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• TAKING ACTION

Supplier non-compliance is classified into four categories:

• Zero tolerance breaches (relating to the most serious potential violations,

including child labor, forced labor, irregular work, undeclared

subcontractors, threats, discrimination, serious breaches of regulations,

counterfeiting, etc.);

• Serious compliance breaches where the supplier is given one month to

resolve the serious compliance breach, and a follow-up audit is scheduled

to confirm that the issue has been resolved;

Identification of zero tolerance or serious compliance breaches triggers

the immediate establishment of a committee comprising the Kering audit

team and the relevant House(s) to decide on the future of the relationship

with the supplier. If the supplier is in the process of being activated but

has not started working, the response is the immediate shutdown of the

approval process. If the supplier is working on one or more orders, the

committee will discuss either the possibility of remediation and support

for the supplier, or the need to terminate the contractual relationship. The

House is the ultimate decision-maker on the most appropriate response;

• Moderate compliance breaches by suppliers. The supplier is given three

months to resolve a moderate breach of compliance, and a follow-up audit

is scheduled to confirm that the issue has been resolved; and

• Observations. These give rise to a corrective action plan and are the

subject of a dedicated checklist at the next audit. The supplier has six

months to remedy the observation.

A detailed description of what constitutes zero tolerance breaches, serious

breaches of compliance, moderate breaches of compliance and

observations has been prepared for each of the 13 categories of the

comprehensive audit. Depending on the results of audits, suppliers may be

classified as: compliant; partially compliant; progress expected; or zero

tolerance.

Additionally, Kering and the Houses encourage a certain number of

suppliers to obtain third party certifications covering, inter alia, human

rights-related issues such as child and forced labor

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No proven cases of child or forced

labor detected at the end of 2021.19