POLICY GOVERNING THE SUPPLIER RELATIONSHIP Our approach to working with suppliers is governed by our responsible-sourcing policy. Based on relevant international obligations and principles from the United Nations and the International Labour Organization (ILO), this policy sets out our expectations and requirements regarding issues related to labor and human rights, the environment, and anticorruption. Since 2011, we have asked all our FRAGRANCES & BEAUTY suppliers to commit to applying our policy’s principles. The policy is updated to take into account regulatory changes and will be introduced across all activities and regions over the course of 2018. We provide guidance on applying the policy through annual supplier meetings, and through support from trained professionals on our procurement teams. 2 PROCESSES TO ASSESS AND REMEDIATE IMPACTS In recent years, we have developed a thorough risk-assessment methodology, which determines and helps remediate social, environmental, and governance risks across our supply base. First, we assess all suppliers according to criteria covering the state of the business relationship (purchasing volumes, dependency), social and environmental issues associated with the value - adding activity undertaken by the supplier, and potential reputational risks for the brand. This exercise is conducted on an ongoing basis with the procurement teams, and requires, at a minimum, tracing the value- adding activity back to the last transformation stage. Based on our risk-assessment approach, we have identified where there are areas of actual and potential risk with a small number of our suppliers from a business dependency, CSR, and/or reputational perspective. Second, to better understand supplier management of social and environmental risks at a more detailed level, we ask suppliers to assess themselves online using our standard. We first developed this in 2011, in line with international norms, guidelines, and principles, including the OECD Due Diligence Guidance for Responsible Supply Chains. 1 A GOVERNANCE AND OPERATING MODEL FOR RESPONSIBLE SOURCING In order to continue to monitor the performance of our suppliers, we have created a Responsible-Sourcing Expert Team at the corporate level. It’s their mission to define and update our responsible-sourcing guidelines and to ensure coherence in implementing our responsible-sourcing strategy. Our Sustainability Excellence Program (SEP) audit committees at divisional and corporate levels ensure the audit results are integrated in follow-up actions endorsed by top management, and that we monitor results. In total, we have five internal and 10 external trained and certified auditors devoted to implementing our sourcing policy. A HUMAN-DRIVEN COMPANY