LVMH

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We launched a comprehensive due diligence process in January 2019. The first

phase consisted of identifying and auditing all our colored gemstone suppliers. After that we

were able to start the second phase, which involved visiting mines so we could trace the supply source and ensure that the raw materials are extracted in a sustainable manner. Our top priority is the respect for human rights, but preserving the environment is also a major concern.

ELEONORA RIZZUTO, CSR DIRECTOR FOR

BVLGARI AND LVMH IN ITALY

A STRINGENT AUDIT POLICY

The Group s traceability policy includes making its suppliers

and sub-contractors accountable. A code of conduct, trans- lated into 20 languages and updated in 2017, urges them to strictly apply ethical, social and environmental standards and

regulations, use techniques that preserve natural resources,

and implement an environmental management system.

LVMH conducts compliance audits to ensure that they adopt

sustainable practices. In 2019, the Group s Maisons carried

out 1,589 social and/or environmental audits of 1,261 suppliers across all its businesses Italian Maison Acqua di Parma, for example, conducted 15 last year. Supply chain audits were also

carried out, including one into South African-sourced Mohair in the summer of 2019. In addition, LVMH has developed two

environmental audit checklists for its buyers and offers train-

ing in how to use them at the Environment Academy.

The Maisons share their audits, findings and information on a collaborative in-house platform (which supplements Sedex,

an external platform for buyers, suppliers and auditors).

Some Maisons have updated their structures to implement

sustainable purchasing more effectively. For example, in 2019,

Louis Vuitton set up a Responsible Purchasing Committee

to extend the scope of its sustainable development policy to

include purchasing. Members of the Purchasing Department, the Sustainable Development Department, and various cross-functional departments sit on this committee, which

meets three times a year. It defines joint objectives and tools, deploys joint initiatives, and shares existing best practice applied within the Group by individual suppliers, or in the

supply chains.

Audits make it possible to assess suppliers, they are not just a way of monitoring them. If and when LVMH identifies any non-compliance, it helps suppliers progress and implement

corrective action where necessary. The Group encourages

its suppliers to go beyond the minimum requirements of