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pg. 16

"OUTCOMES AND KPIS

According to Kering’s risk assessment, Modern Slavery is essentially a concern within the supply chain of the Group, rather than in its business activities.

The nature of the Kering Group supply chain, and the due diligence and other controls applied to the supply chain have been outlined above in the sections entitled Our Supply Chain and Our Risk Management. In this section, there is a review of progress made in applying the Group’s controls that relate to human rights risks including modern slavery and trafficking.

4.83% of suppliers are deemed at risk because they are located in countries considered by the Group to be at risk. A country is deemed to be “at risk” when the indicators contained in various external databases imply that human rights risks are high or very high.

9.5% of suppliers were deemed critical in 2020. Suppliers are deemed critical when they are strategic and/or at risk. They are given special attention in view of their importance to the business and their location. Subcontracting without prior authorization is not permitted.

Among its suppliers, Kering also singles out raw material suppliers. Raw materials suppliers identified as key to the Group represent roughly 20% of all such suppliers, corresponding to approximately 80% of purchases.

For a limited portion of its activities (fragrances and cosmetics), Kering Group also works with licensed suppliers, i.e., those that are under license to the Houses.

Within this portfolio of suppliers, 2,399 audits were conducted in 2020 despite the health crisis (3,241 in 2019), breaking down as 1,102 comprehensive audits and 1,297 follow-up audits. A total of 37% of these audits were carried out by Kering’s Internal Audit team, and 63% by external auditors, with the Group audit protocol applied in the same way for all audits conducted. This means that 41% of suppliers were audited in 2020.

Over the 2015-2020 period, 88% of suppliers were audited, 5% more than in 2015-2019. Moreover, Kering has undertaken to audit all of its key suppliers every two years. It should be noted that “activation” audits for new suppliers are comprehensive audits, and that they therefore cover the entire scope of a comprehensive audit. In 2020, audits were extended to Kering Eyewear suppliers."

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pg. 17

"Human rights and fundamental freedoms

Kering group operations

Indicators

• Reach of training on the annual Ethics & Compliance program in 2020: 95.1%

• Number of complaints received by Ethics Committees in 2020, on all subjects covered by the Code of Ethics, including human rights and fundamental freedoms: 64 (including 14 still under investigation by December 31, 2020)

Examples of implementation

• Gap analysis between Kering practices and the United Nations Guiding Principles on Business and Human Rights, to determine specific focuses for progress and action plan

• SA8000 certification for internal and outsourced production processes (e.g., Gucci and Bottega Veneta)

• Update and reissue of the Code of Ethics to all Group employees worldwide in 2019

Kering group supply chains

Indicators

• Number of third-party due diligence procedures since 2017: more than 176,000(1)

• Supplier compliance monitoring in 2020: 94.5% of suppliers audited wholly or partially compliant

Examples of implementation

• Inclusion of Sustainability Principles and Group Suppliers’ Charter in contractual relationship with suppliers

• Centralized supplier management and common audit methodology

• Roll-out of Kering Standards on raw materials, including requirements on human rights

• Update and reissue of the Code of Ethics to all Group employees worldwide in 2019

• Roll-out of the Vendor Rating system for evaluating supplier performance on social criteria (92 questions)

• Roll-out of a communication plan on Kering’s key ethical principles and whistleblowing procedure targeting suppliers’ employees"