INVESTING IN SUSTAINABILITY IN NEW CALEDONIA Sandalwood extract is used as an ingredient in many perfumes, including several CHANEL fragrances. Although India has been our source of this ingredient for many decades, its overexploitation in the country, due to its excessive use outside the perfume industry, had led to severe deforestation. In 2010, CHANEL decided instead to buy all sandalwood from New Caledonia, an island territory in the South Pacific. While New Caledonia has extensive resources of sandalwood, the supply chain faced a combination of environmental, social, and economic risks. There was no regulation or control of sandalwood harvesting there, raising the threat of deforestation. Sourcing activities risked disrupting local Kanak communities, whose economies and cultural heritage depended on sandalwood exploitation. Since 2015, increased global competition, caused by weakened global markets, had led to an intensification of illegal woodcutting in the area. To ensure the long-term sustainability of sandalwood in New Caledonia, we developed a supply-chain strategy involving three key components: a breeding, conservation, and reforestation program, the control of wood exploitation, and a strong engagement with local communities. The sandalwood program aims to conserve 75,000 sandalwood trees in their natural habitat. For every tree cut in the conservation area, five new trees are now transplanted to and cultivated in the sandalwood nursery of our Kanak partner. Working with local authorities, our support also contributed to reducing illegal exploitation by establishing controlled woodcutting zones. At the same time, we engaged with local Kanak communities to resolve potential tensions and address economic concerns. We also set up a number of associated conservation projects to protect indigenous plants and animals, including rare butterfly and lizard species. OTHER RAW MATERIALS Where we don’t fully control other raw materials we use in our products, we follow another strategy, which includes the following elements: • Traceability: We try to trace the structure and composition of the supply chain to as close to the material’s origin as is possible. • Audits: We assess and monitor the actual and potential risks and impacts on the welfare of humans, animals, and natural ecosystems. • Remediation: We set up programs to remediate local environmental and social impacts wherever possible through long-term cooperation with suppliers and local communities. A CREATION-DRIVEN BRAND
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