We also submit this in-house standard to external experts regularly to ensure it covers all relevant issues and continues to set the high standards we expect from our suppliers. We have designed this standard to be both all-inclusive (covering social, environmental, governance, and ethics topics) and exemplary — establishing high standards for the rest of the industry for supplier performance on these issues. Finally, based on the results from the first two process steps, our internal auditors plan and undertake annual audits. We conducted over 200 of these during 2017. Over the next two years, we plan to conduct over 500 audits across our diverse supply base, using an intelligent audit tool that provides guidance and the most up-to-date information possible. Where these audits reveal critical noncompliance issues with our SEP standard, we put remediation plans in place, and, if they are not implemented, we may even end our partnership with the supplier altogether. HUMAN-RIGHTS IMPACT ASSESSMENTS In addition to our risk analysis at the corporate level, we have commissioned independent organizations to conduct in-depth human-rights impact assessments at the source of our raw materials when we have identified actual and potential risks. For example, in India and Madagascar, they visited and interviewed farmers, suppliers, local stakeholders, and other rights holders to better understand the scale of the risk, its severity, remediability, and the possibility for us to influence it. Our responsible sourcing teams also assess human-rights impacts on-site before and during the implementation of our reinforcement projects at the source of our key raw-materials supplies around the world. We recognize we need to talk to stakeholders and experts for guidance and support in our human-rights approach. So in early 2018, with the help of a leading business and human-rights organization, we brought together function heads from across our business to discuss and prioritize our salient human-rights issues and to formulate a plan to address them. At the same time, using a proprietary maturity model, we conducted a gap analysis of our existing human-rights due- diligence approach, using the United Nations Guiding Principles on Business and Human Rights (UNGPs). These principles set the international standard for human-rights due diligence and help guide us in the progressive implementation of our approach. 0 30 60 90 120 150 NUMBER OF AUDITS CARRIED OUT AMONG HIGH-RISK SUPPLIERS (2017) FASHION 134 OTHER FRAGRANCES & BEAUTY 58 6 HUMAN RIGHTS IN OUR SUPPLY CHAIN