SustainableDevelopment

Report

2016

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Conversation with Laurent Boillot – Chairman and CEO - and Sandrine Sommer –Sustainable Development Director - , a look back on ten years of accomplishments,innovations and goals of a House that succeeded very early in placing social and environmental responsibility at the centre of its creations and at the heart of its corporate strategy. They also share their future vision of a company that truly respects and cares for society as a whole, and wishes to “do its part” in order tobe recognised as one of the most responsible Houses from now until 2028, whenit will celebrate its bicentennial.

Laurent Boillot - When I took over as Chairman and CEO in 2007, I was convincedthat in order to preserve the House’s exceptional heritage and to improve it and passit on to future generations, we had to place Sustainable Development at the heart ofour strategy. This year we are celebrating our ten years of commitment. Our goal isunchanging, and I often say that while we can't save the planet on our own, we cando our part. Guerlain has committed itself In the Name of Beauty, and I'm convincedthat civil society, companies in particular, have a true role to play!Sandrine Sommer - Formalised in a Charter, Guerlain’s commitment to sustainabilityis directed by a Sustainable Development Department, which I’ve had the honour ofrepresenting since its creation; I’m also supported by a Steering Committee that represents the House's entire organisation and all its areas of activity. Our approachis based on six issues at stake, each of which has been addressed through ambitiousgoals that can be measured and improved, and always with the idea of passing on our heritage foremost in mind. These ten years of commitment have given employeesa clear vision of our principal environmental and social challenges and has strengthe-ned their ability to tackle issues that affect their field of activity, since they arefully involved in the program. From the very beginning, Sustainable Development was established as a collective project supported by every team, and it’s become a program that binds us together, a project that is also shared by our suppliers andcustomers.Laurent Boillot - It’s a fully established program involving both our teams and stakehol-ders, with a profusion of initiatives and improvements in performance: today, the actionstaken are numerous and our ambitions grow with each achievement ! We’re awarethat we’re not perfect, which is why we are committed to continuous improvement, andto accomplish this we set bold objectives, such as planning on having 100% of ourcreations designed in an environmentally friendly manner by 2020. Cutting our CO2emissions in half by 2020 and becoming carbon-neutral by 2028 when we celebratethe Guerlain House's 200th birthday is also a challenge ! With regard to corporateresponsibility, we wish to continue promoting self-esteem and supporting Belle&Bienin a dynamic way. This signifies expanding our support to encompass the association's

local branches around the world wherever the House has subsidiaries. I’m proud ofall the initiatives undertaken, and the program's emulation by others has been inspiring.However, if I had to choose one initiative this year, it would be the sustainable industriesthat we've developed to preserve biodiversity. We’ve partnered up with several localactors on subjects that are important to us (Yunnan orchids, Indian vetiver, Australiansandalwood, lavender from Provence, Ushant honey, etc.) and our wish is to reachour goal of 100% sustainable industries for all our iconic ingredients by 2028.

Sandrine Sommer - Preserving biodiversity is essential to us, and our commitment toprotecting bees is the priority we wished to highlight this year. A great love story existsbetween Guerlain and bees. Let’s not forget that it’s been the symbol of our Housesince the 18th century, with the Bees bottle created for the Empress Eugénie. The de-velopment of the Abeille Royale range and our research into the most appealingcos¬metic virtues of honey has led us to Ushant. We discovered the exceptional eco-system of this island and its rare, endemic bees. Since 2011, we have supported theBrittany Black Bee Conservatory Association on the island of Ushant and created aSustainable Development sponsorship program. This sentinel of the environment hascaused us to spread the word and organise special meetings with leaders such as theOFA (French Apidology Observatory), which aims to establish 10 million bee hivesand create 30,000 jobs in Europe by 2025. It’s an engaging project that we naturallydecided to support organisationally for the next several years. We were happy toshowcase all the remarkable initiatives during the first edition of the Bee Universitiesthat we launched in May 2017 in order to raise awareness and protect the species.Laurent Boillot - We are very proud of the work we’ve done so far and are determinedto take it even further. We are going to educate as many people as we can about theactions we’ve taken over the past ten years as well as all those that we are committedto carrying out in the next ten years. Our commitment to sustainability is a real creativeboost for our creations and our House. We still have a ways to go regarding our cus-tomers (and those that will be!) in order to make our commitment a different and com-plementary platform for our products and our unique history, reputation, interest andattachment. Because communicating is not simply about passing on information, it alsomeans sharing our certitude that we are implementing a more sustainable and envi-ronmentally-friendly growth strategy. An increasing number of women are aspiring tobe beautiful while also protecting the beauty of the world and its humanity. Committingto a more sustainable planet is thus an excellent opportunity to promote the culture ofbeauty and goodness, the foundation and source of our prosperity, and pass on abeautiful legacy to future generations.

In the Name of Beauty...

E D I T O R I A L

Laurent Boillot and Sandrine Sommer

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- C O N T E N T S -

BIODIVERSITY

8ECO-DESIGN14

NUMBER 68

18

SOCIAL RESPONSIBILITY24

AROUND THE WORLD30 TRANSPORT32

SUSTAINABLEPROCUREMENT

36ECO-RESPONSIBILITY

40

DA R E T O C OMM I TWorking together to make a difference

Fully aware of its social and environ¬mental responsibilities, Guerlainincluded Sustainable Development in its company strategy back in2007. Formalised in a charter, this commitment, driven by LaurentBoillot, is structured around six issues at stake measured using toolssuch as the ISO 14001 standard, the Bilan Carbone® (carbon report)and performance monitoring indicators. This approach involves allour employees, customers and suppliers and wider society more generally. The House was identified as a pilot in the LVMH Group'senvironmental strategy from the inception of the LIFE Programme.

AN ORGANISATION DEDICATED TO MOBILISINGALL ITS EMPLOYEESWe decided to structure our environmental and social approach bycreating a Sustainable Development Department and a SteeringCommittee comprising 18 people from each department in the Company. Each person is responsible for drafting and deploying anaction plan for their site or their department according to their areaof expertise and a specific objective, which is defined annually. This type of organisational approach ensures that we cover all theHouse’s activities in a coherent manner and come up with effectivepragmatic global solutions.

Guerlain's Sustainable Development Steering Committee - First row, left to right: Delphine Chorenslup, Laetitia Corbet, Angélique Clézardin, Marion Oudin, Marie-Charlotte Héliot, Cécile Koenig, Anne-France Cavarec , Sandrine Sommer, Cécile Vatan, Ann-Caroline Prazan - Second row, left to right:

Stéphanie Roy, Sandrine Bécaud, Armand Baudry, Frédéric Gode, Nicolas Faure, Philippe Bernard, Elise Levan, Daniel Ponsy, Aline Valentin.

LIFELVMH Initiative For the Environment. Launched in 2011, the LVMHGroup's LIFE Programme was designed to further incorporate environmental issues into managerial processes.

ISO 14001International standard for reducing our environmental impact andcontinuously improving our process.

The Bilan Carbone®

To further reduce its carbon footprint, Guerlain has been carryingout a Bilan Carbone® (carbon footprint assessment) every yearsince 2007 for Scopes 1, 2 and 3.

Certification body

Biodiversity and Climate Commitmentdeveloped by Ecocert Environnement.

- TOOLS FOR THE PILOT PROGRAMME -

APPENDICES

46

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BIODIVERSITYTo contribute to protecting raw

materials and eco-systems on sites - a source of inspiration and innovation

for the Beauty of the World, and vital to Guerlain.

ECO-DESIGNTo perfect how we innovate

and manufacture while limiting the environmental impact of our

products and our activities.

SOCIAL RESPONSIBILITYTo promote diversity; to improve the working conditions and lives

of our employees and local communities; and to support charitable associations

that are close to our heart.

SUSTAINABLE PROCUREMENT

To adopt a Sustainable Developmentapproach in collaborationwith our partners, suppliers

and service providers.

ECO-RESPONSIBILITYTo be eco-friendly on a daily basis and adopt the best citizenship

practices on all our different sites.

TRANSPORTTo control CO2 emissions

caused by shipments and travel.

6

10 YEARSCOMMITMENT

=1 SUSTAINABLE PARTNERSHIPA ten-year research and sponsorship partner-ship contract has been signed with the BrittanyBlack Bee Conservatory Association on the Island of Ushant.

1stGuerlain is the first Perfume

and Cosmetics House to receive “Biodiversity and Climate Commitment”

certification from Ecocert.

10000This is the number of orchids we have replantedsince 2009 in the TianZi Reserve in Yunnan,China.

100 %Guerlain has revived the growing of vetiver inIndia in Tamil Nadu in the Coimbatore region. It is a sustainable industry as 100% ofthe plant can be used and - thanks to crop rotation - yields are 30% to 40% higher.

6The number of sponsorships directed by Guerlain that promote biodiversity.

USHANT

CERTIFICATION

ORCHIDS

SUSTAINABLE SOURCING

VETIVER

- BIODIVERSITY -

72%Of waste from the Company's industrialsites in France is recycled, reused or composted.

30Number of different waste sorting systems

(Paper, glass, cardboard, plastic, etc.) we

have introduced to recycle our waste,

including tester and obsolete bottles.

100%of the Guerlain sites in France

are ISO 14001 certified.

50% of our European subsidiaries

are ISO 14001 certified.

- ECO-RESPONSIBILITY -

60 %60 % of the heads of subsidiaries and 60 % of the Management

Committee are women.

6 years &13 SUSTAINABLE

AND STRUCTURING

6 years with Clichy/MontfermeilPartnerships and 13 years with the

Belle&Bien Organisation.

4,5%Our employment rate goal for individualsliving with a disability is 6% between nowand the next three years.

- SOCIAL RESPONSIBILITY -

FROM NOW

100%of new Guerlain products

will be eco-designed.

60%THE NEW ECO-DESIGNED

ORCHIDÉE IMPÉRIALE PACK THE

4TH-GENERATION CREAM SAW ITS

JAR LIGHTENED BY 60%.

95%95% of our perfume bottles are recycled

thanks to CEDRE - LVMH's recycling platform.

18The number of perfumes available at ourPerfume Fountains in the emblematic Bees bottle, which can be personalised

and refilled for life.

- ECO-DESIGN -

600THE NUMBER OF

SUPPLIERS THAT HAVE

RECEIVED THE "RESPONSIBLE

PROCUREMENT CHARTER"

FROM THE LVMH GROUP'S

PERFUMES & COSMETICS.

200The number of employees working in the

LVMH Group's Perfumes & Cosmetics

Branch who have been trained to

sustainable procurement.

50%This is our overall CO2 emissions reduction goal

for 2020 compared to 2007 levels.

We are aiming to be carbon neutral by 2028

for the House's 200th birthday.

29%This figure represents Guerlain's CO2 emissions

from transport.

SEA/AIR RATIO

- TRANSPORT -

62%In 2016, 62%

of our freight was

shipped by sea.

I S S U E SA T S TA K E

- RESPONSIBLE PROCUREMENT -

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B I OD I V E R S I T Y

- B I O D I V E R S I T Y -

or scientific, and in some cases we might make our expertise availableto our partners. We are also very proud of the sustainable industrieswe have set up for orchids in Yunnan, vetiver in India, honey in Ushant,sandalwood in Asia and Australia, and lavender in France. By blending "fair business" with philanthropy, the range of methods usedresults in human exchanges and meetings "in the field".

Among our notable achievements in 2015 to promote biodiversity,Guerlain helped create a “Biodiversity Commitment” certification pro-gramme with Ecocert. The House was picked for the pilot programmeand thus became the first Perfume and Cosmetics House to receive its“Biodiversity and Climate Commitment” certification. In 2016, Guerlainimplemented its Biodiversity and Climate programme at its Europeansubsidiaries as a step towards its goal of World certification by 2021.When we created our Abeille Royale skincare range, we decided tohelp protect bees, which are a historic symbol of our company andfind themselves under threat today. In 2016, we thus continued withthe work started in 2011 alongside Ushant’s Brittany Black BeeConservatory to protect this unique, healthy and endemic species,whose honey is used to create our skincare products. This organisa-tional partnership, which represents one of the pillars of our biodiversitycommitment, earned us a special award in 2013 for Sustainable Development-oriented corporate philanthropy, given by the Ministryof Ecology, Sustainable Development and Energy.

Finally, as a logical follow-up and also thanks to a chance meeting,we joined forces with the French Apidology Observatory (OFA) at theend of 2015, helping them develop a stock of hives in Europe and promote the rare and crucial job of beekeeper, since the OFA

launched a long-term programme to restructure the beekeeping industry at the European level.In terms of local programmes at our Orphin and Chartres sites, wehave installed bee hives, created wild flower meadows with honeyplants, and more generally implemented a balanced managementapproach to the green spaces to which, at the end of 2016, we introduced flocks of sheep to ensure eco-grazing.

To help preserve the Beauty of the World, a source of inspiration that motivates Guerlain’s commitment to biodiversity. Pledging to protect biodiversity

is a natural step to take to ensure the long-term viability of our creations and savoir-faire.

1 year of collaboration with the OFA.

Creation of wild flower meadows with honey plants and the introduction of sheep at Orphin and Chartres.

BIODIVERSITY AT OUR SITES

6THE NUMBER

OF SUSTAINABLE

INDUSTRIES PROMOTING

BIODIVERSITY

sustainable industries for our iconic ingredients is our goal by 2020.

The bee has been our glorious symbol since 1853. It inspires our creations, adorns our most precious bottles and guides our commitment to sustainability.

Today we are even more committed to its protection.

« «

100%

1stGuerlain is the first Perfume

and Cosmetics House to receive

“Biodiversity and Climate Commitment”

certification from Ecocert.

Raw materials have always been a source of inspiration and inno-vation for our House. Pledging to protect biodiversity is a naturalstep to take to ensure the quality and long-term viability of our crea-tions and savoir-faire. We are also aware that making commitmentson this issue can help us contribute in our own way to conservingthe Beauty of the World. That is why in France and elsewhere in theworld, Guerlain works with a range of organisations and local sta-

keholders to design programmes and create sustainable industrymodels for our favourite raw materials.Whether in Brittany or faraway places such as Asia, Guerlain sup-ports virtuous ecological, socio-economic and cultural approachesto dealing with the natural materials that are used to create our products. For these industries, we provide long-term support, usuallyover a period of 10 years. This support can be financial, technical

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logic behind this certification on the evaluation of all organisations interms of their dependency and impact on biodiversity and the effec-tiveness of their actions to protect it. In the absence of any recognisedmethodology for measuring the biodiversity footprint apart from thecarbon footprint, we started off with five factors contributing to theerosion of biodiversity that have been recognised by the Conventionon Biological Diversity (UN – Rio 1992): the degradation of habitatsand ecological continuity, the pollution of ecosystems, the over-exploitation of natural resources, the introduction of invasive speciesand climate change. To obtain this certification, each company evaluates its footprint based on these five factors and implements anaction plan to reduce its impact. If the company so chooses, it cango even further and establish to engage in actions that promote biodiversity and whose appropriateness is evaluated.

Marion Oudin: Guerlain is concerned with these 5 issues, albeit toa lesser extent when dealing with invasive species. From my point ofview, the main purpose of this certification is to account for and mea-sure the negative external influence of human activities and thus main-tain a sort of environmental compatibility. We had already receivedISO 14001 certification, but this "Biodiversity and Climate" certifica-tion has enabled us to identify impacts that we hadn't noticed in thebeginning or to deal with them in a more thorough manner. Morethan just a toolbox, this certification is designed to create a link bet-ween the various elements that constitute a company’s ecosystem,and in Guerlain’s case, the 6 issues at stake in its commitment to sus-tainability. It’s easier to stress the issue of biodiversity at a productionsite than with a commercial subsidiary. But the notion of erosion factors, along with the local partnerships we’ve created to protect

bees, helps us with this. And thanks to this certification standard, weraise awareness more easily while illustrating our commitment.Without necessarily anticipating it, the certification standard, in addi-tion to being an excellent guideline, has also become a very strongmarketing vehicle for our customers and suppliers.Laurent Croguennec: I would add that for a company, it’s a ques-tion of transitioning from the concept of “supply chain” to that of“value chain". Guerlain was the first cosmetic company and the onlyone of its segment Luxury Cosmetics to adopt this certification stan-dard and become certified within a logic of continuous improvement.Ecocert Environnement conducts yearly on-site audits, questioningnot only the managers, but also the teams and all the stakeholdersin a broader sense. It’s all about measuring the consistency betweenthe analysis and the actions in the field, as well as their appropria-

teness. I'd like to clarify that management’s commitment is fundamen-tal, which is why Laurent Boillot has fully played his role by not tryingto avoid any of the issues linked to the dependence on biodiversity,which is critical to sustaining the business activity of a Perfumes andCosmetics House.Marion Oudin: For the managers of our Sustainable Developmentprogramme, these certifications represent a profound acknowledge-ment of the work accomplished over the years by our teams in thefield, and is only one step in a process to be maintained over time.Over the medium-term, our objective is to implement the Biodiversityand Climate approach at our European subsidiaries, starting thisyear in Germany, Belgium, Spain, Italy, the Netherlands and Portugal. These will be the first foreign countries to be certified. Andthe final challenge? World certification by 2021!

Guerlain is the first Perfume and Cosmetics House to receive “Biodiversity and Climate Commitment” certification from Ecocert.A look back on the awareness that arose from numerous efforts to incorporate these issues into the House's strategy, with Marion Oudin, Sustainable Development Manager at Guerlain,and Laurent Croguennec, CEO of Ecocert Environnement.

Marion Oudin : For the last 7 years that I’ve been in charge of de-ploying Guerlain's Sustainable Development Programme in Franceand abroad, I’ve put all my support and confidence in Ecocert, particularly in our work towards ISO 14001 certification. In my view,Ecocert is unquestionably an inspection and certification body whoseserious approach for the past 20 years has enabled it to become aworld benchmark, but apart from its technical expertise, it is also ateam that possesses a true Sustainable Development vision. Apartfrom all that concerns “standards” and “benchmarks”, Ecocert hastranscended the “strictly environmental” to embrace social struggles.All these positive points convinced Guerlain to move forward withthem to construct a new challenge together: the “Biodiversity and Climate Commitment”.Laurent Croguennec : Founded 25 years ago through the driveand determination of an entrepreneurial agronomist and ecologicalpioneer, Ecocert has successfully used its independence and certi-fying activities as an instrument to compel its partners to take up theenviron¬mental and social challenges that face our society today.Ecocert thus developed an initial "Climate Commitment" certificationprior to the COP 21 in order to assist motivated companies and re-gions with their ecological transition. We wished to take it even furtherby developing an approach that addresses biodiversity issues, convin-ced that only by reconciling organisations with their ecosystems canwe guarantee their sustainability and long-term performance. Encou-raged by Guerlain, we have worked to combine these two ap-proaches in order to take account of the strong interaction between

biodiversity and climate. This work and lots of feedback from the fieldled to the creation of our "Biodiversity and Climate Commitment" cer-tification. Marion Oudin : We’re very proud that this certification standardwas established under the impetus of our House. Ten years later, ourdesire to reconcile economy with ecology and generate positive im-pacts is still strong. All activity conducted by a company like Guerlain entails both a dependence and an impact on biodiversity.We encouraged the creation of this “double certification” becauseclimate change is a factor contributing to the erosion of biodiversity.The goal is to find solutions to address the climate-related issues facing society today.Laurent Croguennec : Scientists estimate that more than 60% of theplanet’s ecosystems today have been damaged by human activity;they also propose that the 6th mass extinction of species is alreadyunderway. As an agronomist, I’m more than sensitive to the destinyof bees and other pollinators that play a crucial role in this biodiversitysince without them there would be no more pollination… In order tohelp ecosystems regenerate, we've made the decision to base the

THE BIODIVERSITY AND CLIMATE COMMITMENT, OR HOW TO “(RE)CONCILE ITS ACTIVITIES WITH ITS ECOSYSTEMS

Guerlain is very proud to have taken part in the birth of this “Biodiversity and Climate Commitment” certification along with Ecocert,

and to be the first Perfumes and Cosmetics House to be certified. It is also a true mobilising force that drives the company's employees.

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Laurent Croguennec and Marion Oudin

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- B I O D I V E R S I T É -- B I O D I V E R S I T Y -

VETIVER & INDIA A human adventureVetiver is one of Guerlain's iconic ingredients,and most of its supplies come from eitherHaiti or India where we have built a sustai-nable industry. Vetiver is used in many ofGuerlain's fragrances, such as GuerlainHomme l’Eau Boisée.

In south India, our perfumer, Thierry Wasser,has launched a new vetiver industry in thehigh plains overlooking the city of Coimba-tore. It is a rational and respectful plantingprogramme that respects the environmentand is developed with the local community.100% of the plant can be used: the foliagecan be used as animal feed, the plants areused to take cuttings, and the roots are distil-led to make perfume. Moreover, the roots ofthe vetiver plant limit soil erosion and improvesoil humidity and fertility. We give the plantsto isolated families living in Coimbatore. Wealso give them the necessary training to growthis crop, and at the end of 18 months wepay them for their crop, thus creating a newsource of income in the region.

We are also conducting an irrigation study,which will facilitate the supply of water to thelocal community.

ASIAN AND AUSTRALIAN SANDALWOOD Long-term conservationSandalwood is another iconic ingredient usedin Guerlain's perfumes such as Jicky, Mouchoirde Monsieur, Shalimar and Samsara. Howe-ver, this wild tree is becoming scarcer and scar-cer. For instance, in several perfumes we onlyuse Santalum Album, which used to be sour-ced only from the forest of Mysore in southIndia. Today, there is hardly any left due to de-forestation and an exponen-tial demand throu-ghout the world. That is why we are lookingfor alternative sources, mainly in Asian coun-tries, which can supply us with a similar qualityproduct in a transparent manner. Sandalwoodis a very demanding species; on average, atree needs 15 years to reach maturity, at whichpoint its essence can be extracted from thetrunk. So, we are leaving our trees to maturein their ideal secret location until we can use"Guerlain" sandalwood that meets our demanding quality criteria in our creations.Our Australian partner has joined in this endeavour and is committed to replanting twotrees for every one removed. In addition, 30%of our partner’s employees are aborigines. It’sone of the scant sources of revenue in this remote arid location, where nothing growsother than sandalwood and mango trees.

FRENCH LAVENDER The purity of the essenceIn April 2013, Thierry Wasser met the foun-der of the “Baume des Anges” company. Forseveral years, the company has been sup-plying the Lenôtre company with culinary fla-vourings. He ordered some samples and wasdelighted with the ethereal nature of their la-vender.

In June 2014, Thierry visited the companyand met passionate farmers who really lookafter their land. Grown in the Drôme regionin the south of France, Carla lavender is100% organic. It was obvious that a partner-ship was called for !

Baume des Anges developed and patentedan exceptional low-temperature extractionprocess delivering an essence with a fragrance that is very close to that of theplant. The resulting 100% natural oil tastes as it smells and can be used in perfume andin cooking. It is showcased to perfection inthe Mon Exclusif perfume launched in 2015.

USHANT HONEYThe Strength of a symbolWhen Guerlain created its Abeille Royale skincare range, it wassearching for a honey of exceptional quality, and Ushant honey metthe House’s requirements. Due to its isolation, the Ushant bee is apure rustic race that has only lived on this island in Brittany. The rela-tionship with Ushant's Brittany Black Bee Conservatory, which per-petuates the legacy of the visionaries who founded this communitywith the most resistant strains of bees over forty years ago, datesfrom 2008; an initial agreement was signed in 2011 and finally aten-year sustainable development sponsorship agreed upon in 2014.Today, the partnership is based on two pillars: the sustainable deve-lopment sponsorship, which funds part of the costs of a full-time bee-keeper on the island and the purchase of an electric vehicle, andprovides access to legal assistance as well as important networkingopportunities.The sponsorship of research and communication. To cite just a fewof our communication and educational initiatives, Guerlain made acorporate film about the Conservatory, helped create and print theConservatory's brochures, and helped us compete for a specialaward for Sustainable Development-oriented corporate philanthropy– a prize we won in 2013. For its supplies, the House is commited to follow a number of rulesto guarantee a social and ethical approach.

ORCHIDS & TIANZI A global commitmentThe reigning flower of the Plant Kingdom, the orchid possesses inestimable biological properties and is capable of living more than100 years, even in the most hostile environments. In order to unlockthe secrets of its longevity and offer them to women, Guerlain hasdeveloped the Orchidarium, the only research platform of its kind in the world: three complementary research centres are dedicatedto the preservation of orchids and the application of their exceptionalanti-aging properties to women’s beauty. It consists of a basic research laboratory in Strasbourg, France, an experimental gardenin Geneva, Switzerland, and a ten-year Sustainable Developmentpartnership created in 2009 with the TianZi reserve in Yunnan Province in southwest China.The “TianZi Centre for Biodiversity Research and Development” hascreated a method of “Rainforestation farming”, which uses mixed farming in the forest, from the subsoil to the forest canopy, in a regionthat was formerly seared by intensive farming.This partnership has enabled us to regenerate and protect the original rainforest, protect the region's flora and fauna, and cultivatedifferent types of orchids, all above and beyond Guerlain's own requirements. Since 2009, 10,000 orchids have been planted in TianZi.

Guerlain has made a commitment to study and protect several industriesthat produce its raw materials, which include:

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- E C O - D E S I G N -

2016 we launched the 4th generation of Orchidée Impériale Cream.Its jar has a more organic design: its lighter-weight glass, more precisevolume, non-coated paper pine and cellulose packing material significantly reduce its carbon imprint by 55%, thus minimising its impacton the environment.

Among our objectives 2017: switching from paper to digital leaflets inorder to avoid using too much paper. Although recyclable, the bestsolution is not to use it at all. This represents an excellent opportunityto demonstrate the consistency that must exist between commitments,discourse and actions. We are also going to review the bottle designs of our historic and iconic perfumes, particularly by prioritising the use of screw pumps sothat these bottles can be separated by our customers to make recyclingeasier. We will also continue to give our old advertising materials asecond lease on life by transforming posters into small notebooks. Theimpact is three-fold: ecological, since our time-dependent materials arereused; social, since the notebooks are made by people with disabi-lities; and societal, since the profits from the sale of these notebooksgo into a Guerlain support Fund used to defend causes that are closeto our heart.

Our premium lipstick - Rouge G - is now

refillablein Shops.

18 Perfumefountains

Our Bees bottles, which have always been refillable,

can now be filled at the perfumefountain at our Saint-Honoré Boutiqueat 68 Champs-Élysées and in Brussels

Our shopping bags are now

100% recyclable.

Our perfume packaging has been reduced by 15%, saving 35 tons of cardboard per year.

The 3 R’s rule takes precedence in any design project for a new Guerlain product, and the Marketing and Development teams are trained in this systematic approach: Reduce, Reuse and Recycle. Thisyear, Guerlain has added a fourth R in order to “rethink” the model !

35 tonnes

100%

All our boxes are

FSC certified.

For several years, we have been developing products in a way thatlimits their impact on the environment at each stage of their life cycle,from the design stage through to the end of the product's life. Witha view to continuous improvement, we must be able to quantify ourprogress, and that is why each new development is scored using anEPI (Environmental Performance Index calculated using Edibox soft-ware, managed by the LVMH Group). This 0-20 rating ranks eachnew development in terms of its environmental impact. The resultsare then shared and discussed with the Sustainable Innovation Com-

mittee, which meets quarterly with the Marketing and Packaging Development Departments, and was formed to accelerate and multiply eco-design projects.Last year our Chairman set an ambitious goal: 100% of the Com-pany's products must be eco-designed by 2020, signifying that100% of products must have an EPI of over 12/20. Among Guerlain's eco-design initiatives over the last few years, we are par-ticularly proud of our work on the Orchidée Impériale skincarerange. In addition to our orchid conservation work, at the end of

E C O - D E S I GN

A source of innovation, creativity and commitment for our teams,eco-design enables us to reinvent luxury in a more responsible

and sustainable manner day after day. 60%THE NEW ECO-DESIGNED

PACKAGING FOR THE 4TH-GENERATION

ORCHIDÉE IMPÉRIALE CREAM HAD ITS

JAR LIGHTENED BY 60%.

FROM NOW TO 2020

100%ALL GUERLAIN

NEW PRODUCTS WILL BE

ECO-DESIGNED

95% of our perfume bottles are recycled thanks to CEDRE - LVMH's recycling platform.

One of the major challenges for Guerlain ?Eco-design, but without compromising our House’s

quality and luxury standards.« « REDUCE, REUSE, RECYCLE AND RETHINK !

- 16 -

Joint interview with Cécile Koeing, Director of Marketing Skincare, and Nicolas Faure, Director of Development forMake-up and Skincare, both members of Guerlain’s SustainableDevelopment Steering Committee and the masterminds behind the launch of the new eco-design packaging for OrchidéeImpériale Cream.

Cécile Koenig : With Guerlain Skincare, we integrated SustainableDevelopment as a key element very early on, placing ourselves at thecutting edge of innovation and its driving force, both in formula andpackaging. The first generation of Orchidée Impériale Cream, bornin 2006 in a gold-topped blue jar, immediately captured the public’sheart. Today, it’s the House’s star product and, as such, had to embodythe avant-garde of our commitment to the environment, without com-prising on quality standards or aesthetics. Now, eleven years after itslaunch, Orchidée Impériale is reinventing itself for the fourth time, offe-ring once again the best in cellular longevity research as well as anew, highly ambitious eco-designed pack. Even though we’ve beenmaking a constant effort for ten years, we decided to speed up com-munication around our commitments, to raise awareness and convertour 140,000 Orchidée Impériale customers. Women today are loo-king for a new type of luxury, luxury that is no longer based solely oninstant personal satisfaction and the acquisition of showy objects, butluxury that defines itself by a quest for well-being and continuity in well-being. The desires of Guerlain customers stem from the deepest values,

focused on emotion and sharing, in a world ever more concernedwith preserving our environment. The standards of luxury are evolvingand our search for excellence is overarching; and packaging is an in-tegral part of our House’s commitment.Nicolas Faure : I share in Cécile’s enthusiasm and optimism and I sincerely believe that the new generation of customers is educatedand aware of the stakes linked to the overconsumption of resourcesand the production of waste, and, as a committed company, we wantto respond with ever greater ambition, creativity and pedagogy. Weneed to not only meet their concerns but anticipate them as well, shakeup the codes of luxury and constantly innovate at the risk of disap-pointing and losing them as customers. These stakes are integrated inour innovation and marketing plans. It’s a collective approach and adaily commitment imposed on our teams as an inspirational task forany new product’s design – a prerequisite expressed through the 3Rrule: reduce, reuse and recycle. To which we recently added a fourthR at Guerlain, to ‘rethink’ the model ! So how do we translate theseconcerns in the context of packaging and containers? By thinkingabout filling, weight and simplicity of assembly. Cécile Koenig : The fundamental design issue when reworking theOrchidée Impériale Cream pack was to blend beauty and functiona-lity, linked to the reduction of anything that wasn’t needed to maintainall the product’s allure.Nicolas Faure :We worked pragmatically, looking for ways to save re-sources and asking ourselves how to improve the jar, as well as its packaging.

- E C O - D E S I G N -

ORCHIDÉE IMPÉRIALE: THE TORCHBEARER OF GUERLAIN’S ECO-DESIGN APPROACH

With this very successful eco-design work on the new Orchidée Impériale Cream jar, we are right in our basic function when it comes to luxury, namely to be precursors,

to innovate and to carry out “pedagogical ecology”.

« « Cécile Koenig and Nicolas Faure

- E C O - D E S I G N -

Indeed, it was al about bringing the dream of a beautiful, more respon-sible container to tangible life. And it took our development engineersmore than a year to design and manufacture this new packaging. Cécile Koenig : From the shape of the jar to the wraparound box,everything was re-imagined, aside from the capacity, which remainsthe same (50 ml). Thus, the 4th generation Orchidée Impériale Creamfeatures the first eco-designed Guerlain packaging for a premium skin-care product. In other words, the new jar, sumptuous as ever, was re-designed and re-outfitted with pure, more organic lines. We chose tokeep the aluminium lid to ensure a cool, higher quality feel than plastic,but the jar contains less raw materials (10 pieces rather than 17) andfavours recyclable ones: lightweight glass, non-coated paper and awhite interior in pine cellulose.The volume of the box was reduced by 40% and a QR code doesaway with the paper notice allowing customers to connect directly to

the website guerlain.com to discover information about the productand its application instructions. Thanks to our Beauty Advisors, weknow that customers are praising the elegance and modernity of thisnew packaging, with a new weight that makes for lighter travel ! Thenew jar feels like a smooth stone – more feminine, alluring and modern– that fits perfectly in the palm of your hand. Nicolas Faure : For the past five years at Guerlain, each departmenthas been graded on an index that allows us to measure environmentalimpact in order to ensure every new development improves the overallscore of the House. We strive to ensure that each new product is betterthan the one it replaces. A calculation confirms that the reworking ofthe Orchidée Impériale Cream pack has reduced the product’s car-bon footprint by 58%! The efforts carried out on Orchidée Impérialedemonstrate that a work of total eco-design is possible and it is the“founding act” from which new developments will be moved forward.

- 18 -

My job is to make number 68 the destination for a ge-nuine French art of living through bespoke events aimedat corporate and private customers from both France

and abroad. The goal every time is to offer a multi-sensory, dreamlikeand initiatory experience at the heart of Guerlain, dedicated to fra-grance, beauty and gastronomy. During an event-visit with LVMH Group companies at 68, I decidedto initiate a module for sharing our vision and actions in terms of sustainable development. Having received very positive feedback,given that our common DNA of transmission, authenticity and respectfor raw materials is strong and resonates with the prerequisites ofsustainable development, I decided to extend this offer to our part-ners. A number of companies opted in - including Nespresso, ano-ther brand committed to an ambitious environmental policy – withall the wealth of exchange and shared experiences that it generated !Moreover, our faithful customers for whom I organise meetings withour Perfumer and various artists are not left behind. Our customers increasingly want to be informed of the origins of ouriconic raw materials and are very sensitive to the sustainability ofour subsidiaries, which comforts me in that sustainable developmentoffers an excellent terrain for discussion, reflection anddreaming, as well as an exceptional opportunity to getto know Guerlain from a new point of view.

Guerlain at 68, Champs-Élysées embodies a dream as much asan ambition. Exclusive creations, the Institut (which provides un-precedented bespoke treatments) and the restaurant run by Michelin-star chef Guy Martin truly embody the French 'art devivre' thanks to our passionate and dedicated teams who ensurethat our guests experience rare emotions. Jacques Guerlain usedto come down from his office at 68, Champs-Élysées to listen tohis customers' comments, to encourage them to try new productsand note down their impressions. This Store is a testament to Art,and to the artists and artisans who showcase our unique Company all over the world.What better backdrop to present our Sustainable Development

approach? Over the last three years, we have been organisingevents with our partner agency, Sidièse, which pay tribute to committed and inspirational men and women. “The SustainableInspirations” is an informal get-together bringing together managers from the Sustainable Development network, committedpartners and customers interested in the House's corporate responsibility approach. It is an informal cocktail party paying tri-bute to our guests of honour who each give a very brief overviewof what drives them to do what they do.We really enjoy the discussion we have with our stakeholders andwe are proud that these Sustainable Inspirations are bringingmore and more people on board within the profession!

« 68NUMBER

THE SUSTAINABLE INSPIRATIONS

Vanessa ValladasEvents and Customer Development Manager

for Guerlain at 68, Champs-Élysées

Movember 2016’s committed Men

March 2016’s committed Women

- 19 -

«

- 20 - - 21 -La cigale ayant chanté tout l’été se trouve fort dépourvue.

Founder and spokesperson of the network Entrepreneurs d’Avenir, Jacques assigned himself the cumbersome task of“reinventing enterprise”. The network, made up of approxima-tely 800 companies, promotes a new model of growth and sustainable progress through concrete actions and proposi-tions. Jacques inspires us for his ability to have very quickly de-veloped a new ecological and social consciousness amongeconomic actors and to have created conditions for sharing.

“After graduating from the Sorbonne, I launched conferences aimedat students along with two of my friends. In 1989, this gave birth tothe “Cité de la Réussite”, a forum for cultural, economic, scientificand political debate, organised every two years. In 1992, duringthe Rio climate summit, I came to a shocking realisation about theclimatic consequences of human activity. I became truly aware of the need for a new economic and socialera that would reconcile ecology and economy and I decided todevote an event to the issue, “l’Université de la Terre”, whose lastedition took place during the COP 21 in 2015 in the presence of8000 participants. In 2008, at the height of the financial crisis, Ifully realised that the economy as it was – that is, financialised inexcess and ignorant and deaf to social and climatic urgencies –was leading us to catastrophe and collapse. Only global aware-ness among economic actors and a new way of taking action couldallow us to progressively repair things. In 2009, I initiated the first

Parlement des Entrepreneurs d’Avenir, with the desire to bring toge-ther leaders and entrepreneurs who are different, who integrateMan, Nature and Society into the heart of their economic project,their modes of production and their management with goodwill andefficiency. A new economic consciousness exists. And for me, theorganisation of all these events is my way of participating in an en-lightened future and inciting my fellow citizens to commit to a betterworld.”

Guerlain is very proud to have welcomed the Entrepreneurs d’Avenir“club” during a private visit of its industrial site, La Ruche. The begin-ning of a journey between committed actors...

A journalist on French TV channel D8 for three years, Cyriellegave up everything to commit to humanitarian work and theenvironment. In 2014, after a trip to Bangladesh with the pre-sident of Action Contre La Faim, she returned transformed andwanting to take action to help the most vulnerable. A “Green & Positive” journalist, conscious that a new world ispossible, today Cyrielle highlights the actors of this “change”via her blog and Ushuaia TV. A self-proclaimed “inspiring journalist”, the young woman ins-pires us with her spontaneity and energy to embrace any causethat makes sense.

An active member of Restos du Cœur since 1986, Véronique hascontinued Coluche’s fight since the early days of the association,which provides vital help for millions of people. A member of theBoard of Directors and responsible for communications, Véronique inspires Guerlain with her humility, tenacity and courage, with the unwavering commitment of a woman whonever gives up...

“I come from a family that was very sensitive to the lot of others. The best way to share this short time we are given on Earth is to livepeacefully in connection to those around you. Commitment, therefore, is a very serious notion for me, although mylife is also proof of my love of laughter and fun. Commitment is something that must be built over time, and I’ve been working withRestos for 31 years now... But that happened without me even rea-lising it. What’s important for me is that Restos is an association thathasn’t fallen into a sense of misery; we always help in joy and ingood spirit. One of the things I’m most proud of is the trust peopleput into the association. It’s the 71,000 volunteers, the 936 millionmeals distributed all over France, the number of people in needwho rise out of their situation (30% permanently) and the unwave-ring loyalty of artists.” It is with great joy that Guerlain has been a Restos partner since2013 – a partnership that means a lot to Véronique. “I’ve bathedin Guerlain and L’heure bleue since my childhood. Guerlain is therefore dear to my heart, even more so because it supports Restos with beauty breaks for our beneficiaries. It’s veryimportant in our eyes because women need to feel beautiful even– perhaps especially – in difficult times.”

T H E Y I N S P I R E U S

VÉRONIQUE COLUCCI

JACQUES HUYBRECHTS

CYRIELLE HARIELLE

An ambitious policy of Sustainable Development and structuring partnerships isn’t built at the office ! Guerlain believes in the magicof meetings, the strength of co-constructed projects and the beauty of stories that help to innovate or think differently or that give birthto collaborations, to the point of creating a format for meetings at 68, Champs-Élysées – the “68 Sustainable Inspirations” – and a dedicated website – Aunomdelabeauté.fr. A look back at some memorable meetings between the men and women who have beencommitted for years to making the world a better place and who continue to inspire us each and every day... We dug deep to find out what drives them.

- 23 -- 22 -

Since 1992 and the Earth Summit in Rio she attended for Hen-nessy, Sylvie Bénard has managed LVMH’s Department of theEnvironment, which she helped to create After nearly 25 years,her expert, enthusiastic approach has allowed the Group to carryout a great deal of progress in preserving the environment – progress that materialised in LIFE (LVMH Initiative For the Envi-ronment), the action plan divided into nine key themes inscribedsince 2015 in the strategic plan of the Group’s 70 Houses.

"I’m an agronomic engineer and had the chance to spend the lastyear of this training in the United States at Cornell University in theagri-food industry and I returned to France to do a doctorate on themicrobiological activity of yeasts and milk bacteria, which led meto join the ‘H’ of LVMH, Hennessy. From a more personal point ofview, I’m the daughter of two biology professors – ecologists fromthe outset. I therefore always had a strong interest for the environ-ment and my commitment stems from there.It first emerged in prolonged volunteer work that allowed me to goto Rio in 1992.

When I came back from the Earth Summit, I decided that I wantedto work definitively with the environment. I informed Hennessy of my

plans and the Group proposed that I create, 25 years ago, whathas become the LVMH Group’s Department of the Environment. Iam convinced that protection, prudence and precaution are theprinciples that must be respected if economic development andhuman well-being are to co-exist.

I also have the habit of saying that when you sell a product you sellan ecosystem. To be able to propose luxury products, everythingbehind the scenes must be perfect. Concern for the environment isthus an intrinsic condition to our productions and is understood assuch by our customers. For the customer, it’s a tacit agreement withthe brand but internally I admit I’ll be delighted the day that mana-gers arrive in the company – whether they be controllers, buyers,"marketers", whatever – who are environmentally aware and whoknow what a life cycle analysis is!”

We are very proud that Guerlain plays a special role in deployingthe LVMH Group's environmental strategy. For us, Sylvie is an inspi-ration and, more so, has been the person who allowed LaurentBoillot to initiate an ambitious policy of Sustainable Developmentbeginning in 2007. She trained and mentored Sandrine Sommerfrom the moment she came on board.

“Humanitarian work, ecology and Sustainable Development arethree themes that are close to my heart ! In a year, I had the goodfortune and honour to meet numerous actors, defenders and big-wigs in their fields, such as Pierre Rabhi, Nicolas Hulot, Yann ArthusBertrand, Robert Redford, Chief Raoni, Captain Paul Watson, Marion Cotillard, the Fondation de l’Abbé Pierre, Matthieu Ricard,Jean Jouzel and committed CEOs like Laurent Boillot. The heart, thekey to this crisis of consciousness, thus became the signature of myphotos, the symbol of my commitment and of my personal story. Mycommitment is pinned to my heart and I’m convinced that we allhave the power to change the world. Each and every action in ourlives can make a difference.”

Cyrielle participates in our Sustainable Inspirations events and interviews our committed Men and Women backstage, after havingherself been honoured in this same format on 8 March 2016 onthe occasion of International Women’s Day. A participant in theOdysséa Race against breast cancer on the Guerlain team, bene-fiting the Belle&Bien association, she is also one of the contributorsto the editorial team of our new website Aunomdela-beaute.fr

Maxime de Rostolan graduated from the Ecole Nationale Supérieure des Ingénieurs en Arts Chimiques et Technologiques(Ensiacet) in 2004 having specialised in water and been madeaware of “ecological issues”. In the three years that followed,Maxime dove into a “world tour of water” with two friends to raiseawareness amongst school students to the problems linked to theresource. Since then, on the experimental micro-farm that he ma-nages near Tours, this 36 year old has been striving to prove thatagro-ecology is more profitable than conventional agriculture.Discover a journey and experience that will turn every preconcei-ved notion on its head.

“At the end of 2013, I created the Fermes d’Avenir association as asocial project to promote a new agricultural model based on theprinciples of agro-ecology and taking into account the socio-eco-nomic context that needs to evolve. My objective is to acceleratethis transformation by demonstrating that agro-ecology is more pro-fitable and generates more jobs than conventional agriculture.Under the supervision of a researcher from the Institut National deRecherche Agronomique (INRA), the idea is to validate by experi-ment the elements that may preside over the viability of installing afarm of this type. Because the lack of information on the initial set-up conditions serves as an alibi for all the lobbies and unions notwanting to change the model already in place. The idea is also tocreate a toolbox that can be reproduced anywhere, thus develo-ping the Fermes d’Avenir network – a militant philosophy that hasbeen forged in me over the years, though little would suggest I wasdestined for it. After being trained in organic market farming, I ob-tained an agricultural management certificate in 2014. Today, Iwant to invent a profession which I’ve named “countryvator”. A bitlike me, its a man who cultivates the country or a new type of entre-preneur capable of creating and managing several farms of thistype upon finding financing.” Guerlain is developing with Maximethe “countryvator engineer”, a micro-farm project on the La Ruchesite in Chartres.

- T H E Y I N S P I R E U S - - T H E Y I N S P I R E U S -

A website dedicated to our commitment and to the responsible figureswho inspire us: “In the Name of beauty” This is how we baptised our pro-gramme of Sustainable Development in 2007. Or how to act to preservethe world’s beauty and contribute to a better consideration of the menand women who are part of it. We have just launched this eponymouswebsite, with our responsible communication agency Sidièse, as a placefor initiatives led by our teams, innovative projects spotted here and there,and meetings with committed figures who inspire us throughout the world.

www.aunomdelabeaute.fr

MAXIME DE ROSTOLAN

SYLVIE BENARD

Feminine leadership is demonstrated by the fact that the majority of supervisory posts are held by women: integrating men is also an importantchallenge. In 2016, 60% of the Board of Directors was female.

In order to better promote diversity, we have formed a partnership withClichy and Montfermeil, which every year culminates in a Culture andCreation fashion parade. For the sixth year running, nine GuerlainMake-up Artists attended the eleventh edition to help the 90 “Modelsfor a Day” prepare for the event. As every year in the framework ofthis partnership, we welcomed two classes of middle school pupilsfrom Levallois and Orphin as part of their school work placement pro-gramme.Moreover, Princess Esther Kamatari is our ambassadress andspokesperson for the values we hold so dear: sharing, the culture ofBeauty and the promise of exceptional products full of emotion forwomen around the world. She helps us understand Beauty issues forall women.

In France, all staff responsible for recruitment take part in regular "recruiting without discrimination" training courses offered by the LVMHGroup. The self-testing process that the holding company organisesevery year demonstrates that Guerlain has never experienced any failings in terms of recruitments or in its answers to candidates.

The amount work we do with disability-friendly companies is not to beout done, with a 50% increase in turnover between 2015 and 2016among our ESAT partners. Finally, disability was included on the Management Committee's agenda and to coincide with World Disability Day (3 December 2016), each manager raised his teams'awareness of the issue by dedicating a day to the topic.

- 25 -

- 24 -

We are keen to hire young people as well as keeping more senioremployees in their jobs, we encourage diversity within teams parti-cularly at the highest level, we also develop skills and recruit peopleliving with disabilities as well as working with disability-friendly companies.In terms of age diversity, here at Guerlain we are convinced that allgenerations should be represented.

In 2016, 34% of our new recruits were young people and we arevery proud of our 11-year partnership with EMA SUP, a school pro-viding training for the Luxury, Fashion and Beauty professions. Weensure the continued employment of our most senior employeesthrough training (6% of training) and encourage them to become in-volved in mentoring programmes. All these commitments were for-malised in our Generation Agreement.

SO C I A LR E S PON S I B I L I T Y

There is no wealth but human... And it has more than one face.At Guerlain, we are convinced that diversity is a precious assetand we promote it in all its forms.

6 years OF A STRUCTURING

PARTNERSHIP

with Clichy / Montfermeil

with fashion parade, welcoming of

middle school students,school work

placement programme at reception...

4,5%Our employment rate goal for indivi-

duals living with a disability is 6%

between now and the next three years.

+ 150 youngapprentices

for 10 years of which 1/3 were recruited at Guerlain.

of the Heads of

subsidiaries and

60% of the

Management

Committee are women.

of Beauty Advisors in our Paris stores are aged over 50.

20%

60%Preventing disability via

the introduction of ergonomic workstations in stores and in plants,

+ 50%IN TURNOVER REALISED

BY ESATS

BETWEEN 2015 AND 2016.

- S O C I A L R E S P O N S I B I L I T Y -

We are very often asked about our sustainable commitments by candidates. It has clearly become a criterion of choice.

« «

- 27 -- 26 -

Because the ideal man is an engaged man, every year Guerlainsupports Movember, the world association that invites men tosport a moustache the entire month of November in order to raiseawareness and money in the fight against men’s diseases. This citizen-centred activism was adapted in 2016 around a travellingbarber shop proposed in partnership with La Barbière de Paris,the Parisian reference in men’s hair. An exchange between JulienFagoaga, Sales Delegate for the Indian Ocean and leader of theGuerlain "La Moustache de Messieurs" team, and Sarah Daniel-Hamizi, President and Founder of La Barbière de Paris, at her shopin the 1st arrondissement of Paris.

Julien : From the moment I arrived at Guerlain five years ago, I wastouched by the House’s commitment to solidarity and the unwaveringmobilisation of employees for charitable organisations such as theOdysséa Race, or the support for association like Restos du Coeurand Belle&Bien, which helps women get back their self-esteem. Noaction, however, had been initiated for men’s causes. Having takennote of the campaigns by the Movember Foundation, which had justlaunched the movement worldwide, I proposed to Sandrine Sommer,our Director of Sustainable Development, to lead a men's team ofGuerlain employees. The “La Moustache de Messieurs” collectivewas thus born and has since become very involved both internally

- S O C I A L R E S P O N S I B I L I T Y -

AT GUERLAIN, IN HONOUR OF MOVEMBER,THE BARBER IS A BARBIÈRE AND HER SHOP A TRAVELLING

ELECTRIC BARBER TRUCK

and externally, supported by Thierry Wasser, the House’s Perfumer.For four years now, our team has proudly grown moustaches for thefight against men’s diseases. Conferences to raise awareness, in-house challenges, sporting competitions, lotteries and participatorybreakfasts have given way to an increasingly sophisticated way ofengaging our clients, in addition to Guerlain employees. Thus,L'Homme Idéal boxes are offered for sale benefiting the associationof derivative products, as well as notebooks designed from postersand produced by a Parisian workshop that employs people with di-sabilities. For two years now, our Boutiques have been hosting “LaBarbière de Paris” and proposing barber workshops whose entireturnover is donated to Movember. We didn’t choose “La Barbière”by chance!

Sarah : “La Barbière de Paris” was already highly invested and acti-vely participating in Movember’s campaigns, but this marriage withGuerlain, a rigorous, demanding “Men-Women” partnership, imme-diately won me over. By founding "La Barbière de Paris", I was ableto rehabilitate one of the oldest trades in the world as well as realiseone of my childhood dreams. As a child, I would watch my grand-fa-ther’s ritual of cutting his beard with a straight razor twice a week. Itwas a real show, and I never gave up the idea of becoming a bar-ber. After getting professional certification and a vocational diploma,I trained with two well-established barbers, as the profession had nolonger been taught for thirty years. In 2000, I bought the 21 m2 of aformer barber shop in the Rue Condorcet and fifteen years later Iopened a second shop of 200 m2 after establishing a tried and truesavoir-faire. I’m convinced that men can have their beauty ritual, justlike women. A man’s make-up is his beard. Being elegant, a gentle-man – or rather “hipster” –, establishing one’s masculinity or presence,all that is via facial hair. And it requires as much care as the hair onone’s head. My 25 barbers trim, sculpt and work beards with preci-sion, according to our own techniques. Genuine fashion accessories,

beards are the focus of everyone’s attention and at my shops I noti-ced very early on that the awareness-raising work begun by Movem-ber really saw results. Today, all my clients have heard of themovement. In November, in our barber shop, it goes without sayingthat the moustache is popular. But it’s rare, rather strict and difficult tosport. You need to own it and know that a moustache (which is nota trend, contrary to the beard) attracts curiosity from others. Whatmatters is not the moustache itself, but the explanation of why youhave it – otherwise it’s all for nothing! Julien : Last November, in partnership with “La Barbière”, Guerlaininvited Parisian men to get their moustaches and beards trimmed forthe cause, not only in our stores, but also for the first time in our BarberTruck, which was none other than “Le Bourdon”, our electric truck re-styled by one of our employees set out on helping the cause. Themembers of the “La Moustache de Messieurs” team took turns at thefoot of the truck in front of our stores to raise as much awareness aspossible. The capital’s men who opted for a close shave by Guerlainand the Master Barbers selected and trained by Sarah saw the entireservice donated to Movember France. Thanks to everyone’s commit-ment, we are very proud to have collected a sum of 13,000 euros in2016, putting us once again at the top of the national ranking ofFrench corporate donors for Movember.

. MOVEMBER

Beauty is not about futility, but utility. And we are very proud that Guerlain,

for the second year in a row,is the largest corporate donorto Movember in France .

« « Sarah Daniel-Hamizi and Julien Fagoaga

The “La Moustache de Messieurs” team and the creator of the Guerlain Truck decoration for Movember.

Our Company considers social responsibilityas being key; this means looking beyond itsown interests and supporting associationswhose projects reflect the Company's values.The desire to do more is demonstrated by ouremployees involvement in a range of initiatives,e.g. the participation of our teams in races combining a personalchallenge and a commitment to a worthy cause. Among otherswe can cite the Odysséa Race in which 200 Guerlain employeestook part to raise money for breast cancer research wearing thecolours of the Belle&Bien charity. Since 2015, we have launchedthe "Journée Engagée" initiative: a day off from work offered byGuerlain to its employees so they can volunteer in an environmen-tal or social initiative. In France, we are strengthening our supportfor three associations:

Look Good Feel BetterCreated in the United States in 1989, the Look Good Feel Betterorganises skincare and make-up workshops for women undergoingtreatment for cancer. These workshops take place in two-hour ses-sions at skincare establishments, hosted by beauticians and charityorganisers, during which women relearn to take care of themselvesand share a moment of well-being to reclaim their self-confidence.For 13 years, Guerlain has been supporting this French version ofthe international programme Look Good Feel Better and encouragesits foreign subsidiaries to develop local partners.Guerlain providesfinancial assistance annually to Belle&Bien and offers free products

to put together beauty bags as gifts for the works-hops’ beneficiaries. Guerlain also sits on the association’s Board of Directors and in 2015,Sandrine Sommer, Director of Sustainable Deve-lopment at Guerlain, became its Vice President.

Les Restos du CœurIn 2016, 150 Guerlain employees took part in the third edition ofour partnership with Restos du Cœur. For ten days in two Parisiancentres and in Chartres, Lyon and Strasbourg, Guerlain beauty sessions were offered to Restos du Cœur beneficiaries. In total, 850women enjoyed a moment of well-being offered by our make-up artists (over 150 individuals were trained to take part in this year'soperation). Guerlain also launched a Story competition. All royaltieswill be donated to the Restos du Cœur to tackle illiteracy and to repaint a Restos centre in Paris.

MovemberMovember is an international charity, which raises money to fightmale diseases such as prostate cancer. Each November, Movemberasks men to grow a moustache to raise public awareness and raisemoney for the charity. For the fourth year running and via a TravellingBarber Truck, the Guerlain "La Moustache de Messieurs" team –sponsored by our perfumer Thierry Wasser – has taken part in theMovember campaign, which supports research into male diseases.Once again, Guerlain has risen to the top ranks of Movember donors in France!

- 28 -

A

COMMITMENT

TO

SOLIDARITY

IS

KEY

- I N T H E N A M E O F B E A U T Y -

Guerlain employees in the 2016 Odysséa Race supporting Look Good Feel Better colours

- 31 -

AROUND THE WORLD THE ENVIRONMENTAL, CORPORATE AND SOCIAL INITIATIVES

OF OUR SUBSIDIARIES

EUROPE

All the European subsidiaries will be certified ISO 14001 and “Commitment to

Biodiversity and Climate” by 2020.

GERMANYGuerlain Germany has been certified ISO 14001

since 2014 and in the Commitment to Biodiversity & Climate since 2017.

BELGIUMGuerlain Belgium was the first subsidiary

certified ISO 14001 in May 2013 and has continued to roll out numerous

environmental and social actions ever since.

UNITED KINGDOMGuerlain UK strengthens its commitment

with the local branch of Look Good Feel Better.

SPAINGuerlain Spain was certified ISO 14001 and

in the Commitment to Biodiversity & Climate in 2016. Partner-ship with Ponte Guapá te sentir mejor (Spanish branch of Look

Good Feel Better/Belle&Bien) through product donations.

NETHERLANDS Guerlain Netherlands was certified ISO 14001

and in the Commitment to Biodiversity & Climate in 2016. Recycling customer returns thanks to CEDRE since 2014.

PORTUGALGuerlain Portugal has been certified ISO 14001 and in the

Commitment to Biodiversity & Climate since 2017 and organisesoperations to raise awareness amongst its clientèle regarding the House’s Sustainable Development

and in particular eco-design.

ITALYGuerlain Italy has been certified ISO 14001 since 2017 and trains its Beauty Advisors

via Sustainable Development E-learning modules.

CANADAIn June 2017, Guerlain Canada installed

two pedagogical beehives at its Montreal head office and organises training and eventswith the help of a bee-keeper.

MEXICOGuerlain Mexico has signed a partnership with

a local bee-keeper and organises bee-hive sponsorship.

KOREAGuerlain Korea organises events,

donations and corporate patronagein favour of a local NGO that

supports single moms.

JAPANGuerlain Japan was the first Asian subsidiary

certified ISO 14001 and has been since November 2013.

HONG KONGIn early 2017, Guerlain Hong Kong

created an internal Sustainable Development Committee and trained all the subsidiary’s employees.

- 33 -- 32 -

To further reduce its environmental footprint, every year Guerlain carries out a Bilan Carbone® (carbon footprint assessment). This ishow we know that transport is the main culprit in terms of greenhousegas emissions in our business: logistics is responsible for 29% of Guerlain's CO2 emissions, mainly due to the mass exportation of ourproducts.Working with our subsidiaries, we want to favour the use of shipping(maritime transport) for major exports via the use of key monthly information: they are sent a report showing the number of kilogramsshipped, billed Euros and CO2 emissions. The percentage of our shipments exported by ship has been increasing steadily for threeyears. In 2015, 57% of our major exports were transported by ship. In2016, this figure rose to 62%. Excellent progress !

To reduce its CO2 emissions in France, Guerlain supplies its Paris storesusing a zero-emission road delivery system. Working with our partnersSpeed Distribution Logistique (from the warehouses) and Renault Trucks (supplier of an innovative 100% electric delivery truck,the Bourdon), we launched the full-scale test, the first¬ of its kind in theworld, at the beginning of May 2014. Whenever pollution peaks, ourSales Advisors very proudly tell our customers that Guerlain is doingits bit to reduce its environmental footprint. It is an initiative we are delighted to share inside the LVMH Group and outside it.

This is also illustrated by the increase in the number of hybrid vehiclesin the Guerlain fleet. At the end of 2016, the fleet was made up of al-most 20% hybrid vehicles. To promote more environmentally-friendlytransport solutions, we are funding the installation of electric chargingpoints on our sites and at our Levallois-Perret HQ, and we encouragethe use of bike couriers in Paris. We also encourage our employeesto use hybrid taxis, and offer them a citizenship bonus if they cycle to

work. In Belgium, employees have the option to use electric bikes forbusiness travel during the day.

T R AN S POR T

Transport is responsible for the majority of our greenhouse gas emissions. This is a major challenge for Guerlain and a reminder of the importance

of each and every link in the logistics chain.

- T R A N S P O R T -

Cycling bonuses are offered to employees.

Almost 20% of vehiclesin the Guerlain fleet are hybrid vehicles.

In 2016, 62% of our freight was shipped (maritime).

Carbon neutrality by 2028 for Guerlain's200th anniversary

62%

0

20%CO2

SAVINGS: 27 TONNESIN 2016.

15 Paris Stores are supplied by a 200-kilometre

“zero-emissions” deliveryround using a 16-ton

electric truck.

50%This is our overall

CO2 reduction target

by 2020 compared

with 2007 levels.

- 35 -- 34 -

Sea transport causes less pollution per ton shipped and “blue mo-torways” have for around a decade been the focus of a smallgreen revolution in the context of the energy transition. Shippingwill help improve our environmental impact even further. Theseare some of the reasons for Guerlain to ship its products by seaas much as possible, and it has been increasing its use of this formof transport steadily for several years. Joint interview between Philippe Bernard, our Head of Transport and Customs, and hispartner in this modal shift, Laurent Cochard, DHL Global Forwar-ding Branch Manager in Le Hâvre.Philippe Bernard : This is unfortunately becoming a bit of a well-worn joke, but I have to admit that despite having attended everymeeting of the Guerlain Sustainable Committee since it was created,as the Head of Transport I am still our company's chief culprit interms of greenhouse gas emissions! Logistics accounts for 29% ofGuerlain's total CO2 emissions, mainly due to the mass exportationof our products. That’s why we want to make shipping (maritimetransport) our go-to method for deliveries to our foreign subsidiaries.It's strange to think, but just over ten years ago air transport was farand away the dominant -method. The main difficulty at the time, andthe obstacle we came up against again and again as we tried tomake the transition in the luxury industry, was calling into questionthe benefits that had made air transport such a success: first and fo-

remost its speed, but also enduring preconceptions. Air transportwas perceived as being more attractive, and more consistent withthe idea of delivering luxury goods. Today our direction of travel isclear: the proportion of freight that goes by air must be minimisedwhile shipping must be favoured.In my line of work I often say that my best friend is the CFO, becauseshipping is cheaper, and that it just remains for me to educate myclients and my sales staff using simple arguments: to be good managers in every sense of the word and to manage your stockscarefully upstream. As a result, the percentage of our shipments -ex-ported by boat has been growing steadily for three years. As partof this effort, DHL is our long-standing partner. We have a relationshipof trust that goes back over twenty years.Laurent Cochard : DHL Global Forwarding is a subsidiary of theDHL Group, and we too see sustainable development as more thanjust a concept. It is a tangible long-term process for which we wererecognised in 2009 by the Climate Counts organisation, which ran-ked the DHL Group top in the transport and logistics sector. As theworld number 1 for maritime freight, our aim is to offer our clientslike Guerlain the most efficient and competitive service possiblethrough our business as a “transport organiser”. But we also want togive them a space protection and boarding priority service in all theworld’s major container ports thanks to our partnerships with

- T R A N S P O R T -

GREEN, CLEAN TRANSPORT SOLUTIONS:GUERLAIN IS INCREASING ITS USE OF SHIPPING

rigorously selected shipping lines. All these actions are aimed atachieving a very clear objective: to offer solutions that constantlyshrink the overall carbon footprint.At DHL Global Forwarding wecan now calculate the carbon footprint of each shipping line andeach container. When people ask me about the pressure from myclients to move to fully green “sea and barge” transport, I’d like tosay that that's where the narrative is leading, especially as we arecompletely ready: we have all the tools at our disposal to implementmulti-modal solutions, but negotiations can break down over leadtimes and feasibility. But I remain hopeful, because when brands likeGuerlain challenge us regularly, it drives us to improve!Philippe Bernard : It is true that it is very hard to deliver to our air-

port-based Travel Retail clients by boat. In reality, it is not a questionof routinely setting sea transport against air transport, but rather ofsmart synergies. DHL helps us to strike the best balance: direct, fastand environmentally-friendly. At Guerlain another key strategy for favouring shipping lies in the use of key monthly information: our fo-reign subsidiaries are sent a report showing the number of kilogramsshipped, billed Euros and CO2 emissions. While it is a slow processof persuasion, the virtuous argument is clear to see. And we havethe results to show for it: in 2014, 54% of our major exports weretransported by ship. In 2015 we shipped 57% of our freight, andthe set goal of over 60% in 2016 was exceeded, as we achieveda figure of 62% !

Laurent Cochard Philippe Bernard

Maritime freight is ultimately quite a simple equation and something we can only encourage: it is a virtuous circle in terms of both savings and lower CO2 emissions!

« «

- 36 -- 36 - - 37 -- 37 -

A CRUCIAL ROLE IN THE IMPLEMENTATION OF OUR SUSTAINABLE DEVELOPMENT STRATEGY

The concepts of partnership, the long term, transparency and perfor-mance are common concerns of Procurement and Sustainable Develop-ment. Guerlain is privileged to have established long-standingrelationships with its suppliers: glass-makers of course, but also suppliersof all types of packaging, merchandising, raw materials and so on...

THE CHARTER: A CO-CONSTRUCTION PROCESSWe worked with a partner who audited all our buying teams and otherkey players in the organisation. Together, we came up with an initialdraft that we shared with around ten pilot suppliers. In 2013, togetherwe produced this charter and then an evaluation grid to assess oursuppliers in terms of their commitments to environmental, social, skillsprotection and innovation aspects. Once this work was completed,we organised an event to launch this new approach with suppliers inApril 2014, and sent all 600 of them a copy of the new charter: overone hundred of them completed the self-assessment. Working togetherin this way and supporting our suppliers has been a powerful tool forgarnering commitment and ownership.

In early 2015, we debriefed one hundred suppliers about their strongpoints as well as suggesting recommendations for improvement, andat the end of 2015 we re-evaluated them in the same way, procure-ment segment by procurement segment, which enabled us to measuretheir progress. On this basis, we set up a scoring system and fixedgoals by type of purchase in order to help buyers adopt this new approach. These elements have been included in the strategic meetings with our suppliers for two years. In terms of invitations to ten-der, it provides us with additional performance indicators with whichto evaluate the responses. A supplier who scores above average interms of the indicators is often someone we can form a quality relationship with... However, when a supplier falls below the averagerequirement, we help then make progress – we see it as our duty as acommitted company.

Our trustworthy facts and figures help steer us in the right direction.Moreover, we have observed a positive development. In early 2016,121 suppliers were evaluated in all segments, 30% of whom for thesecond time (2014 and 2015). For the suppliers evaluated twice, weobserved an improvement of 20%. This demonstrates our suppliers’strong involvement in this approach, and their ownership of it.

For several years, our service providers and suppliers have beenaware of our sustainable development approach. In order to makemore progress and formalise our vision, in 2013 we drew up a "Sustainable Procurement" charter with the LVMH Group's Perfumes& Cosmetics Branch.

The conditions for a responsible relationship between our Compa-nies and our partners are based on quality and long-term relations,improving our mutual economic results, selecting sustainable materials, and designing innovative solutions to protect raw materialsand savoir-faire.

S U S TA I NA B L E P RO CU R EM EN T

The strategic dimension of procurement in a committed company

THE NUMBER OF SUPPLIERS THAT HAVE RECEIVED THE "SUSTAINABLE PROCUREMENT CHARTER" FROM THE LVMH GROUP'S PERFUMES & COSMETICS BRANCH.

600200

The number of employees working in the LVMH Group's Perfumes & Cosmetics Branch who have been trained

to sustainable procurement.

- S U S T A I N A B L E P R O C U R E M E N T -

Working with our suppliers to draw up our Sustainable Procurement charter and supporting them have been powerful tools for garnering commitment and ownership.

« «

A report on a unique experiment with Pierre-Antoine de Vriendt,non-production buyer for Guerlain's production sites, and LaurentLe Peniec, operations director of the Ecomouton company.

Pierre-Antoine de Vriendt : My day-to-day job is to manage non-production purchases, i.e. anything to do with production investments,buildings and green spaces for our two industrial sites, Chartres andOrphin. When the Sustainable Development Department suggestedI look into the feasibility of having a flock of sheep on our Orphinsite, it naturally resonated with me as I’m a farmer's son! Laurent Le Peniec : Ecomouton is a young small business that startedup in 2012, partly by chance and very much out of mischief. My part-ner in a previous business venture had a warehouse in Seine-et-Marne. He was looking for a cheap way of maintaining his greenspaces. At the time, no company offered an eco-grazing service forbusiness sites. In practice, we spent the first six months of Ecomoutonnegotiating a specific insurance contract for this new business so that

we could canvas without risk. Having got that green light, we approached large firms, local authorities and public companies tohighlight the responsible, fun and of course economical aspects ofour solution. With Guerlain there was no need to talk it up and persuade them because the Department bought into it fully !Pierre-Antoine de Vriendt : The environmental argument was clear:could there be a more natural way of avoiding the noise pollution ofmechanical mowing and improving soil quality than eco-grazing?We just needed to check that it complied with the rules, in particularthe legal framework relating to site security. One of the arguments infavour of this solution, besides the environmental benefits, was theeconomic argument. We needed it to cost the same as the conven-tional maintenance of our green spaces at Orphin. The package in-cludes fencing, a pen where the sheep can shelter from heavy rainor the hot sun, and a lead shepherd who visits the flock two to threetimes a week, on average, to make sure they are healthy, and checkthe condition of the fences and the grazing area. He gives them any

A FLOCK OF 40 USHANT SHEEPTO MAINTAIN THE GREEN SPACES

OF THE ORPHIN SITE Eco-grazing is perfectly suited to the configuration of our industrialsites and is beneficial in every respect: it is a responsible, fun and cheap solution,

and something that brings our teams together!

« « - S U S T A I N A B L E P R O C U R E M E N T -

necessary -treatments, checks on any pregnant ewes, and assessesthe quality of the grass. In winter, he might bring extra hay if needed.He might also move sheep from one grazing area to another to en-sure the grass is grazed evenly across the site. Between visits, twodesignated Guerlain employees take responsibility for reporting anyunusual behaviour and thus avoid unnecessary call-outs. And our em-ployees grow very fond of the sheep !Laurent Le Peniec : Eco-grazing is an option on sites of 3,000m2 ormore, i.e. two sheep (unlike goats, sheep cannot live alone). On ave-rage and on a site like Orphin, we use a flock of 40 Ushant breedsheep. It is a rustic, very hardy breed native to Ile Bretonne whichcan live outdoors all year round, making them ideal candidates foreco-grazing. As the smallest breed of sheep in the world (they standless than 50 cm tall at the withers and weigh no more than 20 kg),they are featherweights, so do no harm to the grass they maintain.Their agility also means they can go anywhere very comfortably, thussolving the problems of impassable or very wet plots that can be dif-ficult or dangerous to tackle with a mechanical mower.Pierre-Antoine de Vriendt : There are many direct or indirect benefitsof eco-grazing. The new guests are a friendly presence and em-ployees soon take them to their hearts, even giving them names! Thissolution is consistent with Guerlain's Sustainable Development ap-proach, in that it reduces the environmental impact of mowers. Thesheep are well suited to the type of soil on the Orphin site, which ishas a high clay and moisture content. There is also no longer anyneed to deal with green waste, as it is swallowed by the sheep. Notto mention the impact on biodiversity. By limiting the growth of invasiveplant species and maintaining low-level vegetation, eco-grazing pro-motes the growth of the flora and fauna specific to grassland and en-riches the site's biodiversity. The bees are back ! The initiative backs

up existing biodiversity preservation measures on the site, where sixhives have been installed and two flower meadows created. TheSainte Mesme ESAT is looking after the green spaces not grazed bysheep. It was important for us to be able to involve an ESAT in thisgreat partnership, as disability is one of our priority social commitments.These are just some of the arguments that persuaded us to extend theinitative to our Chartres site in 2017. Sheep arrived there in April.Laurent Le Peniec : Thanks to companies like Guerlain who haveput their trust in us, the Ushant breed has been given a fresh lease oflife. In France, the population has grown from 1,500 sheep in theyear 2000 to 12,000 in 2016. These initiatives also create local jobs,as Ecomouton now employs (as well as our 2,600 sheep!) 11 she-pherds, five of them full-time, and all on permanent contracts. We takegreat pains to respect gender equality, the age range is broad (from18 to 74 years), employees always earn more than the minimumwage, and we require no prior experience, as we train our shepherds. The expect them to be patient, self-reliant, observant andforward-thinking, and to display initiative.

- S U S T A I N A B L E P R O C U R E M E N T -

Laurent Le Peniec and Pierre-Antoine de Vriendt

- 40 - - 41 -

In terms of waste, we have set up 30 different waste sorting channels(paper, cardboard, different types of plastic, glass, batteries, etc.) torecycle our waste including tester bottles and obsolete products. Guer-lain, mainly thanks to the CEDRE platform (an ecological deconditio-ning and recycling platform) that Guerlain helped set up in 2009 andthe increasing number of innovative industries recycling limitations arebeing gradually overcome. In total, 72% of waste originating from ourindustrial sites is recycled, re-used or composted. 95% of perfume bot-tles are recycled!Since 2012, we have been offering our customers visiting our Parisstores the opportunity to bring in their used bottles and pots; we thenrecycle them and give them a new lease of life by sending them toCEDRE.

Reducing water consumption is an ongoing challenge, even thoughour consumption fell in 2016 (48,617 m3 compared to 51,635 m3 in2015). In order to make water savings, we regularly implement ad hocmeasures e.g. installing pressure-reducing valves and back-office detectors; in our plants, we have implemented an efficient washingprocess and we also catch rain water to be re-used in the "La Ruche"bathrooms. Moreover, our two plants are located outside water stresszones. Our consumption of raw materials and energy are carefullymonitored and optimised (energy consumption in 2016 fell to 16,976MWh from 17,617 MWh in 2015). We take steps to constantly raiseour employees’ awareness, including by displaying monthly indicatorsin plants, installing motion sensors on all sites, and carrying out energy audits. In terms of emissions, our two plants in France are

classified as “Installations Classées” pour la “Protection de l’Environ-nement” (installations listed under French environment protection regu-lations) and as such must comply with strict environmental regulations.Consequently, they are regularly inspected by the Ministry of Ecology,Energy, Sustainable Development and Territorial Development (DREAL)and the Regional and Inter-Departmental Directorate for Energy andthe Environment (DRIEE). Moreover, all our sites have been awardedISO 14001 certification, which helps us to control our environmentalimpact and commit to a process of continuous improvement.

E C O - R E S PON S I B I L I T Y

Eco-responsibility is practised on a daily basis on all our sites and by all our employees.

Managing the production sites, the headquarters and the stores with ever increasing eco-efficiency standards in order to limit our environmental impact on a daily basis.

• Encouraging and supporting changes in employees' behaviours in the workplace.

• Making it easier for customers to participate in greener consumption

modes is a growing aspiration.

THE OBJECTIVES OF THIS CHALLENGE

Eco-citizenship action that enables all employees and customers to acquire the right instincts

72%waste from the Company's

industrial sites in France is recycled,

reused or composted.

30This is the number of different

waste sorting sort channels

(paper, glass, cardboard, plastic ,

etc.) we have set up to recycle

our waste including tester bottles

and obsolete products.

100%OF THE GUERLAIN SITES

IN FRANCE

ARE ISO 14001

CERTIFIED.

50% of our European subsidiaries

are ISO 14001 certified.

- 43 -- 42 -

With a scope varied in nature, General Services has had to makecreative choices, especially to better integrate Sustainable Development concepts into employee services and to initiate andfacilitate good practices. The following is an interview with CécileVatan, the Head of General Services at Guerlain.

A KEY ROLE IN PROMOTING ECO-CITIZENSHIP

I have been at the head of Guerlain's General Services for our head-quarters and Paris stores for the past seven years. I am also a proudmember of the Sustainable Development Committee and have beensince its inception. My areas of responsibility are broad, ranging fromthe management of service providers (post, technical services, recep-tionists, etc.), waste, power and water management, up to logisticsissues relevant to a business’s headquarters and its employees (ma-nagement of the fleet of vehicles, messengers, etc.). To this end, I amGuerlain's point of contact for numerous service providers. I also over-see the promotion of ESATs (employment centres which aid the disa-bled) in the panel. Since my responsibilities are varied and broad intheir scope and impact, I am proud of the importance of my role inaiding change towards more eco-friendly behaviours.

CINCHING IN OUR WASTE

One of the largest issues pertains to managing and reducing waste,as well as products’ end of service life in general. We have had to

create habits for waste sorting in the headquarters’ kitchens and atthe office in general. We work with an ESAT service provider whoregularly congratulates us on our exemplary dust bins. It’s extremelyrare for companies to deserve such a mention. These habits are fallinginto place little by little throughout all of the company's roles, and mymotto, “Nothing is wasted”, couldn’t be more relevant. I am increa-singly convinced that any product can be repurposed. Consequently,models, reports, sales materials and drawings destined for recyclingare even used in creative workshops during “Facstory” sessions, ourtraining and collective intelligence space.

CREATING AN ECOSYSTEM OF HANDPICKED SERVICE PROVIDERS

All of the service providers related to my function undergo a Sustai-nable Development screening. Creating a full network of companieswho are true gems in terms of their social, environmental and localcommitments is increasingly becoming a mark of pride that our part-ners would like to emulate. Today, they follow us in all that we do,and we even inspire missions. Consequently, Sogeres, who managesour company restaurant, has joined us in all of our initiatives (after ac-cepting to jointly plan meatless days, doing away with plastic packa-ging, increasing the use of organic and local food, sustainable fish,etc.). For causes such as Movember, Odyssea, Belle&Bien, from of-fering buffets and the Chef’s creation of desserts for each of thesecauses (to which a part of the proceeds is donated), support hasbeen constant and unwavering. This year, even Sodexo Energie et

GUERLAINGENERAL SERVICES AHEAD OF THEIR TIME

IN THE AGE OF SUSTAINABLE DEVELOPMENT

- E C O - R E S P O N S I B I L I T Y -

Maintenance decided to take on the costs of the painting studios atthe centres of Restos du Cœur (a charity which provides food to theneedy), with whom we are in partnership. These were moments takento enjoy beauty, which then expanded to the renovation of the pre-mises.

ECO-CITIZENSHIP: PROMOTING AND AIDING THE DEVELOPMENT OF POSITIVE BEHAVIOURS

One of the goals of eco-citizenship is to promote modes of transportand vehicles with low CO2 emissions, and consequently to promotethe use of hybrid vehicles in the company fleet. All of the vehicles ren-ted for the headquarters for employees are hybrids. We've also beenable to increase the portion of hybrids in our fleet, reaching 20% atthe beginning of 2017, with a President who, naturally, set the exam-ple. In three years, I installed 12 charging sockets, and I’m thrilledwith it. We have also been recognised through a mention by the AreaPurchases professional committee on our performance as an exem-plary company within the LVMH Group.My future ambitions include making 100% of the office's supplies100% eco-friendly by 2020, as well as to hire more and more ESAT

work. It costs nothing extra and the quality and service timelines arenot only in line with “conventional companies”, but there is a charita-ble aspect as well. It is fundamental and worthwhile to think aboutand make steps to reduce the pressure posed by office activities onthe environment.How do we make employees follow habits to reduce the impact ofoffice activities on the environment and motivate them over the longterm?By starting with simple steps, with the awareness that positive gesturespay off and have real influence. The example of my other big project,regarding paper, says it all. Employees are able to see their numbersand how much they consume using their printer badge. Even thesemodest initiatives show how habits and behaviours can change, andthat even modest gestures can be very efficient. I have no problemteaching by repetition, organising cleaning days twice per year, for example, to remind people of the rules of waste sorting. Their participation in the project and their involvement are dispensa-ble. By favouring these exchanges, letting staff speak, react and makesuggestions, it's easier to get them to stick to it, with some evenconvincing and encouraging others. In short, team spirit is key here,as it is anywhere.

As employees of a committed company, we all have the power to be trend-setters, leaders, and even champions of sustainable development.

« « CÉCILE VATAN

- 45 -- 44 -

Since 1828 until today, Guerlain has always produced its pro-ducts in France. In 2015, with the inauguration in Chartres of "LaRuche" - the new Skincare and Make-up production site - Guerlain,is confirming once again and for the foreseeable future, the im-portance of manufacturing in France.

The La Ruche production site was awarded HQE® certification (ex-cellent rating) and is often cited as a key example of LVMH's andits companies' sustainable construction policy. From an environmen-tal standpoint, the construction site was exemplary: all waste wassorted; noise and visual pollution was kept to a minimum, traffic waslimited; and ground, water and air pollution was controlled.

Guerlain also demanded water and energy consumption monito-ring, on-going training for teams, and regular information updates

for local residents. The actual building is extremely eco-friendly. TheCompany even signed a performance-based contract with the ge-neral contractor. In order to monitor progress, over 600 sensors wereinstalled on the site to track energy, water and steam consumption.In order to optimise energy performance on the site, much thoughtwas given to how to insulate the site effectively. The lighting systemrelies on low-energy equipment, which is managed by motion andtwilight sensors. The use of air-conditioning is limited thanks to thebuilding's bioclimatic design and heat-exchangers. The toilets userecuperated rain water and the hot water is supplied by solar panels.

Much attention was given to the biodiversity of the site and how itsgreen spaces would be managed: eight bee hives were set up onthe site - this is the number of hives needed to give a pot of honeyto each of the 350 employees - and 302 trees were planted on the

site. In 2015, La Ruche obtained ISO 14001 certification following inthe footsteps of all the Guerlain's other French sites (HQ, productionsites and Stores).

Employee well-being was taken into consideration upstream of the de-velopment and at each step of the construction. One of the prioritieswas to have as much light as possible thanks to the inclusion of lightwells, bay windows, two patios, etc. Far from the image of a drearyindustrial site, La Ruche faces the sun and provides a considerable de-gree of comfort for all its occupants.

Employees were involved in a number of ways: upstream of the projectdesign stage certain key spaces of the Ruche were made into scalemodels (in cardboard) so that employees could validate the sites andtake ownership of their future workplace. Certain projects like landsca-

ping the grounds and designing the staff store were entrusted to em-ployees with a passionate interest in these areas. Downstream of theproject, 75 employees supervised the transfer of the machines. Theteams attended 120 information meetings and regularly visited the siteto monitor the progress of their future workplace.Training sessions were arranged on Best Manufacturing Practices andon how to use the new equipment. Nothing was overlooked. We wan-ted to ensure that this site was a pleasant and enjoyable place to work- even including the prevention of musculoskeletal disorders.

Officially opened in February 2015 in the presence of Manuel Valls,the French Prime Minister and Bernard Arnault, CEO of the LVMHGroup, La Ruche is the perfect blend of industrial requirements, qualitystandards, environmental requirements, and the well-being of the teams.350 employees named the site after the bee, which is so dear to Guerlain.

LA RUCHE - AN AMBASSADOR SITEAND A TESTAMENT TO OUR COMMITMENT

- 46 - - 47 -

Guerlain is not a listed company and as such, only criteria applicable to non-listed companies are shared.

Furthermore, the scope covered in this report is limited to Guerlain SA, which corresponds to Guerlain France. It should also be noted that the company's

products are manufactured in France (in Chartres and Orphin) and it is because of this that environmental data mainly refers to these two sites.

SIX KEY CHALLENGES DEFINING OUR CSR APPROACH:

- PROTECTING BIODIVERSIT Y

- DESIGNING ECO-FRIENDLY PRODUCTS

- SOCIAL RESPONSIBIL IT Y

- REDUCING CO2 TRANSPORT EMISSIONS

- INVOLVING SUPPLIERS

- DAY-TO-DAY ECO-RESPONSIBIL IT Y

SOCIAL, ENVIRONMENTAL AND CORPORATEDATA FOR GUERLAIN 2016

1° COMPANY INFORMATION

TOTAL STAFF, BREAKDOWN OF STAFF BY GENDER, AGE AND GEOGRAPHICAL ZONE ON 31/12/2016

In France, Guerlain has 1,017 permanent employees and 54 employees on fixed-termcontracts, making a total of 1,060 FTEs. Out of these employees on permanent employ-ment contracts, 72% are women and 28% are men.

2014 2015 2016

<24 years 2,1% 2,3% 2%

25 - 29 years 16,4% 15,4% 15%

30 - 34 years 16,5% 16,5% 16,5%

35 - 39 years 17,3% 16,0% 15%

40 - 44 years 14,3% 16,4% 16,5%

45 - 49 years 10,3% 10,4% 10,6%

50 - 54 years 12,1% 11,9% 12,5%

55 - 59 years 8,3% 8,4% 9%

>60 years 2,7% 2,5% 2%

HIRING AND REDUNDANCY

Hire type 2014 2015 2016 2016 (in absolute terms)

Transition from a fixed-term to a permanent employment contract 22% 17% 22% 21

External recruitment 66% 55% 58% 55

Internal mobility/group 12% 28% 19% 18

Employee turnover 2014 2015 2016

Resignation 30 35 41

Individual redundancy 14 18 23

Internal mobility/group 20 17 20

Retirement or pre-retirement 13 14 16

Termination of trial 3 2 2

TOTAL 80 88 102

GROSS MONTHLY PAY (BASE + VARIABLE, MINUS INCENTIVES AND PROFIT SHARING) AND RELATIVE CHANGE

Remuneration 2014 2015 2016

1500 à 2250€ 27% 26% 22%

2250€à 3000€ 30% 30% 32%

3000€à 3750€ 18% 17% 18%

3750€ à 4500€ 9% 10% 11%

More than 4500€ 16% 17% 17%

Deferred compensation is added to base pay: incentives (5.6% of payroll comparedto 6.1% in 2015), profit-sharing (3.7% compared to 3.3% in 2014) and employee saving scheme (1.2% ISO compared to 2015). 2% of payroll is allocated to stafffood costs (1.6% compared to 2.2% in 2015) or subsidises the works council (0.8%ISO vs 2015).

FLEXIBLE WORKING HOURS

The option to work flexible hours is particularly relevant for technicians/super-visors/managers (137 out of 143 employees, compared to 146 out of 154 in employees in 2015, and 142 out of 150 in 2014). Shift work and night work is practised by all workers (238 out of 238 compared to 243 out of 243 in 2015, and182 out of 237 in 2014), far behind technicians/supervisors/managers (only 75 outof 243, compared to 80 out of 266 in 2015, and 51 out of 264 in 2014). This isthen followed by workers and executives, who are least involved (7 out of 122 and1 out of 420, respectively, compared to 7 out of 132 and 1 out of 438 in 2015, and5 out of 142 and 4 out of 428 in 2014).

In France, workers can perform a portion of their functions remotely. At present, aroundthirty employees (women only) have taken advantage of this scheme. This is either a temporary solution often related to pregnancy or a weekly practicecharacterised by a good understanding of the role, which is validated by the manager.

ORGANISATION OF SOCIAL DIALOGUE, I.E.INFORMATION, CONSULTATION ANDNEGOTIATION PROCEDURES WITH STAFF

Guerlain believes in open and constructive social dialogue. Our social partners likeour employees are committed to the brand and want to see it grow and prosper. Theagreements that they sign with us reflect this.

We regularly provide information to works councils and central works councils on thecompany's strategic topics: digital affairs, e-commerce, marketing plan, social andenvironmental issues, future restructuring operations, etc.

Additionally, all employees were involved in the decision to move the Levallois site.This took place in the form of brainstorming on new ways to work and exchangingideas on Slack. During 2016, employee representatives participated in 65 meetings,broken down as follows (note that the works council and staff representatives met thisyear):

2014 2015 2016

Total number of meetings 67 71 65

Works council 32 38 47

Staff representatives 13 15 1

C.H.S.C.T. 16 13 17

Other 6 5 0

COLLECTIVE BARGAINING AGREEMENT REPORT

Five agreements were signed this year: an agreement on social dialogue and relativemethods, electronic voting during professional elections, consolidation of work councils/staff representatives to create shared representative bodies pursuant to theRebsamen law, mandatory annual negotiations and the incentives agreement.

Breakdown of permanent employees by age

- 48 - - 49 -

OCCUPATIONAL HEALTH AND SAFETYCONDITIONS IN FRANCE

On-the-job and commuting accidents in 2016

Number of fatal accidents 0 0

Accidents resulting in absence 21 7

Number of working days lost 463 180

Occurrence rate 12.40 4,13

Severity rate 15

Psychological services were put in place and security rules were reviewed followingthe attacks on 13 November 2015.284 of 1070 people received security training in 2016, compared to 428 of 1079in 2015. In 2014, there were 496 out of 1071. The highest on-the-job or commutingaccident severity rate was not higher than 0.27 in 2016, compared to 0.46 in 2015and 0.36 in 2014. No employees were disabled following a reported workplaceaccident. CHSCT managed the security budget, for the following amounts:€350,000 in 2016, compared to €446,000 in 2015 and €556,572 in 2014.Further Security Training was implemented: OHS Training, Fire Drills, and Eco-drivingto raise employees' awareness of road safety. Actions linked to ergonomics are re-gularly arranged in our two plants and ergonomics expert jobs were created in 2012.A special safety/evacuation training was held for the members of the Executive Com-mittee in 2016.

OVERVIEW OF OCCUPATIONAL HEALTH AND SAFETY AGREEMENTS SIGNED WITH TRADE UNION ORGANISATIONS OR STAFF REPRESENTATIVES

In France, no occupational health and safety agreements were signed in 2016. Ho-wever, as well-being is known to promote health and safety in the workplace, we si-gned a three-year agreement in 2013. It will be negotiated in 2017.We will take steps to favour the well-being of our employees, allowing them to finda good work-life balance.1 - Organic and vegetarian products at the company restaurant2 - Events concerning workplace quality of life week:- Headquarters: fresh fruit juice available at the restaurant, test Pilates class - Stores: seasonal fruit delivered to stores and test manicure offerings3 - Yoga: every Monday and Thursday lunchtimes, employees can attend a relaxing1-hour yoga session. Guerlain also makes meeting rooms available; the costs are co-vered by the employee. 20 employees have participated to date.4 - Sports coaching: every Monday and Thursday evening at 6.30 p.m. employeescan take part in a one-hour fitness class (bums, tums and abs!). Guerlain makes meeting rooms available for this as well; costs are covered by the employee. 30 employees have participated.5- Beautiful hands: every Wednesday between 11.30 a.m. and 2.30 p.m. employeescan arrange to have a manicure in their office. Around 15 female employees havetaken part.6 - Reorganisation of the International Merchandising Department: for better ergo-nomics and the team’s comfort. 7 - Organisation of cleaning days to tidy up offices and social spaces: once or twiceper year.8 - Massages offered once a month at manufacturing sites.

In our new Chartres plant, we have:Ergonomics/security/safety: - Ergonomics: considered straight from the construction of the site, e.g. fully ergonomic

production zones, simplified and optimised workflows, improved ventilation for ma-chines producing powders, new machines for manufacturing emulsions (implementingraw materials using automatic suction, cleaning and disinfection; controlled operationof process parameters).- Safety : a dedicated weighing area for hazardous materials and safety systems thatswitch off machinery in the event of a malfunction Security: improved controls of pedestrian/vehicle access at the various entrances,controlled access to the site's key locations, cameras and alarms installed around theindustrial perimeter; all the equipment is optimised and controlled from the building.Teams' well-being was central to the development and taken into account at the design stage: two central patios let light into all the areas and notably the works-hops/well-tended grounds: trees planted, living roof, etc. / relaxation areas, gym,staff canteen with a terrace, auditorium, etc. / ventilation in offices and air-conditioning in all production areas, etc.

TRAINING POLICIES

In 2016, Guerlain invested more than 4% of payroll in employee training: this scoreis a testament to Guerlain's commitment to professional development¬ and develo-ping skills. As for skill development, our priorities in 2016 focused on:

CREATIVITY WITH THE FACTORY

- Our creativity lab: An experience involving creativity and group intelligence whichbegan in 2015 and expanded in 2016 with more than 10 concrete projects launchedor in development concerning a range of topics such as retail, operations, productinnovation, ‘the future of us’, etc. More than 200 employees from different departmentstook part. Furthermore, conference series on creativity were offered to employees.Three took place, during which 210 employees attended, concerning a number oftopics as broad as non-verbal communication or relationship management.- Management: two new trainings were held this year. ‘Another way to manage’,based on positive discipline and co-development workshops based on looking forsolutions as a group. We also offered trainings on getting to know oneself and others.Trainings were held on non-violent communication - Le digital : an LVMH e-learning programme was rolled out to all employees. Internaldigital trainings were also held.

Two other topics were also discussed this year:- A Generation Focus: Increasingly thorough guidance for young workers: a fully integrated seminar at the outset of the traineeship (1 day), an event at the end of thetraineeship, and guidance throughout with 2 HR interviews during the traineeship.Training for mentors is always available More than 7% of training hours was dedica-ted to seniors this year.- A Safety/Health Focus: a training on motions and postures was held for all thoseinvolved in stocking stores. Trainings for on-the-job first-aid and rescue were held, with47 people having participated this year. This training is also offered to all of our employees. Enrolment is held on a volunteer basis. A fire extinguisher, evacuation andsafety training was designed specifically for Executive Committee members. Lastly,an informational meeting was held for employees concerning male illnesses, as partof our Movember initiatives (a speech given by a urologist). Like every year, multiple information sessions were held for all employees concerningthe main development topics: training (the CPF, or ‘personal training account’, andhow to use it), mobility, annual review, etc.

TOTAL NUMBER OF TRAINING HOURS

11728 training hours were performed in 2016, versus 12757 in 2015. 600 peoplewere trained in 2016, compared to 814 in 2015. The difference is explained by the

fact that in 2015, preparation for an FDA inspection took place in Chartres, which re-quired 1678 hours of training.

MEASURES TAKEN TO PROMOTE GENDER EQUALITY

We are still very vigilant in terms of this issue and we aim to maintain diversity at thehighest levels and for all careers.In France, a gender equality and diversity agreement was signed in 2011 and thenrenewed in 2014. ‘Female leadership’ are not just empty words at Guerlain, as 60%of the Executive Board is female and 60% of BGMs (Heads of subsidiaries aroundthe world) is female.Currently, 73% of permanent staff members is women. 95% of employees, 73% oftechnicians/supervisors/managers, 73% of executives, 59% of workers: to promotediversity, we actively encourage the integration of men.

Proportion of Women 2014 2015

Employees 95% 94%

Technicians/supervisors/managers 75% 75%

Workers 62% 60%

Executives 72% 74%

MEASURES TAKEN TO PROMOTE THE EMPLOYMENT AND INTEGRATION OF PEOPLE LIVING WITH DISABILITIES

Substantive work has been carried out over the past four years, helping us increasefrom 2.71% (2012) to 4.5% (2016) the percentage of employees living with a disa-bility and enabling us to make real headway at the headquarters (from 1.34 to3.94%). In France, Guerlain has 36 employees living with a disability in 2016 in itsworkforce. A sum of €281,069 was donated to the social enterprise, compared to€195,379 in 2015, rounding off the company's initiatives towards employees withdisabilities. This topic is one that remains high in our priorities, and we intend to raise¬it regularly with our teams. For example, for International Day of Persons with Disabi-lities on 3 December last year, the Orphin site held an awareness session on the sub-ject for its teams.

ANTI-DISCRIMINATION POLICY

To better promote diversity and equal opportunity, we have had a partnership with Clichy and Montfermeil for the past six years, and we are implementing the followingactions in these communities:- Culture and Creation Fashion Show: for the sixth year running, nine Guerlain make-up artists attended the eleventh edition to help the 90 'Models for a Day' preparefor the event. - The second year of training for Amy Coulibaly, the young woman wemet last year during the Culture and Creation Fashion Show.- Participation in the Clichy/Montfermeil recruitment forum: unfortunately, no traineeswere selected this year.- Inviting two middle-school classes from Levallois and Orphin as part of their workplacement.- A traineeship as a receptionist in partnership with the service provider - Thanks tothe partnership with Montfermeil, the meeting with Esther took place. Esther Kamatariis the company’s ambassador for the third year running and supports the companyin its outreach efforts regarding all types of beauty. She also organised three eventsin Africa in 2016.Staff members in charge of recruitment in France received "Recruiting without Discri-

minating" training, which is regularly offered by our parent company LVMH.- The self-testing process that the holding company organises every year demonstratesthat Guerlain has never experienced any failings in terms of recruitments or in its answers to candidates.

In addition, Guerlain's active participation in the Clichy/Montfermeil recruitment forum(see social criteria) and more generally in Montfermeil and Clichy expresses and embodies our commitment to tackle socio-cultural discrimination in recruitment.

2 ENVIRONMENTAL INFORMATION

ORGANISATION OF THE COMPANY CONCERNINGENVIRONMENTAL ISSUES, EVALUATION APPROACHES AND CERTIFICATION

Since 2015, Laurent Boillot, Guerlain's CEO, has been including Sustainable Deve-lopment on the Executive Board's scorecard, which helps position this subject as anintegral part of the company's strategy.Moreover, our company has formed a Steering Committee, with 18 people in 2016,who represent all the company's departments. It also has an SD department, whichwas created in 2007 to implement a charter and measured actions, including an an-nual carbon¬ report and ISO 14001 certification throughout France; the Chartressite, opened in 2015, was also awarded HQE certification (high environmental¬ qua-lity label applied to buildings).

Structuring and deploying the approach at all of our siteswith the ISO 14001 standard:Guerlain started the certification process in 2011 for the various sites in France (HQ,Stores, Orphin and Chartres).In 2015, the company decided to go one step further and renewed its certificationin France (we no longer have site-specific certification, but instead an overall environ-mental management system for the whole of France). Guerlain renewed this certifica-tion in France in October 2015 for a period of three years. The company alsodecided to implement this approach overseas and particularly in Europe with the aimof certifying all its European subsidiaries by 2020. Two subsidiaries, Italy and Portugal,were undergoing certification in 2016 for an audit in 2017. Spain was certified in 2016.Guerlain produces all of its products in France between two production sites (in Orphin and Chartres). This is why the majority of the environmental impact informationabove relates to these sites.

EMPLOYEE ENVIRONMENTAL PROTECTION TRAINING AND INFORMATION-SHARING ACTIONS

This concerns all company employees: the aim is to make everyone responsible andencourage everyone to adopt more environmentally-friendly behaviours within thecompany on a daily basis.Employee Training: monthly sessions for all new employees. 100% of employeesworking at Levallois and in the Chartres and Orphin stores receive relative trainingevery yeare.Store training: our in-store beauty advisors receive training sessions once or twice ayear on our Sustainable Development approach so they can respond to customers'questions.Training for Sustainable Development Experts: key for disseminating the approach,they are given specific training after each SD site meeting. For example, we share information and updates about our raw materials initiatives, actions implemented onthe sites, regulatory aspects about waste disposal, etc.An in-house Guerlain communication plan dedicated to the approach has been

- 51 -- 50 -

The measures we have taken to reduce energy consumption include: raising the awa-reness of our employees, posting monthly indicators in all the plants, and installingmotion sensors on all the sites. However, as with water consumption, energy consump-tion had increased for the Chartres plant, which experienced technical difficulties atthe set-up: actions taken in 2016 allowed us to decrease consumption (notablythrough improved operation of installations on weekends and at night).

What’s more, we switched to a Renewable Energy contract in 2016 thanks to LVMHnegotiation.

GREENHOUSE GAS EMISSIONS

Measuring, evaluating and orienting our actions thanks to the Bilan Carbone®: since2007, we have commissioned an annual carbon report in order to identify the highestemitting sectors; this helps us manage our priorities and regularly measure progress.Based on the information in this report, we drafted an action plan, which we can re-evaluate if necessary.We are committed (via the Paris Action Climat charter signed with the Mairie deParis) to diminishing our CO2 emissions by 50% by 2020 compared to 2007 levels.

Total GSA CO2 emissions: 27 594.5 t eq CO2 in 2016down 0.56% from 2015down 31% from 2007

The Bilan Carbone® identified transport as the main culprit in terms of greenhousegas emissions in our business: logistics is responsible for up to 35% of Guerlain's CO2emissions mainly due to the mass exportation of our products. Working with our subsidiaries, we want to favour the use of shipping (maritime transport) for major exports via the use of key monthly information: a report on the number of kilogramsshipped, the amount invoiced in Euros and CO2 emissions. In 2014, 54% of our majorexports were transported by ship. In 2015, we improved this percentage reaching57% and we are very proud to have reached 62% in 2016!Furthermore, to reduce its CO2 emissions in France, Guerlain supplies its 15 ParisianStores using a zero-emission road delivery system. Working with our partners SpeedDistribution Logistique (from the warehouses) and Renault Trucks (supplier of an innovative delivery truck), we launched the full-scale test in May 2014: regular citydelivery routes of over 200 km in a 16-ton 100% electric vehicle. A world first! Thishas enabled us to save over 20 tons of CO2 a year.This is also illustrated in the increase in the number of hybrid vehicles in the Guerlainfleet: 20% of the fleet is made up of hybrid vehicles.

To promote more environmentally-friendly transport, we offer our employees a citizenship bonus if they cycle to work.The second largest sector in our Bilan Carbone® report relates to packaging. We have initiated an approach for the eco-development of our products, notably toreduce the weight and quantity of our packaging, especially glass, a main contributorto CO2 emissions.

MEASURES TAKEN TO CONSERVE OR DEVELOP BIODIVERSITY

Whether in France or elsewhere in the world, biodiversity is one of Guerlain's six CSRchallenges; our strategy consists of creating sustainable industries around our iconicnatural ingredients.

Raw materials are a source of inspiration and innovation for our Company. Makinga biodiversity commitment means ensuring the sustainability of our creations and savoir-faire as well as contributing to the Beauty of our planet. That is why Guerlaindecided to team up with several organisations and local stakeholders implementinga variety of programmes including:

• Orchids & TianZi: a global commitmentGuerlain has created a unique research centre for orchids named the 'Orchidarium',which has three hubs: a basic research laboratory in Strasbourg (France), an experi-mental garden in Geneva (Switzerland) and an exploratory reserve in TianZi (Yunnan,China). In 2009, we signed a ten-year Sustainable Development sponsorship agreement withMinguo Li Margraf, Head of the TianZi Centre. A partnership based on three flagshipactions:- The reconstitution and conservation of the ancient rainforest as well as contributingto the development of the local economy,- Introducing and cultivating all types of orchids above and beyond our own raw material requirements: 10,000 orchids have already been planted since 2009- Protecting the region’s flora and fauna.

• Bees and the Island of Ushant: a long-term partnership

When we created our Abeille Royale skincare range, we decided to help protectbees - a historic symbol of our company - and which are under threat today. We created a Sustainable Development sponsorship Fund with the Brittany BlackBee Conservatory Association, which includes:- financial support notably to partially fund a full-time beekeeper who looks after the150 hives owned by the Conservatory,- adding value to how the Conservatory shares information about its initiatives,- providing legal assistance in order to protect the Ushant bees.Back in 2013, we won the Mécénat Développement Durable "Coup de Cœur" prizeawarded by the Ministry of Ecology, Sustainable Development and Energy for ourcommitments in Ushant.Thanks to our financial support, the association now has an electric vehicle in whichto travel round the island without polluting.In 2016, the conservatory was certified as Organic and we are very proud to haveaccompanied our partner in this process.

• Vetiver & India: a human adventure

In south India, our perfumer, Thierry Wasser, has set up a new vetiver industry in thehigh plains overlooking the town of Coimbatore. A rational and respectful plantingprogramme that respects the environment and which is developed with the local po-pulation. 100% of the the plant can be used: the foliage is used as animal feed, theplants are used to take cuttings and the roots are distilled to make perfume.

The roots of the vetiver plant limit soil erosion and improve soil humidity and fertility.We give the plants to isolated families living in Coimbatore. We also give them thenecessary training to grow this crop and at the end of 18 months, we pay them fortheir vetiver.A new local economy in the regio.We are also conducting an irrigation study, which would facilitate the supply of waterto the local community.

Our biodiversity protection strategy involves creating sustainable industries. Thesethree industries will open up opportunities for other emblematic raw ingredients usedby the brand.Biodiversity is also high on production sites with the implementation of wild flowerson both sites and the introduction of Ushant sheep to the Orphin site to mow greenspaces naturally.

And finally, Guerlain is proud to renew our “Biodiversity and Climate Commitment”certification with Ecocert, further evidence that this concern has been integrated intothe heart of the brand.

implemented along with monthly communications. In 2016, more than 30 e-mail communications were sent to employees. And each month, the production sites areinvolved in producing local updates linked to our approach.

RESOURCES EARMARKED FOR PREVENTINGENVIRONMENTAL RISKS AND POLLUTION

The majority of resources earmarked for this area are human and a dedicated structurewas set up for its management: there is also a department with three employees managing the subject as well as an SD steering committee: one person from eachdepartment comprises the committee (each having met an SD objective as part ofhis/her annual appraisal).In addition, a budget of €340,000 (not including investments in machinery or thepayroll) is managed by the SD department.Finally twice a year, the results are presented to the management committee in orderto provide information and involve management in all aspects related to the subject.

PREVENTION, REDUCTION AND REPAIRMEASURES FOR WASTE IN THE AIR, WATER AND GROUND SERIOUSLYAFFECTING THE ENVIRONMENT

Our two production plants in France are classified as Installations Classées pour laProtection de l’Environnement (installations listed under French environment protectionregulations) and as such must comply with strict environmental regulations. Conse-quently, they are regularly inspected by the regional offices of the Ministries of Ecology, Energy, Housing and Regional Equality (DREAL). Guerlain's industrial activities give off COD (COD after processing in Orphin = 117.72 kg; COD afterprocessing in Chartres = 47.95 kg). Moreover, our two plants have been awardedISO 14001 certification, which helps us to control our environmental impact and commit to a process of continuous improvement.

PREVENTION,RECYCLING AND WASTE DISPOSAL MEASURES

Guerlain La Ruche 866 277 860

Guerlain Orphin 427 143 426

In our four sites in France, there are over 30 different waste sorting options (paper,cardboard, soft plastic, hard plastic, PE, PS, clear glass, soiled glass, batteries, etc.)enabling us to recycle our waste. Tester bottles and obsolete products are also recy-cled. In 2009, along with other companies in the LVMH Group, Guerlain participatedin the construction of a deconditioning, sorting, recycling and re-use platform calledCEDRE; 95% of perfume bottles are recycled via this platform. Since 2011, we havebeen offering our Paris clients the option to bring in their used bottles and pots; wethen recycle them and give them a new lease of life by sending them to CEDRE.At Guerlain, we have made progress in how we develop our products i.e. by limitingtheir environmental impact at each stage of their lifecycle - from the design stage tothe end of their life.

With a view to continuous improvement, each new development is scored using anEPI (Environmental Performance Index calculated using Edibox software, managedby the LVMH Group).

In 2015, our CEO gave us a clear goal: 100% of our products must be designedwith the environment in mind by 2020. The Head of Operations and the Head ofMarketing and Communication are the sponsors of the initiative.We have set up a supervisory body to support this ambitious initiative; the SustainableInnovation Committee meets every three months and helps us track the progress ofour projects and progress in terms of reaching this goal.We are continuing to give a second lease of life to our old advertising materials bytransforming posters (bus shelter posters) into little notebooks. This is an environmen-tally-friendly project as it gives new life to something we would have thrown away; itis also a social project, as the notebooks are made by people living with disabilities,and a societal project as well, as all proceeds from the sale of the notebooks aredonated to the Fonds de Soutien Guerlain and used to support a range of causes.The notebooks are sold in our store at 68, avenue des Champs Elysées and online.

ADDRESSING NOISE POLLUTION ANDALL OTHER FORMS OF POLLUTION RELATED TO AN ACTIVITY

Our two plants are located away from residential areas to protect residents from anyinconveniences.Furthermore, all Guerlain's Paris stores only receive deliveries at night made by anelectric lorry, for the greater comfort of residents and to contribute to better air qualityin Paris.

WATER CONSUMPTION AND WATER SUPPLY IN RELATION TO LOCAL CONSTRAINTS

Our water use decreased to 48,617 m3 of water in 2016, compared to 51,635 m3

of water in 2015 and 45,000 m3 in 2014).To save water, we regularly implement ad hoc measures such as installing pressure-reducing valves and back-office detectors; in our plants, we have implemented a sim-plified washing process and we catch rain water to be re-used in the La Ruchebathrooms. Our two plants are located outside water stress zones.The increase in water consumption in 2015 was due to greater consumption at ournew La Ruche site, which encountered technical difficulties during its start-up phase.Corrective actions were implemented in 2016 to address this problem. Finally, as partof social initiatives and in order to secure the water supply for a community in thesouth of India, where Guerlain has a sustainable vetiver supply chain, we are studyingthe viability of an irrigation project.

CONSUMPTION OF RAW MATERIALS AND MEASURES TAKEN TO IMPROVE THEIR EFFICIENCY IN TERMS OF USE.

Raw materials are a source of inspiration and innovation for Guerlain. Protecting bio-diversity and fair consumption of these materials affect the longevity and quality ofour creations and know-how; thus, the honey of The black bee of Ushant Island - anendangered species, which our partnership helps to save - is now included in ouriconic “Abeille Royale” range of products.

Moreover, in the LVHM Group's R&D department - whose HEQ-certified buildingHélios was inaugurated in 2013 - researchers are looking for the best raw materialsby anticipating new regulations while we recommend the right amount.

ENERGY CONSUMPTION; MEASURES TAKEN TO IMPROVE ENERGY EFFICIENCY AND THE USE OF RENEWABLE ENERGY

In France, electricity consumption went up to 9,957 MWH in 2016 (compared to10,744 MWH in 2015 and 8,331 MWH in 2014). Total energy consumption in2016 was 16,976 MWH.

Recycled waste (T) and energyfrom waste

Hazardous waste

of total (T)

Total waste (T)

- 52 -

3 - INFORMATION ABOUT SOCIAL COMMITMENTS THAT PROMOTE SUSTAINABLE DEVELOPMENT

IN TERMS OF EMPLOYMENT AND REGIONAL DEVELOPMENT

At Guerlain, we are very proud of the 'Made in France' label: all our products aremade in Orphin and Chartres.

LOCAL COMMUNITIES AND RESIDENTS

We have not had a negative impact thanks to locating our plants in business zones.

DIALOGUE CONDITIONSWITH THESE INDIVIDUALS AND ORGANISATIONS

A responsible advertising agency supports our external communications. Our brochure summarising eight years of actions is given to each employee and is available in all stores for interested customers.

During breakfasts and evening events such as "The 68 Sustainable Inspirations", Guerlain shares and discusses issues surrounding sustainable development with experts and stakeholders.For the moment, there is no formal dialogue with other stakeholders, though thecreation of an ethics committee is planned for 2017.

PARTNERSHIP AND SPONSORSHIP ACTIONS

As a responsible company, it seemed obvious that Guerlain would make societalcommitment i.e. implementing actions that benefit others rather than ourselves.

In France, our assistance translates to financial support and team involvement. In 2015,we launched the “Journée Engagée” initiative in France: a day off from work offeredby Guerlain to its employees so they can volunteer in an environmental or social initiative related to associations supported by Guerlain. In 2016, over 150 employeesparticipated in the day.

The associations which we support:

For 13 years, Guerlain has supported Belle&Bien which offers free beauty workshopsin hospitals for women with cancer to help them regain confidence and self-esteem.As a member of the board of directors since the very beginning, our support translatesthrough financial support, product donations and publicity for the association bothinternally and among our customers. Furthermore, we are proud that 200 employeeshave participated in the Odyssea race with Belle & Bien in the past 3 years.

Movember is an international charity, which collects donations to fight men’s healthissues. In 2016, as in 2015, Guerlain was the top contributor to Movember Francewith our team “La Moustache de Messieurs” consisting of employees and lead byThierry Wasser, Guerlain’s Perfumer. This year, Guerlain also invited our customersto enjoy a barber treatment in our electric “Barber Truck”, all of whose proceedswere donated to Movember France. Several internal operations were organised forthe teams throughout November.

For the third edition of our partnership with Restos du Cœur, 150 Guerlain employeesoffered beauty breaks for the beneficiaries of Restos in locations in Paris, Chartres,Rambouillet, Strasbourg and Lyon in honour of Mother’s Day. In total, more than 800women enjoyed a moment of well-being offered by our make-up artists for the day.

Furthermore, other events are offered with Restos: for the Story competition launchedby Guerlain, all royalties will be donated to the Restos du Coeur to fund its workshopto tackle illiteracy. As soon as we have anything to donate - laptops at the end oftheir lease or wedding dresses used in advertisements - we like to give it to the Restos.

And finally, since 2015, we have decided to go further to protect bees, the historicsymbol of Guerlain, which are key to biodiversity. Guerlain has decided to accom-pany the OFA (French Apidology Observatory) in its goal of training 30,000 newbeekeepers in Europe and creating 10 million new bee colonies by 2025. We provide financial support which has helped train 2 beekeepers in 2015 and we highlight the association every chance we get.

INTEGRATING SOCIAL AND ENVIRONMENTAL ISSUES IN THE PROCUREMENT POLICY

For several years now, our service providers and suppliers have been aware of oursustainable development approach: corporate responsibility criteria have been inclu-ded in our invitations to tender and are key decision-making criteria. In order to furtherand formalise our commitment, we sent over 600 suppliers our "Responsible Procurement Charter" drafted by the LVMH Group's Perfumes & Cosmetics Branchin 2014.Moreover, 38 environmental audits were carried out in 2016, compared with 9 theprevious year.

All suppliers must complete a self-evaluation form in order to obtain a score. An analysis was conducted by the Procurement coordination unit of the Perfumes & Cosmetics branch to compare scores from suppliers in the same family, to define thebest in class in each category, and to define individual action plans to ensure continued improvement. Compared to 2015, all suppliers have improved their score,with glass makers up 7 points from 2015. Metal & Plastic suppliers as well as card-board suppliers are up 4 points from 2015.

THE EXEMPLARY NATURE OF THE REPORT

The aim of this format is to facilitate the use and handling of the report in order to ensure pleasure

of use, functionality and a rational use of resources. For this edition, the Curious Matter paper used

for the cover uses an innovative starch-based technique to create a unique texture. The Cocoon Silk

Mat paper used for the internal pages is 100% recycled. This paper is also FSC certified in order

to ensure that the forest the wood was taken from is properly managed. We would like to thank all

the individuals who made time to participate in the “Regards Croisés” joint interviews. We would

like to thank the Guerlain team working at 68, Champs-Elysées for their warm welcome. We would

also like to thank our partners who designed and drafted this report: Development and editorial:

Cécile Lochard, Citizen Luxury Agency - Design & Production: Julie Chazelle - Photographs: Arnaud

Joron et DR Guerlain - Printing: Handiprint - a disability-friendly company.