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system. LVMH also has environmental audit grids adapted to the buyers in a 10-question or 35-question version. Training sessions for LVMH buyers are organized on a regular basis. The Houses can launch compliance audits with their suppliers at any time and are increasingly using this right.

The audits are not just a means to control effective implementation of the Code of Conduct prin- ciples. They allow LVMH to help its suppliers and subcontractors to improve at the environmental level. The company identifies non-conformities and the areas for improvement, can launch correc- tive or innovative action plans, monitor results, and make adjustments within the framework of ongoing improvement. The campaign conducted group- wide in 2018 is an illustration of this process. Of the 1,092 social and environmental audits con- ducted in 2018, 20% of the suppliers audited did not meet the requirements defined by the Group, according to a four-level performance scale, that takes into account the number and gravity of the non-conformities found, 4% of which found non-conformities considered to be critical. The Houses also know how to anticipate in order to improve the scores obtained during the audits. For

example, in November 2018, Belvedere organized its 13th seminar in Poland based on a partnership program set up with scientists and its raw materials suppliers to improve the quality of the spirits, deploy agricultural methods that protect the envi- ronment, and guarantee the purchase of local rye. In 2018, Fendi had 314 audits conducted. The company developed specific criteria to assess the performances of its suppliers at the social and environmental levels. These performances now count for 20% in the total assessment, along with price, delivery time, quality and development. Between 2017 and 2018, Fendi sharply increased the audits of raw materials suppliers for the pro- duction of its ready-to-wear and fur items. Audits jumped from 103 to 149, an increase of 44%. The House is now preparing the next step. It will audit the suppliers of threatened raw materials in 2019.

In 2018, the policy to increase the responsibility of LVMH suppliers was again enhanced through pool- ing. LVMH now has an in-house platform to share audit results and joined EcoVadis, another outside platform to assess the social and environmental responsibility of the suppliers. For example, the Houses of the Perfumes & Cosmetics business sec- tor conducted 20 packaging supplier audits and 26 audits of raw materials suppliers using this pooled method. A total of 105 audits of the same type are scheduled by 2020.


Supplier Code of Conduct created in 2008 and upgraded in 2017.

Compliance audits conducted by the Group and the Houses at their suppliers: corporate, environmental audits...

Group tools to strengthen the environmental assessment of suppliers: 35 questions.

Pooled audits by Houses, where they use the same suppliers.

Introduction of corrective actions for audits whose results do not align with Group requirements.