COMPENSATING FOR SUPPLY-CHAIN EMISSIONS We currently estimate our Scope 3 emissions to be approximately 1.72 million tCO 2 e per year, with the majority being generated in our supply base from the steps associated with the sourcing and transformation of the raw materials used in our products, and the upstream impacts associated with the production of sales and promotional materials. Work is underway to better understand our full Scope 3 emissions in order for us to be able to set ambitious targets for reducing these emissions over a reasonable time frame. In parallel, we are committing to offset at least 1.5 million tCO 2 e per year to compensate for our overall emissions, while also continuing to invest in various insetting projects in our supply base. BUILDING A MORE INCLUSIVE ENERGY TRANSITION Extreme climate events will disproportionately affect the most socially and economically vulnerable communities. Often, it is these same communities that are excluded from the economic benefits of the transition to renewable energy. Just as we look outside our immediate operations in building resilience and investing in our approach to sourcing, we also aim to include communities in how we envision a resilient renewable-energy market. For the new energy system and economy to be truly sustainable, it must include and benefit all communities. Based on this vision, we will look for renewable-energy investments that meet at least one of the following principles: COMMUNITY Rather than contribute to financing a large- scale wind or solar farm, we will aim to invest primarily in community-level projects. Not only is this type of investment closer to our actual energy use and spending, but it also resonates with our brand value of empowering people. INCLUSIVENESS In each market we sign a deal, we will look to ensure our investment benefits communities that have historically experienced economic or social exclusion. Our priority will be to work with community businesses and organizations to provide training and professional opportunities in energy infrastructure for local residents, and ensure equal access to these opportunities. RESILIENCE As extreme weather becomes more common, empowering people will also mean building their capacity for resilience. Providing economic opportunity through training and job creation is one way we can contribute to this. Where relevant, we may also look to invest in physical grid resilience through microgrid and storage capacity. 3 INSETTING Insetting refers to what an organization does within its own value chain to balance out its negative impacts on climate. For CHANEL, insetting is a key component of our strategy to compensate for our Scope 3 carbon emissions. It translates into projects within our supply base, including agroforestry projects, which are designed to sequester as much carbon as possible. We are a founding member of the International Platform for Insetting (IPI), a multi-stakeholder group that facilitates collaboration on insetting projects and promotes best practices. CHANEL’S CLIMATE STRATEGY