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Accelerate innovation with the internal carbon fund In three years, the LVMH internal carbon fund has become a major strategic driver for investments to combat climate change. It was at the opening of COP21 (the 21st Conference of the Parties to the United Nations Framework Agreement on climate change) in Paris that this fund was launched. It is based on the idea that placing a value on the cost of greenhouse gas emitting activities can stimulate a change in behaviors. LVMH decided to set a price of 30 for each ton of CO2 generated by the oper- ations of its Houses, particularly by the energy con- sumption of their production sites and sales floor areas. The contributions of the Houses are calcu- lated on this basis. They must then release an invest- ment amount that is at least equal to finance innovative projects that will limit their carbon foot- print. As a result, the fund gives them an additional right to invest to reduce their greenhouse gas emissions. Two types of projects can be financed: equipment, to reduce this consumption, and the production of renewable energies. The projects sup- ported are selected on the basis of the carbon impact (emissions avoided), and the trigger effect (carbon fund approval releases the investment). The internal carbon fund and the active participa- tion of the Houses have allowed the Group to

establish a virtuous circle to accelerate the decline in its greenhouse gas emissions. From 15 initially, the price per metric ton of CO2 generated had dou- bled in 2018 to 30 at January 1. Contributions thus reached a total of 11.3 million, up from 6.7 mil- lion and 5.8 million in 2016 and 2017. The fund financed 112 structuring projects, 100% more than the previous year. The projects selected are led by 28 Houses: Acqua di Parma, Belvedere, Benefit, Berluti, Bvlgari, Celine, Chandon India, Christian Dior Couture, DFS, Fendi, Fred, Fresh, Givenchy, Glenmorangie, Guerlain, Hennessy, Hublot, Le Bon Marché, Loewe, Loro Piana, Louis Vuitton, LVMH Fragrance Brands, MHCS, Parfums Christian Dior, Royal Van Lent, Sephora, Tag Heuer and Zenith. The majority (55%) of the projects financed affect the boutiques, 43% the industrial and logistics sites and 2% the corporate offices. Nearly 80% of the pro- jects will improve energy efficiency and 13% involve the production of renewable energy.

Two Houses, Fendi and Le Bon Marché, took advan- tage of this measure designed to accelerate changes. The Fendi Energy Officer works on 13 sites, including 7 boutiques, which represent a total of 28,000 m2. The manager at Le Bon Marché has jurisdiction over the entire Paris perimeter of the House. Certain projects financed by the LVMH carbon fund are particularly innovative, such as the project launched by Belvedere in Poland. This pro- ject is working to design a co-generation system for the production of power and steam from biomass. The House is going to invest 2 million in the devel- opment of this doubly pioneering equipment because of its reduced size and its industrial use. The operation is so innovative with such potential for the future that the Polish government has decided to subsidize it at the level of 40%. The Louis Vuitton House alone has launched 45 dif- ferent projects since the fund was formed in 2016,

ACTIONS AND INITITIATIVES

For the first time ever, in 2018 an Energy Officer was appointed, eligible to manage the carbon fund. The Energy Officer s role is to reduce energy consumption while ensuring operational continuity and quality at the sites.

CHANGE IN GREENHOUSE GAS EMISSIONS (in metric tons of CO2 equivalent)

Direct greenhouse gas emissions in T CO2 eq

Indirect greenhouse gas emissions in T CO2 eq

Of which estimated

2016 2017 2018

400,000

300,000

200,000

100,000

0

62 ,6

57

63 ,9

70

73 ,9

40

32 2,

97 2

31 5,

34 2

31 0,

18 3