April 2022”, § 8.2.2 – Explanatory statements in

the 18

and 19

resolutions).

7.2.2

INFORMATION ON SHAREHOLDERS

7.2.2.1

NUMBER OF SHAREHOLDERS

Until the end of 2021, the Company used the so-called “identifiable

bearer shares” procedure (TPI) of Euroclear France to ascertain its

shareholder structure. This procedure, introduced into French law in

1987, enabled issuing companies to ask the central custodian about the

holders of securities and thus ascertain the identity and number of

securities held in the form of “bearer” securities at financial

intermediaries.

Amount Number Par value

As at 01/01/2021 €53,840,400.12 105,569,412 €0.51

As at 31/12/2021 €53,840,400.12 105,569,412 €0.51

On the day of the General Meeting €53,840,400.12 105,569,412 €0.51

https://finance.hermes.com/en/regulated-information.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 451

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INFORMATION ON SHARE CAPITAL AND SHAREHOLDERS

This procedure evolved with Law no. 2021-1308 of 8October 2021,

which transposed into French law Directive (EU) 2017/828 of 17May

2017 (known as “SRDII”) amending Directive 2007/36/EC of 11July

2007 (known as “SRDI”) in order to promote the long-term commitment

of shareholders. This law replaced the TPI procedure with a new

mandatory system, called identification on request, resulting from this

SRDII directive (ArticleL.228-2 of the French Commercial Code [Code

de Commerce]). Through this transposition, the law enshrines the

identification of their shareholders as a right of listed companies and

obliges financial intermediaries to participate in this identification

process.

Shareholder analyses are now based on this procedure.

During the review as at 31December 2021, there were approximately

122,000shareholders, compared to approximately 108,700 as at

31December 2020 and some 101,800 as at 31December 2019.

7.2.2.2

PERCENTAGE OF INDIVIDUAL SHAREHOLDERS

The percentage of individual shareholders amounted to 7.1% in

December2021, a slight increase compared to 2020 (6.4%), comprising

the shares held in registered form as at 31December 2021 by individual

shareholders and bearer shareholders identified by identification on

request as at 31December 2021, excluding family group holdings.

7.2.2.3

PRINCIPAL SHAREHOLDERS

AS AT 31DECEMBER 2021 – CONTROL

OF THE COMPANY

Hermès International is controlled through the intermediary of Émile

HermèsSAS, its Active partner by the Hermès family group, which also

holds, notably via the intermediary of the company H51, a majority

shareholding (in share capital and voting rights) within the Company as a

Limited Partner. This control is exclusive control within the meaning of

ArticleL.233-16 of the French Commercial Code (Code de commerce).

The companies H51 and H2 are held exclusively by members of the

Hermès family group. To the Company’s knowledge, there are no

shareholders directly or indirectly holding, alone or together, more than

5% of the share capital or voting rights, other than those shown in the

tables in § 7.2.2.5.

The ownership interests of Corporate Officers and Senior Executives are

listed in chapter3 “Corporate governance”, § 3.10.1.

To the Company’s knowledge, material changes in the ownership of the

share capital over the past three years are described § 7.2.2.5. Given

the time that has elapsed since it was established, the description of the

procedures for setting up H51 is no longer in the universal registration

document. The definition and description of the organisation of the

Hermès family group are presented in chapter9 “Additional information”,

§ 9.6; and in chapter3 “Corporate governance”, § 3.2.1.

7.2.2.3.1 Significant movements occurring during the last

three years in the distribution of its share capital and voting

rights, and the reasons for these movements – Retention

commitment

According to the terms of a transaction signed on 3September 2014,

LVMH Moët Hennessy Louis Vuitton (“LVMH”) (in its own name and on

behalf of its subsidiaries), Christian Dior (in its own name and on behalf

of its subsidiaries) and Financière Jean Goujon (in its own name and on

behalf of its subsidiaries) undertook to no longer hold any Hermès

International shares. These undertakings ended on 3September 2019.

On 25April 2017, the Arnault family group, Christian Dior and LVMH

launched a simplified public offering from the Arnault family group on

Christian Dior shares that they did not hold on that date, open from 8 to

28June 2017.

On 4July 2017, the results of this simplified public offering were the

delivery, by Semyrhamis, of nearly 7million shares in Hermès

International to the ex-minority interests of Christian Dior, representing

about 6.6% of the capital.

Following the transaction, the Arnault family group held 1.87% of the

capital and 1.13% of the voting rights of Hermès International. See the

threshold crossing declaration of 11July 2017 (AMF notice

No.217C1525 of 11July 2017) described on page392 of the 2019

universal registration document).

On 21July 2017, the Hermès family group declared that it held 66.67%

of the capital of Hermès International, of which 0.95% of the capital by

assimilation (see AMF notice No.217C1755 of 28July 2017 and

§ 7.2.2.7.4).

7.2.2.3.2 Changes occurring after closure of the financial year

To the Company’s knowledge, there has been no significant change with

regards to Hermès International shareholders between 31December

2021 and the date on which this universal registration document was

filed with the AMF.

7.2.2.3.3 Measures taken to prevent abusive control

Refer to chapter3 “Corporate governance”, § 3.4.7.5.

7.2.2.3.4 Measures taken to ensure a balance of powers

Refer to chapter3 “Corporate governance”, § 3.4.7.5.

7.2.2.4

TREASURY SHARES

As at 31December 2021, Hermès International held 925,153 treasury

shares, representing 0.9% of its share capital, acquired as part of the

share buyback programme presented in § 7.2.2.10.

In practice, treasury shares are mainly allocated to cover free share

plans for employees (see chapter3, “Corporate governance”,

§ 3.8.4.10).

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL452

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INFORMATION ON SHARE CAPITAL AND SHAREHOLDERS

7.2.2.5

BREAKDOWN OF SHARE CAPITAL AND VOTING RIGHTS AS AT 31DECEMBER 2021

BREAKDOWN OF SHAREHOLDERSAS AT 31DECEMBER 2021

Public

32.5%

Treasury shares

0.9%

Hermès

family group

66.6%

As at 31December 2021 and to the Company’s knowledge, the distribution of the share capital and voting rights of the Company was as follows:

Voting rights that can be exercised in the General Meeting. In accordance with Article12 of the Articles of Association of the Company, the voting right is exercised by(1)

the bare owner for all decisions taken by all General Meetings, except for decisions concerning the allocation of net income, for which the voting right is exercised by

the usufructuary. The procedures for publication and allocation of voting rights are detailed in § 7.2.1.2.

(2) The definition of the Hermès family group is in chapter9 “Additional information”, § 9.6.

(3) These amounts correspond to all of the shares and voting rights in circulation, reduced by the number of shares and voting rights declared by the identified

shareholders as mentioned in this table.

(4) Including the Arnault family group. See the threshold crossing declaration of 11July 2017 (AMF notice No.217C1525 of 11July 2017) described on page392 of the

2019 universal registration document).

These figures result, for registered shares on the register kept by the BP2S Securities service as well as for bearer shares, from the declarations, where

applicable, of those in question.

Changes occurring after closure of the financial year are detailed in § 7.2.2.3.2.

Share capital

Voting rights

Allocation of net income Other

Number % Number % Number %

H51 57,279,794 54.3 113,689,009 63.9 113,689,009 63.9

H2 7,012,602 6.6 13,888,704 7.8 13,888,704 7.8

Other members of the Hermès family group 6,001,893 5.7 7,428,860 4.2 11,508,860 6.5

Sub-total Hermès family group

70,294,289 66.6 135,006,573 75.9 139,086,573 78.2

Public

34,349,970 32.5 42,751,499 24.1 38,671,499 21.8

Treasury shares 925,153 0.9 – 0.0 – 0.0

TOTAL 105,569,412 100.0 177,758,072 100.0 177,758,072 100.0

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 453

INFORMATION ON THE COMPANY AND ITS SHARE CAPITAL

INFORMATION ON SHARE CAPITAL AND SHAREHOLDERS

Partners of

Émile Hermès SAS

Spouse, children and

grandchildren of the partners

of Émile Hermès SAS and their

family holding companies

Direct equity interestsÉmile Hermès SAS

Public

Treasury shares

Total Hermès family group

Active Partner

Limited Partners

H51

54.3% 6.6% 5.7%

HERMÈS INTERNATIONAL (% of share capital)

HERMÈS FAMILY GROUP

Spouse, children and

66.6%

32.5%

0.9%

(1) Voting rights that can be exercised in the General Meeting. In accordance with Article12 of the Articles of Association of the Company, the voting right is exercised by

the bare owner for all decisions taken by all General Meetings, except for decisions concerning the allocation of net income, for which the voting right is exercised by

the usufructuary. The procedures for publication and allocation of voting rights are detailed in § 7.2.1.2.

(2) The definition of the Hermès family group is in chapter9 “Additional information”, § 9.6.

(3) These percentages correspond to the total shares and voting rights in circulation, reduced by the number of shares and voting rights declared by the identified

shareholders as mentioned in this table.

(4) Including the Arnault family group. See the threshold crossing declaration of 11July 2017 (AMF notice No.217C1525 of 11July 2017) described on page392 of the

2019 universal registration document).

7.2.2.6

CHANGE IN SHARE CAPITAL AND VOTING RIGHTS

During the last three financial years and to the Company’s knowledge, the distribution of capital and voting rights in the Company (by percentage) was

as follows:

31/12/2021 31/12/2020 31/12/2019

Shareholders holding more than 5%

of the share capital or voting rights

capital

Voting rights

Allocation

of net

income Other

capital

Voting rights

Allocation

of net

income Other

capital

Voting rights

Allocation

of net

income Other

H51 54.3% 63.9% 63.9% 54.2% 63.8% 63.8% 54.2% 63.8% 63.8%

H2 6.6% 7.8% 7.8% 6.6% 7.9% 7.9% 6.6% 7.9% 7.9%

Other members of the Hermès family group 5.7% 4.2% 6.5% 5.7% 4.2% 6.5% 5.8% 4.5% 6.8%

Sub-total Hermès family group

66.6% 75.9% 78.2% 66.6% 75.9% 78.2% 66.7% 76.1% 78.5%

Public

32.5% 24.1% 21.8% 32.5% 24.1% 21.8% 32.0% 23.9% 21.5%

Treasury shares 0.9% 0.0% 0.0% 0.9% 0.0% 0.0% 1.3% 0.0% 0.0%

TOTAL 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL454

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INFORMATION ON SHARE CAPITAL AND SHAREHOLDERS

7.2.2.7

CROSSING OF THRESHOLDS

7.2.2.7.1 Crossing of thresholds occurring after the closure

of the 2021 financial year

No crossing of a legal threshold was declared between the closure of

the 2021 financial year and 28February 2022.

7.2.2.7.2 Crossing of thresholds in financial year 2021

No crossing of a legal threshold was declared in 2021.

7.2.2.7.3 Reminder of crossing of thresholds during the past

two financial years

Crossing of thresholds in financial year 2020

No crossing of a legal threshold was declared in 2020.

Crossing of thresholds in financial year 2019

No crossing of a legal threshold was declared in 2019.

7.2.2.7.4 Crossing of previous thresholds for shareholders

holding more than 5% of the share capital or voting rights

AMF Notice No.217C1755 of 28July 2017 (the full text of which is

available on the AMF website – www.amf-france.org): the Hermès familyavailable on the AMF website – www.amf-france.org): the Hermès family

group declared that it had crossed upwards, on 21July 2017, the

threshold of two-thirds of Hermès International’s share capital and held

70,385,066shares representing 130,403,428 voting rights at General

Meetings in respect of decisions concerning the allocation of net income

and 134,256,835 voting rights for other decisions, i.e., 66.67% of the

share capital and respectively 74.92% and 77.13% of the voting rights

of this company, broken down as follows:

This crossing is the result of an acquisition of Hermès International shares on the market by the company H51.

7.2.2.8

EMPLOYEE OWNERSHIP OF THE SHARE CAPITAL

Maison Hermès, faithful to its family tradition, involves all of its

employees throughout the world with in the Group’s growth,

through employee shareholding mechanisms, which form part of

the Group’s long-term compensation policy and which help to

motivate and retain its employees for the future. Thus, the

Hermès Group has offered five times its employees, in France

and internationally, free share plans; these were granted in

2007, 2010, 2012, 2016 and 2019 (see chapter3 “Corporate

governance”, § 3.8.3).

The latest plans have been implemented by the Executive Management

in accordance with the authorisation granted by the General Meeting of

4June 2019 in its fifteenth resolution. Thus, on 1July 2019, the

Executive Management decided to implement two new free share

allocation plans for all employees of the Group subject to eligibility,

notably in terms of seniority, subject to the mechanisms applicable to

existing free share plans, in particular concerning the reference and

retention periods. These allocations are subject to presence conditions

and, where applicable, performance conditions, with vesting periods of

four to five years.

As at 31December 2021, employee shareholding, based on plans

already allocated and/or vested, involved a significant part of the Group’s

workforce, accounting for the holding of 1,116,350 Hermès International

shares, representing 1.06% of the share capital. Taking into account

rights under the last 2019 plans, employee shareholding involved

approximately 12,000 Group employees.

No shares in the Company are held by the employees of the Company

and affiliated companies under the savings plan and the company mutual

fund of the Company.

7.2.2.9

PLEDGE OF SHARES

Duly registered shares are not encumbered by any material pledges.

7.2.2.10

SHARE BUYBACK PROGRAMMES

7.2.2.10.1 Use in 2021 of authorisations to buy back shares

granted by the General Meeting

The Combined General Meetings of 24April 2020, and 4May 2021

approved share buyback programmes authorising the Executive

Management, on the basis of ArticlesL.22-10-62 et seq. of the French

Commercial Code (Code de Commerce), to purchase, on the market or

off-market, a number of shares representing up to 10% of the Company’s

share capital on the date of the repurchase, in order to allocate them to

the objectives authorised by European regulations or to one or more

market practices accepted by the French Financial Markets Authority

(AMF) to date or in the future, and more generally, to allocate them to the

completion of any transactions in accordance with the regulations in

force.

The Combined General Meetings of 24April 2020 and 4May 2021

authorised the Executive Management to reduce the share capital by

cancellation of repurchased shares, within the limit of 10% of the share

capital per period of 24months.

Decisions concerning allocation of net income Other decisions

% share

capital Voting rights Voting rights % voting rights

H51 56,209,021 53.24 109,244,318 109,244,318 62.76

13,072,204

8,086,906

130,403,428

% voting rights

62.76

H2 6,876,102 6.51 7.51 13,072,204 7.51

Other members 6,292,154 5.96 4.65 11,940,313 6.86

Treasury shares 1,007,789 0.95 - - -

TOTAL HERMÈS FAMILY GROUP 70,385,066 66.67 74.92 134,256,835 77.13

www.amf-france.org):

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 455

INFORMATION ON THE COMPANY AND ITS SHARE CAPITAL

INFORMATION ON SHARE CAPITAL AND SHAREHOLDERS

The characteristics of the delegations granted to the Executive

Management are detailed in chapter3 “Corporate governance”, § 3.9.4.

the context of share buyback programmes authorising the Executive

Management to buy and sell its own shares under ArticleL.22-10-62 of

the French Commercial Code (Code de commerce).

During the financial year ended 31December 2021, the Executive

Management carried out the transactions shown in the table below, in

Number of shares issued to employees under share and stock option allocation plans.(1)

(2) Average purchase price of shares issued to employees.

7.2.2.10.2 Description of the new share buyback programme proposed to the vote of the Combined General Meeting

of 20April 2022

Pursuant to Articles 241-2 and 241-3 of the General Regulation of the

AMF, the Company hereinafter presents the share buyback programme to

be submitted for the approval of the Combined General Meeting of 4 May

2021. This programme will supersede that authorised by the Combined

General Meeting of 24 April 2020.

As at 28 February 2022, the share capital of the Company consisted of

105,569,412 shares, of which 925,834 treasury shares (number of

shares as at the date of the operation) held by Hermès International,

representing 0.9% of the share capital.

Du 01/01/2021

au 04/05/2021

Du 05/05/2021

au 31/12/2021 Total

EXCLUDING THE LIQUIDITY CONTRACT

Number of shares booked in the name of the Company as at

31December 2020 961,978 961,978

Number of shares purchased 142,131 142,131

Reason for acquisitions Employee shareholding

Average price of purchases €1,139.33 €1,139.33

Number of shares sold 172 178,784 178,956

Average price of sales €266.11 €392.09 €391.97

Amount of net expenses excluding taxes

Number of shares cancelled

Average price of cancelled shares

Number of shares booked in the name of the Company as at

31December 2021 961,806 (36,653) 925,153

Allocation

Employee shareholding 883,433 (36,653) 846,780

External growth 78,373 0 78,373

Net value assessed at cost €459,656,614 €91,833,809 €551,490,423

Net value assessed at the closing rate €1,477,334,016 €(56,299,008) €1,421,035,008

Par value €490,521 €(18,693) €471,828

Fraction of the share capital that they represent 0.91% (0.03)% 0.88%

IN THE CONTEXT OF THE LIQUIDITY CONTRACT

Number of shares booked in the name of the Company as at

31December 2020 4,815 0 4,815

Resources implemented (liquidity account) €5,000,000 €5,000,000 €5,000,000

Number of shares purchased 2,200 10,054 12,254

Average price of purchases €849.36 €1,144.17 €1,091.24

Number of shares sold 5,624 11,445 17,069

Average price of sales €905.23 €1,167.75 €1,081.25

Number of shares booked in the name of the Company as at

31December 2021 1,391 (1,391) 0

Net value assessed at cost €1,180,950 €(1,180,950) €0

Net value assessed at the closing rate €2,136,576 €(2,136,576) €0

Par value €709 €(709) €0

Fraction of the share capital that they represent 0.00% 0.00% 0.00%

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL456

INFORMATION ON THE COMPANY AND ITS SHARE CAPITAL

INFORMATION ON SHARE CAPITAL AND SHAREHOLDERS

The shares may be repurchased in order to be allocated to the objectives permitted by regulation (EU)

No.596/2014 of 16April 2014 on market abuse (Market Abuse Regulation – “MAR”):

◆

10% of the share capital on the date of the General Meeting:

◆

The shares may be purchased by any means, including all or part of interventions on regulated

markets, multilateral trading systems, with systematic internalisers or OTC, including block purchases

of securities (without limiting the portion of the buyback programme carried out by this means), by

public offering to purchase or exchange or the use of options or derivatives (in compliance with legal

and regulatory requirements applicable at the time), excluding the sale of put options, and at the time

that the Executive Management deems appropriate, including during a public offering for the shares of

the Company, in accordance with stock market regulations, either directly or indirectly via an

investment services provider. The shares acquired pursuant to this authorisation may be retained,

sold, or transferred by any means, including by block sales, and at any time, including during public

offerings.

This authorisation would be valid for 18months from the date of the Combined General Meeting of

20April 2022, i.e. until 20October 2023.

objectives provided for in Article5 of the MAR: capital decrease, hedging of debt securities

exchangeable for shares and coverage of employee shareholding plans;

objectives provided for in Article13 of the MAR and under the market practice accepted by the

Financial Markets Authority (AMF): the implementation of a liquidity contract by an investment

service provider acting independently and in accordance with the provisions of AMF Decision

No.2021-01 of 22June 2021;

other objectives: acquisitions, hedging of equity securities exchangeable for shares and, more

generally, to allocate them for the completion of any transactions in accordance with the regulations

in force.

Objectives of the share buyback

programme

Maximum share of capital that may be

bought back

i.e. on the basis of the share capital issued at 31 December 2021: 10,556,941 shares;

it being specified that treasury shares held on the day of the General Meeting are not taken into

account in this maximum amount.

Maximum purchase price and maximum

authorised amount of funds that may be

committed

the maximum purchase price (excluding costs) would be set at €1,900 per share;

the maximum amount of funds to be committed would be set at 3 billion. It is specified that treasury

shares held on the day of the General Meeting are not taken into account in this maximum amount.

Terms & Conditions

Duration of the buyback programme

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 457

INFORMATION ON THE COMPANY AND ITS SHARE CAPITAL

INFORMATION ON SHARE CAPITAL AND SHAREHOLDERS

7.2.3

TRANSACTIONS PERFORMED BY CORPORATE OFFICERS AND THOSE CLOSE TO THEM

ON THE SHARES OF THE COMPANY

In accordance with Article223-26 of the AMF General Regulation, a summary is presented below of the transactions mentioned in ArticleL.621-18-2 of

the French Monetary and Financial Code carried out during the last financial year, having been declared and of which the Company is aware.

NAME AND FUNCTION

Declaration no. Date of the transaction Nature of the transaction Unit price

Amount of the

transaction

Henri-Louis Bauer, member of the

Executive Management Board of Émile

Hermès SAS, Active Partner and

Executive Chairman

2021DD798850 15 November 2021 Disposal €1,333.17 €766,572.75

2021DD812547 14 December 2021 Donation received €0 €0

Legal entity related to Henri-Louis

Bauer, Chairman of the Executive

Management Board of Émile Hermès

SAS, Active Partner and Executive

Chairman, and to Charles-Éric Bauer,

member of the Supervisory Board 2021DD798852 15 November 2021 Purchase €1,333.17 €1,966,425.75

Sandrine Brekke, member of the

Executive Management Board of Émile

Hermès SAS, Active Partner and

Executive Chairman of Hermès

International

2021DD733633 22 February 2021 Pledge €0 €0

2021DD811708 4 December 2021 Release of pledges €0 €0

2021DD811713 7 December 2021 Pledge €0 €0

Pureza Cardoso, member of the

Supervisory Board 2021DD758155 1 June 2021 Vesting of free shares €0 €0

Legal entity related to Alice Charbin,

member of the Executive Management

Board of Émile Hermès SAS, Active

Partner and Executive Chairman 2021DD737527 18 March 2021 Purchase €978.00 €4,890,000.00

Florian Craen, member of the Executive

Committee

2021DD758153 1 June 2021 Vesting of free shares €0 €0

2021DD760604 18 June 2021 Disposal €1,213.83 €2,427,661.80

Pierre-Alexis Dumas, member

of the Executive Committee

2021DD733632 22 February 2021 Pledge €0 €0

2021DD733630 23 February 2021 Release of pledges €0 €0

2021DD758152 1 June 2021 Vesting of free shares €0 €0

2021DD811714 4 December 2021 Release of pledges €0 €0

2021DD811715 7 December 2021 Pledge €0 €0

Olivier Fournier, member

of the Executive Committee 2021DD758151 1 June 2021 Vesting of free shares €0 €0

Catherine Fulconis, member

of the Executive Committee

2021DD733454 22 February 2021 Pledge €0 €0

2021DD758156 1 June 2021 Vesting of free shares €0 €0

Wilfried Guerrand, member

of the Executive Committee

2021DD758168 1 June 2021 Vesting of free shares €0 €0

2021DD760429 17 June 2021 Disposal €1,195.05 €2,748,603.96

Éric du Halgouët, member

of the Executive Committee

2021DD758166 1 June 2021 Vesting of free shares €0 €0

2021DD760889 22 June 2021 Disposal €1,221.92 €1,270,793.47

Laurent Momméja, member of the

Executive Management Board of Émile

Hermès SAS, Active Partner and

Executive Chairman

2021DD760456 14 June 2021 Donation €0 €0

2021DD769675 3 September 2021 Donation €0 €0

Renaud Momméja, member

of the Supervisory Board

2021DD760458 18 June 2021 Bare ownership donations €0 €0

2021DD769677 3 September 2021 Donation €0 €0

Amounts rounded to two decimal places.(1)

◆

inclusion of precautionary measures concerning the broadcasting of

comments on social networks and media in connection with the

Hermès Group;

◆

update of applicable regulations (Cnil deliberation no. 2017-200 of

6July 2017, ESMA interpretations, GDPR adaptation, law no.

2019-744 of 19July 2019 on simplifying, clarifying and updating

company law), AMF recommendations no. 2016-08, updated on

29April 2021, “Guide to ongoing information and management of

inside information”);

◆

addition of examples drawn from the guiding principles from case law

of the AMF Sanctions Commission;

◆

editorial details.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL458

INFORMATION ON THE COMPANY AND ITS SHARE CAPITAL

INFORMATION ON SHARE CAPITAL AND SHAREHOLDERS

NAME AND FUNCTION

Declaration no. Date of the transaction Nature of the transaction Unit price

Amount of the

transaction

Rémy Kroll, member of the Supervisory

Board 2021DD758169 1 June 2021 Vesting of free shares €0 €0

Legal entity related to Dorothée

Altmayer, member of the Supervisory

Board 2021DD743101 26 April 2021 Purchase €1,047.18 €146,605.20

Pascale Mussard, member of the

Executive Management Board of Émile

Hermès SAS, Active Partner and

Executive Chairman

2021DD758399 1 June 2021 Vesting of free shares €0 €0

2021DD758721 1 June 2021 Disposal €1,150.00 €14,950.00

2021DD771892 22 September 2021 Disposal €1,271.24 €7,691,002.00

2021DD772919 30 September 2021 Disposal €1,271.24 €9,775,835.60

Legal entity linked to Jean-Baptiste

Puech, member of the Executive

Management Board of Émile Hermès

SAS Active Partner and Executive

Chairman 2021DD796173 25 October 2021 Purchase €1,255.87 €602,817.60

Éric de Seynes, Chairman

of the Supervisory Board 2021DD760172 15 June 2021

Share transfer following

succession €0 €0

Guillaume de Seynes, member

of the Executive Committee

2021DD736526 12 March 2021 Disposal €909.14 €2,727,420.00

2021DD758154 1 June 2021 Vesting of free shares €0 €0

2021DD760173 15 June 2021

Share transfer following

succession €0 €0

Legal entity related to various Senior

Executives, the Executive Chairman,

members of the Executive Committee,

members of the Supervisory Board,

members of the Executive Management

Board of Émile Hermès SAS, Active

Partner and Executive Chairman

2021DD736525 12 March 2021 Purchase €909.14 €2,727,420.00

2021DD739379 31 March 2021 Purchase €900.66 €4,503,300.00

2021DD771891 22 September 2021 Purchase €1,271.24 €7,691,002.00

2021DD772918 30 September 2021 Purchase €1,271.24 €9,775,835.60

Charles-Éric Bauer, member

of the Supervisory Board

2021DD798851 15 November 2021 Disposal €1,333.17 €1,199,853.00

2021DD812602 14 December 2021 Donation received €0 €0

Amounts rounded to two decimal places.(1)

No other Corporate Officer (Executive Chairman or Supervisory Board

member) of Hermès International reported any trades in Company shares

in 2021.

No other Senior Executive (Executive Committee member) of Hermès

International reported any trades in Company shares in 2021.

Neither did the Company receive any other reports of such trades from

any of its immediate family members.

7.2.4

STOCK MARKET ETHICS CODE

Pursuant to European regulation (EU) No.596/2014 of 16April 2014 on

market abuse (known as the “MAR”), a review was carried out of internal

procedures, practices and training on the prevention of insider trading in

the Hermès Group.

On 1February 2017, the Hermès Group adopted a new Stock

Market Ethics Code (the “Code”) formalising the steps taken and

the obligations incumbent on people, whether or not they are Senior

Executives, who have access to inside or sensitive information.

A summary of this Code is made available each time it is updated

on the website https://finance.hermes.com/en/governing-bodies-

rules-procedure-articles-association/

The Code was updated several times as follows:

◆

review of definitions (inside information, insiders and similar, insider

lists, trading days, AMF);

◆

internal procedures within the Group.

◆

for Permanent Insiders, as a precaution and even though the

information in question is not considered Inside information by the

Inside Information Committee (IIC), from the reporting dates for

quarterly sales, and those for annual and interim results (reporting of

financial information that could provide an indication of the figures,

prior to the “financial” blackout periods below) up to and including the

date on which revenue and annual or interim results are reported,

where appropriate;

◆

for Permanent Insiders and Sensitive Persons during “financial”

blackout periods, plus the day of publication of the press release:

•

period of 30 calendar days preceding the publication of the annual

or half-yearly financial statements,

•

period of 15 calendar days before the quarterly publication of

revenue;

•

to a period of 30days before the annual or interim financial

statements are made public and up to and including the date on

which the annual or interim results are reported, where

appropriate,

•

exceptionally, to a period beginning when the Group issues a

specific alert about a transaction prohibiting trading until the date

the transaction is made public.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 459

INFORMATION ON THE COMPANY AND ITS SHARE CAPITAL

INFORMATION ON SHARE CAPITAL AND SHAREHOLDERS

Version 9 of the Code, dated 29July 2021, is structured as follows:

7.2.4.1

ESTABLISHMENT OF ABSTENTION PERIODS

OR “BLACKOUT WINDOWS” (OR CLOSED

PERIODS)

The Code notes that Executive Chairmen, members of the Executive

Committee, members of the Supervisory Board and members of the

Executive Management Board of Émile HermèsSAS are qualified as

“permanent insiders” (as defined in the MAR, the “Permanent Insiders”).

Internally, Hermès International qualifies as “sensitive” persons any

non-insiders among employees who are liable to hold sensitive or

confidential information that is not classified as inside information (the

“Sensitive Persons”). As a preventive measure and to facilitate

accountability, these people are subject to specific blackout periods. A

list of Sensitive Persons is established, and the relevant persons

concerned are informed of their status.

Permanent Insiders and Sensitive Persons are required to refrain from

trading in the securities of the Company during blackout periods set out

in the schedules drawn up and published each year.

The requirement to respect blackout periods covers all transactions on

Hermès International shares. It applies:

◆

for recipients of free shares (only for the sale of free shares), at the

end of the retention period during “free share” blackout periods:

7.2.4.2

PROCEDURE FOR QUALIFYING AND DEFERRING

DISCLOSURE OF INSIDE INFORMATION

Hermès International has established an Inside Information Committee

(IIC), whose role is to identify and qualify inside information, to decide

whether or not to defer its publication, and to identify insiders for each

item of inside information (other than Permanent Insiders). TheIIC is

composed of an Executive Chairman, the Executive Vice-President

Finance and the Group Director of Financial Communication and Investor

Relations.

7.2.4.3

APPOINTMENT OF A COMPLIANCE OFFICER

Hermès International has appointed the Director of Corporate law and

Stock exchange regulation/Supervisory Board Secretary) as Compliance

Officer. The Compliance Officer is tasked with: establishing management

procedures and tools for the Insider lists, creating and updating the lists

of Permanent Insiders, occasional insiders and Sensitive Persons based

on information received from theIIC, drafting, distributing and updating of

the Stock Market Ethics Code, organising training of insiders, drawing up

and publicising calendars of blackout periods applicable to Permanent

Insiders, occasional insiders and Sensitive Persons, informing insiders

and obtaining their explicit recognition of their obligations, and issuing

oral advisory notice prior to completion of a transaction by permanent or

occasional insiders.

7.2.4.4

E-LEARNING

In order to respond to the recommendations of the AMF

(position-recommendation DOC-2016-08 “Guide to ongoing information

and management of inside information”, amended on 29April 2021,

Article 2.1.2.3.) Hermès International has developed an e-learning

course on the prevention of market abuse. This training, launched on

1February 2022, is compulsory for all Permanent Insiders and Sensitive

Persons.

7.2.5

MATERIAL CONTRACTS, SHAREHOLDER

PACTS AND AGREEMENTS

7.2.5.1

MATERIAL CONTRACTS

During the last two financial years, the Company has not entered into any

significant contracts, other than those entered into in the normal course

of business, conferring a significant obligation or commitment for the

entire Group.

The information relating to the priority right to acquire Hermès

International shares and to the Dutreil agreements in force is presented

below (respectively in § 7.2.5.2 and § 7.2.5.3).

◆

the priority acquisition right that H51 benefits from covered – at the

date of signature – most of the Hermès International shares also held

by the members of the Hermès family group (as at 31December

2021, approximately 12.3% of the capital held by H2 and other

members of the Hermès family group, see § 7.2.2.5);

◆

the priority acquisition right was granted by members of the Hermès

family group and descendants of these members who do not yet

directly or indirectly hold shares in the Company.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL460

INFORMATION ON THE COMPANY AND ITS SHARE CAPITAL

INFORMATION ON SHARE CAPITAL AND SHAREHOLDERS

7.2.5.2

PRIORITY ACQUISITION RIGHTS

A priority right to acquire Hermès International shares (AMF notice

No.211C2288) came into force on 13December 2011.

This priority acquisition right is stipulated for the benefit of H51, a société

par actions simplifies à capital variable (simplified joint stock company

with variable capital), and was initially granted by 102 natural persons

and 33 legal entities (all members, held by members or for whom one of

the parents is a member of the Hermès family group), representing a

total of about 12.3% of the share capital of Hermès International.

By amendment (AMF notice No.213C0716) which came into force on

17June 2013, the price at which H51 could acquire the Hermès

International shares from the members of the Hermès family group

pursuant to this priority acquisition right would be equal to the average of

the prices weighted by volumes (on the entire trading platform) of the

Hermès International share during the 30stock market trading days

preceding the day of notification of the transfer, unless the said share is

insufficiently liquid (as defined in the amendment), in which case an

expert appraisal procedure will be implemented.

To the Company’s knowledge:

The definition and description of the organisation of the Hermès family

group are presented in chapter9 “Additional information”, § 9.6; in

§ 7.2.2.3; and in chapter3 “Corporate governance”, § 3.2.1.

7.2.5.3

DUTREIL AGREEMENTS

The following shareholder agreements, falling within the scope of the Dutreil law and still in force in 2022, were brought to the Company’s attention:

Pacte

Dutreil

Transmission

02/2020.1

Pacte

Dutreil

Transmission

02/2020.2

Pacte

Dutreil

Transmission

02/2020.3

Pacte

Dutreil

Transmission

02/2020.4

Pacte

Dutreil

Transmission

07/2020.1

Pacte

Dutreil

Transmission

07/2020.2

Pacte

Dutreil

Transmission

10/2020.1

Pacte

Dutreil

Transmission

11/2020.1

Pacte

Dutreil

Transmission

03/2021

Pacte

Dutreil

Transmission

06/2021.1

Pacte

Dutreil

Transmission

06/2020.2

Regime Article787 B of the French General Tax Code (Code général des impôts, CGI)

Date of signature

7February

2020

7February

2020

20February

2020

28February

2020

16July

2020

17July

2020

29October

2020

15 November

2020

23March

2021

4June

2021

15June

2021

Duration of the

collective commitment

Two years from the date of registration or

the date of filing of the declaration

recording the change

Two years

from the

date of

registration

(in this case,

28February

2020)

Two years from the date of registration or the date of filing of the

declaration recording the change

Two years

from the

date of

registration

(in this case,

4June

2021)

Two years

from the

date of

registration

(in this case,

15June

2021)

Contractual duration of

the agreement

Procedures for renewal Non-renewable

Percentage of the share

capital covered by the

agreement on the date

of its signature

54.48% 54.22% 54.62% 60.87% 54.22% 54.62% 54.23% 54.24% 54.24% 54.37% 54.31%

Percentage of voting

rights covered by the

agreement on the date

of its signature

Name of signatories

having the capacity of

Senior Executives

(within the meaning of

ArticleL.621-18-2-a of

-the -French Monetary

and Financial Code

(Code monétaire et

financier)

63.95% 63.79% 64.03% 71.65% 63.79% 64.03% 63.79% 63.83% 63.80% 63.88% 63.81%

On the date of signature of the agreement:

Émile HermèsSAS, Executive Chairman and Active partner

Axel Dumas, Executive Chairman

Name of signatories

having close personal

links with the Senior

Executives (according

to the meaning of

ArticlesL.621-18-2-c

and R.621-43-1 of the

French Monetary and

Financial Code (Code

monétaire et financier)

All signatories

Names signatories

holding at least 5% of

the share capital

and/or voting rights in

the Company as at

31December 2021

H51 H51 H51

H51

H51 H51 H51 H51 H51 H51 H51

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 461

INFORMATION ON THE COMPANY AND ITS SHARE CAPITAL

DIVIDEND POLICY

7.3

DIVIDEND POLICY

7.3.1

PRINCIPLES

Subject to the investments needed for the Company’s development and

the corresponding financing requirements, the Company’s current

intention is to continue the “ordinary” dividend policy it has conducted

over the past several years. The amounts of dividends paid in each of the

financial years included in the historical financial information are shown

in chapter9 “Additional information”, § 9.4.

You are reminded that, in order to distribute part of the large amount of

cash available, an “exceptional” dividend of €5.00 was paid in 2012,

2015 and 2018, in addition to the “ordinary” dividend.

7.3.2

PROPOSAL SUBMITTED TO THE 2022

GENERAL MEETING

During the General Meeting of 20April 2022, it will be proposed that the

ordinary dividend be set at €8.00 per share. In view of the level of cash

reached at the end of 2021, the Executive Management decided to pay

an interim ordinary dividend of €2.50 per share, which was paid on

23February 2022. In future, the Executive Management will decide case

by case, given the situation of the Group and its prospects, whether it is

appropriate to pay interim dividends before the General Meeting. In

accordance with the law, the time limit after which entitlement to

dividends of Hermès International shares ceases is five years from the

dividend payment date. After the five-year time limit expires, the Company

pays over any unclaimed dividends to the tax centre to which it reports.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL462

INFORMATION ON THE COMPANY AND ITS SHARE CAPITAL

STOCK MARKET INFORMATION

7.4

STOCK MARKET INFORMATION

7.4.1

SUMMARY OF STOCK MARKET INFORMATION

Subject to the decisions of the Ordinary General Meeting of 20April 2022, an interim dividend of €2.50 was paid on 23February 2022.(1)

(2) In the context of the health crisis linked to the Covid-19 pandemic, on 30March 2020, on the proposal of the Executive Management, the Supervisory Board decided

to modify the dividend distribution proposal initially submitted to the Shareholders’ General Meeting of 24April 2020 and to reduce the amount from €5.00 to €4.55

per share, i.e. the same amount as that paid in 2019.

7.4.2

HISTORY OF MONTHLY TRANSACTIONS

In number of shares1

(Source Bloomberg)

3,500,000

3,000,000

2,500,000

2,000,000

1,500,000

1,000,000

500,000

2015 2016 2017 2018 2019 2020 2021

1. Euronext.

(Source Bloomberg)

2021 2020 2019

Number of shares as at 31December 105,569,412 105,569,412 105,569,412

Average number of shares (excluding treasury shares) 104,623,330 104,430,772 104,233,233

Market capitalisation as at 31December €162.15billion €92.86billion €70.33billion

Earnings per share (excluding treasury shares) €23.37 €13.27 €14.66

Dividend per share €8.00

€4.55 €4.55

Average daily volume (Euronext) 55,257 66,151 54,467

12-month high share price €1,678.00 €890.20 €689.20

12-month low share price €839.40 €516.00 €462.40

12-month average share price €1,190.97 €729.42 €607.44

Share price as at 31December €1,536.00 €879.60 €666.20

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 463

INFORMATION ON THE COMPANY AND ITS SHARE CAPITAL

STOCK MARKET INFORMATION

7.4.3

HERMÈS SHARE PRICE HISTORY

The company Hermès International was listed on the CAC40 on 7June 2018 and in the EURO STOXX 50 index on 20December 2021.

In euros

1,950

1,750

1,550

1,350

1,150

950

750

550

350

150

2016 2017 2018

2019 2020 2021

CHANGE IN SHARE PRICE OVER THE LAST FIVE FINANCIAL YEARS

2017

Month

High Low Average closing price

Price in euros

Monthly average

of daily transactions

on Euronext

January 414.00 386.30 401.50 35,958

February 417.40 392.45 405.64 38,331

March 444.40 414.25 429.86 36,030

April 468.30 431.40 449.63 75,106

May 456.20 430.25 441.84 98,916

June 452.00 431.25 440.97 89,970

July 456.75 425.55 438.92 106,816

August 449.00 427.50 439.58 38,568

September 450.10 415.70 431.30 67,862

October 447.50 422.85 432.84 47,319

November 450.30 436.00

432.95

443.16

442.93

58,268

December 450.30 57,268

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL464

INFORMATION ON THE COMPANY AND ITS SHARE CAPITAL

STOCK MARKET INFORMATION

2018

Month

High Low Average closing price

Price in euros

Monthly average

of daily transactions

on Euronext

January 451.70 439.00 445.35 39,874

February 449.90 417.90 438.24 54,890

March 482.70 437.30 454.28 64,429

April 535.80 479.60 513.27 59,598

May 614.60 534.60 586.93 83,352

June 613.80 515.20 551.00 151,521

July 558.60 516.00 535.85 68,505

August 572.80 539.40 551.72 41,497

September 576.80 526.00 548.48 81,654

October 574.20 482.20 511.59 89,945

November

December

515.80

498.60

475.40 492.25 71,050

463.50 479.86 70,814

2019

Month

High Low Average closing price

Price in euros

Monthly average

of daily transactions

on Euronext

January 524.40 462.40 494.16 58,397

February 562.40 519.20 541.57 49,241

March 598.40 554.00 578.31 59,544

April 627.20 586.60 604.95 54,551

May 625.20 587.80 609.16 57,024

June 638.40 590.60 618.30 56,104

July 652.00 626.20 640.47 45,999

August 645.40 597.80 614.95 56,340

September 656.60 614.60 633.02 56,847

October 654.80 599.20 630.59 50,310

November

December

683.80

689.20

641.00 657.22 58,972

644.20 666.24 50,737

2020

Month

High Low Average closing price

Price in euros

Monthly average

of daily transactions

on Euronext

January 725.60 662.80 693.35 63,670

February 718.00 615.00 688.27 82,254

March 671.60 516.00 610.17 135,051

April 701.00 592.00 656.02 59,162

May 751.60 646.20 687.03 61,088

June 788.20 715.80 750.86 69,066

July 780.00 686.20 750.28 56,949

August 729.60 679.00 700.70 47,673

September 765.40 716.20 737.10 47,135

October 830.00 738.40 784.53 57,265

November

December

865.00

890.20

791.80 833.90 64,960

815.80 849.09 49,433

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 465

INFORMATION ON THE COMPANY AND ITS SHARE CAPITAL

STOCK MARKET INFORMATION

2021

Month

High Low Average closing price

Price in euros

Monthly average

of daily transactions

on Euronext

January 898.20 839.40 874.54 47,680

February 1,018.00 847.60 918.62 47,871

March 984.80 872.80 939.34 53,706

April 1,065.50 945.80 1,013.45 47,394

May 1,160.00 1,029.00 1,077.23 47,766

June 1,237.50 1,141.50 1,198.11 49,160

July 1,311.50 1,191.00 1,253.09 41,252

August 1,354.50 1,202.50 1,293.64 47,270

September 1,325.50 1,190.50 1,266.00 50,444

October 1,370.50 1,166.50 1,277.69 52,304

November 1,676.50 1,375.00

1,462.00

1,529.41

1,570.37

75,093

December 1,678.00 98,808

7.4.4

ELEMENTS LIABLE TO HAVE AN IMPACT IN THE EVENT OF A PUBLIC OFFERING

To the best of the Company’s knowledge, no items other than those relating to the items referred to in chapter3 “Corporate governance”, § 3.9.2 are

likely to have an impact in the event of a public offering, or could have the effect of delaying or preventing a change of control.

◆

the convening of General Meetings, with systematic sending of the

notice of meeting, the single postal and proxy voting form, a request

for an admission card and the legal information documents;

◆

the management of securities, the taxation of securities and the

organisation of the General Meeting.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL466

INFORMATION ON THE COMPANY AND ITS SHARE CAPITAL

SHAREHOLDER INFORMATION

7.5

SHAREHOLDER INFORMATION

7.5.1

RELATIONS WITH SHAREHOLDERS

Shareholders and investors may obtain information on the Hermès Group

by contacting:

MsCarole Dupont-Pietri

Director of Financial Communications and Investor Relations

Hermès International

13-15, rue de la Ville-l’Évêque – 75008 Paris

Tel.: +33 (0)1 40 17 49 26

Email: [email protected]

7.5.2

SECURITIES SERVICE

These shares are registered in a securities account held by:

BNP PARIBAS SECURITIES SERVICES

Issuer Services

LES GRANDS MOULINS DE PANTIN

9, rue du Débarcadère – 93761 Pantin Cedex

Tel.: +33 (0)8 26 10 91 19

NOA – NextGen Online Assistant: virtual assistant on Planetshares

(https://planetshares.bnpparibas.com).

7.5.3

DOCUMENTS AVAILABLE TO THE PUBLIC

Legal documents relating to the Company, and more broadly regulated

information within the meaning of Article221-1 of the General Regulation

of the AMF are available on the Company’s financial information site

(https://finance.hermes.com/en/regulated-information/). They may also

be consulted upon appointment in print version during business hours at

the Company’s registered office. On this website, shareholders and

investors can access information on the Group Management, governing

bodies and registration documents, universal registration documents and

financial press releases, available in French and English, for the last five

financial years.

Information on the website is not part of the universal registration

document, unless it is incorporated by reference.

7.5.4

BECOMING A HERMÈS INTERNATIONAL

SHAREHOLDER

Registered shares

Hermès International offers its shareholders the opportunity to register

their shares in pure registered form, offering the following advantages:

Free management

Pure registered shares are handled directly by BNP Paribas Securities

Services. Shareholders must sign a service agreement to open a fully

registered share account, setting out the terms and conditions for buying

and selling shares via BNP Paribas Securities Services.

Pure registered shareholders are totally exempt from custody fees, as

well as costs inherent in the day-to-day management of their shares such

as conversion to bearer shares, transfer of securities, changes in legal

situations (transfers, donations, inheritance, etc.), securities transactions

(capital increase, allocation of securities, etc.) and the payment of

dividends.

The guarantee of personalised information

Pure registered shareholders receive personalised information on:

In addition, an online service is available for consultation of equity

holdings and placing of stock market orders:

Easy access to the General Meeting

Like any shareholder of the Company, registered shareholders are

entitled to attend the General Meeting and enjoy the benefit of not having

to make a prior request for a shareholding certificate.

In addition to the usual voting methods, holders of pure registered shares

can vote before the meeting or give their proxy via “Votaccess”, a voting

platform.

Registration procedures

To transfer your securities directly to pure registered shares or for more

information about pure registered shares, please contact:

BNP PARIBAS SECURITIES SERVICES:

Hermès International Shareholder Relations

Les Grands Moulins de Pantin

9, rue du Débarcadère – 93761 Pantin Cedex

From France: 0826109119

From abroad: +33 1 55 77 40 57

Administered registered shares are handled by another financial

institution, of the shareholder’s choice, that may charge custody fees.

https://planetshares.bnpparibas.com

https://www.planetshares.bnpparibas.com.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 467

INFORMATION ON THE COMPANY AND ITS SHARE CAPITAL

SHAREHOLDER INFORMATION

Bearer shares

Bearer shares are handled by a financial institution that may apply

custody fees. Shareholders who opt for this form of administration are

not known to the Company and must identify themselves if they wish to

obtain documents and attend General Meetings.

Thus, to participate in the General Meeting, bearer shareholders must

obtain a shareholding certificate certifying the registration or recording in

the books of their shares no later than midnight, Paris time, two working

days prior to the General Meeting, from the financial intermediary

managing their Hermès International securities.

7.5.5

DIALOGUE WITH SHAREHOLDERS AND

THE FINANCIAL COMMUNITY IN 2021

The financial communication and investor relations department engages

in dialogue with the financial community and all Group shareholders

throughout the year, adapting in particular this year to the health context

through the use of digital means, and by strengthening its discussions

with shareholders.

In 2021:

Number of

roadshows

Investor

meetings

Institutions

met

140

◆

first, the main trends in the métiers and exclusive distribution,

presented by the Executive Vice-President Finance;

◆

then, an immersion in the House’s largest métier, Leather Goods &

Saddlery, and the excellence of the savoir-faire of our craftspeople,

presented by the Executive Vice-President Manufacturing Division &

Equity Investments; and

◆

finally, Hermès’ commitments in terms of social and environmental

responsibility, developed by the Executive Vice-President Corporate

Development and Social Affairs.

◆

the dynamics of the business model;

◆

Hermès Leather Goods & Saddlery: unique savoir-faire constantly

reinvented and;

◆

a craftsmanship, responsible and sustainable business model, whose

commitments to sustainable development have been recognised by

the exceptional increase in non-financial ratings this year.

•

half-yearly and annual financial presentations, and press releases,

•

the universal registration document and the half-year financial

report,

•

letters to shareholders, in the section “Shareholders’ Guide”,

•

the House’s key figures and the House’s financial events;

◆

a specific “General Meeting” section, which allows shareholders to

read all the information relating to this event and its retransmission;

◆

a section dedicated to the “Group” and the specific features of its

independent craftsmanship model, its creativity and know-how;

◆

the section dedicated to “Sustainable development”, which contains

the commitments and actions carried out by Maison Hermès, has

been enhanced. The House’s objectives, initiatives and number of

projects are set out in this dedicated digital space. The Group thus

confirms its commitment to social, societal and environmental

performance, which is part of the Maison Hermès DNA and its

craftsmanship model.

The House’s sustainable, responsible and supportive model was

presented at several events and in publications during 2021.

In October2021, during the 12th Grand Prix de Transparence awards,

Hermès International was awarded the Grand Prix de Transparence in

the “CAC Large 60” category (CAC40 and CAC Next 20) and was ranked

third in the TOP 20 most transparent companies (see chapter3

“Corporate governance”, § 3.1.2), based on the criteria of accessibility,

accuracy, comparability and availability of financial information.

In June2021, Hermès was awarded the Palme de la performance des

jeunes actionnaires, awarded by the Federation of Individual Investors

and Investment Clubs (F2iC) in partnership with the EDHEC Business

School, which demonstrates the dynamism of the Hermès share over the

past ten years.

The Shareholders’ General Meeting and the presentations of the

financial results were broadcast live and recorded on the Company’s

website at https://finance.hermes.com/en/.

On 8December 2021, Hermès organised an Analysts’ Day at its

premises in Pantin. This day was an opportunity to open the doors of its

workshops and share the House’s values, through three presentations:

The main topics on the Analysts’ Day agenda were:

All presentations relating to the event are available at the following

address: https://finance.hermes.com/en/publications/.

Hermès is making a website, https://finance.hermes.com/en/,

available

to the financial community, its shareholders and, more generally, its

stakeholders, which will be enhanced in 2021, in particular in respect of

information relating to sustainable development.

◆

In the “Investors” section, shareholders can in particular find:

◆

https://www.amf-france.org, for press releases, registration

documents/universal registration documents, threshold crossings,

shareholder pacts and declarations sent to the AMF;

◆

https://www.journal-officiel.gouv.fr/balo, for documents published in

the Bulletin des Annonces Légales Obligatoires (BALO);

◆

https://www.infogreffe.fr for filings made with the clerks of the

Commercial Court of Paris (search by identification number:

572076396).

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL468

INFORMATION ON THE COMPANY AND ITS SHARE CAPITAL

SHAREHOLDER INFORMATION

Financial information, including financial press releases, presentations of

the Group’s revenues and financial results, the letter to shareholders,

information on General Meetings and the universal registration

document, is available and archived on the Company’s website.

In 2021, Hermès published two issues of its Letter to Shareholders, in

French and English, a regular source of information on its news,

presenting the main facts and figures and providing information on the

Company’s relationship with its shareholders.

Shareholders can also consult the information published by the Company

on the following websites:

7.5.6

FINANCIAL CALENDAR FOR 2022

(1) The dates of the financial publications (revenue, annual and half-year results) and of the General Meeting are available on the website.

7.5.7

REGULATED INFORMATION

All the documents constituting regulated information within the meaning of the French Financial Markets Authority (AMF) are available on the website

under the heading “Regulated information”.

7.5.8

OBLIGATIONS OF DECLARATION OF THRESHOLD CROSSINGS AND NOMINATIVE REGISTRATION

Crossing of threshold disclosures

Legal thresholds (Articles L. 233-7

et seq. of the French Commercial Code

(Code de commerce) and

Articles L. 433-3 et seq. of the French

Monetary and Financial Code

(Code monétaire et financier)

Ownership thresholds

(Article 11 of the Articles of

Association)

Nominative registration requirement

(Article 11 of the Articles

of Association)

Recipients The Issuer

The AMF, which makes this

information public

The Issuer

Share capital and voting rights

thresholds upwards and

downwards

Declaration time limit

5%, 10%, 15%, 20%, 25%, 30%,

1/3, 50%, 2/3, 90% and 95%

Owing to the existence of double

voting rights, in practice, 22

thresholds must be monitored.

0.5% (or any multiple of this

percentage)

From 0.5%

The thresholds may be attained after shares are acquired or sold, regardless of the means (purchase,

transfer, merger, demerger, scrip dividends or by any other means) or following a change in the apportionment

of voting rights (gain or loss of double voting rights, etc.).

The shares to be taken into account include not just newly acquired shares, but the shares that the

shareholder has the right to acquire at their sole initiative pursuant to an agreement (contract of sale, option,

etc.) and those that the shareholder can acquire at their sole initiative, immediately or in the future, as a result

of holding a financial instrument (bond redeemable for shares, equity swap, warrant, etc.), that gives rise to a

physical settlement (delivery of shares) or a settlement in cash, subject to the exemptions provided for in

ArticleL.233-7IV of the French Commercial Code (Code de commerce).

By the 15thday of each month, the Company publishes a report on its website

(https://finance.hermes.com/en/) disclosing the total number of shares, the total number of theoretical voting

rights (including shares disqualified from voting) and the total number of exercisable voting rights (excluding

shares disqualified from voting) that make up the share capital on the last day of the previous month.

Publication of the 2021 annual consolidated results 18/02/2022

Publication of consolidated revenue for the first quarter of 2022 14/04/2022

Shareholders’ Combined General Meeting 20/04/2022

Publication of consolidated results for the first half of 2022 29/07/2022

Publication of consolidated revenue for the third quarter of 2022 October2022

https://finance.hermes.com/en/calendar/

https://finance.hermes.com/en,

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 469

INFORMATION ON THE COMPANY AND ITS SHARE CAPITAL

SHAREHOLDER INFORMATION

Crossing of threshold disclosures

Legal thresholds (Articles L. 233-7

et seq. of the French Commercial Code

(Code de commerce) and

Articles L. 433-3 et seq. of the French

Monetary and Financial Code

(Code monétaire et financier)

Ownership thresholds

(Article 11 of the Articles of

Association)

Nominative registration requirement

(Article 11 of the Articles

of Association)

Before the close of trading four

trading days after a legal threshold

was crossed.

Before the close of trading five

trading days after a threshold

under the Articles of Association

was crossed (even after crossing

any of the legal thresholds).

Before the close of trading five

trading days after a threshold

under the Articles of Association

was crossed.

A copy of the nominative

registration application, sent by

registered post with

acknowledgement of receipt to the

registered office within 10stock

market trading days from the date

on which the threshold is attained,

shall constitute a declaration of

attaining the ownership threshold

in question.

Penalty for non-compliance with

ownership threshold disclosure and

nominative registration

requirements

Shares exceeding the fraction that

should have been declared are

deprived of voting rights for any

General Meeting held until the

expiry of a period of two years

following the date of regularisation

of the notification.

The shares that exceed the

threshold subject to disclosure or

having been subject to disclosure

shall be disqualified from voting

rights.

In the event of regularisation, the

corresponding voting rights can

only be exercised once the period

stipulated by law and current

regulations has expired.

The shares that exceed the

threshold subject to disclosure or

having been subject to disclosure

shall be disqualified from voting

rights.

Based on the total number of theoretical voting rights.(1)

8.1.1

Ordinary business

472

8.1.2

Extraordinary business

473

8.2.1

Ordinary business

474

8.2.2

Extraordinary business

490

8.3

SUPERVISORY BOARD REPORT TO THE COMBINED GENERAL MEETING

OF 20APRIL 2022

496

8.4

STATUTORY AUDITORS’ REPORTS

498

8.4.1

Statutory Auditors’ report on the financial statements

498

8.4.2

Statutory Auditors’ report on the consolidated financial statements

498

8.4.3

Statutory Auditors’ special report on related-party agreements

499

8.4.4

Report by one of the Statutory Auditors, designated as an independent third party,

on the consolidated social, environmental and societal information contained in

the management report

501

8.4.5

Statutory Auditors’ report on the share capital reduction (seventeenth resolution)

501

8.4.6

Statutory Auditors’ report on the authorisation to grant share purchase options

(eighteenthresolution)

502

8.4.7

Statutory Auditors’ report on the authorisation to grant existing shares free of

consideration (nineteenth resolution)

503

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 471

COMBINED GENERAL MEETING

OF 20 APRIL 2022

AGENDA

8.1

472

8.2

EXPLANATORY STATEMENTS AND DRAFT RESOLUTIONS

474

◆

On the financial statements for the year ended 31December 2021

and on the Company’s activity for said financial year.

◆

On the management of the Group and the consolidated financial

statements for the year ended 31December 2021.

◆

On the resolutions relating to ordinary business.

Supervisory Board corporate governance report

◆

On the annual financial statements.

◆

On the consolidated financial statements.

◆

On related-party agreements.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL472

COMBINED GENERAL MEETING OF 20 APRIL 2022

AGENDA

8.1

AGENDA

8.1.1

ORDINARY BUSINESS

8.1.1.1

PRESENTATION OF REPORTS TO BE SUBMITTED

TO THE ORDINARY GENERAL MEETING

Executive management reports

Supervisory Board report to the Combined General Meeting

of 20April 2022

Statutory Auditors’ reports

Report by one of the Statutory Auditors, designated

as an independent third party, on the consolidated social,

environmental and societal information contained

in the management report

VOTING ON ORDINARY RESOLUTIONS

8.1.1.2

First resolution

Approval of the parent company financial statements.

Second resolution

Approval of the consolidated financial statements.

Third resolution

Executive Management discharge.

Fourth resolution

Allocation of net income – Distribution of an ordinary dividend.

Fifth resolution

Approval of related-party agreements.

Sixth resolution

Authorisation granted to the Executive Management to trade in the

Company’s shares.

Seventh resolution

Approval of the information referred to inI of ArticleL.22-10-9 of the

French Commercial Code (Code de commerce) with regard to

compensation for the financial year ended 31December 2021, for all

Corporate Officers (global ex-post vote).

Eighth resolution

Approval of total compensation and benefits of all kinds paid during or

awarded in respect of the financial year ended 31December 2021 to

MrAxel Dumas, Executive Chairman (individual ex-post vote).

Ninth resolution

Approval of total compensation and benefits of all kinds paid during or

awarded in respect of the financial year ended 31December 2021 to

the company Émile HermèsSAS, Executive Chairman (individual ex-post

vote).

Tenth resolution

Approval of total compensation and benefits of all kinds paid during or

awarded in respect of the financial year ended 31December 2021 to

MrÉric de Seynes, Chairman of the Supervisory Board (individual ex-post

vote).

Eleventh resolution

Approval of the compensation policy for the Executive Chairmen (ex-ante

vote).

Twelfth resolution

Approval of the compensation policy for Supervisory Board members

(ex-ante vote).

Thirteenth resolution

Re-election of MrCharles-Éric Bauer as Supervisory Board member for a

term of three years.

Fourteenth resolution

Re-election of MsEstelle Brachlianoff as Supervisory Board member for a

term of three years.

Fifteenth resolution

Re-election of MsJulie Guerrand as Supervisory Board member for a

term of three years.

Sixteenth resolution

Re-election of MsDominique Senequier as Supervisory Board member

for a term of three years.

◆

On the capital decrease (17

resolution).

◆

On the authorisation to grant stock options (18

resolution).

◆

On the authorization to grant free existing shares (19

resolution).

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 473

COMBINED GENERAL MEETING OF 20 APRIL 2022

AGENDA

8.1.2

EXTRAORDINARY BUSINESS

8.1.2.1

PRESENTATION OF REPORTS TO BE SUBMITTED

TO THE EXTRAORDINARY GENERAL MEETING

Executive management report

◆

On the resolutions relating to extraordinary business.

Supervisory Board report to the Combined General Meeting

of 20 April 2022

Statutory Auditors’ reports

8.1.2.2

VOTING ON EXTRAORDINARY RESOLUTIONS

Seventeenth resolution

Authorisation to be granted to the Executive Management to reduce the

share capital by cancellation of all or part of the treasury shares held by

the Company (ArticleL.22-10-62 of the French Commercial Code (Code

de commerce)) – General cancellation programme.

Eighteenth resolution

Authorisation to be given to Executive Management to grant stock

options.

Nineteenth resolution

Authorisation to be given to Executive Management to grant free existing

shares.

Twentieth resolution

Delegation of authority to carry out the formalities related to the General

Meeting.

◆

the parent company financial statements for financial year 2021, which show a net profit of €1,165,343,741.66, and the expenses and

charges mentioned in Article39-4 of the French General Tax Code (Code général des impôts);

◆

the consolidated financial statements for financial year 2021.

◆

the consolidated financial statements in the 2021 universal registration document (chapter5 “Consolidated financial statements”,

§ 5.1 to 5.6);

◆

the parent company financial statements in the 2021 universal registration document (chapter6 “Parent company financial statements”,

§ 6.1 to 6.5);

◆

the Statutory Auditors’ reports on the parent company and consolidated financial statements in the 2021 universal registration document

(chapter6 “Parent company financial statements”, § 6.9 and chapter5 “Consolidated financial statements”, § 5.7, respectively).

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL474

COMBINED GENERAL MEETING OF 20 APRIL 2022

EXPLANATORY STATEMENTS AND DRAFT RESOLUTIONS

8.2

EXPLANATORY STATEMENTS AND DRAFT RESOLUTIONS

Resolutions submitted for approval to the Combined General Meeting of 20April 2022.

8.2.1

ORDINARY BUSINESS

RESOLUTIONS 1, 2 AND 3: APPROVAL OF THE ANNUAL FINANCIAL STATEMENTS (PARENT COMPANY AND

CONSOLIDATED) – EXECUTIVE MANAGEMENT DISCHARGE

Explanatory statement

In the first and second resolutions, we ask you to approve:

In the third resolution, we ask you to grant discharge to the Executive Management for its management in respect of said financial year.

You will find:

First resolution:

Approval of the parent company financial statements

The General Meeting, acting under the quorum and majority

requirements for Ordinary General Meetings, having reviewed the

Executive management report on the activity and situation of the

Company, the Supervisory Board report and the Statutory Auditors’ report

for the financial year ended 31December 2021, approves as presented

the parent company financial statements for said financial year, including

the balance sheet, income statement, and notes, which show a net profit

of €1,165,343,741.66, as well as the transactions reflected in these

financial statements or described in these reports.

Pursuant to Article223 quater of the French General Tax Code (Code

général des impôts), the General Meeting approves the expenses and

charges mentioned in Article39-4 of the French General Tax Code, which

amounted in the financial year ended 31December 2021 to €346,123,

and which generated an estimated income tax expense of €98,334.

Second resolution:

Approval of the consolidated financial statements

The General Meeting, acting under the quorum and majority

requirements for Ordinary General Meetings, having reviewed the

Executive management report on the activity and situation of the Group,

the Supervisory Board report and the Statutory Auditors’ report for the

financial year ended 31December 2021, approves as presented the

consolidated financial statements for said financial year, including the

balance sheet, income statement, and notes, which show a consolidated

net profit of €2,454 million, as well as the transactions reflected in these

financial statements or described in these reports.

Third resolution:

Executive Management discharge

The General Meeting, acting under the quorum and majority

requirements for Ordinary General Meetings, grants discharge to the

Executive Management for its management in respect of the financial

year beginning 1January 2021 and ended 31December 2021.

◆

to the Active partner, pursuant to Article26 of the Articles of

Association, in the amount of €7,807,803.07;

◆

to the shareholders, an “ordinary” dividend of €8.00 per share, i.e.

€844,555,296.00 ;

◆

allocation to other reserves of the sum of €200,000,000.00;

◆

the balance to the “Retained earnings” account, i.e.

€2,495,765,147.71;

◆

together €3,548,128,246.78.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 475

COMBINED GENERAL MEETING OF 20 APRIL 2022

EXPLANATORY STATEMENTS AND DRAFT RESOLUTIONS

FOURTH RESOLUTION: ALLOCATION OF NET INCOME – DISTRIBUTION OF AN ORDINARY DIVIDEND

Explanatory statement

In the fourth resolution, we submit for your approval the allocation of net income for the period, in the amount of €1,165,343,741.66. Of this

amount, pursuant to the Articles of Association, the sum of €7,807,803.07 is to be distributed to the Active partner.

We invite you to allocate €200,000,000.00 to other reserves. The Supervisory Board proposes that you set the ordinary dividend at €8.00 per

share. The proposed distribution would thus be €844,555,296.00.

For shareholder beneficiaries who are natural persons fiscally domiciled in France, this entire dividend will be subject to a single flat-rate

withholding tax at the overall rate of 30%.

The latter will consist in the application of tax on the income paid as an interim payment (so-called flat-rate withholding tax) withheld at source at a

single flat rate of 12.8% of gross revenue, to which will be added social security withholdings of 17.2%.

This flat-rate taxation at the single rate of 12.8% will be automatically applicable unless the progressive tax scale is opted for overall, allowing the

taxpayer to benefit from the 40%

tax allowance.

For shareholders who are not fiscally domiciled in France, the dividend distributed is subject to withholding tax at source at one of the rates

specified in Article187 of the French General Tax Code (Code général des impôts), in accordance with Article119 bis of said Code, which may be

reduced in application of any tax agreement concluded between France and the State in which the beneficiary is fiscally resident.

An interim dividend of €2.50 per share having been paid on 23February 2022, the balance of the ordinary dividend, i.e. €5.50 per share, will be

detached from the share on 25April 2022 and will be payable in cash on 27April 2022 on the positions closed in the evening of 26April 2022.

As Hermès International is not entitled to receive dividends for shares held in treasury, the corresponding sums will be transferred to “Retained

earnings” on the date the dividend becomes payable.

We note that the five-year summary of the Company’s financial data required under ArticleR.225-102 of the French Commercial Code (Code de

commerce) is presented in the 2021 universal registration document (chapter6 “Parent company financial statements”, § 6.6).

1. Within the scope of the single flat-rate withholding tax, taxpayers may opt, expressly and irrevocably before the deadline for the declaration and

overall for all their income defined in Article200-A-1 of the French General Tax Code (Code général des impôts), for their income to be taxed using

the progressive income tax scale, in accordance with Article200-A-2 of the French General Tax Code.

Fourth resolution:

Allocation of net income – Distribution of an ordinary

dividend

The General Meeting, acting under the quorum and majority

requirements applicable to Ordinary General Meetings, noting that the

profit for the year amounts to €1,165,343,741.66 and that the previous

retained earnings amounts to €2,382,784,505.12, and after noting that

the legal reserve is fully funded, approves the allocation of these

amounts, representing distributable profits in the amount of

€3,548,128,246.78, as proposed by the Supervisory Board, namely:

The total amount of the distribution is calculated on the basis of the number of shares comprising the share capital at 31 December 2021, i.e. 105,569,412 shares, and1.

may vary if the number of shares giving entitlement to dividends changes between 1 January 2022 and the ex-dividend date, depending in particular on the change in the

number of treasury shares, which do not give entitlement to dividends in accordance with the provisions of Article L. 225-210 paragraph 4 of the French Commercial Code.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL476

COMBINED GENERAL MEETING OF 20 APRIL 2022

EXPLANATORY STATEMENTS AND DRAFT RESOLUTIONS

The Ordinary General Meeting resolves that the balance of the ordinary

dividend for the period (an interim dividend of €2.50 per share was paid

on 23February 2022), i.e. €5.50 per share, will be detached from the

share on 25April 2022 and payable in cash on 27April 2022 on the

positions closed in the evening of 26April 2022.

As Hermès International is not entitled to receive dividends for shares

held in treasury, the corresponding sums will be transferred to “Retained

earnings” on the date the dividend becomes payable.

For shareholder beneficiaries who are natural persons fiscally domiciled

in France, this entire dividend will be subject to a single flat-rate

withholding tax at the overall rate of 30%.

The latter will consist in the application of tax on the income paid as an

interim payment (so-called flat-rate withholding tax) withheld at source at

a single flat rate of 12.8% of gross revenue, to which will be added social

security withholdings of 17.2%.

This flat-rate taxation at the single rate of 12.8% will be automatically

applicable unless the progressive tax scale is opted for overall, allowing

the taxpayer to benefit from the 40% tax allowance.

For shareholders who are not fiscally domiciled in France, the dividend

distributed is subject to withholding tax at source at one of the rates

specified in Article187 of the French General Tax Code (Code général

des impôts), in accordance with Article119 bis of said Code, which may

be reduced in application of any tax agreement concluded between

France and the State in which the beneficiary is fiscally resident.

In accordance with the provisions of Article43 bis of the French General Tax Code (Code general des impôts), the General Meeting duly notes that

dividends distributed to shareholders in respect of the three previous financial years were as follows:

Prior to the General Meeting of 24April 2020, the Supervisory Board – on the proposal of the Executive Management – decided to reduce the amount of the ordinary(1)

dividend from €5.00 to €4.55 per share, in order to take into account the potential impacts of the Covid-19 pandemic.

Within the scope of the single flat-rate withholding tax, taxpayers may opt, expressly and irrevocably before the deadline for the declaration and overall for all their income1.

defined in Article200-A-1 of the French General Tax Code, for their income to be taxed using the progressive income tax scale, in accordance with Article200-A-2 of the

French General Tax Code.

Financial year

In euros

2020 2019 2018

“Ordinary” dividend 4.55 4.55

4.55

“Exceptional” dividend ---

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 477

COMBINED GENERAL MEETING OF 20 APRIL 2022

EXPLANATORY STATEMENTS AND DRAFT RESOLUTIONS

FIFTH RESOLUTION: APPROVAL OF RELATED-PARTY AGREEMENTS

Explanatory statement

By the fifth resolution, we ask you to approve the new agreements referred to in ArticlesL.226-10, and L.225-38 to L.225-43 of the French

Commercial Code (Code de commerce), the sole agreements which are submitted to the General Meeting for a vote.

Agreement authorised and concluded during the past financial year

Approval of the new commercial conditions applicable to the contract concluded between Hermès International and Studio des Fleurs.

You are reminded that, at its meeting of 20March 2018, the Supervisory Board authorised the conclusion of a contract between Hermès

International and Studio des Fleurs relating to services for shots and retouches for e-commerce product pack shots.

This agreement provided for the revision of tariffs following an initial period of three (3) years by application of an index and a ceiling, with the

possibility of the parties waiving this ceiling if changes in the index or service provisions justified it.

The significant change in tariff practices in the market and, in particular, the index in question, thus led the parties to agree on new trading terms

and conditions for 2021 and 2022.

At its meeting of 29July 2021, the Supervisory Board approved the new commercial conditions applicable to this contract.

The Supervisory Board noted that, pursuant to these new commercial conditions, the increase in prices over the period covered by the contract is

lower than the increase in the index chosen over the same period and that the new commercial conditions agreed upon are therefore in the

Company’s interest.

In accordance with the provisions of ArticlesL.225-40-2 and R.225-30-1 of the French Commercial Code (Code de commerce), Hermès

International published the information relating to this agreement, at the time of its conclusion, in a dedicated section of its website

This agreement is described in the Statutory Auditors’ special report on agreements referred to in ArticlesL.226-10, L.225-38 to L.225-43,

L.22-10-12 and L.22-10-13 of the French Commercial Code (Code de commerce).

This report can be found in the 2021 universal registration document (chapter8 “Combined General Meeting of 20April 2022”, § 8.4.3).

Agreements authorised in prior years

The agreements authorised and signed during previous financial years and whose performance continued during the last financial year are

described in the Statutory Auditors’ special report on the agreements referred to in ArticlesL.226-10, L.225-38 to L.225-43

, L.22-10-12 and

L.22-10-13 of the French Commercial Code (Code de commerce). Since they have already been approved by the General Meeting, they are not

resubmitted to you for a vote.

This report can be found in the 2021 universal registration document (chapter8 “Combined General Meeting of 20April 2022”, § 8.4.3).

Fifth resolution:

Approval of the related-party agreements

The General Meeting, acting under the quorum and majority

requirements applicable to Ordinary General Meetings, having reviewed

the Statutory Auditors’ special report on the agreements pertaining to the

combined provisions of ArticlesL.226-10, L.225-38 to L.225-43,

L.22-10-12 and L.22-10-13 of the French Commercial Code (Code de

commerce), approves said report in all its provisions, as well as the

agreements and transactions referred to therein.

SIXTH RESOLUTION: AUTHORISATION GRANTED TO THE EXECUTIVE MANAGEMENT TO TRADE

IN THE COMPANY’S SHARES

Explanatory statement

In the sixth resolution, we ask you to renew the authorisation granted to the Executive Management to trade in the Company’s shares.

Objectives

The shares may be repurchased in order to be allocated to the objectives permitted by Regulation (EU) No.596/2014 of 16April 2014 on market

abuse (Market Abuse Regulation – “MAR”):

◆

objectives provided for in Article5 of the MAR: capital decrease, hedging of debt securities exchangeable for shares and coverage of employee

shareholding plans;

(https://finance.hermes.com/en/regulated-agreements/).

◆

objectives provided for in Article13 of the MAR and under the sole market practice accepted by the Financial Markets Authority (AMF): the

implementation of a liquidity contract by an investment service provider acting independently and in accordance with the provisions of AMF

Decision No.2021-01 of 22June 2021;

◆

other objectives: acquisitions, hedging of equity securities exchangeable for shares and, more generally, allocation to the completion of any

transactions in accordance with the regulations in force.

◆

purchases and sales of securities representing holdings of up to 10% of the share capital would be authorised, i.e. for indicative purposes as

at 31December 2021: 10,556,941shares;

◆

the maximum purchase price (excluding costs) would be set at €1,900 per share;

◆

the maximum amount of funds to be committed would be set at €3,000million. It is specified that treasury shares held on the day of the

General Meeting are not taken into account in this maximum amount;

◆

pursuant to the law, the total number of shares held at any given date may not exceed 10% of the share capital as at that date.

◆

the number of shares purchased by the Company during the term of

the buyback programme shall not exceed 10% of the total number of

shares comprising the Company’s share capital, at any time; this

percentage shall apply to share capital adjusted in accordance with

transactions that may affect it subsequent to this General Meeting. In

accordance with the provisions of ArticleL.22-10-62 of the French

Commercial Code (Code de commerce), the number of shares used

as a basis for calculating the 10% limit is the number of shares

bought, less the number of shares sold during the term of the

authorisation if these shares were purchased to ensure liquidity

under the conditions defined by the Financial Markets Authority (AMF)

General Regulation, and

◆

the Company will not at any time own more than 10% of its capital on

the date in question;

•

cancelling all or part of the shares bought back in this way in order

notably to increase the return on equity and earnings per share,

and/or to neutralise the dilutive impact for shareholders of capital

increases, wherein such purpose is contingent upon adoption of a

special resolution by the Extraordinary General Meeting,

•

reallocating them upon the exercise of rights attached to debt

securities giving entitlement by conversion, exercise, redemption,

exchange, presentation of a warrant or in any other way, to the

allocation of Company shares,

•

allotting or selling the shares to employees and Corporate Officers

of the Company or a Group company, under the terms and

conditions stipulated by law, as part of stock option plans (in

accordance with the provisions of ArticlesL.225-179 et seq. of

the French Commercial Code (Code de commerce), or free share

allocations (in accordance with the provisions of

ArticlesL.225-197-1 et seq. and L.22-10-59 et seq. of the

French Commercial Code, or with respect to their participation in

the Company’s profit-sharing or through a shareholding plan or a

company or group savings plan (or similar plan) under conditions

provided by law, in particular ArticlesL.3332-1 et seq. of the

French Labour Code (Code du travail);

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL478

COMBINED GENERAL MEETING OF 20 APRIL 2022

EXPLANATORY STATEMENTS AND DRAFT RESOLUTIONS

Limits of the authorisation

Duration of the authorisation

This authorisation would be valid for a period of 18months from the date of the General Meeting.

Sixth resolution:

Authorisation granted to the Executive Management to

trade in the Company’s shares

The General Meeting, acting under the quorum and majority

requirements applicable to Ordinary General Meetings, having reviewed

the Executive management report:

authorises the Executive Management, with the option to

sub-delegate under the terms and conditions set by law, in

accordance with the provisions of ArticlesL.22-10-62 et seq. of the

French Commercial Code (Code de commerce

) and Regulation (EU)

No.596/2014 of 16April 2014 on market abuse (MAR), to buy

Company shares or have Company shares bought, within the limits

stipulated by legal and regulatory provisions, provided that:

resolves that the shares may be acquired with a view to:

◆

objectives provided for in Article5 of the MAR:

◆

objectives provided for in Article13 of the MAR and under the sole

market practice accepted by the Financial Markets Authority (AMF):

•

ensuring the promotion of a secondary market or the liquidity of

the share through an investment service provider acting

independently under a liquidity contract in accordance with an

ethics charter recognised by the Financial Markets Authority (AMF),

and in accordance with the provisions of AMF Decision

No.2021-01 of 22June 2021;

•

retaining the shares, in order subsequently to transfer the shares

in payment, exchange or as other consideration for acquisitions

initiated by the Company, it being specified that the number of

shares purchased by the Company in view of retaining them and

subsequently delivering them in payment or exchange under the

terms of a merger, demerger or contribution shall not exceed 5% of

the share capital,

•

reallocating them upon the exercise of rights attached to equity

securities giving entitlement by conversion, exercise, redemption,

exchange, presentation of a warrant or in any other way, to the

allocation of Company shares; and more generally,

•

allocating them to the completion of any transactions in

accordance with the applicable regulations.

resolves that, except for shares acquired for allocation under share

purchase plans for the Company’s employees or Corporate Officers,

the purchase price per share shall be no higher than one thousand

nine hundred euros (€1,900), excluding costs;

resolves that the Executive Management may nevertheless adjust the

aforementioned purchase price in the event of a change in the par

value of the share, a capital increase by capitalisation of reserves, a

free share allocation, a stock split or reverse split, a write-off or

reduction in the share capital, a distribution of reserves or other

assets, or any other equity transactions, to take into account the

effect of such transactions on the value of the share;

resolves that the maximum amount of funds that may be committed

to this share purchase programme cannot exceed three billion euros

(€3 billion);

resolves that the shares may be purchased by any means, including

in full or in part by transactions on regulated markets, multilateral

trading systems, using systematic internalisers or OTC, including

block purchases of securities (without limiting the portion of the

buyback programme carried out by this means), by public offering or

the use of options or derivatives (in accordance with legal and

regulatory requirements applicable at the time), excluding the sale of

put options, and at the times that the Executive Management deems

appropriate, including during a public offering on the Company’s

securities, in accordance with stock market regulations, either directly

or indirectly via an investment service provider. The shares acquired

pursuant to this authorisation may be retained, sold, or transferred by

any means, including by block sales, and at any time, including during

public offerings;

grants all powers to the Executive Management to implement this

delegation, and in particular:

◆

to decide and carry out the transactions provided for by this

authorisation,

◆

to determine the terms, conditions and procedures applicable

thereto,

◆

to place all orders, either on or off market,

◆

to adjust the purchase price of the shares to take into account the

effect of the aforementioned transactions on the value of the share,

◆

to allocate or re-allocate the acquired shares to the various objectives

pursued under the applicable legal and regulatory conditions,

◆

to enter into all agreements, in particular for purposes of maintaining

the stock transfer ledgers,

◆

to file all necessary reports with the Financial Markets Authority (AMF)

and any other relevant body,

◆

to undertake all formalities, and

◆

to generally carry out all necessary measures;

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 479

COMBINED GENERAL MEETING OF 20 APRIL 2022

EXPLANATORY STATEMENTS AND DRAFT RESOLUTIONS

◆

other objectives:

This programme is also intended to enable the Company to operate for

any other purpose that may be authorised, or come to be authorised, by

law or regulations in force, including in particular any other market

practice that may come to be approved by the Financial Markets

Authority (AMF), subsequent to this General Meeting.

In such case, the Company would inform its shareholders by publishing a

special notice;

resolves that this authorisation is granted for a period of 18months

from this meeting.

This authorisation cancels and replaces, for the remaining term and the

unused portion, the authorisation granted by the Combined General

Meeting of 4May 2021 in its 6 resolution (“Authorisation granted to the

Executive Management to trade in the Company’s shares”).

◆

a so-called “global” ex-post vote concerning the information referred to inI of ArticleL.22-10-9 of the French Commercial Code (Code de

commerce). This information reflects, for each of the Corporate Officers in office during the financial year ended on 31December 2021, the

effective application of the compensation policy for that financial year.

The information referred to in 1°, 2° and 4° of ArticleL.22-10-9,I. of the French Commercial Code (Code de commerce) is detailed and

explained below. The other information referred to in this Article, which is also subject to the global ex-post vote, is described in the 2021

universal registration document (chapter3 “Corporate Governance”, § 3.8.1, § 3.8.2 and § 3.8.4).

In the seventh resolution, we ask that you approve this information for each of the Corporate Officers;

◆

a so-called “individual” ex-post vote concerning the total compensation and benefits of all kinds paid during or awarded in respect of the

financial year ended to the Executive Chairmen and the Chairman of the Supervisory Board.

In the eighth to tenth resolutions, we ask that you approve the total compensation and benefits of all kinds paid during or awarded in respect

of the financial year ended 31December 2021 to the Executive Chairmen and the Chairman of the Supervisory Board.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL480

COMBINED GENERAL MEETING OF 20 APRIL 2022

EXPLANATORY STATEMENTS AND DRAFT RESOLUTIONS

SEVENTH, EIGHTH, NINTH AND TENTH RESOLUTIONS: APPROVAL OF TOTAL COMPENSATION

AND BENEFITS OF ALL KINDS PAID DURING OR AWARDED IN RESPECT OF THE FINANCIAL YEAR ENDED

31DECEMBER 2021 TO THE CORPORATE OFFICERS – ACTUAL APPLICATION OF THE COMPENSATION

POLICY

Explanatory statement

The mechanism applicable to sociétés en commandite par actions (Partnerships limited by shares) governing Corporate Officers’ compensation is

described in detail in the 2021 universal registration document (chapter3 “Corporate Governance”, § 3.8).

In respect of the past financial year (ended on 31December 2021), this mechanism provides for:

The components making up this total compensation and benefits in kind are presented in the tables below, as follows:

Resolution Corporate Officers concerned

Global ex-post vote

(information on the compensation and benefits of all Corporate

Officers)

Executive Chairmen, Chairman and members of the Supervisory Board

Individual ex-post votes

(compensation and benefits of MrAxel Dumas) Executive Chairman

(compensation and benefits of Émile HermèsSAS) Executive Chairman

(compensation and benefits of MrÉric de Seynes) Chairman of the Supervisory Board

(1) It should be noted that, in the context of the Covid-19 epidemic, Mr. Axel Dumas waived the increase in his gross annual fixed compensation in 2020, and therefore

received the same amount of fixed compensation in 2020 as that received in 2019.

(2) It should be noted that, in the context of the Covid-19 epidemic, Mr. Axel Dumas waived the increase in his gross annual variable compensation in 2020, and

therefore received the same amount of variable compensation in 2020 as that received in 2019.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 481

COMBINED GENERAL MEETING OF 20 APRIL 2022

EXPLANATORY STATEMENTS AND DRAFT RESOLUTIONS

Executive Chairmen

Components

of compensation

submitted to the vote

Amount awarded in respect

of financial year 2021

or accounting valuation

Amount paid during

financial year 2021 Presentation

and 8

resolutions (global and individual ex-post votes):

MrAxel Dumas

To the extent that the Executive Chairmen receive neither multi-year

variable compensation nor deferred variable compensation, only the

following elements are subject to a vote:

fixed compensation paid during financial year 2021;

◆

variable compensation awarded in respect of financial year 2020, paid

during financial year 2021;

◆

variable compensation awarded in respect of financial year 2021

whose payment in 2022 is contingent on approval by shareholders at

the General Meeting of 20April 2022; and

◆

benefits of all kinds.

◆

The components of compensation detailed below all comply with the

compensation policy for the Executive Chairmen presented in the 2021

universal registration document (chapter3 “Corporate governance”,

§ 3.8.1.1 and § 3.8.1.2).

The other information referred to in ArticleL.22-10-9,I. of the French

Commercial Code (Code de commerce), which is also subject to the global

ex-post vote, is described in the 2021 universal registration document

(chapter3 “Corporate governance”, § 3.8.1, § 3.8.2 and § 3.8.4).

In the seventh resolution, we ask that you approve this information for

each of the Corporate Officers.

Gross annual

fixed

compensation

for 2021

(or “additional”

compensation

in the Articles

of Association)

€1,623,378

(amount unchanged from

that received in 2020

and 2019)

The 2021 fixed compensation of MrAxel Dumas was determined by the

Executive Management Board on 17February 2021, in accordance with

the compensation policy for the Executive Chairmen, and submitted to the

Supervisory Board for approval at its meeting of 18February 2021.

In accordance with the compensation policy for the Executive Chairmen

presented in the universal registration document for 2021 (chapter3

“Corporate Governance”, § 3.8.1.1 and § 3.8.1.2), the gross annual fixed

compensation of MrAxel Dumas did not change in 2021.

Gross annual

variable

compensation

for 2021 set

by the Articles

of Association

(“statutory

compensation”)

€1,559,319

of which 10% for

achieving the CSR

criterion

The gross annual variable compensation in 2021 of MrAxel Dumas,

awarded in respect of 2020, was determined by the Executive

Management Board on 17February 2021 in accordance with the

compensation policy for the Executive Chairmen and was subject to the

deliberation of the Supervisory Board at its meeting of 18February 2021.

This component of compensation for MrAxel Dumas was already

submitted to a vote (ex-post) by shareholders at the General Meeting of

4May 2021 (“Gross annual variable compensation awarded in 2021 in

respect of 2020”). Shareholders having approved the seventh and eighth

resolutions by 95.10% and 94.42% respectively, the gross annual

variable compensation was paid to MrAxel Dumas after the General

Meeting of 4May 2021 (payment subject to approval by the General

Meeting).

Given the terms of application of the mechanism governing Senior

Executives’ compensation, this component remains subject to a vote

(ex-post) by this meeting due to its payment in 2021.

In application of the compensation policy for the Executive Chairmen

presented in the universal registration document for 2021 (chapter3

“Corporate Governance”, § 3.8.1.1 and § 3.8.1.2), the effective gross

annual variable compensation in 2021 of MrAxel Dumas for financial

year 2020

decreased (-12.4%).

Deferred variable

compensation

n/a The principle of the allocation of deferred variable compensation is not

provided for.

Multi-year

variable

compensation

n/a The principle of such compensation is not provided for.

Exceptional

compensation

n/a The principle of such compensation is not provided for.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL482

COMBINED GENERAL MEETING OF 20 APRIL 2022

EXPLANATORY STATEMENTS AND DRAFT RESOLUTIONS

Components

of compensation

submitted to the vote

Amount awarded in respect

of financial year 2021

or accounting valuation

Amount paid during

financial year 2021 Presentation

Stock options,

performance-based

shares or any

other element

of long-term

compensation

(IFRS valuation

at the allocation

date)

Stock options: n/a

Performance-based shares: n/a

Other items: n/a

No stock option or performance-based share plans benefiting the

Executive Chairmen were implemented during or in respect of the 2021

financial year.

Compensation

for assumption

of duties

n/a No such commitment exists.

Severance

payment

€0 The conditions governing the severance payment are presented in the

2021 universal registration document (chapter3 “Corporate

governance”, § 3.8.1.2.4).

No payment has been made during or in respect of financial year 2021.

Non-compete

indemnity

n/a MrAxel Dumas is not subject to any non-competition agreement,

therefore no compensation is made in this respect.

Supplemental

pension plan

With respect to Article83: No payment

With respect to Article39: No payment

The supplemental pension plans (Article83 and Article39 of the French

General Tax Code (Code général des impôts)) are presented in the 2021

universal registration document (chapter3 “Corporate governance”,

§ 3.8.1.2.4)

No payment has been made during or in respect of financial year 2021.

Defined-contribution pension plan (Article83 of the French General Tax

Code (Code général des impôts))

For information, if MrAxel Dumas had been able to liquidate his

retirement entitlements at 31December 2021, the estimated maximum

gross amount of annual pension under the defined-contribution pension

plan would be €7,851.

Defined-benefit pension plan (Article39 of the French General Tax Code

(Code général des impôts) – ArticleL.137-11 of the French Social

Security Code (Code de la sécurité sociale))

Subject to satisfying the conditions of the plan at the time of liquidation of

his pension, in particular, the beneficiary ending his career in the

Company after at least 10years’ seniority and the liquidation of the

retirement pension as per the basic social security pension regime, and

any statutory changes that may occur, the potential pension rights

calculated for MrAxel Dumas at 31December 2021 would be €87,352.

Compensation

paid or awarded

by a company

falling within the

scope of

consolidation

n/a The principle of such compensation is not provided for.

Valuation

of benefits

of any kind

€1,950 Benefits in kind are presented in the 2021 universal registration

document (chapter3 “Corporate governance”, § 3.8.1.2.4).

Death and

disability plan

The death and disability plan is presented in the universal registration

document for 2021 (chapter3 “Corporate Governance”, § 3.8.1.2.4).

not applicable.n/a:

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 483

COMBINED GENERAL MEETING OF 20 APRIL 2022

EXPLANATORY STATEMENTS AND DRAFT RESOLUTIONS

Components

of compensation

submitted to the vote

Amount awarded in respect

of financial year 2021

or accounting valuation

Amount paid during

financial year 2021 Presentation

Gross annual

variable

compensation for

2022 set by the

Articles of

Association

(“statutory

compensation”)

€2,700,742

of which 10% for

achieving the CSR

criterion

The gross annual variable compensation in 2022 of MrAxel Dumas,

awarded in respect of 2021, was determined by the Executive

Management Board on 16February 2022, in accordance with the

compensation policy for the Executive Chairmen, and was subject to the

deliberation of the Supervisory Board at its meeting of 17February 2022.

A portion of the variable compensation is submitted to a “CSR” criterion

representing the Group’s firm and ongoing commitments to sustainable

development.

The CAG-CSR Committee evaluated the level of achievement of the CSR

criterion applicable to 10% of the variable compensation of the Executive

Chairmen at its meeting of 7January 2022 and noted that the three

indicators making up the criterion were fully achieved. The details of this

assessment can be found in the 2021 universal registration document

(chapter3 “Corporate governance”, § 3.8.2.1.2).

Consequently, the gross variable compensation for financial year 2021

has been calculated by applying the change in the Company’s

consolidated net income before tax for financial year 2021 compared

with that of 2020, i.e. an increase of 73.2%, to the variable

compensation paid in 2021 in respect of financial year 2020.

Payment of this compensation is subject to the approval of the General

Meeting of 20April 2022.

Components

of compensation

submitted to the vote

Amount awarded in respect

of financial year 2021 or

accounting valuation

Amount paid during

financial year 2021 Presentation

and 9

resolutions (global and individual ex-post votes):

Émile HermèsSAS

To the extent that the Executive Chairmen receive neither multi-year

variable compensation nor deferred variable compensation, only the

following elements are subject to a vote:

fixed compensation paid during financial year 2021;

◆

variable compensation awarded in respect of financial year 2020, paid

during financial year 2021;

◆

variable compensation awarded in respect of financial year 2021

whose payment in 2022 is contingent on approval by the shareholders

at the General Meeting of 20 April 2022;

◆

benefits of all kinds.

◆

The components of compensation presented below all comply with the

compensation policy for the Executive Chairmen presented in the 2021

universal registration document (chapter3 “Corporate governance”,

§ 3.8.1.1 and § 3.8.1.2).

The other information referred to in ArticleL.22-10-9,I. of the French

Commercial Code (Code de commerce), which is also subject to the global

ex-post vote, is described in the 2021 universal registration document

(chapter3 “Corporate governance”, § 3.8.1, § 3.8.2 and § 3.8.4).

In the seventh resolution we ask that you approve this information for

each of the Corporate Officers.

Gross annual

fixed

compensation

for 2021

(or “additional”

compensation

in the Articles

of Association)

€551,850

(amount unchanged from

that received in 2020

and 2019)

The fixed compensation paid in 2021 to the company Émile HermèsSAS

was determined by the Executive Management Board on 17February

2021, in accordance with the compensation policy for the Executive

Chairmen, and submitted to the Supervisory Board for approval at its

meeting of 18February 2021.

In accordance with the compensation policy for the Executive Chairmen

presented in the 2021 universal registration document (chapter3

“Corporate Governance”, § 3.8.1.1 and § 3.8.1.2), the gross annual fixed

compensation of Émile HermèsSAS did not change in 2021.

It should be noted that, in the context of the Covid-19 epidemic, Émile Hermès SAS waived the increase in its gross annual fixed compensation in 2020, and therefore(1)

received the same amount of fixed compensation in 2020 as that received in 2019.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL484

COMBINED GENERAL MEETING OF 20 APRIL 2022

EXPLANATORY STATEMENTS AND DRAFT RESOLUTIONS

(1) It should be noted that, in the context of the Covid-19 epidemic, Émile Hermès SAS waived the increase in its gross annual variable compensation in 2020, and

therefore received the same amount of variable compensation in 2020 as that received in 2019.

not applicablen/a:

Components

of compensation

submitted to the vote

Amount awarded in respect

of financial year 2021

or accounting valuation

Amount paid during

financial year 2021 Presentation

Gross annual

variable

compensation

for 2021 set

by the Articles

of Association

(“statutory

compensation”)

€727,153

of which 10% for

achieving the CSR

criterion

The gross annual variable compensation in 2021 of Émile HermèsSAS,

awarded in respect of 2020, was determined by the Executive

Management Board on 17February 2021, in accordance with the

compensation policy for the Executive Chairmen, and was subject to the

deliberation of the Supervisory Board at its meeting of 18February 2021.

This component of compensation for the company Émile HermèsSAS was

already submitted to a vote (ex-post) by shareholders at the General

Meeting of 4May 2021 (“gross annual variable compensation awarded

in 2021 in respect of 2020”). Shareholders having approved the seventh

and ninth resolutions by 95.10% and 94.41% respectively, the gross

annual variable compensation was paid to the company Émile

HermèsSAS after the General Meeting of 4May 2021 (payment subject

to approval by the General Meeting). Given the terms of application of the

mechanism governing Senior Executives’ compensation, this component

remains subject to a vote (ex-post) by this meeting, due to its payment in

2021.

In application of the compensation policy for the Executive Chairmen

presented in the 2021 universal registration document (chapter3

“Corporate Governance”, § 3.8.1.1 and § 3.8.1.2), the actual gross

annual variable compensation of Émile HermèsSAS in 2021 for financial

year 2020

decreased (-12.4%).

Deferred variable

compensation

n/a The principle of the allocation of deferred variable compensation is not

provided for.

Multi-year

variable

compensation

n/a The principle of such compensation is not provided for.

Exceptional

compensation

n/a The principle of such compensation is not provided for.

Stock options,

performance-

based shares

or any other

element

of long-term

compensation

(IFRS valuation

at the allocation

date)

Stock options: n/a No stock option or performance-based share plans benefiting the

Executive Chairmen were implemented during or in respect of the 2021

financial year.

Performance-based shares: n/a

Other items: n/a

Émile HermèsSAS, a legal entity, is in addition not eligible for the stock

option or performance-based share plans.

Compensation

for assumption

of duties

n/a No such commitment exists.

Severance

payment

n/a No such commitment exists.

Non-compete

indemnity

n/a No such commitment exists.

Supplemental

pension plan

n/a Émile HermèsSAS, a legal entity, is not eligible for a supplemental

pension plan.

Compensation

paid or awarded

by a company

falling within

the scope of

consolidation

n/a The principle of such compensation is not provided for.

Valuation of

benefits of any

kind

n/a Émile HermèsSAS does not receive benefits of any kind.

Death and

disability plan

n/a Émile HermèsSAS, a legal entity, is not eligible for a death and disability

plan.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 485

COMBINED GENERAL MEETING OF 20 APRIL 2022

EXPLANATORY STATEMENTS AND DRAFT RESOLUTIONS

Chairman of the Supervisory Board

Components

of compensation

submitted to the vote

Amount awarded in respect

of financial year 2021

or accounting valuation

Amount paid during

financial year 2021 Presentation

Gross annual

variable

compensation

for 2022

(compensation

set by the Articles

of Association

(“statutory

compensation"))

€ 1,259,430

of which 10% for

achieving the CSR

criterion

The gross annual variable compensation in 2022 of Émile Hermès SAS,

awarded in respect of 2021, was determined by the Executive

Management Board on 16 February 2022, in accordance with the

compensation policy for the Executive Chairmen, and was subject to the

deliberation of the Supervisory Board at its meeting of 18 February 2022.

A portion of the variable compensation is subject to a “CSR” criterion

representing the Group’s firm and ongoing commitments to sustainable

development.

The CAG-CSR Committee evaluated the level of achievement of the CSR

criterion applicable at 10% of the variable compensation of the Executive

Chairmen at its meeting of 7 January 2022 and noted that the three

indicators making up the criterion were fully achieved. The details of this

assessment can be found in the 2021 universal registration document

(chapter 2 “Corporate governance”, § 3.8.2.1.2).

Consequently, the variable compensation for financial year 2021 has

been calculated by applying the change in the Company’s consolidated

net income before tax for financial year 2021 compared with that of

2020, i.e. an increase of 73.2%, to the variable compensation paid in

2021 in respect of 2020. Payment of this compensation is subject to the

approval of the General Meeting of 20 April 2022.

Components

of compensation

submitted to the vote

Amount awarded in respect

of financial year 2021 or

accounting valuation

Amount paid during

financial year 2021 Presentation

The components of compensation detailed below all comply with the

compensation policy for members of the Supervisory Board described in

the 2021 universal registration document (chapter3 “Corporate

governance”, § 3.8.1.1 and § 3.8.1.3).

and 10

resolutions (global and individual ex-post votes):

MrÉric de Seynes

The other information referred to in ArticleL.22-10-9,I. of the French

Commercial Code (Code de commerce), which is also subject to the global

ex-post vote, is described in the 2021 universal registration document

(chapter3 “Corporate governance”, § 3.8.1, § 3.8.2 and § 3.8.4).

In the seventh resolution, we ask that you approve this information for

each of the Corporate Officers.

Gross annual

fixed

compensation

€140,000 €140,000 The Chairman of the Supervisory Board is entitled to a fixed annual

compensation of €140,000. This is deducted from the total amount of

compensation awarded to the Supervisory Board by the General Meeting.

He is not entitled to any variable compensation as he attends all

Supervisory Board meetings.

Gross annual

variable

compensation

n/a The principle of such compensation for the Chairman is not provided for.

Other

components of

compensation

n/a No other form of compensation is provided for.

Other

commitments

n/a No other commitments exist.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL486

COMBINED GENERAL MEETING OF 20 APRIL 2022

EXPLANATORY STATEMENTS AND DRAFT RESOLUTIONS

Other members of the Supervisory Board

Components

of compensation

submitted to the vote

Amount awarded in respect

of financial year 2021

or accounting valuation

Amount paid during

financial year 2021 Presentation

resolution (global ex-post vote):

Members of the Supervisory Board (excluding the Chairman)

The components of compensation detailed below all comply with the

compensation policy for members of the Supervisory Board described in

the 2021 universal registration document (chapter3 “Corporate

governance”, § 3.8.1.1 and § 3.8.1.3).

The other information referred to in ArticleL.22-10-9,I. of the French

Commercial Code (Code de commerce), which is also subject to the global

ex-post vote, is described in the 2021 universal registration document

(chapter3 “Corporate governance”, § 3.8.1, § 3.8.2 and § 3.8.4).

In the seventh resolution, we ask that you approve this information for

each of the Corporate Officers.

Gross annual

fixed

compensation for

Board members

Please refer to Table3 in the 2021 universal

registration document (chapter3 “Corporate

governance”, § 3.8.4.3)

The allocation principles provided for in the compensation policy are

presented in the 2021 universal registration document (chapter3

“Corporate governance”, § 3.8.1.3).

Gross annual

variable

compensation for

Board members

Please refer to Table3 in the 2021 universal

registration document (chapter3 “Corporate

governance”, § 3.8.4.3)

The allocation principles provided for in the compensation policy are

presented in the 2021 universal registration document (chapter3

“Corporate governance”, § 3.8.1.3).

Other

components of

compensation

n/a No other form of compensation is provided for.

Other

commitments

n/a No other commitments exist.

Seventh resolution:

Approval of the information referred to inI of

ArticleL.22-10-9 of the French Commercial Code (Code de

commerce) with regard to compensation for the financial

year ended 31December 2021, for all Corporate Officers

(global ex-post vote)

The General Meeting, acting under the quorum and majority

requirements for Ordinary General Meetings, having reviewed the

Supervisory Board’s corporate governance report, approves, in

accordance withI of ArticleL.22-10-77 of the French Commercial Code

(Code de commerce), in respect of each Corporate Officer, the

information referred to inI of ArticleL.22-10-9 of the French Commercial

Code (Code de commerce), as presented in the 2021 universal

registration document (chapter3 “Corporate governance”, § 3.8.2) and

in the explanatory statements to the resolutions.

Eighth resolution:

Approval of total compensation and benefits of all kinds

paid during or awarded in respect of the financial year

ended 31December 2021 to MrAxel Dumas, Executive

Chairman (individual ex-post vote)

The General Meeting, acting under the quorum and majority

requirements for Ordinary General Meetings, in accordance with the

provisions ofII of ArticleL.22-10-77 of the French Commercial Code

(Code de commerce), approves the total compensation and benefits of all

kinds paid during or awarded in respect of the financial year ended

31December 2021 to MrAxel Dumas, Executive Chairman, as

presented in the explanatory statements to the resolutions.

Ninth resolution:

Approval of total compensation and benefits of all kinds

paid during or awarded in respect of the financial year

ended 31December 2021 to the company Émile

HermèsSAS, Executive Chairman (individual ex-post vote)

The General Meeting, acting under the quorum and majority

requirements for Ordinary General Meetings, in accordance with the

provisions ofII of ArticleL.22-10-77 of the French Commercial Code

(Code de commerce), approves the total compensation and benefits of all

kinds paid during or awarded in respect of the financial year ended

31December 2021 to the company Émile HermèsSAS, Executive

Chairman, as presented in the explanatory statements to the resolutions.

Tenth resolution:

Approval of total compensation and benefits of all kinds

paid during or awarded in respect of the financial year

ended 31December 2021 to MrÉric de Seynes, Chairman

of the Supervisory Board (individual ex-post vote)

The General Meeting, acting under the quorum and majority

requirements for Ordinary General Meetings, in accordance with the

provisions ofII of ArticleL.22-10-77 of the French Commercial Code

(Code de commerce), approves the total compensation and benefits of all

kinds paid during or awarded in respect of the financial year ended

31December 2021 to MrÉric de Seynes, Chairman of the Supervisory

Board, as presented in the explanatory statements to the resolutions.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 487

COMBINED GENERAL MEETING OF 20 APRIL 2022

EXPLANATORY STATEMENTS AND DRAFT RESOLUTIONS

ELEVENTH AND TWELFTH RESOLUTIONS: COMPENSATION POLICIES FOR EXECUTIVE CHAIRMEN

AND SUPERVISORY BOARD MEMBERS (EX-ANTE VOTES)

Eleventh resolution:

Approval of the compensation policy for the Executive

Chairmen (ex-ante vote)

The General Meeting, acting under the quorum and majority

requirements for Ordinary General Meetings, having reviewed the

Supervisory Board’s corporate governance report, pursuant toII of

ArticleL.22-10-76 of the French Commercial Code (Code de commerce),

approves the compensation policy for Executive Chairmen, as set out in

the 2021 universal registration document (chapter3 “Corporate

governance”, § 3.8.1.1 and § 3.8.1.2).

Twelfth resolution:

Approval of the compensation policy for Supervisory Board

members (ex-ante vote)

The General Meeting, acting under the quorum and majority

requirements for Ordinary General Meetings, having reviewed the

Supervisory Board’s corporate governance report, pursuant toII of

ArticleL.22-10-76 of the French Commercial Code (Code de commerce),

approves the compensation policy for Supervisory Board members, as

set out in the 2021 universal registration document (chapter3

“Corporate governance”, § 3.8.1.1 and § 3.8.1.3).

Explanatory statement

The mechanism applicable to sociétés en commandite par actions (Partnerships limited by shares) governing Senior Executives’ compensation,

introduced by Order No.2019-1234 of 27November 2019, is described in detail in the 2021 universal registration document (chapter3

“Corporate governance”, § 3.8).

This system provides that the Shareholders’ General Meeting votes each year on the compensation policies of the Corporate Officers (i.e. the

Executive Chairmen and the Supervisory Board members).

These are presented in the 2021 universal registration document (chapter3 “Corporate governance”, § 3.8.1.1 to § 3.8.1.3).

In the eleventh and twelfth resolutions, we ask that you approve the following compensation policies (ex-ante votes):

Resolution Corporate Officers concerned

Ex-ante votes

(compensation Executive Chairmen

(compensation policy) Members of the Supervisory Board

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL488

COMBINED GENERAL MEETING OF 20 APRIL 2022

EXPLANATORY STATEMENTS AND DRAFT RESOLUTIONS

THIRTEENTH, FOURTEENTH, FIFTEENTH AND SIXTEENTH RESOLUTIONS: RE-ELECTION OF SUPERVISORY

BOARD MEMBERS

Explanatory statement

The terms of office of four members of the Supervisory Board (MrCharles-Éric Bauer, MssEstelle Brachlianoff, Julie Guerrand and Dominique

Senequier) expire at the end of this meeting.

In the thirteenth, fourteenth, fifteenth and sixteenth resolutions, the Active partner proposes that you renew, for the three year period as set out in

the Articles of Association, the mandates of these members of the Supervisory Board.

These four terms of office would thus expire at the end of the General Meeting called in 2025 to approve the financial statements for the financial

year ending 31December 2024.

MrCharles-Éric Bauer has been a member of the Supervisory Board since 3June 2008. He brings to the Board his in-depth knowledge of the

history and culture of Hermès. His expertise in banking and finance, and the commitment with which he carries out his duties and participates in

the Audit and Risk Committee enable him to make an effective contribution to the quality of the discussions and work of the Board in all of its

areas of responsibility.

MsEstelle Brachlianoff has been a member of the Supervisory Board since 4June 2019. Her experience as a high-level manager in a group with

an international dimension, steering structures undergoing transformation, as well as her expertise in CSR and the commitment with which she

carries out her duties and participates in the Audit and Risk Committee and the CAG-CSR Committee enable her to make an effective contribution

to the quality of the discussions and work of the Board in all of its areas of responsibility. She also brings her dynamism, intellectual agility and the

special care she gives to the quality of human relations in organisations.

MsJulie Guerrand has been a member of the Supervisory Board since 2June 2005. She brings to the Board her in-depth knowledge of the history

and culture of Hermès. Her experience in the fields of finance and M&A, as well as her legal expertise and the commitment with which she carries

out her duties enable her to contribute actively to the quality of the discussions and work of the Board in all of its areas of responsibility.

MsDominique Senequier has been a member of the Supervisory Board since 4June 2013. She brings to the Board her expertise in the field of

finance and private equity, as well as her understanding of global macroeconomic and geopolitical issues. Her grasp of corporate governance, her

international dimension acquired in China, the United States, the Middle East and emerging countries, and the commitment with which she carries

out her duties and directs the work of the CAG-CSR Committee enable her to make an effective contribution to the quality of the discussions and

work of the Board in all of its areas of responsibility.

Cumulative attendance over the last three years (2019-2021) of their term of office

Supervisory Board

Audit and Risk

Committee

CAG-CSR

Committee

MrCharles-Éric Bauer 100.00% 100.00% n/a

MsEstelle Brachlianoff 85.00% 100.00% 73.33%

MsJulie Guerrand 100.00% n/a n/a

MsDominique Senequier 78.26% n/a 100.00%

n/a: not applicable

Information concerning the persons whose re-election is submitted for your approval is provided in the 2021 universal registration document

(chapter3 “Corporate governance”, § 3.4.8.8, § 3.4.8.9, § 3.4.8.11 and § 3.4.8.1.).

These reappointments proposed by the CAG-CSR Committee – which since 2011 has been tasked with making recommendations to the

Supervisory Board regarding changes in the composition of the Board – are fully in line with the diversity policy applied within the Supervisory

Board and revised in 2020, which is described in detail in the 2021 universal registration document (chapter3 “Corporate governance”, § 3.4.3).

The Supervisory Board has set itself objectives or principles in terms of optimal Board size, age limit, number of independent members and

diversity (representation of women and men, nationalities, international experience, expertise, etc.), and has gradually changed the compositionof

the Board to achieve this.

These proposed reappointments submitted to the vote of the General Meeting meet these objectives and principles, in particular by enabling a

variety of skills and experience to be retained, covering each of the areas of expertise corresponding to the main operational issues facing the

Hermès Group and the core subjects that the Supervisory Board and its committees are required to oversee as part of their duties. They also

respond to the Board’s desire to maintain a composition that takes into account the specific nature of the Maison Hermès.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 489

COMBINED GENERAL MEETING OF 20 APRIL 2022

EXPLANATORY STATEMENTS AND DRAFT RESOLUTIONS

Thirteenth resolution:

Re-election of MrCharles-Éric Bauer as Supervisory Board

member for a term of three years

On proposal of the Active partner, the General Meeting, acting under the

quorum and majority requirements applicable to Ordinary General

Meetings, renews, as a member of the Supervisory Board the mandate

of:

MrCharles-Éric Bauer

Pursuant to Article18.2 of the Articles of Association, his mandate for a

period of three years will expire at the end of the Annual Ordinary General

Meeting called in 2025 to approve the financial statements for the

financial year ending 31December 2024.

MrCharles-Éric Bauer has indicated that he is prepared to accept the

renewal of his mandate, and that he does not hold any positions and is

not subject to any restrictions that could prevent him from carrying out

his duties.

Fourteenth resolution:

Re-election of MsEstelle Brachlianoff as Supervisory Board

member for a term of three years

On proposal of the Active partner, the General Meeting, acting under the

quorum and majority requirements applicable to Ordinary General

Meetings, renews, as a member of the Supervisory Board the mandate

of:

MsEstelle Brachlianoff

Pursuant to Article18.2 of the Articles of Association, her mandate for a

period of three years will expire at the end of the Annual Ordinary General

Meeting called in 2025 to approve the financial statements for the

financial year ending 31December 2024.

MsEstelle Brachlianoff has indicated that she is prepared to accept the

renewal of her mandate, and that she does not hold any positions and is

not subject to any restrictions that could prevent her from carrying out

her duties.

Fifteenth resolution:

Re-election of MsJulie Guerrand as Supervisory Board

member for a term of three years

On proposal of the Active partner, the General Meeting, acting under the

quorum and majority requirements applicable to Ordinary General

Meetings, renews, as a member of the Supervisory Board the mandate

of:

MsJulie Guerrand

Pursuant to Article18.2 of the Articles of Association, her mandate for a

period of three years will expire at the end of the Annual Ordinary General

Meeting called in 2025 to approve the financial statements for the

financial year ending 31December 2024.

MsJulie Guerrand has indicated that she is prepared to accept the

renewal of her mandate, and that she does not hold any positions and is

not subject to any restrictions that could prevent her from carrying out

her duties.

Sixteenth resolution:

Re-election of MsDominique Senequier as Supervisory

Board member for a term of three years

On proposal of the Active partner, the General Meeting, acting under the

quorum and majority requirements applicable to Ordinary General

Meetings, renews, as a member of the Supervisory Board the mandate

of:

MsDominique Senequier

Pursuant to Article18.2 of the Articles of Association, her mandate for a

period of three years will expire at the end of the Annual Ordinary General

Meeting called in 2025 to approve the financial statements for the

financial year ending 31December 2024.

MsDominique Senequier has indicated that she is prepared to accept

the renewal of her mandate, and that she does not hold any positions

and is not subject to any restrictions that could prevent her from carrying

out her duties.

◆

to allocate the difference between the purchase price and the par

value of the cancelled shares to whichever reserve account it sees fit,

and to record the reductions in share capital resulting from the

cancellations authorised by this resolution;

◆

to amend the Company’s Articles of Association accordingly, and to

undertake all necessary formalities.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL490

COMBINED GENERAL MEETING OF 20 APRIL 2022

EXPLANATORY STATEMENTS AND DRAFT RESOLUTIONS

8.2.2

EXTRAORDINARY BUSINESS

SEVENTEENTH RESOLUTION: AUTHORISATION TO REDUCE THE SHARE CAPITAL BY CANCELLATION

OF SHARES

Explanatory statement

In the seventeenth resolution, we ask you to renew the authorisation granted to the Executive Management to cancel, on one or more occasions,

in the amounts and at the times it so decides, all or part of the shares acquired by the Company under the programme to purchase its own shares.

This authorisation would in particular enable the Company to cancel shares issued to cover stock options that are no longer exercisable or that

have expired.

Limit

Up to a maximum of 10% of the share capital per 24-month period.

Duration of the authorisation

This authorisation would be valid for 24months from the date of the General Meeting.

The Statutory Auditors’ report on the seventeenth resolution is presented in the 2021 universal registration document, (chapter 8 “Combined

General Meeting of 20April 2022”, § 8.4.5).

Seventeenth resolution:

Authorisation to be granted to the Executive Management

to reduce the share capital by cancellation of all or part of

the treasury shares held by the Company

(ArticleL.22-10-62 of the French Commercial Code

(Code de commerce) – General cancellation programme

The General Meeting, acting under the quorum and majority

requirements for Extraordinary General Meetings, having reviewed the

Executive management report, the Supervisory Board report and the

Statutory Auditors’ special report, authorises the Executive Management,

in accordance with ArticleL.22-10-62 of the French Commercial Code

(Code de commerce), to reduce the share capital by cancelling, on one or

more occasions, in the amounts and at the times it so decides, some or

all of the shares held by the Company or acquired by the Company under

the share buyback programme referred to in the 6

resolution

(“Authorisation granted to the Executive Management to trade in the

Company’s shares”) submitted to this General Meeting and/or pursuant

to any authorisation granted by a past or future General Meeting, up to a

maximum of 10% of the share capital per 24-month period.

The General Meeting delegates the broadest of powers to the Executive

Management for the purpose of implementing this delegation, and in

particular:

This delegation is granted to the Executive Management for a period of

24months.

It cancels and replaces, for the remaining term and the unused portion,

the authorisation granted by the Combined General Meeting of 4May

2021 in its 17

resolution (“Authorisation to reduce the share capital by

cancellation of shares”).

◆

those already awarded under previous authorisations;

◆

those that have not been definitively allocated at the end of the vesting period provided for in the sixth paragraph of Article L.225-197-1,I of

the French Commercial Code (Code de commerce);

◆

those that are no longer subject to the retention obligation provided for in the seventh paragraph of ArticleL.225-197-1,I of the French

Commercial Code (Code de commerce).

◆

either grant such options to all employees of the Company and to at least 90% of the employees of its French subsidiaries, or

◆

grant free shares to the employees referred to above,

◆

or improve (or set up, where applicable) the terms of employee incentive and/or profit-sharing schemes of the Company and its French

subsidiaries;

in accordance with the provisions of ArticlesL.225-185 and L.22-10-57 of the French Commercial Code (Code de commerce), the

Supervisory Board must ensure that the options cannot be exercised prior to the termination of the duties of the Executive Chairmen

concerned, or set a quantity of shares resulting from the exercise of options that the latter must hold in registered form until the termination of

their duties;

in addition, in accordance with the Afep-Medef Corporate Governance Code, to which the Company has adhered:

◆

the option exercise price will not include any discount,

◆

the options granted will be subject to demanding performance conditions to be met over several years and defined at the time of their

allocation,

◆

the maximum percentage of shares to which the stock options granted to the Executive Chairmen under this resolution may give right will be

0.05% of the share capital on the day of the Executive Management’s allocation decision, this sub-limit being deducted from the ceiling of 2%

common to the delegations of the 18

and 19

resolutions,

◆

the beneficiary Executive Chairmen must make a formal commitment not to use any risk hedging operations either for the options or the shares

resulting from the exercise of options, and until the end of the share retention period set.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 491

COMBINED GENERAL MEETING OF 20 APRIL 2022

EXPLANATORY STATEMENTS AND DRAFT RESOLUTIONS

EIGHTEENTH RESOLUTION: STOCK OPTIONS

Explanatory statement

By the eighteenth resolution, we ask you to renew the authorisation granted to the Executive Management to grant stock options to employees

and Corporate Officers of the Company and its subsidiaries.

Since 2008, no stock option plan has been granted to employees and Corporate Officers of the Company and its subsidiaries. Nevertheless, the

Company wishes to renew this authorisation in order to retain the possibility of using this instrument. Options can be a suitable compensation tool

in certain situations, in particular to align the interests of Senior Executives and employees with those of shareholders by creating value in the

medium and long term. The conditions under which such options may be granted are strictly limited.

The total number of stock options that may be granted under this authorisation and not yet exercised and the total number of free shares granted

pursuant to the nineteenth resolution ("Authorisation to be given to Executive Management to grant free existing shares") may not represent a

number of shares greater than 2% of the number of ordinary shares on the day on which the options are granted, without taking into account:

The purchase price of the shares would be set by the Executive Management within the limits and in accordance with the terms and conditions

provided for by law.

In view of the regulations currently in force, the purchase price may not be less than 80% of the average price quoted for the twenty trading

sessions on the regulated market of Euronext Paris preceding the day on which the options are granted, while also not being less than 80% of the

average purchase price of the shares held by the Company, acquired in particular as part of the buyback programme. This price may not be

changed, unless the Company carries out financial transactions referred to in ArticleL.225-181 of the French Commercial Code (Code de

commerce), during the life of the options. In this case, the Executive Management would adjust the number and price of the shares in accordance

with legal provisions. The options could be exercised within a maximum period of seven years from the date on which they are granted.

In accordance with ArticleL.233-32 of the French Commercial Code (Code de commerce), this delegation of authority may be implemented during

a public offering on the shares of the Company.

In the event of allocation to one or more Executive Chairmen:

the Company must fulfil one or more of the conditions provided for in ArticleL.22-10-58 of the French Commercial Code (Code de commerce),

namely:

This authorisation would be valid for 38months from the date of the General Meeting.

The Statutory Auditors’ report on the 18

resolution is presented in the 2021 universal registration document (chapter8 “Combined General

Meeting of 20April 2022”, § 8.4.6).

◆

on one or more occasions,

◆

to employees and Executive Corporate Officers, or certain of them or

certain categories of them, of Hermès International and companies or

groups related to it under the conditions referred to in

ArticleL.225-180 of the French Commercial Code (Code de

commerce), options giving the right to purchase Hermès International

shares acquired by the Company under the legal conditions;

◆

the period during which the Executive Management may use this

authorisation, at the time(s) it deems appropriate, is set at 38months

from the date of this meeting,

◆

the total number of options that may be granted under this

authorisation shall not be such that the number of purchase options

granted under this resolution and the number of free shares granted

under the 19

resolution ("Authorisation to be given to Executive

Management to grant free existing shares") represent a number of

shares greater than 2% of the number of ordinary shares of the

Company at the time the options are granted, without taking into

account:

•

those already allocated under previous authorisations,

•

those that have not been definitively allocated at the end of the

vesting period provided for in the sixth paragraph of

ArticleL.225-197-1 of the French Commercial Code (Code de

commerce),

•

those that are no longer subject to the retention obligation

provided for in the seventh paragraph of ArticleL.225-197-1, I of

the French Commercial Code (Code de commerce);

◆

the options may be exercised by the beneficiaries within a maximum

period of seven years from the date on which they are granted;

◆

the purchase price of the shares shall be set by the Executive

Management within the limits and in accordance with the terms and

conditions provided for in ArticlesL.225-177, paragraph4, and

L.225-179, paragraph2, of the French Commercial Code (Code de

commerce), and shall be at least equal to 80% of the average listed

price of the Company’s share on the regulated market of Euronext Paris

during the twenty trading sessions preceding the grant of the option,

without being less than 80% of the average purchase price of the shares

held by the Company in respect of purchases made under the conditions

provided for in ArticlesL.22-10-61 and L.22-10-62 of said Code;

◆

to this end, the General Meeting grants the Executive Management,

within the limits set above, the broadest of powers to implement this

resolution, and in particular to:

•

determine the terms of the transaction, in particular the conditions

under which the options will be granted, the period or periods in

which the options may be granted and exercised, the list of

beneficiaries of the options and the number of shares that each

may acquire,

•

set the conditions for exercising options,

•

stipulate, where applicable, a period of non-transferability and/or

prohibition of the transfer to bearer form of shares resulting from

the exercise of the options, without this period of non-transferability

exceeding three years from the exercise of the option,

•

provide for the ability to temporarily suspend the exercise of options

for a maximum period of three months in the event of financial

transactions involving the exercise of a right attached to the shares;

•

resolves that the Executive Management must ensure that the

Company meets one or more of the conditions provided for in

ArticleL.22-10-58 of the French Commercial Code (Code de

commerce), and must take all measures to this effect,

•

resolves that the Supervisory Board must ensure that the options

cannot be exercised prior to the termination of the duties of the

Executive Chairman/Chairmen concerned, or set a quantity of

shares resulting from the exercise of options that the Executive

Chairman/Chairmen must retain in registered form until the end of

their duties,

•

resolves that, in accordance with the Afep-Medef Corporate

Governance Code, to which the Company has adhered:

the option exercise price will not include any discount,

the options granted will be subject to demanding performance

conditions to be met over several consecutive years and defined at

the time of their allocation,

the maximum percentage of shares to which the stock options

granted to the Executive Chairmen under this resolution may give

right will be 0.05% of the share capital on the day of the Executive

Management’s allocation decision, this sub-limit being deducted

from the ceiling of 2% common to the delegations granted in the

and 19

resolutions,

the Executive Chairmen must make a formal commitment not to

use any risk hedging operations either for the options or the

shares resulting from the exercise of options, and until the end of

the share retention period set;

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL492

COMBINED GENERAL MEETING OF 20 APRIL 2022

EXPLANATORY STATEMENTS AND DRAFT RESOLUTIONS

Eighteenth resolution:

Authorisation to be given to Executive Management

to grant stock options

The General Meeting, acting under the quorum and majority

requirements for Extraordinary General Meetings, having reviewed the

Executive management report, the Statutory Auditors’ special report and

the Supervisory Board’s report:

resolves to authorise the Executive Management, within the

framework of ArticlesL.225-177 to L.225-186 and L.22-10-56 to

L.22-10-58 of the French Commercial Code (Code de commerce

), to

grant, within the limits of the texts in force:

confirms that, pursuant to ArticleL.233-32 of the French Commercial

Code (Code de commerce), this delegation may be implemented

during a public offering on the shares of the Company:

◆

in the event of allocation to one or more Executive Chairmen:

◆

those already allocated under previous authorisations;

◆

those that have not been definitively allocated at the end of the vesting period provided for in the sixth paragraph of Article L.225-197-1,I of

the French Commercial Code (Code de commerce);

◆

those that are no longer subject to the retention obligation provided for in the seventh paragraph of ArticleL.225-197-1,I of the French

Commercial Code (Code de commerce).

◆

either grant free shares to all of the Company’s employees and to at least 90% of the employees of its French subsidiaries, or

◆

grant stock options to the employees referred to above, or

◆

provide the above-mentioned employees with a unilateral contribution to the company savings plan, or

◆

improve (or set up, where applicable) the terms of employee incentive and/or profit-sharing schemes of the Company and its French

subsidiaries;

in accordance with the provisions of ArticleL.225-197-1,II of the French Commercial Code (Code de commerce), the Supervisory Board must

ensure that the allocated shares cannot be sold prior to the termination of the duties of the Executive Chairmen, or shall set a quantity of

these shares that the latter must hold in registered form until the termination of their duties;

in addition, in accordance with the Afep-Medef Corporate Governance Code, to which the Company has adhered:

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 493

COMBINED GENERAL MEETING OF 20 APRIL 2022

EXPLANATORY STATEMENTS AND DRAFT RESOLUTIONS

◆

if, during the period in which the options were granted, the Company

carries out any of the transactions provided for by ArticlesL.225-181

or R.22-10-37 of the French Commercial Code, the Company will,

under the regulatory conditions, in order to take into account the

impact of this transaction, undertake the necessary measures to

protect the interests of the beneficiaries, including, where applicable,

by adjusting the number and price of the shares that may be obtained

by exercising the options granted to beneficiaries,

each year, the Executive Management will inform the Ordinary

General Meeting of the transactions carried out under this delegation.

◆

NINETEENTH RESOLUTION: FREE SHARE AWARDS

Explanatory statement

By the 19

resolution, we propose that you renew the authorisation given to the Executive Management to allocate free existing ordinary shares of

the Company.

The Company wishes to renew this authorisation because it is part of the Group’s compensation policy, which aims to share the fruits of its growth

with employees and enable them to be more closely involved in Hermès’ long-term development decisions. The employee shareholding plans in

place for many years (the first dating back to 1993) recognise the contribution of employees to the House’s development, regardless of their role

and geographical location. They are also an instrument to enhance attractiveness, motivation and loyalty, aimed at aligning the interests of

beneficiaries with those of the Company and its stakeholders.

The total number of free shares granted under this authorisation and the total number of shares to which the stock options granted under the 18

resolution ("Authorisation to be given to Executive Management to grant stock options") and not yet exercised may not represent a number of

shares greater than 2% of the number of ordinary shares of the Company on the grant date, without taking into account:

The total number of free shares granted must also comply with the maximum limit authorised by ArticleL.225-197-1 of the French Commercial

Code (Code de commerce) and, more generally, by applicable laws.

The vesting period for the shares allocated may not be less than two years, with the Executive Management being authorised to reduce the

vesting period to one year, if the allocation of shares is accompanied by a mandatory retention period of a minimum of one year. The mandatory

retention period for shares may not be less than one year, with the Executive Management being authorised to reduce it or eliminate it, under the

conditions and limits provided for by the law in force on the date of the allocation decision, except for the specific cases set out in the resolution.

In accordance with ArticleL.233-32 of the French Commercial Code (Code de commerce), this delegation of authority may be implemented during

a public offering on the shares of the Company. In the same way as for stock options, in the event of allocation to one or more Executive Chairmen:

the Company must fulfil one or more of the conditions provided for in ArticleL.22-10-60 of the French Commercial Code (Code de commerce),

namely:

◆

the free shares awarded will be subject to demanding performance conditions to be met over several years and defined at the time of their

allocation,

◆

the maximum percentage of free shares that may be allocated will be 0.05%, this sub-limit being deducted from the ceiling of 2% common to

the delegations of the eighteenth and nineteenth resolutions,

◆

the beneficiary Executive Chairmen must make a formal commitment not to use any risk hedging operations relating to their performance

shares, and until the end of the share retention period.

authorises the Executive Management to proceed, on one or more

occasions, for the benefit of employees and/or Corporate Officers of

the Company and of the companies or groups related to it under the

conditions referred to in ArticleL.225-197-2 of the French

Commercial Code (Code de commerce), or to certain of them or

certain categories of them, with the allocation of free existing ordinary

shares of the Company. The existing shares that may be allocated

under this resolution must be acquired by the Company under the

share buyback program authorized by the sixth resolution

(“Authorization granted to the Executive Management to trade in the

Company’s shares”) under Article L. 22-10-62 of the French

Commercial Code, or any share buyback programme applicable

previously or subsequently;

resolves that the Executive Management will determine the identity of

the beneficiaries or the categories of beneficiaries of the allocations

as well as the conditions and, where applicable, the criteria for

allocating the shares;

resolves that the Executive Management will set, under the legal

conditions and limits, the dates on which the free allocations will be

made;

resolves that the total number of free ordinary shares granted under

this authorisation shall not be such that the total number of free

shares granted under this resolution and the total number of shares

to which the stock options granted under the 18

resolution

("Authorisation to be given to Executive Management to grant stock

options") and not yet exercised may give entitlement represent a

number of shares greater than 2% of the number of ordinary shares

of the Company on the day of the free share allocation, without taking

into account:

◆

those already allocated pursuant to authorisations by previous

General Meetings,

◆

those that have not been definitively allocated at the end of the

vesting period provided for in the sixth paragraph of

ArticleL.225-197-1 of the French Commercial Code (Code de

commerce),

◆

those that are no longer subject to the retention obligation provided

for in the seventh paragraph of ArticleL.225-197-1,I of the French

Commercial Code (Code de commerce);

resolves that the Executive Management will set, at the time of each

allocation, the vesting period at the end of which the allocation of

ordinary shares will become definitive, this period being not less than

one year; however, in the event of the death of the beneficiary, his or

her heirs may request the allocation of shares within six months of

the death, subject, where applicable, to the achievement of the

performance conditions; in addition, in the event of disability of the

beneficiary corresponding to the classification in the second or third

of the categories provided for in ArticleL.341-4 of the French Social

Security Code (Code de la Sécurité sociale) and resulting in the

cessation of all professional activity, the beneficiary may request the

allocation of such shares before the end of this period, subject, where

applicable, to the achievement of the performance conditions;

resolves that the Executive Management will set, in principle, at the

time of each allocation, a period during which the shares must be

held by the beneficiaries, which will run from the final allocation of the

ordinary shares and may not be less than one year. Nevertheless, the

Executive Management is authorised to reduce or eliminate the said

retention period, under the conditions and limits provided for by the

law in force on the date of the allocation decision. However, the

shares will be freely transferable in the event of the death of the

beneficiary, as well as in the event of disability of the beneficiary

corresponding to the classification in the second or third category

provided for in ArticleL.341-4 of the French Social Security Code

(Code de la Sécurité sociale);

authorises the Executive Management to set, where applicable, the

conditions and criteria for the allocation of shares, such as, without

the following list being exhaustive, the conditions of length of service,

the conditions relating to the continuation of the employment contract

or corporate office during the vesting period, and any other financial

or individual or collective performance condition;

authorises the Executive Management to register the free shares

allocated in a registered account in the name of their holder, stating,

where applicable, the unavailability of the shares;

authorises the Executive Management to make, if necessary, during

the vesting period of the allocated shares, all adjustments in order to

take into account the impact of transactions on the Company’s share

capital and, in particular, to determine the conditions under which the

number of ordinary shares awarded will be adjusted;

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL494

COMBINED GENERAL MEETING OF 20 APRIL 2022

EXPLANATORY STATEMENTS AND DRAFT RESOLUTIONS

This authorisation would be valid for 38months from the date of the General Meeting.

The Statutory Auditors’ report on the nineteenth resolution is presented in the 2021 universal registration document (chapter8 “Combined

General Meeting of 20April 2022”, § 8.4.7).

Nineteenth resolution:

Authorisation to be given to Executive Management

to grant free existing shares

The General Meeting, acting under the quorum and majority

requirements for Extraordinary General Meetings, having reviewed the

Executive management report, the Statutory Auditors’ report and the

Supervisory Board’s report, in accordance with ArticlesL.225-197-1 et

seq. and ArticlesL.22-10-59 and L.22-10-60 of the French Commercial

Code (Code de commerce):

10)

confirms that, pursuant to ArticleL.233-32 of the French Commercial

Code (Code de commerce), this delegation may be implemented

during a public offering on the shares of the Company;

11)

more generally, gives the broadest of powers to the Executive

Management, with the option of subdelegation under the legal

conditions, for the purpose of entering into all agreements, preparing

all documents, carrying out all formalities and declarations to all

bodies and, more generally, doing whatever is necessary:

◆

the period during which the Executive Management may make use of

this authorisation, on one or more occasions, is set at 38months

from the date of this meeting,

◆

in the event of allocation to one or more Executive Chairmen:

•

resolves that the Executive Management must ensure that the

Company meets one or more of the conditions provided for in

ArticleL.22-10-60 of the French Commercial Code (Code de

commerce), and must take all measures to this effect,

•

resolves that the Supervisory Board must ensure that the allocated

shares may not be sold prior to the termination of the duties of the

Executive Chairman/Chairmen, or shall set a quantity of these

shares that the Executive Chairman/Chairmen must retain in

registered form until the end of their duties,

•

resolves that, in accordance with the Afep-Medef Corporate

Governance Code, to which the Company has adhered:

the free shares awarded will be subject to demanding

performance conditions to be met over several years, defined at

the time of their allocation,

the maximum percentage of shares that may be allocated free of

charge to the Executive Chairmen under this resolution will be

0.05%, this sub-limit being deducted from the ceiling of 2%

common to the delegations granted in the 18

and 19

resolutions,

the beneficiary Executive Chairmen must make a formal

commitment not to use any risk hedging operations relating to their

performance shares, and until the end of the share retention

period;

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 495

COMBINED GENERAL MEETING OF 20 APRIL 2022

EXPLANATORY STATEMENTS AND DRAFT RESOLUTIONS

◆

each year, the Executive Management will inform the General

Meeting of the allocations made under this resolution under the legal

conditions, and in particular ArticleL.225-197-4 of the French

Commercial Code (Code de commerce).

TWENTIETH RESOLUTION: POWERS

Explanatory statement

The twentieth resolution is a standard resolution making it possible to undertake all legal filing and disclosure formalities required by law, following

the General Meeting.

Twentieth resolution:

Delegation of authority to carry out the formalities related to the General Meeting

The General Meeting, acting under the quorum and majority requirements for Extraordinary General Meetings, confers full powers on any bearer of an

extract or copy of these minutes recording its resolutions, in order to carry out all legal publication or other formalities.

◆

the Executive Management has kept us regularly informed of the

Company’s business operations and results;

◆

the balance sheet and its notes, as well as the income statement,

have been provided to us as required by law;

◆

transactions subject to prior authorisation by the Supervisory Board

under the terms of specific provisions contained in the Company’s

Articles of Association have been duly approved by us, as is duly

demonstrated hereafter;

◆

lastly, the Supervisory Board ruled on various matters within its

exclusive competence with respect to the Articles of Association.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL496

COMBINED GENERAL MEETING OF 20 APRIL 2022

SUPERVISORY BOARD REPORT TO THE COMBINED GENERAL MEETING OF 20APRIL 2022

8.3

SUPERVISORY BOARD REPORT TO THE COMBINED GENERAL

MEETING OF 20APRIL 2022

In accordance with legal and regulatory provisions, we hereby present our

report on the accomplishment of our duties for the financial year ended

31December 2021.

We first wish to inform you that:

COMMENTS ON THE PARENT COMPANY

AND CONSOLIDATED FINANCIAL

STATEMENTS

In the light of the comprehensive review already provided, we have no

specific comments on the business performance or on the financial

statements for the financial year ended 31December 2021. We issue a

favourable opinion on the approval of the financial statements.

ALLOCATION OF NET INCOME

On 17February 2022, the Executive Management decided to pay an

interim dividend of €2.50 per share. The payment of this interim dividend

took place on 23February 2022.

We ask that you approve the proposed allocation of net income as set

out in the draft resolutions submitted to you for approval, calling for an

ordinary dividend of €8.00 per share.

After deduction of the interim dividend, the balance, i.e. €5.50 per share,

will be detached on 25April 2022 and paid on 27April 2022 on the

positions closed on 26April 2022.

RELATED-PARTY AGREEMENTS

The Executive Management has informed us of the draft agreement to be

entered into during the financial year ended 31December 2021 and

falling under the combined provisions of ArticlesL.226-10, L.225-38 to

L.225-43, L.22-10-12 and L.22-10-13 of the French Commercial Code

(Code de commerce), and submitted it to our prior authorisation

(approval of the new commercial conditions applicable to the contract

concluded between Hermès International and Studio des Fleurs).

You will find in the 2021 universal registration document (chapter8

“Combined General Meeting of 20April 2022”, § 8.2.1 – Explanatory

statement to the 4

resolution), a brief presentation of the agreement

authorised during financial year 2021.

In accordance with the provisions of ArticlesL.225-40-2 and

R.225-30-1 of the French Commercial Code (Code de commerce),

Hermès International published the information relating to this

agreement, at the time of its conclusion, in a dedicated section of its

website

The agreements approved previously by the General Meeting are

presented in the Statutory Auditors’ special report on the agreements

mentioned in ArticlesL.226-10, L.225-38 to L.225-43, L.22-10-12

and L.22-10-13 of the French Commercial Code (Code de commerce),

which appear in the 2021 universal registration document (chapter8

“Combined General Meeting of 20April 2022, § 8.4.3). With the

exception of the aforementioned agreement, none of these agreements

changed significantly with respect to amounts or financial terms in 2021.

The contract for the provision of fast food services on the Hermès

International site, located at 12 rue d’Anjou (75008), with MOCE

(“EatMe” brand), was terminated with effect from 8June 2021.

The service agreement with Émile HermèsSAS was revised with effect

from 1January 2021. This revision led to the reclassification of this

agreement as a current agreement at the Supervisory Board meeting of

29July 2021, as it no longer qualified as a related-party agreement in

view of the change in applicable conditions.

No other agreements were downgraded in 2021.

A summary of the related-party agreements in force is presented in the

Supervisory Board corporate governance report in the 2021 universal

registration document (chapter3 “Corporate governance”, §

3.9.1.1).

In accordance with the provisions of ArticleL.225-38 of the French

Commercial Code (Code de commerce), authorisation decisions of the

Supervisory Board since 1August 2014 are all supported by justification.

A review of related-party agreements concluded in previous years and for

which implementation was still in progress, is carried out by the

Supervisory Board every year in accordance with in the provisions of

ArticleL.225-40-1 of the French Commercial Code.

Following the review of 2021, the Board had no comments to make.

In addition, pursuant to law No.2019-486 of 22May 2019 relating to

the growth and transformation of companies (the “Pacte” law), the

Company is obliged to implement a procedure to regularly assess

whether agreements relating to usual transactions, concluded under

normal conditions, meet these conditions.

(https://finance.hermes.com/en/regulated-agreements/).

◆

MrCharles-Éric Bauer;

◆

MsEstelle Brachlianoff;

◆

MsJulie Guerrand; and

◆

MsDominique Senequier.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 497

COMBINED GENERAL MEETING OF 20 APRIL 2022

SUPERVISORY BOARD REPORT TO THE COMBINED GENERAL MEETING OF 20APRIL 2022

This procedure, which applies only to Hermès International and not to its

subsidiaries, was approved by the Supervisory Board on 25February

2020. Its purpose is to enable Hermès International to periodically

assess the appropriateness of the classification used for ongoing

agreements entered into during the financial year, those that continue

over several years, and any agreements that may have been modified.

The description of this procedure and its implementation are given in the

Supervisory Board’s corporate governance report in the 2021 universal

registration document (chapter3 “Corporate governance”, § 3.9.1.3).

ACTIVITIES OF THE SUPERVISORY BOARD

The Supervisory Board’s 2021 activity is presented in the Supervisory

Board corporate governance report in the 2021 universal registration

document (chapter3 “Corporate governance”, § 3.5.4).

COMPOSITION OF THE SUPERVISORY

BOARD

We fully support the proposal that is made to you in the explanatory

statement in the 2021 universal registration document (chapter8

“Combined General Meeting of 20April 2022”, § 8.2.1 – Explanatory

statement to resolutions thirteen to sixteen) to renew for a three-year

term, pursuant to the Articles of Association, the expiring terms of office

of:

The diversity policy applied within the Supervisory Board, including a

progress report on the mission to change the composition of the

Supervisory Board, entrusted since 2011 to the CAG-CSR Committee, can

be found in the Supervisory Board corporate governance report in the

2021 universal registration document (chapter3 “Corporate

governance”, § 3.4.3).

RECOMMENDATIONS ON THE DRAFT

RESOLUTIONS SUBMITTED TO THE

COMBINED GENERAL MEETING

OF 20APRIL 2022

We are in favour of all the draft resolutions submitted.

This concludes our report on the information and opinions we considered

necessary to bring to your attention in connection with this meeting, and

we recommend that you vote to adopt all the resolutions submitted to

you.

The Supervisory Board

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL498

COMBINED GENERAL MEETING OF 20 APRIL 2022

STATUTORY AUDITORS’ REPORTS

8.4

STATUTORY AUDITORS’ REPORTS

8.4.1

STATUTORY AUDITORS’ REPORT ON THE FINANCIAL STATEMENTS

The report can be found in the 2021 universal registration document (chapter6 “Parent company financial statements”, § 6.9).

8.4.2

STATUTORY AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS

The report can be found in the 2021 universal registration document (chapter5 “Consolidated financial statements”, § 5.7).

◆

compliance with very precise specifications, duty to advise,

monitoring of services, quality control and performance indicator

monitoring criteria;

◆

no minimum order guaranteed;

◆

fixed term of three years and then an indefinite term;

◆

advanced notice of termination (18months);

◆

non-exclusivity;

◆

undertaking by Studio des Fleurs to take the necessary measures to

maintain its economic independence (in particular by expanding and

diversifying its customer base) from the Hermès Group;

◆

confidentiality and prohibition of use of Hermès as a reference;

◆

fixed fees for three years.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 499

COMBINED GENERAL MEETING OF 20 APRIL 2022

STATUTORY AUDITORS’ REPORTS

8.4.3

STATUTORY AUDITORS’ SPECIAL REPORT ON RELATED-PARTY AGREEMENTS

General Meeting for the approval of the financial

statements for the year ended 31December 2021

This is a free translation into English of the Statutory Auditors’ special

report on related-party agreements issued in French and is provided

solely for the convenience of English-speaking readers. This report should

be read in conjunction with, and construed in accordance with, French

law and professional auditing standards applicable in France.

To the Shareholders,

In our capacity as Statutory Auditors of Hermès International, we hereby

report to you on related-party agreements.

It is our responsibility to report to shareholders, based on the information

provided to us, on the main terms and conditions of agreements that

have been disclosed to us or that we may have identified as part of our

engagement, as well as the reasons given as to why they are beneficial

for the Company, without commenting on their relevance or substance or

identifying any undisclosed agreements. Under the provisions of

articleR.226-2 of the French Commercial Code (Code de commerce), it is

the responsibility of the shareholders to determine whether the

agreements are appropriate and should be approved.

Where applicable, it is also our responsibility to provide shareholders with

the information required by articleR.226-2 of the French Commercial

Code in relation to the implementation during the year of agreements

already approved by the General Meeting.

We performed the procedures that we deemed necessary in accordance

with professional standards applicable in France to such engagements.

These procedures consisted in verifying that the information given to us

is consistent with the underlying documents.

Agreements to be submitted for the approval of the

General Meeting

Agreements authorised and entered into during the year

In accordance with articleL.226-10 of the French Commercial Code, we

were informed of the following agreement that was entered into during

the year and authorised in advance by the Supervisory Board.

Amendment to the service agreement with Studio des Fleurs

Person concerned

Frédéric Dumas, member of the Management Board of Émile

HermèsSAS, legal manager (gérant) of Hermès International.

Nature, purpose and conditions

On 29July2021, the Supervisory Board authorised an amendment to the

initial agreement between Hermès International and Studio des Fleurs

relating to the provision of photography and photo editing services for

e-commerce product pack shots. The purpose of the amendment is to

agree on new contractual conditions, as the initial agreement, which was

authorised by the Supervisory Board on 20March2018, provided for a

revision of the fees at the end of an initial three-year period.

Reasons why the agreement is beneficial for the Company

Under the new conditions, the fees for 2021 and 2022 are lower than

those that would have resulted from the application of the revaluation

index provided for in the agreement.

In the initial agreement, Hermès International set out the following

fundamental principles, which were accepted by Studio des Fleurs:

The amendment did not change any of the above principles.

For 2021, Hermès International was invoiced €3,248,687 for services

provided under the agreement.

Agreements already approved by the General Meeting

Agreements approved in previous years that were implemented

during the year

In accordance with articleR.226-2 of the French Commercial Code, we

were informed of the following agreements, approved by the General

Meeting in previous years, which were implemented during the year.

1. Catering service agreement with MOCE

Person concerned

Charles-Eric Bauer, majority shareholder of MOCE and member of the

Supervisory Board of Hermès International.

Nature, purpose and conditions

On 6June2017, the Supervisory Board authorised the signing of an

agreement between Hermès International and MOCE (under the “EatMe”

banner) for the provision of fast food services at the Hermès International

site located at 12 rue d’Anjou, 75008 Paris, France.

Reasons why the agreement is beneficial for the Company

During a consultation process, Hermès International considered and

compared tenders from several fast food service providers. MOCE was

selected on the basis of its commercial offer, which had no fixed costs

and provided for renovations in keeping with the building.

For 2021, Hermès International was invoiced €4,964 for services

provided under the agreement.

On 28May2021, the Supervisory Board placed on record the end of the

agreement.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL500

COMBINED GENERAL MEETING OF 20 APRIL 2022

STATUTORY AUDITORS’ REPORTS

2. Design agreement with architectural firm RDAI

Person concerned

Sandrine Brekke, partner with a stake of more than 10% in RDAI and

member of the Management Board of Émile HermèsSAS, legal manager

(gérant) of Hermès International.

Nature, purpose and conditions

At its meetings of 7July2017 and 13September2017, the Supervisory

Board authorised a new framework agreement between the Company

and all the companies that it directly or indirectly controls, and RDAI,

defining the scope of the work to be undertaken by RDAI in applying an

exclusive architecture design concept to Hermès projects.

Reasons why the agreement is beneficial for the Company

The concept created by RDAI will enable stores and points of sale

distributing Hermès products worldwide to be easily identified for their

quality design.

The new agreement aims to integrate changes in Hermès’ organisation

(Real Estate Department, purchasing policy, digital initiatives), specify the

roles and obligations of the parties and adjust the terms and conditions

of execution to the changing needs in Hermès’ projects. Following

analysis of the renegotiated agreement, it is clear that the changes made

are essentially to Hermès International’s benefit, both with regard to

RDAI’s obligations and its fees.

For 2021, Hermès International was invoiced €1,846 for services

provided under the agreement.

Neuilly-sur-Seine, 3March2022

The Statutory Auditors

PricewaterhouseCoopers Audit Grant Thornton Audit

Vincent FrambourtOlivier Auberty

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 501

COMBINED GENERAL MEETING OF 20 APRIL 2022

STATUTORY AUDITORS’ REPORTS

8.4.4

REPORT BY ONE OF THE STATUTORY AUDITORS, DESIGNATED AS AN INDEPENDENT THIRD

PARTY, ON THE CONSOLIDATED SOCIAL, ENVIRONMENTAL AND SOCIETAL INFORMATION

CONTAINED IN THE MANAGEMENT REPORT

The report can be found in the 2021 universal registration document (chapter2 “Corporate social responsibility”, § 2.9).

8.4.5

STATUTORY AUDITORS’ REPORT ON THE SHARE CAPITAL REDUCTION (SEVENTEENTH

RESOLUTION)

General Meeting of 20April 2022 – 17

resolution

This is a free translation into English of the Statutory Auditors’ report issued in French and is provided solely for the convenience of English-speaking

readers. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in

France.

To the Shareholders,

In our capacity as Statutory Auditors of Hermès International, and in accordance with the provisions of articleL.22-10-62 of the French Commercial

Code (Code de commerce), applicable in the event of a share capital reduction via the cancellation of treasury shares, we hereby report to you on our

assessment of the reasons for and the terms and conditions of the proposed share capital reduction.

Executive Management is seeking a 24-month authorisation, from the date of this General Meeting, to cancel, for up to a maximum of 10% of the share

capital per 24month-period, the shares bought back by Hermès International pursuant to an authorisation to buy back its own shares in accordance

with the provisions of the aforementioned article.

We performed the procedures that we deemed necessary in accordance with professional standards applicable in France to such engagements. These

procedures consisted in verifying that the reasons for and the terms and conditions of the proposed share capital reduction, which is not considered to

affect shareholder equality, comply with the applicable legal provisions.

We have no matters to report as regards the reasons for and conditions of the proposed share capital reduction.

Neuilly-sur-Seine, 3 March 2022

The Statutory Auditors

PricewaterhouseCoopers Audit

Olivier Auberty

Grant Thornton Audit

Vincent Frambourt

◆

shares already granted under previous authorisations;

◆

shares that have not vested at the end of the vesting period provided

for in the sixth paragraph of articleL.225-197-1 of the French

Commercial Code;

◆

shares that are no longer subject to the lock-up obligation provided

for in the seventh paragraph of articleL.225-197-1 of the French

Commercial Code.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL502

COMBINED GENERAL MEETING OF 20 APRIL 2022

STATUTORY AUDITORS’ REPORTS

8.4.6

STATUTORY AUDITORS’ REPORT ON THE AUTHORISATION TO GRANT SHARE PURCHASE OPTIONS

(EIGHTEENTHRESOLUTION)

Combined General Meeting of 20 April 2022 - 18

resolution

This is a free translation into English of the Statutory Auditors’ report

issued in French and is provided solely for the convenience of

English-speaking readers. This report should be read in conjunction with,

and construed in accordance with, French law and professional auditing

standards applicable in France.

To the Shareholders,

In our capacity as Statutory Auditors of Hermès International, and in

accordance with the provisions of articlesL.225-177 and R.225-144 of

the French Commercial Code (Code de commerce), we hereby report to

you on the authorisation to grant share purchase options to employees

and corporate officers of HermèsInternational and all or some of its

affiliated companies or groups, under the conditions stipulated by

articleL.225-180 of the French Commercial Code, which is submitted to

you for approval.

On the basis of its report, Executive Management proposes that, for a

period of 38months from the date of this General Meeting, the

shareholders authorise it to grant share purchase options on one or more

occasions. The total number of options that may be granted under this

authorisation may not be such that the number of purchase options

granted under this resolution and the number of free shares granted

under the nineteenth resolution represent a number of shares greater

than 2% of the Company’s ordinary shares at the time the options are

granted, without taking into account:

It is the responsibility of Executive Management to draw up a report on

the reasons for granting share purchase options as well as the proposed

methods for determining the purchase price. It is our responsibility to

express an opinion on the proposed methods for determining the share

purchase price.

We performed the procedures that we deemed necessary in accordance

with professional standards applicable in France to such engagements.

These procedures consisted, in particular, in verifying that the proposed

methods for determining the share purchase price are specified in the

report prepared by Executive Management and that they comply with the

applicable laws and regulations.

We have no comments to make on the proposed methods used to set the

share purchase price.

Neuilly-sur-Seine, 3 March 2022

The Statutory Auditors

PricewaterhouseCoopers Audit Grant Thornton Audit

Olivier Auberty Vincent Frambourt

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 503

COMBINED GENERAL MEETING OF 20 APRIL 2022

STATUTORY AUDITORS’ REPORTS

8.4.7

STATUTORY AUDITORS’ REPORT ON THE AUTHORISATION TO GRANT EXISTING SHARES FREE

OF CONSIDERATION (NINETEENTH RESOLUTION)

General Meeting of 20 April 2022 - 19

resolution

This is a free translation into English of the Statutory Auditors’ report

issued in French and is provided solely for the convenience of English

speaking readers. This report should be read in conjunction with, and

construed in accordance with, French law and professional auditing

standards applicable in France.

To the Shareholders,

In our capacity as Statutory Auditors of Hermès International, and in

accordance with the provisions of articleL.225-197-1 of the French

Commercial Code (Code de commerce), we hereby report to you on the

proposed authorisation to grant existing shares, free of consideration, to

employees and/or corporate officers of HermèsInternational and all or

some of its affiliated companies or groups, or to certain categories of

said employees and corporate officers, under the conditions stipulated by

articleL.225-197-2 of the French Commercial Code, which is submitted

to you for approval.

On the basis of its report, Executive Management proposes that, for a

period of 38months from the date of this General Meeting, the

shareholders authorise it to grant free existing shares on one or more

occasions. The maximum percentage of free shares that may be granted

to the managers (gérants) under this resolution shall be 0.05% of the

share capital. This sub-ceiling shall be deducted from the 2% ceiling

applicable to the authorisations granted in the eighteenth and nineteenth

resolutions.

It is the responsibility of Executive Management to draw up a report on

the proposed transaction. It is our responsibility to provide you with our

comments, if any, in respect of the information provided to you on the

proposed transaction.

We performed the procedures that we deemed necessary in accordance

with professional standards applicable in France to such engagements.

These procedures consisted, in particular, in verifying that the proposed

methods disclosed in the report prepared by Executive Management

comply with the applicable laws and regulations.

We have no matters to report on the information provided in the report

prepared by Executive Management on the proposed authorisation to

grant free shares.

Neuilly-sur-Seine, 3 March 2022

The Statutory Auditors

PricewaterhouseCoopers Audit Grant Thornton Audit

Olivier Auberty Vincent Frambourt

9.1.1

Name and function of persons responsible for the information contained in the

universal registration document

506

9.1.2

Certification by the persons responsible for the universal registration document

506

9.3

CONSULTATION OF REGULATORY INFORMATION

507

9.4

INFORMATION INCLUDED BY REFERENCE

507

9.5

CROSS REFERENCE TABLES

510

9.5.1

Cross-reference table for the annual financial report

513

9.5.2

Cross-reference table for the management report

514

9.5.3

Cross-reference table for the Supervisory Board report on corporate governance

517

9.5.4

Cross-reference table for the universal registration document

519

9.5.5

Cross-reference table for the non-financial performance statement

525

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 505

ADDITIONAL INFORMATION

9.1

PERSONS RESPONSIBLE FOR THE UNIVERSAL REGISTRATION

AFR

DOCUMENT

506

AFR

9.2

PERSONS RESPONSIBLE FOR AUDITING THE FINANCIAL STATEMENTS

507

9.6

GLOSSARY

527

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL506

ADDITIONAL INFORMATION

PERSONS RESPONSIBLE FOR THE UNIVERSAL REGISTRATION DOCUMENT

AFR

9.1

PERSONS RESPONSIBLE FOR THE UNIVERSAL REGISTRATION

DOCUMENT

9.1.1

NAME AND FUNCTION OF PERSONS

RESPONSIBLE FOR THE INFORMATION

CONTAINED IN THE UNIVERSAL

REGISTRATION DOCUMENT

MrAxel Dumas, Executive Chairman.

Émile Hermès SAS, 23, rue Boissy d’Anglas 75008 Paris, Executive

Chairman.

9.1.2

CERTIFICATION BY THE PERSONS

RESPONSIBLE FOR THE UNIVERSAL

REGISTRATION DOCUMENT

We certify that the information contained in this universal registration

document is, to the best of our knowledge, consistent with the facts and

does not contain any omissions that could affect its import.

We hereby certify, to the best of our knowledge, that the financial

statements have been prepared in accordance with the applicable

accounting standards and give a true and fair view of the assets,

financial position and results of the Company and of all the entities

included in the scope of consolidation, and that the Executive

management report, the contents of which are listed in § 9.5.2

(cross-reference table for the management report) presents a true and

fair view of the development of the business, its results and the financial

position of the Company and of all the entities included in the scope of

consolidation, and that it describes the main risks and uncertainties to

which they are exposed.

Paris, 23March 2022

Executive Chairmen

MrAxel Dumas MrHenri-Louis Bauer

Representative of Émile Hermès SAS

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 507

ADDITIONAL INFORMATION

PERSONS RESPONSIBLE FOR AUDITING THE FINANCIAL STATEMENTS

AFR

9.2

PERSONS RESPONSIBLE FOR AUDITING THE FINANCIAL STATEMENTS

The Principal Statutory Auditors serve for a term of six years.

If a Statutory Auditor is appointed to fill a vacancy left by the resignation

of a Statutory Auditor or any other reason, he or she is appointed for the

remainder of his or her predecessor’s term.

The terms of the Principal Statutory Auditors will end in 2023.

The Principal Statutory Auditors are:

PricewaterhouseCoopers Audit

Member of the Compagnie Régionale des Commissaires aux Comptes de

Versailles.

63, rue de Villiers

92200 Neuilly-sur-Seine

Represented by MrOlivier Auberty

First appointed: Ordinary General Meeting of 30May 2011.

End of current office: Ordinary General Meeting called to approve the

financial statements for 2022.

Grant Thornton Audit

Member of the Compagnie Régionale des Commissaires aux Comptes de

Versailles.

29, rue du Pont

92200 Neuilly-sur-Seine

Represented by: Mr Vincent Frambourt.

First appointed: Ordinary General Meeting of 31May 1999.

End of current office: Ordinary General Meeting called to approve the

financial statements for 2022.

9.3

CONSULTATION OF REGULATORY INFORMATION

The Company’s financial website can be accessed at the following address: This site provides shareholders and

investors with information available in French and English for the last five financial years.

9.4

INFORMATION INCLUDED BY REFERENCE

Pursuant to Article19 of Regulation (EU) No.2017/1129 of 24June 2017, this universal registration document incorporates the following information

by reference, to which the reader is invited to refer:

Section of the relevant appendix

Document(s) containing the information

(with hyperlink) Parts incorporated by reference

18.1.1 Universal registration document filed with the

French Financial Markets Authority (AMF) on

25 March 2020 under reference D20-0169.

For the financial year ended 31December

2019: consolidated financial statements, parent

company financial statements and related

Statutory Auditors’ reports, on pages298 to 348

and 352 to 372 respectively.

18.3.1

This document is available on the website

https://finance.hermes.com/en/publications.

https://finance.hermes.com/en/.

https://finance.hermes.com/en/publications.

§ 3.3.4.3/page 239

§ 3.3.5.1/page 240

§ 7.1.3/page 444

§ 7.2.4/page 458

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL508

ADDITIONAL INFORMATION

INFORMATION INCLUDED BY REFERENCE

18.1.

Section of the relevant appendix

Document(s) containing the information

(with hyperlink) Parts incorporated by reference

18.3.1

Universal registration document filed with the

French Financial Markets Authority (AMF) on

25March 2021 under reference D21-0190.

This document is available on the website

For the financial year ended 31December

2020: consolidated financial statements, parent

company financial statements and related

Statutory Auditors’ reports, on pages354 to 402

and 406 to 427 respectively.

Information included in these two registration documents, other than the information referred to above, has been replaced and/or updated, where

appropriate, by the information contained in this universal registration document. Copies of this universal registration document are available as

described on the website

The information on the websites mentioned by the following hyperlinks in this universal registration document is not part of the universal registration

document. As such, this information has not been reviewed or approved by the AMF.

Chapter 2

§ 2.2.2.3/page 84

§ 2.6.1.4/page 174

§ 2.8.1.1.1/page 198

§ 2.8.1.1.2/page 199

§ 2.8.1.1.3/page 199

§ 2.8.2/page 203

§ 2.8.2.3.2/page 204

Chapter 3

§ 3.1.2/page 224

§ 3.4.7.1/page 253

§ 3.4.7.2/page 253

§ 3.4.7.3/page 253

§ 3.6.2.2/page 285

§ 3.6.3.2/page 288

Chapter 4

§ 4.3.2/page 349

Chapter 7

Chapter 3

§ 3.8.1.1.4/page 295

URL Paragraph

Chapter 2

§ 2.7.2.2/page 190

Chapter 4

§ 4.1.1.1/page 330

§ 4.3.1/page 348

Chapter 2

§ 2.4.2.2.1/page 120

§ 2.8.1.3.4/page 202

https://finance.hermes.com/en/publications.

https://finance.hermes.com/en/a-value-creating-and-sustainable-french-model/

https://finance.hermes.com/en/ethics-human-rights-and-diversities/

https://finance.hermes.com/en/responsible-sourcing/

https://finance.hermes.com/en/governing-bodies-rules-procedure-articles-association/

https://finance.hermes.com/en/corporate-officers/

§ 7.1.1 / page 440

§ 77.5.5/page 467

§ 7.5.8 / page 468

§ 7.1.2.2 / page 540

§ 7.5.3 / page 466

§ 7.5.7 / page 468

Chapter 3

§ 3.9.1.1/page 316

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 509

ADDITIONAL INFORMATION

INFORMATION INCLUDED BY REFERENCE

Chapter 2

§ 2.6.1.6/page 175

Chapter 3

§ 3.1.2/page 225

Chapter 7

Chapter 9

§ 9.3/page 507

Chapter 7

Chapter 8

§ 8.2.1/page 477

§ 8.3/page 496

Chapter 3

§ 3.3.5.1/page 468

Chapter 7

§ 7.5.6/page 468

Chapter 7

§ 7.5.5/page 467

Chapter 9

§ 9.4/pages 507 and 508

Chapter 2

§ 2.3.2.12 / page 93

URL Paragraph

https://finance.hermes.com/en

https://finance.hermes.com/en/regulated-information/

https://finance.hermes.com/en/regulated-agreements/

https://finance.hermes.com/en/other-legal-information/

https://finance.hermes.com/en/calendar/

https://finance.hermes.com/en/publications/

https://talents.hermes.com

◆

the annual financial report required by ArticlesL.451-1-2 of the French Monetary and Financial Code (Code monétaire et financier) and

Article222-3 of the AMF General Regulation;

◆

the full management report within the meaning of ArticleL.232-1 of the French Commercial Code (Code de commerce), including:

•

the Non-Financial Performance Statement required by ArticlesL.225-102-1 and R.225-105,I of the French Commercial Code (Code de

commerce);

•

the report on corporate governance required by ArticleL.226-10-1 of the French Commercial Code; and

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL510

ADDITIONAL INFORMATION

CROSS REFERENCE TABLES

9.5

CROSS REFERENCE TABLES

The universal registration document consists of presenting in a single document information that the Company has already disclosed in other forms,

and separately, in application of existing law.

This universal registration document thus aggregates various information which is also published by the Company in accordance with the legislative and

regulatory obligations in force. It also includes:

◆

all the information required for the General Meeting and provided for by ArticlesL.225-100 and R.225-83 of the French Commercial Code,

including the documents and information sent to shareholders.

As a result, and in accordance with the AMF position-recommendation DOC-2021-02, we inform you that this universal registration document is

presented in the form of a “4-in-1 URD”.

The table below summarises the content of the aforementioned documents:

Document(s) Reference texts Chapter/§/ Page

1. Universal registration document Headings in Annexes 1 and 2 of Delegated Regulation (EU)

No.2019/980 of 14March 2019, supplementing Regulation

(EU) No.2017/1129 of 14June 2017

Chapter9

§ 9.5.4 / pages519 to 524

2. Annual financial report ArticleL.451-1-2 of the French Monetary and Financial Code

Article222-3 of the AMF General Regulation

Chapter9

§ 9.5.1 / page513

3. Management report ArticlesL.225-100, L.232-1 et seq., R.225-102 et seq. of

the French Commercial Code

Chapter9

§ 9.5.2 / pages514 to 516

Non-Financial Performance

Statement

ArticlesL.22-10-36, L.225-102-1, L.225-102-4, L.464-2,

R.225-73-1, R.225-105 and R.225-105-2 of the French

Commercial Code

Articles223 quater et 223 quinquies of the French General

Tax Code

Chapter9

§ 9.5.5 / page525

Supervisory Board report on

corporate governance

ArticlesL.226-10-1 and L.22-10-78 of the French

Commercial Code

Chapter9

§ 9.5.3 / pages517-518

4. Documents intended for the General

Meeting

ArticlesL.225-100 and R.225-83 of the French Commercial

Code

Information relating to the

Executive Chairmen and members

of the Supervisory Board

ArticlesL.22-10-78 and L.225-37-4 of the French

Commercial Code

Chapter3

§§ 3.3.23.3.2 // ppages230 et seq.

§ 3.4.5 / pages247 et seq.

Text of the draft resolutions

Ordinary resolutions

and 3

resolutions

Approval of the annual

financial statements

(parent company and

consolidated) –

Management discharge

ArticlesL.225-100 and L.22-10-34 of the French Commercial

Code

Chapter8

§ 8.2.1 / page474

resolution

Allocation of net income –

Distribution of an ordinary

dividend

ArticleL.232-12 of the French Commercial Code Chapter8

§ 8.2.1 / pages475-476

resolution

Approval of the

related-party agreements

ArticlesL.225-38 to L.225-43, L.226-10, L.22-10-12 and

L.22-10-13 of the French Commercial Code

Chapter8

§ 8.2.1 / page477

§ 3.4.8.3 / pages267-268

§ 3.4.8.5 / page262

§ 3.4.8.6 / pages263-264

§ 3.4.8.10 / pages269-270

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ADDITIONAL INFORMATION

CROSS REFERENCE TABLES

Document(s) Reference texts Chapter/§/ Page

Chapter8

§ 8.2.1 / pages478-479

resolution

Authorisation granted to

the Executive Management

to trade in the Company’s

ArticlesL.22-10-62 et seq. of the French Commercial Code

“MAR” Regulation (EU) No.596/2014 of 16April 2014

and

resolutions

Approval of total

compensation and benefits

of all kinds paid during or

awarded in respect of the

financial year ended

31December 2020 to the

Corporate Officers – Actual

application of the

compensation policy

ArticlesL.22-10-9 and L.22-10-77 of the French Commercial

Code

Chapter8

§ 8.2.1 / pages480-486

and 12

resolutions

Compensation policies for

the Executive Chairmen

and Supervisory Board

members (ex-ante votes)

ArticleL.22-10-76 of the French Commercial Code Chapter8

§ 8.2.1 / page487

,14

,15

and

resolutions

Reappointment of

Supervisory Board

members

ArticleL.226-4 of the French Commercial Code Chapter8

§ 8.2.1 / pages488-489

Extraordinary resolutions

resolution

Capital reduction

ArticleL.22-10-62 of the French Commercial Code Chapter8

§ 8.2.2 / page490

resolution

Authorisation to grant stock

options

ArticlesL. 225-177 to L.225-186, L.22-10-56 to L.22-10-58,

L.233-32, L.225-197-1, L.22-10-61, L.22-10-62 and

R. 22-10-37 of the French Commercial Code

Chapter8

§ 8.2.2 / pages491 to 493

resolution

Authorisation to allocate

existing free shares

ArticlesL.225-197-1, L.225-197-2, L.225-197-4,

L. 22-10-59, L. 22-10-60, L.22-10-62 and L.233-32 of the

French Commercial Code

L.341-4 of the French Social Security Code

Chapter8

§ 8.2.2 / pages493 to 495

resolution

Powers for formalities

ArticleR.210-18 of the French Commercial Code Chapter8

§ 8.2.2 / page495

Text and purposes presented by

shareholders as well as the list of

items added to the agenda at their

request

ArticlesL.225-105, R.225-71 to R.225-73 of the French

Commercial Code

n/a

Information relating to corporate

governance

ArticlesL.226-10-1 and L.22-10-78 of the French

Commercial Code

Chapter9

§ 9.5.3 / pages517-518

Supervisory Board report to the

Combined General Meeting of

20April 2022

ArticleL.226-9 of the French Commercial Code Chapter8

§ 8.3 / pages496-497

Information on the members of the

Supervisory Board whose renewal

is proposed to the Combined

General Meeting of 20May 2022

ArticleR.225-83 of the French Commercial Code Chapter3

Annual financial statements ArticleL.232-1 of the French Commercial Code Chapter6

§ 6.1 et seq. / pages411 et seq.

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CROSS REFERENCE TABLES

Document(s) Reference texts Chapter/§/ Page

Consolidated financial statements ArticlesL.233-18 to L.233-26 of the French Commercial

Code

Chapter5

§ 5.1 et seq. / pages359 et seq.

Management report ArticlesL.225-100, L.232-1 et seq., R.225-102 et seq. of

the French Commercial Code

Chapter9

§ 9.5.2 / pages514-516

Allocation of net income ArticleR.225-83 of the French Commercial Code Chapter8

§ 8.2.1 (4

resolution) /

pages475-476

Executive management report on

transactions carried out by the

Company or affiliated companies in

connection with stock subscription

or purchase options reserved for

employees and Senior Executives

ArticleL.225-184 of the French Commercial Code Chapter3

§ 3.8.3 / page308

Executive management report on

transactions carried out by the

Company or affiliated companies in

connection with free share

allocations reserved for employees

and Senior Executives

ArticleL.225-197-4 of the French Commercial Code Chapter3

§ 3.8.3 / page308

Statutory Auditors’ reports

Statutory Auditors’ report

on the annual financial

statements

ArticlesL.823-9 and R.823-7 of the French Commercial Code Chapter6

§ 6.9 / pages433 et seq.

Statutory Auditors’ report

on the consolidated

financial statements

ArticlesL.823-9 and R.823-7 of the French Commercial Code Chapter5

§ 5.7 / pages404 et seq.

Statutory Auditors’ special

report on related-party

agreements

ArticlesL.226-10 and R.226-2 of the French Commercial

Code

Chapter8

§ 8.4.3 / pages499-500

Statutory Auditors’ special

report on the share capital

reduction (17

resolution)

ArticleL.22-10-62 of the French Commercial Code Chapter8

§ 8.4.5 / page501

Statutory Auditors’ report

on the authorisation to

grant stock options

(18

resolution)

ArticlesL.255-177, R.225-144, L.225-180 and

L.225-197-1 of the French Commercial Code

Chapter8

§ 8.4.6 / page502

Statutory Auditors’ report

on the authorisation to

allocate existing free

shares (19

resolution)

ArticlesL.225-197-1 and L.225-197-2 of the French

Commercial Code

Chapter3

§ 8.4.7 / page503

Report of one of the

Statutory Auditors,

appointed as independent

third-party body, on the

consolidated Non-Financial

Performance Statement in

the management report

ArticlesL.22-10-36, R.225-105 and R.225-105-1 of the

French Commercial Code

Chapter2

§ 2.9 / pages212 to 216

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CROSS REFERENCE TABLES

9.5.1

CROSS-REFERENCE TABLE FOR THE ANNUAL FINANCIAL REPORT

(Article222–3 of the AMF General Regulation)

In order to facilitate the reading of this document, the cross-reference table below makes it possible to identify, in this universal registration document,

the information that constitutes the annual financial report that must be published by listed companies in accordance with ArticlesL.451-1-2 of the

French Monetary and Financial Code and 222-3 of the AMF General Regulation.

Required elements Chapter/§/ Page

Hermès International annual financial statements Chapter6

§ 6.1 et seq. / pages411 et seq.

Hermès Group consolidated financial statements Chapter5

§ 5.1 et seq. / pages359 et seq.

Executive management report Chapter9

§ 9.5.2 / pages514 to 516

Responsibility statement for the annual financial report Chapter9

§ 9.1.2 / page506

Statutory Auditors’ report on the annual financial statements Chapter6

§ 6.9 / pages433 et seq.

Statutory Auditors’ report on the consolidated financial statements Chapter5

§ 5.7 / pages404 et seq.

Supervisory Board report on corporate governance Chapter3

§ 9.5.3 / pages517-518

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CROSS REFERENCE TABLES

9.5.2

CROSS-REFERENCE TABLE FOR THE MANAGEMENT REPORT

(ArticlesL.225-100 et seq., L.232-I,II and R.225-102 of the French Commercial Code (Code de commerce))

In order to facilitate the reading of this document, the cross-reference table below makes it possible to identify the information that must be included in

the management report, in accordance with the provisions of the French Commercial Code applicable to société en commandite par actions

(partnership limited by shares).

Items that are not applicable to Hermès International are marked “n/a”.

No. Required elements Reference texts Chapter/§/ Page

1/1 Group situation and activity in 2021 / Comments on the financial year

1.1 Situation of the Company during the past financial year and

objective and exhaustive analysis of the evolution of the

business, earnings and financial position of the Company and

the Group, in particular its debt position, with regard to volume

and complexity of the business

ArticlesL.225-100-1,I., 1°, L.232-1,II,

L.233-6, L.22-10-35 and L.233-26 of

the French Commercial Code

Highlights 2021 / pages6-7

Chapter1

§ 1.6 / pages26 et seq.

§ 1.7 / pages35 et seq.

§ 1.8 / pages38 et seq.

§ 1.9 / page40

1.2 Financial key performance indicators ArticleL.225-100-1,I., 2 ° of the French

Commercial Code

Chapter1

§ 1.5 / page24

1.3 Non-financial key performance indicators relating to the

Company’s specific activity, in particular information on

environmental and staff issues with reference made to amounts

featured in the annual financial statements and the relevant

additional explanations

Chapter2

§ 2.1 -2.9 / pages47 et seq.

1.4 Important events between the closing date of the financial year

and the date the report is established

ArticlesL.232-1,II. and L.233-26 of the

French Commercial Code

Chapter1

§ 1.9 / page40

1.5 Identity of the main shareholders and holders of voting rights at

General Meetings, and changes made during the financial year

ArticleL.233-13 of the French

Commercial Code

Chapter7

§ 7.2.2.5 / pages452-453

1.6 Existing branches ArticleL.232-1 of the French

Commercial Code

Chapter6

§ 6.8.1 / page432

1.7 Significant equity investments in companies based in France or

the takeover of such companies

ArticleL.233-6, paragraph1 of the

French Commercial Code

Chapter6

§ 6.8.3 / page432

1.8 Disposals of shares arising from the effect of regulating

cross-shareholdings

ArticlesL.233-29, L.233-30 and

R.233-19 of the French Commercial

Code

n/a

1.9 Foreseeable developments of the Company and its outlook ArticlesL.232-1,II and L.233-26 of the

French Commercial Code

Chapter1

§ 1.10 / page41

1.10 Company research and development activities ArticlesL.232-1,II and L.233-26 of the

French Commercial Code

Chapter2

§ 2.4 / pages109 et seq.

§ 2.5 / pages129 et seq.

§ 2.6 / pages167 et seq.

1.11 Table of the Company’s results during each of the last five

financial years

ArticleR.225-102 of the French

Commercial Code

Chapter6

§ 6.6 / page430

1.12 Information regarding payment terms of suppliers and

customers of the Company whose annual financial statements

are certified by a Statutory Auditor

ArticleD.441-4 of the French

Commercial Code

Chapter6

§ 6.7 / page431

1.13 Amount of loans with a maturity of less than two years granted

by the Company, on an ancillary basis to its main activity, to

micro-companies or small or medium-sized companies with

which it has economic links

ArticlesL.511-6 and R.511-2-1-3 of the

French Monetary and Financial Code

Chapter6

§ 6.8.2 / page432

1.14 Activity of the Company’s subsidiaries and companies under its

control

ArticleL.233-6 of the French

Commercial Code

Chapter1

§ 1.4 / pages17 to 23

Chapter6

§ 6.5 (Note7.3) / page423

§ 6.8 / page432

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No. Required elements Reference texts Chapter/§/ Page

1.15 Notice given to another joint-stock company in which the

Company holds more than 10% of its capital

n/a

1.16 Progress made or difficulties encountered ArticleL.22-10-35,I of the French

Commercial Code

Chapter1

§ 1.8 / page38

2 Internal control and risk management

2.1 Description of main risks and uncertainties the Company faces ArticleL.225-100-1,I., 3° of the French

Commercial Code

Chapter4

§ 4.1 / pages328 et seq.

2.2 Guidance on financial risks linked to the effects of climate

change and steps taken by the Company to reduce them by

implementing a low-carbon strategy in all areas of its activity

ArticleL.22-10-35,I of the French

Commercial Code

Chapter4

§ 4.1.4 / pages340-343

2.3 Principal characteristics of the internal control and risk

management procedures put in place by the Company relating to

the preparation and processing of accounting and financial

information

ArticleL.22-10-35, 2° of the French

Commercial Code

Chapter4

§ 4.3 / pages348 et seq.

2.4 Information regarding the Company’s objectives and its policy as

to the hedging of each main category of scheduled transactions

for which hedge accounting is used, along with its exposure to

price, credit, liquidity and cash risk; these indications include the

Company’s use of financial instruments

ArticleL.225-100-1, 6° of the French

Commercial Code

Chapter4

§ 4.2 / page347

Chapter5

§ 5.6 (note10) / pages391 et

seq.

2.5 Anti-corruption system Law No.2016-1691 of 9December

2016 known as “Sapin2”

Chapter2

§ 2.8.2 / pages202 et seq.

2.6 The vigilance plan helps to identify risks and prevent serious

breaches of human rights and fundamental freedoms, health,

safety and the environment arising from the activity of the

Company and companies it controls, as well as the activities of

subcontractors and suppliers.

ArticleL.225-102-4 of the French

Commercial Code

Chapter4

Reporting of the effective implementation of the vigilance plan

§ 4.1.2.3 / page337

§ 4.1.4.3/page343

Chapter2

§ 2.8.4 / pages206 et seq.

3 Information relating to corporate governance

Refer to the cross-reference table for the Supervisory Board report on corporate governance Chapter9

§ 9.5.3 / pages517-518

4 Information on shareholding and share capital

4.1 Structure, change in the Company’s share capital and crossing

of thresholds

ArticleL.233-13 of the French

Commercial Code

Chapter7

§ 7.2.2.4 / page451

§ 7.2.2.5 / pages452-453

§ 7.2.2.7 / page454

4.2 Information regarding the Company’s acquisition of its own

shares with a view to allocating them to employees or Senior

Executives (share buyback programme)

ArticleL.225-211 of the French

Commercial Code

Chapter7

§ 7.2.2.10 / pages454-456

4.3 Statement of employee and Senior Executive holdings in the

share capital on the last day of the financial year, and proportion

of the capital represented by the shares held by employees

managed collectively (in an employee savings plan or an

employee mutual fund), and the registered shares held directly

by them following the allocation of free shares or from other

schemes

ArticleL.225-102, paragraph1 of the

French Commercial Code

Chapter7

§ 7.2.2.8 / page454

4.4 Statement of any adjustments for securities giving access to the

share capital in the event of share buybacks or financial

operations

ArticlesR.228-90 and R.228-91 of the

French Commercial Code

n/a

4.5 Summary of transactions carried out on their securities by Senior

Executives, senior managers or persons with which they are

closely linked

ArticleL.621-18-2 of the French

Monetary and Financial Code

Chapter7

§ 7.2.3 / pages457-458

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No. Required elements Reference texts Chapter/§/ Page

4.6 Amount of dividends distributed over the last three years, and

amount of distributed income eligible and ineligible for

deductions, broken down by share class

Article243 bis of the French General Tax

Code

Chapter6

§ 6.6 / page430

Chapter8

§ 8.2.1 (4

resolution) /

pages475-476

4.7 Restrictions imposed by the Board regarding the exercise of

options granted or the sale of free shares awarded to Senior

Executives

ArticleL.225-185 of the French

Commercial Code

n/a

4.8 Calculation elements and results of adjustment to the

conversion basis, and terms of subscription or exercise of

securities giving access to the share capital or options to

subscribe for or purchase shares

ArticlesR.228-90 and R.228-91 of the

French Commercial Code

n/a

5 Non-Financial Performance Statement

Refer to the cross-reference table for the Non-Financial Performance Statement Chapter9

§ 9.5.5 / page525

6 Other information

6.1 Additional tax information Articles223 quater et 223 quinquies of

the French General Tax Code

Chapter8

§ 8.2.1 (1

and

resolutions) / page474

6.2 Injunctions or fines for anti-competitive practices imposed by the

Competition Council, the inclusion of which in the annual report

was prescribed by said Council

ArticleL.464-2 of the French

Commercial Code

n/a

7 Other documents

7.1 Supervisory Board report to the Combined General Meeting of

20April 2022

ArticleL.226-9 of the French

Commercial Code

Chapter8

§ 8.3 / pages496-497

7.2 Executive management report on transactions carried out by the

Company or affiliated companies in connection with stock

subscription or purchase options reserved for employees and

Senior Executives

ArticleL.225-184 of the French

Commercial Code

Chapter3

§ 3.8.3 / page308

7.3 Executive management report on transactions carried out by the

Company or affiliated companies in connection with free share

allocations reserved for employees and Senior Executives

ArticleL.225-197-4 of the French

Commercial Code

Chapter3

§ 3.8.3 / page308

8 Documents attached to the management report

8.1 Executive management report on the use of a delegation of

authority or a delegation of powers of the General Meeting

ArticleL.22-10-10 of the French

Commercial Code

Chapter3

§ 3.9.4 / pages321-323

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CROSS REFERENCE TABLES

9.5.3

CROSS-REFERENCE TABLE FOR THE SUPERVISORY BOARD REPORT ON CORPORATE

GOVERNANCE

(ArticlesL.226-10-1 and L.22-10-78 of the French Commercial Code (Code de commerce))

In accordance with ArticleL.226-10-1 of the French Commercial Code (Code de commerce), the report on corporate governance is attached to the

management report.

Items that are not applicable to Hermès International are marked “n/a”.

No. Required elements Reference texts Chapter/§/ Page

3 Compensation information

3.1 Compensation policy for Corporate Officers ArticleL.22-10-8,I, paragraph2 of

the French Commercial Code

Chapter3

§ 3.8.1 / pages293 et seq.

3.2 Compensation and benefits of any kind for each Corporate Officer

paid or awarded during the past financial year

ArticleL.22-10-9,I., 1° of the French

Commercial Code

Chapter3

§ 3.8.2 / pages303 et seq.

3.3 Relative proportion of fixed and variable compensation ArticleL.22-10-9,I., 2° of the French

Commercial Code

Chapter3

§ 3.8.1.2.4 / page297

§ 3.8.1.3.4 / page302

3.4 Use of the option to request the return of variable compensation ArticleL.22-10-9,I., 3° of the French

Commercial Code

n/a

3.5 Commitments of any kind made by the Company in favour of its

Corporate Officers, and corresponding to components of

compensation, indemnities or benefits due or liable to be due in

respect of the taking up, termination of or change in their duties or

subsequent to the exercise thereof

ArticleL.22-10-9,I., 4° of the French

Commercial Code

Chapter3

§ 3.8.1.2.4 / pages297 et

seq.

3.6 Compensation paid or allocated by a company included in the scope

of consolidation within the meaning of ArticleL.233-16 of the French

Commercial Code (Code de commerce)

ArticleL.22-10-9,I., 5° of the French

Commercial Code

Chapter3

§ 3.8.1.2.4 /

pages297-298

3.7 Ratios between the level of compensation of each Executive

Corporate Officer and the average and median compensation of the

Company’s employees

ArticleL.22-10-9,I., 6° of the French

Commercial Code

Chapter3

§ 3.8.2.3 / pages305-307

3.8 Annual change in compensation, company performance, average

compensation of company employees and the aforementioned ratios

over the five most recent financial years

ArticleL.22-10-9, 7° of the French

Commercial Code

Chapter3

§ 3.8.2.3 / pages305-307

3.9 Explanation of how the total compensation complies with the agreed

compensation policy, including how it contributes to the long-term

performance of the Company and the way in which the performance

criteria have been applied

ArticleL.22-10-9, 8° of the French

Commercial Code

Chapter3

§ 3.8.2.1 / pages303-305

§ 3.8.2.2 / page305

§ 3.8.2.4 / page308

3.10 Way in which the vote of the last Ordinary General Meeting, as

provided for inI of ArticleL.22-10-34 of the French Commercial Code

(Code de commerce), was taken into account.

ArticleL.22-10-9, 9° of the French

Commercial Code

Chapter3

§ 3.8.1.2.1 / page296

§ 3.8.1.3.1 / page302

3.11 Deviation from the procedure for implementing the compensation

policy and any exceptions

ArticleL.22-10-9,I., 10° of the

French Commercial Code

Chapter3

§ 3.8.1.2 / pages296-301

§ 3.8.1.3 / pages301-303

3.12 Application of the provisions of the second paragraph of

ArticleL.225-45 of the French Commercial Code (Code de

commerce) (suspension of the payment of compensation to members

of the Supervisory Board in the event of non-compliance in terms of

parity in the composition of the Supervisory Board)

ArticleL.22-10-9,I., 11° of the

French Commercial Code

n/a

3.13 Allocation and retention of options by Corporate Officers ArticleL.225-185 of the French

Commercial Code

Chapter3

§ 3.8.3 / page308

§ 3.8.4.8 / page313

3.14 Allocation and retention of free shares to Executive Corporate Officers ArticlesL.225-197-1 and

L.22-10-59 of the French

Commercial Code

Chapter3

§ 3.8.3 / page316

§ 3.8.4.10 / page314

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CROSS REFERENCE TABLES

No. Required elements Reference texts Chapter/§/ Page

Governance information

3.15 Offices and positions held in any Company by each Corporate Officer

during the past financial year

ArticleL.225-37-4, 1° of the French

Commercial Code

Chapter3

§ 3.3.2.2 / pages231-233

§ 3.4.8 / pages256 et seq.

3.16 Agreements, other than those relating to current transactions

concluded under normal terms and conditions, directly or through an

intermediary, between i) one of the Corporate Officers or

shareholders holding more than 10% of the voting rights of a

company and ii) another company in which the first company directly

or indirectly holds more than half of the capital

ArticleL.226-10 of the French

Commercial Code

Chapter3

§ 3.9.1 / pages315-317

3.17 Summary table of delegations of authority and powers granted by the

General Meeting to Executive Management with respect to capital

increases

ArticlesL.225-37-4, 3° and

L.226-10 of the French Commercial

Code

Chapter3

§ 3.9.4 / pages321-323

3.18 Methods of implementing Group management ArticleL.225-37-4, 4° of the French

Commercial Code

n/a

3.19 Composition and conditions governing the preparation and

organisation of Supervisory Board’s work

ArticleL.22-10-10 of the French

Commercial Code

Chapter3

§ 3.4 to 3.7 / pages241 to

292

3.20 Application of the principle of balanced gender representation on the

Board and description of the diversity policy applied within the Board

ArticleL.22-10-10, 2° of the French

Commercial Code

Chapter3

§ 3.4.3 / pages244-246

3.21 Possible limitations on the powers of the Executive Chairmen ArticleL.22-10-10, 3° of the French

Commercial Code

n/a

3.22 Reference to a Corporate Governance Code and application of the

“comply or explain” principle

ArticleL.22-10-10, 4° of the French

Commercial Code

Chapter3

§ 3.1 / page223

3.23 Specific terms and conditions relating to shareholder participation in

the General Meeting

ArticleL.22-10-10, 5° of the French

Commercial Code

Chapter3

§ 3.9.3 / pages 319-320

3.24 Procedure implemented by the Company to regularly assess the

nature of ordinary and regulated agreements

ArticleL.22-10-10, 6° of the French

Commercial Code

Chapter3

§ 3.9.1.3 / page318

3.25 Information on factors liable to affect the outcome of a public offering ArticleL.22-10-11 of the French

Commercial Code

Chapter3

§ 3.9.2 / pages318-319

3.26 Non-discrimination and diversity policy with respect to the balanced

representation of women and men in the governing bodies and

diversity in the 10% of key management positions

ArticlesL.225-37-4, 6° and

L.22-10-74 of the French

Commercial Code

Chapter3

§ 3.3.4 / pages238-240

1.1 Name and function of responsible persons Chapter9

§ 99.1.1 / page506

1.2 Statement of responsible persons Chapter9

§ 99.1.2 / page506

1.3 Statement of the expert report Chapter2

§ 22.9 / pages212-216

1.4 Information from third parties n/a

1.5 Statement without prior approval of the

competent authority

4.1 Company name and commercial name Chapter7

§ 77.1.1 / page440

4.2 Place of registration and registration number

and legal entity identifier (LEI)

4.3 Date of incorporation and duration Chapter7

§ 77.1.1 / page440

4.4 Registered office, legal form, applicable

legislation, country of origin, address and

telephone number

5.1.1 Transactions carried out and main activities Chapter1

§ 11.6 / pages26-35

5.1.2 New products and services Chapter1

§ 1.6 / pages26-35

§ 1.10 / page41

5.2 Principal markets Chapter1

§ 1.6 / pages26-35

§ 1.7 / pages35-38

5.3 Important events in the development of the

issuer’s business

5.4 Strategy and objectives Chapter1

§ 1.3 / pages14-16

§ 1.10 / page41

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CROSS REFERENCE TABLES

9.5.4

CROSS-REFERENCE TABLE FOR THE UNIVERSAL REGISTRATION DOCUMENT

The following table cross-references this document with the main headings required under Annexes 1 and 2 of Delegated Regulation (EU)

No.2019/980 of 14March 2019 supplementing Regulation (EU) No.2017/1129 of 14June 2017, amended and corrected by Delegated Regulation

(EU) No.2020/1273 of 4June 2020.

Items that are not applicable to Hermès International are marked “n/a”.

No. Required elements Reference texts Chapter/§/ Page

1 Persons responsible, third party information,

experts’ reports and competent authority

approval

Page1

2 Statutory Auditors

2.1 Name and address of the Statutory Auditors Chapter9

§ 9.2 / page507

2.2 Information on the Statutory Auditors who have

resigned or been dismissed from their duties

n/a

3 Risk factors Chapter4

§ 4.1 / pages328-346

4 Information about Hermès International

Headings in Annexes 1 and 2

of Delegated Regulation (EU)

No.2019/980 of 14March 2019,

amended and corrected

by Delegated Regulation (EU)

No.2020/1273

of 4June 2020

Chapter7

§ 7.1.1 / page440

5 Business overview

5.1 Principal activities

Chapter7

§ 7.1.1 / page440

Highlights 2021 / pages6-7

§ 1.1 Hermès in key dates / pages10-12

5.6 Competitive position Chapter1

§ 11.1 / page10

5.7 Investments

5.7.1 Significant investments made Chapter1

§ 1.5.3 / pages24-25

§ 1.5.3.3 / page25

§ 1.8.2 / page39

Chapter5

§ 5.5 / page363

§ 5.6 (Note3) / pages368-369

5.7.2 Major investments in progress or for which firm

commitments have already been made

§ 1.6.1 / pages26-28

§ 1.6.7.4 / page33

6.2 List of significant subsidiaries Chapter5

§ 5.6 (Note16) / pages402-403

Chapter6

§ 6.5 (Note7.3) / page423

§ 1.8.1 / pages38-39

7.2.2 Significant changes in net revenue or net income Chapter1

§ 1.6 / pages26 to 35

§ 1.7 / pages35 to 38

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CROSS REFERENCE TABLES

No. Required elements Reference texts Chapter/§/ Page

5.5 Extent to which the issuer is dependent on

patents or licences, industrial, commercial or

financial contracts or new manufacturing

processes

Chapter4

§ 4.1.3.2 / page340

Chapter1

5.7.3 Joint ventures or undertakings in which the

issuer holds a share of capital likely to have an

impact on its assets/liabilities, its financial

position or its earnings

n/a

6 Organisational structure

Headings in Annexes 1 and 2

of Delegated Regulation (EU)

No.2019/980 of 14March 2019,

amended and corrected

by Delegated Regulation (EU)

No.2020/1273 of 4June 2020

5.7.4 Environmental issues that may influence the use

of property, plant and equipment

Chapter9

§ 9.5.5 / page525

6.1 Brief description and organisational chart for the

Group

Chapter1

§ 1.4 / page17

7 Operating and financial review

7.1 Financial condition Chapter1

§ 1.8.3 / page39

7.2 Operating income

7.2.1 Major factors significantly affecting operating

revenue

Chapter1

§ 1.5 / pages24-25

§ 1.5.3 / page24

Chapter5

§ 5.3 / page361

§ 5.4 / page362

Chapter6

§ 6.2 / page413

§ 6.3 / page414

§ 6.4 / page414

Chapter7

§ 7.2 / pages450-460

8.2 Cash flows Chapter1

§ 1.8.2 / page39

Chapter5

§ 5.5 / page363

8.3 Borrowing requirements and funding structure Chapter5

§ 5.6 (Note11) / pages397 to 399

§ 5.6 (Note10.3) / page395

8.4 Restrictions on the use of capital n/a

8.5 Anticipated sources of funds Chapter1

§ 11.8.3 / page39

§ 2.2 / pages67 to 88

§ 2.8 / pages198 to 211

Chapter4

§ 4.1.3 / page339

§ 1.9 / page40

§ 1.10 / page41

Chapter3

§ 3.3 / pages229 et seq.

§ 3.4 / pages241 et seq.

§ 3.6.1 / pages284-285

§ 3.6.2 / pages285-287

§ 3.10.2 / page325

§ 3.4.7.5 / pages254-255

§ 3.8.1.1.3 / page295

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CROSS REFERENCE TABLES

No. Required elements Reference texts Chapter/§/ Page

8 Capital resources

8.1 Information concerning capital resources Chapter1

9 Regulatory environment Chapter2

Headings in Annexes 1 and 2

of Delegated Regulation (EU)

No.2019/980 of 14March 2019,

amended and corrected

by Delegated Regulation (EU)

No.2020/1273 of 4June 2020

10 Trend information Chapter1

11 Profit forecasts or estimates n/a

12 Administrative, management and supervisory

bodies and senior management

12.1 Information on administrative, management and

supervisory bodies

Chapter1

§ 1.2 / page13

12.2 Administrative, management and supervisory

bodies and senior management conflicts of

interests

13 Remuneration and benefits

Chapter3

13.1 Remuneration and benefits in kind Chapter3

§ 3.8 / pages293 et seq.

Chapter8

§ 8.2.1 (7

to 10

resolutions) /

pages480-486

13.2 Amounts set aside or accrued to provide

pension, retirement or similar benefits

Chapter5

§ 5.6 (Note5.5) / page377

14 Board practices

§ 3.3.2 / pages230-233

§ 3.4.5.1 / page247

14.2 Service contracts Chapter3

§ 3.4.7.5 / pages254-255

§ 3.8.1.2.4 / page297

§ 3.10.2.4 / page325

14.3 Information on the Audit and Risk Committee

and the CAG-CSR Committee

§ 1.5.3 / page24

Chapter2

§ 2.1 / page50

Chapter5

§ 5.6 (Note5.1) / page374

§ 3.4.5.1 / page247

§ 3.8.3 / page308

§ 3.8.4.4 to 3.8.4.12 / pages312-314

§ 3.10.1 / page324

Chapter7

§ 7.2.2.8 / page454

16.2 Existence of different voting rights Chapter7

§ 7.1.2.2 / page450

§ 7.2.2.5 / pages452-453

16.3 Control of Hermès International Chapter7

§ 77.2.2.3 / page451

16.4 Arrangements known to Hermès International

whose implementation could result in a change

of control

§ 3.9.1.1 / pages315-317

Chapter5

§ 5.6 (Note13) / page400

Chapter6

§ 6.5 (Note11) / page429

Chapter8

§ 8.2.1 (5

resolution) / page477

§ 8.4.3 / pages499-500

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No. Required elements Reference texts Chapter/§/ Page

14.1 Expiration dates of current terms of office Chapter3

Chapter3

§ 3.6 / pages284 et seq.

Chapter4

§ 4.3.2 / pages348-350

14.4 Statement of compliance with the applicable

corporate governance regime

Chapter3

§ 3.1.1 / page223

14.5 Potential material impact on corporate

governance

n/a

15 Employees

15.1 Number of employees and breakdown of

workforce

Highlights 2021 / pages6-7

Chapter1

15.2 Shareholdings and stock options held by

members of administrative, supervisory and

management bodies

Headings in Annexes 1 and 2

of Delegated Regulation (EU)

No.2019/980 of 14March 2019,

amended and corrected

by Delegated Regulation (EU)

No.2020/1273 of 4June 2020

Chapter3

15.3 Arrangements for involving employees in the

capital

Chapter2

§ 2.2.1.4.2 / page78

16 Major shareholders

16.1 Notifiable interests – shareholders holding more

than 5% of the share capital or voting rights

Chapter7

§ 7.2.2.5 / pages452-453

Chapter7

§ 7.5.2.2 / page460

17 Related-party transactions Chapter3

18 Financial information concerning the assets

and liabilities, financial position and profits and

losses

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CROSS REFERENCE TABLES

No. Required elements Reference texts Chapter/§/ Page

18.1 Historical financial information Chapter5

§ 5.1 to 5.6 / pages360 to 403

Chapter6

§ 6.1 to 6.5 / pages412-429

Chapter9

§ 9.4 / pages507-509

18.2 Interim and other financial information n/a

18.3 Auditing of historical annual financial information Chapter5

§ 5.7 / pages404-408

Chapter6

§ 6.9 / pages433-436

Chapter9

§ 9.4 / pages507-509

18.4 Pro forma financial information n/a

18.5 Dividend policy Chapter7

§ 7.3 / page461

18.6 Legal and arbitration proceedings Chapter4

§ 4.1.3 / pages339-340

18.7 Significant change in the financial position of

Hermès International

n/a

19 Additional information

19.1 Share capital Chapter5

Headings in Annexes 1 and 2

of Delegated Regulation (EU)

No.2019/980 of 14March 2019,

amended and corrected

by Delegated Regulation (EU)

No.2020/1273 of 4June 2020

§ 5.3 / page361

§ 5.6 (Note11) / pages397-399

Chapter6

§ 6.2 / page413

§ 6.3 / page414

§ 6.5 (Note9) / page428

§ 6.6. / page430

Chapter7

§ 7.1.3 / page441

§ 7.2.1.1 / page450

19.1.1 Amount of issued share capital Chapter5

§ 5.6 (Note11.1) / page397

19.1.2 Other shares n/a

19.1.3 Treasury shares Chapter5

§ 5.6 (Note11.3) / page397

Chapter7

§ 7.2.2.4 / page451

§ 7.2.2.5 / pages452-453

§ 7.2.2.6 / page453

19.1.4 Securities n/a

19.1.5 Acquisition rights and/or obligations over

authorised but unissued capital

n/a

19.1.6 Options or agreements n/a

19.1.7 History of the share capital Chapter7

§ 7.2.2.6 / page453

19.2 Memorandum and Articles of Association Chapter7

§ 7.1.1 / page440

§ 7.1.3 / pages440 et seq.

19.2.1 Register and corporate purpose Chapter7

§ 7.1.1 / page440

§7 .1.3 / page440

19.2.2 Rights, preferences and restrictions attached to

the shares

Chapter7

§ 7.1.3 / pages442-443

§ 7.2.5 / pages459-460

§ 7.5.8 / pages468-469

Chapter8

§ 8.2.1 (6

resolution) / pages477-479

§ 7.5.3 / page466

Chapter9

§ 9.3 / page507

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CROSS REFERENCE TABLES

No. Required elements Reference texts Chapter/§/ Page

19.2.3 Provisions of the Articles of Association and

other provisions that could delay, defer or

prevent a change in control

Headings in Annexes 1 and 2

of Delegated Regulation (EU)

No.2019/980 of 14March 2019,

amended and corrected

by Delegated Regulation (EU)

No.2020/1273 of 4June 2020

20 Material contracts

21 Documents available

Chapter7

§ 7.2.5.1 / page459

Chapter7

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CROSS REFERENCE TABLES

9.5.5

CROSS-REFERENCE TABLE FOR THE NON-FINANCIAL PERFORMANCE STATEMENT

No. Required elements Reference texts Chapter/§/ Page

5.1 Business model ArticlesL.225-102-1 and

R.225-105,I of the French

Commercial Code

chapter2

§ 2.1 / pages47-55

5.2 Description of the main risks related to the business of the

Company or Group, including, where relevant and proportionate,

risks created by business relationships, products or services

ArticlesL.225-102-1 and

R.225-105,I. 1 of the French

Commercial Code

chapter2

§ 2.3.1.1 / page56

5.3 Information on the way in which the Company or the Group takes

into account the social and environmental consequences of its

activity, and the effects of this activity on respect for human rights

and the fight against corruption (description of the policies applied

and due diligence procedures implemented to prevent, identify and

mitigate the main risks related to the business of the Company or

Group)

ArticlesL.225-102-1,III,

R.225-104 and R.225-105,I. 2

of the French Commercial Code

chapter2

§ 2.2.2.3 / pages84-86

§ 2.6.1.2.5 / pages170-178

§ 2.8.1.1 / pages198-200

5.4 Results of policies applied by the Company or Group, including key

performance indicators

ArticlesL.225-102-1 and

R.225-105,I. 3 of the French

Commercial Code

chapter2

§ 2.2 / pages67-88

§ 2.3 / pages89-108

§ 2.4 / pages109-128

§ 2.5 / pages129-166

§ 2.6 / pages167-180

§ 2.7 / pages181-197

§ 2.8 / pages198-211

5.5 Social information (employment, work organisation, health and

safety, labour relations, training, equal treatment)

ArticlesL.225-102-1 and

R.225-105,II. A.1 of the French

Commercial Code

chapter2

§ 2.2 / pages67-88

§ 2.3 / pages89 -108

5.6 Environmental information (general environmental policy, pollution,

circular economy, climate change)

ArticlesL.225-102-1 and

R.225-105,II. A.2 of the French

Commercial Code

chapter2

§ 2.4 / pages109-128

§ 2.5 / pages129-166

5.7 Societal information (societal commitments in favour of sustainable

development, subcontracting and suppliers, fair practices)

ArticlesL.225-102-1 and

R.225-105,II. A.3 of the French

Commercial Code

chapter2

§ 2.6 / pages167-180

§ 2.7 / pages181-197

5.8 Anti-corruption information ArticlesL.225-102-1 and

R.225-105,II. B. 1 of the French

Commercial Code

chapter2

§ 2.8.2 / pages202-205

5.9 Information on actions in favour of human rights ArticlesL.225-102-1 and

R.225-105,II. B. 2 of the French

Commercial Code

chapter2

§ 2.2.2.3 / pages84-86

§ 2.6.1.2.5 / pages172-174

§ 2.8.1.1 / pages198-200

5.10 Specific information: ArticleL.225-102-2 of the French

Commercial Code

Not applicable

the Company’s policy to prevent the risk of technological

accidents;

the Company’s ability to cover its civil liability in respect of

property and persons as a result of the operation of such

facilities;

the means planned by the Company to manage the

compensation of victims in the event of a technological accident

involving its liability.

Collective agreements concluded within the Company and their

impact on the Company’s economic performance as well as on the

working conditions of employees

•

5.11 ArticlesL.225-102-1,III and

R.225-105 of the French

Commercial Code

chapter2

§ 2.2.1.3 / page76

5.12 Statement of the independent third party on the information

presented in the SNFP

ArticlesL.225-102-1,III and

R.225-105 of the French

Commercial Code

chapter2

§ 2.9 / page212

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CROSS REFERENCE TABLES

9.5.6

TCFD CROSS-REFERENCE TABLE

The international working group on transparency of climate-related financial risks (Task Force on Climate-related Financial Disclosures, TCFD) was

created at COP21 by the G20 Financial Stability Board to establish a common global framework for the reporting of climate risks to companies.

The TCFD published its recommendations on the information to be published by companies in June 2017.

The references to the elements of the universal registration document that meet these recommendations are indicated in the cross-reference table

presented in chapter 2 “Corporate social responsibility”, § 2.7.2.2.2.

◆

covers certain principles of efficient operation and transparency to

improve a company’s management and meet demands from investors

and the public;

◆

concerns all the responsibilities, processes and practices designed to

define Group management and the Company’s strategic actions, to

ensure that risks are correctly managed and that goals are achieved;

◆

covers all the different bodies (Supervisory Board and its specialised

committees, Executive Committee, etc.) put in place to oversee the

management of a publicly-traded company.

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GLOSSARY

9.6

GLOSSARY

Active partners

See “société en commandite par actions” (partnership limited by shares).

Adjusted free cash flow

Adjusted free cash flow is the sum of cash flows related to operating

activities, less operating investments and the repayment of lease

liabilities recognised in accordance with IFRS16 (aggregates in the

consolidated statement of cash flows).

Afep-Medef Code

Corporate Governance Code of listed corporations developed by the

Association française des entreprises privées (Afep) and the Mouvement

des entreprises de France (Medef), after consultation with the various

parties of the financial marketplace. This code provides a set of

demanding and precise recommendations on corporate governance. It

can be designated by listed corporations as their reference code

pursuant to ArticleL.22-10-10, 4 of the French Commercial Code (Code

de commerce). The Afep-Medef Code is revised and updated on a regular

basis.

Affiliates

Companies in which your company does not own, directly or indirectly,

more than 50% of the share capital.

Articles of Association

The Articles of Association are a deed of incorporation of a company

which defines its characteristics and the rules governing its operation. An

amendment to the Articles of Association requires the agreement of all

the Active partners and a vote by an extraordinary General Meeting.

Audit and Risk Committee

A committee of the Supervisory Board in charge of the financial

statements, audit, risks, and corruption prevention.

Bearer Share

When shares are in bearer form (the most common), the custodian is a

financial intermediary (bank or stock market firm). This intermediary is

the only entity to know the individual shareholder’s identity, so the issuing

company does not know the name of the holders of these shares.

CAG-CSR Committee

A committee of the Supervisory Board in charge of compensation,

appointments, governance, and corporate social responsibility.

Capital gain

The profit made on the sale or disposal of a security. It is equal to the

positive difference between the sale price and the purchase or

subscription price.

Capital increase

Operation conducted to increase the Company’s equity capital. A capital

increase is either done by increasing the par value of existing shares, or

by creating new shares proceeding from subscriptions in cash,

contributions in kind or profits, reserves or issue of share premiums

incorporated into the capital. Capital increases may be carried out with or

without subscription rights. They may enable new shareholders to hold a

part of the Company’s capital. They must be previously approved by an

Extraordinary General Meeting.

Consensus

This is the mean value of forecasts made by analysts.

Consolidated financial statements

The consolidated financial statements consolidate all of the financial

statements of the companies forming the Hermès Group, for the purpose

of presenting the financial position as if they formed a single entity.

Corporate governance

Corporate governance:

CSR

Corporate social responsibility.

◆

to any fully-paid Hermès International registered share which has

been duly recorded on the books in the name of the same

shareholder for a period of at least four years, and from the date of

the first General Meeting following the fourth anniversary of the date

when the share was registered on the books; and

◆

to any Hermès International registered share allocated as a bonus

share to a shareholder, in the event of a capital increase by

incorporation of amounts entered in share premium, reserve or

retained earnings accounts, in proportion to existing shares carrying a

double voting right.

◆

protection of savings invested in financial products;

◆

investor information;

◆

proper financial market operation.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL528

ADDITIONAL INFORMATION

GLOSSARY

Declaration by Senior Executives (upon disposal

of securities)

Declaration that the Senior Executives, the persons acting on their

behalf, and the persons related to them are required to make to the

issuer and the AMF, in respect of the transactions they carry out on the

shares and debt securities of the Company in which they perform their

duties and the related financial instruments. This declaration must be

made within three working days starting from the date of the transaction

(for more information, see the “Guide de l’information permanente et de

la gestion de l’information privilégiée” DOC-2016-08 of the AMF).

Dividends

Portion of the Company’s profits, retained earnings or reserves that the

General Meeting, on a recommendation by the Supervisory Board,

decides to distribute to the shareholders. The dividend represents the

share earnings, and its amount varies each year depending on the

Company’s results and the policy it adopts.

Double voting right

The double voting right departs from the legal principle that the number

of votes attaching to shares must be proportional to the share of capital

they represent (principle of “one share one vote”).

A double voting right is granted:

The double voting right automatically ceases to exist in the conditions

stipulated by law.

Earnings per share

This is a calculation done for stock market analysis obtained by dividing

the Company’s net profit by the number of shares comprising the capital.

Equity

Capital belonging to the shareholders comprising equity subscriptions,

profits left in reserves and income for the period.

Executive Chairmen

The role of the Executive Chairman consists in running the Group and

acting in the general interests of the Company, within the limits of its

corporate purpose and in compliance with the powers granted by law to

the Supervisory Board and General Meetings of Shareholders.

Extraordinary dividend

This is a dividend of an exceptionally high amount compared to the

dividend ordinarily paid and which is not therefore recurrent. It may

complete or replace the ordinary dividend.

Financial Markets Authority (AMF)

Financial markets authority regulating French financial market players

and products. The authority regulates, authorises, monitors and, when

necessary, audits, investigates and imposes sanctions. It also ensures

that investors are correctly informed and offers investor assistance,

where necessary, via its mediation procedure.

The Financial Markets Authority (AMF) is an independent public authority

responsible for:

“Épargne Info Service” answers your questions about savings products,

the stock market or the role of the AMF on +33 (0)1 53 45 62 00 (local

call rates in France).

General Meeting

The General Meeting is a decision-making body comprising all

shareholders (Limited Partners).

Except for the appointment and dismissal of members of the Supervisory

Board, the appointment and dismissal of the Statutory Auditors, the

allocation of profits for the financial year and the approval of agreements

subject to authorisation, no decisions may be validly made by the

General Meetings unless they are approved by the Active partners at the

latest by the end of the meeting that voted on the decision in question.

Growth in revenue at constant exchange rates

Growth in revenue at constant exchange rates is calculated by applying,

for each currency, the average exchange rates of the previous period to

the revenue for the period.

HCGE

Corporate Governance High Committee (Haut Comité de gouvernement

d’entreprise), whose role is to conduct oversight of the application of the

Afep-Medef Code and to propose changes therein, subject to public

consultation.

Hermès family group

The Hermès family group consists of the partners of Émile HermèsSAS,

their spouses, children and grandchildren, and their direct and indirect

holding companies of Hermès International and Émile HermèsSAS. The

right to be a partner in Émile HermèsSAS is reserved for the

descendants of MrÉmile-Maurice Hermès and his wife, and their

spouses, but solely as the usufructuaries of shares.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 529

ADDITIONAL INFORMATION

GLOSSARY

EHS

Environment, Health and Safety.

Identification on request

In order to know the identity of all or part of its holders of bearer shares

at a given time, a publicly-traded company may ask the Company

Euroclear France for a breakdown of its shareholders using its

notification platform, which allows identification information to be

collected from financial intermediaries.

Law No.2021-1308 of 8October 2021, which transposed Directive (EU)

2017/828 of 17May 2017 (known as “SRDII”) into French law,

amending Directive 2007/36/EC of 11July 2007 (known as “SRDI”) has

replaced the TPI (identifiable bearer share) procedure by this procedure.

IFRS

International Financial Reporting Standards.

Institutional investors

Financial institutions (pension funds, insurance companies, banks,

sovereign funds, etc.) investing money in securities.

Interim dividend

Advance payment of a portion of the forth coming dividend.

Joint Council

Whenever it considers it necessary, the Executive Management of

Hermès International or the Chairman of the Supervisory Board of

Hermès International calls a Joint Council between the Executive

Management Board of Émile HermèsSAS and the Supervisory Board of

Hermès International.

The Joint Council is an institution designed to enable extensive

consultation between the Executive Management Board of the Active

partner, an internal body needing to have knowledge of the main aspects

of Hermès International’s Executive Management, and the Supervisory

Board, an emanation of the shareholders.

The Joint Council hears all questions that are submitted to it by the

person calling it or which it decides to examine, without however being

able to make decisions in place of the bodies to which such powers are

granted by law, the Company’s Articles of Association and those of Émile

HermèsSAS.

The Joint Council of the Executive Management Board and the

Supervisory Board does not, itself, have any decision-making powers. It

acts solely as a consultation body. If they so wish, at a Joint Council

meeting, the Executive Management Board and the Supervisory Board

may make any decision or give any opinion within their sphere of

competence.

LEI

LEI is a unique, global identifier that takes the form of a 20-digit

alpha-numeric code. It is linked to key reference information. Developed

by the International Organisation for Standardisation (ISO), the LEI is

compulsory for all transactions in financial instruments listed on the stock

exchange: it clearly and uniquely identifies the legal entities involved in

such transactions.

Limited Partners

See “société en commandite par actions” (partnership limited by shares).

Liquidity

For a given security, this corresponds to the ratio between the volume of

shares traded on the market and the number of shares comprising the

floating stock. A security or a market is said to be “liquid” when buy or

sell transactions can be completed without causing any excessive

variations compared to the last trading price.

Management report

Information document required by the French Commercial Code (Code de

commerce) whereby the Senior Executives and management bodies of a

company report to the governing body on their management over the past

year, and provide all significant information about the issuer and its

future prospects. It is prepared by the same bodies as those that

approve the annual financial statements. Companies preparing

consolidated financial statements must also provide information about

the management of the Group. This document is included in the universal

registration document.

Market capitalisation

This is the market value of a company at a given time. It is calculated by

multiplying the stock market price by the number of shares comprising

the capital.

Net cash position

Net cash position includes cash and cash equivalents presented under

balance sheet assets, less bank overdrafts which appear under

short-term borrowings and financial liabilities on the liabilities side. Net

cash position does not include lease liabilities recognised in accordance

with IFRS16.

Net income

A company’s net income is the balance between all of its income and all

of its expenses over a given period. It reflects what the Company has

earned or lost through its activities over that period.

Net profit

Positive statement of income balance.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL530

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GLOSSARY

Operating cash flows

Operating cash flows are all the financial resources generated by the

Company in connection with its activity and which it could use to cover its

financial needs. It measures the Company’s ability to finance its

requirements in order to exist, using its own resources, such as

investments or debt repayments.

Parent company financial statements

The parent company financial statements are the annual financial

statements of Hermès International taken individually.

Preemptive subscription right

Tradable right, detached from each existing share, enabling existing

shareholders to purchase new shares or securities giving access to the

share capital in an offering before the general public has the opportunity

to do so, or to obtain, by selling their rights, an amount equivalent to the

notional reduction in the value of their shares that would arise from the

new issue.

Priority subscription right/Priority subscription period

In return for the cancellation of preemptive subscription rights, the

Executive Management may introduce a priority right, which may be

pro-rated. A priority right, like a preemptive subscription right, enables

existing shareholders to subscribe to the proposed issue in proportion to

the number of shares they currently hold. However, unlike a preemptive

subscription right, a priority right is (i)exercisable within a priority period

(in practice, at least five trading sessions) that is shorter than the period

allowed for a preemptive right and (ii)not tradable.

Pro-rated (subscription rights)

In some cases, the Executive Management may introduce pro-rated

subscription rights in favour of existing shareholders. This means that if

irreducible subscriptions (i.e. subscriptions by shareholders exercising

preemptive subscription rights) fail to entirely absorb the capital

increase, the unsubscribed equity securities would be allocated on a

pro-rated basis to those shareholders who made an application for

additional shares (over and above the entitlement given by their

preemptive subscription rights) in proportion to the subscription rights

they hold and within the limit of the number of shares applied for by that

shareholder.

Quorum

Minimum percentage of shares present or represented and carrying

voting rights, required for a General Meeting to validly proceed.

Recurring operating income

Recurring operating income is one of the main performance indicators

monitored by the Group’s management. It excludes non-recurring items

having a significant impact that could affect understanding of the Group’s

economic performance.

Registered share

When shares are registered shares, the custodian is the Company itself

or an agent appointed by the issuing company to keep its registered

share accounts. For Hermès International, this agent is BNP Paribas

Securities Services (BP2S). Holders of registered shares are known by

name by the issuing company. They may either manage their shares

themselves, in which case they are described as “pure” registered

shareholders; or appoint an agent of their choosing to manage their

account held with the issuing company, in which case they are described

as “administered” registered shareholders.

Remote voting

A shareholder may vote by post using a form provided for this purpose or

online (please refer to the corresponding notice of meeting).

Restated net cash

Restated net cash corresponds to net cash plus cash investments that

do not meet the IFRS criteria for cash equivalents due in particular to

their original maturity of more than three months, less borrowings and

financial liabilities.

Revenue

Revenue is the total amount of sales of goods and services made by the

Company, over a given period, in the normal course of business.

A marketable security issued by a listed (publicly-traded) or unlisted

incorporated company, representing the unit value of the Company’s

share capital and granting the holder shareholder status. This share

carries rights to disclosure of information and the right to vote at General

Meetings, as well as financial rights (right to dividends, subscription

rights). A share may be a bearer share or a registered share.

Share buyback

After consulting its shareholders at a General Meeting and obtaining their

consent, a company may purchase its own shares on the stock market,

within the limit of 10% of its capital (in accordance with the objectives

defined in the share buyback programme). Shares thus purchased may

then be held, sold, transferred or cancelled.

Share capital

Portion of equity capital contributed by shareholders when the Company

is established or upon a subsequent capital increase.

Shareholding certificate

Document provided by the financial intermediary proving that a holder of

bearer shares is a shareholder. This document enables the shareholder

to take part in General Meetings.

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL 531

ADDITIONAL INFORMATION

GLOSSARY

Société en commandite par actions (SCA)

(partnership limited by shares)

A company whose capital is divided into shares comprising one or more

Active partners having status as merchant and who have unlimited joint

and several liability for the Company’s debts, and Limited Partners (or

shareholders) who are not merchants and are only liable for the

Company’s debts in proportion to their investment.

Subsidiaries

Companies in which your company owns, directly or indirectly, more than

50% of the share capital.

Supervisory Board

The Company has a Supervisory Board (Conseil de surveillance),

comprising between three and fifteen members (in addition to members

representing the employees) who are appointed for term of three years

(unless otherwise specified pursuant to Article18.2 of the Articles of

Association) from among shareholders that do not have status as Active

partner, legal representative of the Active partner or Executive Chairman.

The powers and competence of the Supervisory Board are defined in

Article18 of the Articles of Association.

Treasury shares

A share that a company holds in its own capital. Treasury shares do not

carry any voting rights and do not grant entitlement to dividends.

Universal registration document

Summary document filed on a voluntary basis by issuers. This is a

communication tool enabling the market (financial analysts, investors,

individual shareholders, etc.) to have access to annual information that

includes all the information necessary to make a judgment on the

business, financial position, results and outlook of the issuer as well as

the governance and shareholding structures. It contains legal, financial

and accounting information, information concerning the activities and

shareholding as well as a description of the issuer for a given financial

year. While this document is optional, most large listed companies

prepare a universal registration document.

Voting right

A voting right attached to a share is exercised at the Company’s General

Meetings and enables shareholders to take part in the Company’s

principal decisions. A share may carry a single or multiple voting right(s),

or no voting right at all, but only shareholders may hold voting rights.

Yield

Ratio of the dividend to the share price.

This glossary contains the most frequently used terms. The definitions

are provided for information only and do not purport to be exhaustive. On

no account shall this glossary be interpreted as replacing rules in force

(legislation, regulations, Articles of Association, etc.), or documents and

communications issued by the Company (notice of meeting, universal

registration document, financial disclosures, etc.).

2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL532

ADDITIONAL INFORMATION

GLOSSARY

Hermès International

Société en commandite par actions (partnership limited by shares)

with share capital of €53,840,400.12 – Paris Trade and Company Register no. 572076396 –

Registered office: 24, rue du Faubourg Saint-Honoré –75008 Paris.

Tel.: +33 (0)1 40 17 49 20

ISBN 978–2–35102–0463

A Hermès publication

Illustration credits

Pages 5, 229, 230, 231, 233: Valérie Archeno - Page 13: Olivier Metzger 1, Sylvie Becquet 2 and 3, Edouard Caupeil 4 - Page 66: Christophe Mariot -

Page 88: Maxime Verret - Page108: Chris Payne - Page 128: François Coquerel - Page 166: Pascal Biomez - Page 180: Nacása & Partners Inc -

Page 234: Olivier Metzger 1, Sylvie Becquet 2 and 3

Pages 247, 256, 258, 259, 261, 262, 263, 265, 266, 268, 269, 271, 272, 273, 275, 285, 288: Edouard Caupeil

Layout: Labrador

e-accessible version: Ipedis

This document is printed in France by an Imprim'Vert certified printer on PEFC certified paper produced from sustainably managed forest.