History

Although the history of the LVMH group began in 1987 with the merger of Moët Hennessy and Louis Vuitton, the roots of the Group actually stretch back much further, to eighteenth-century Champagne, when a man named Claude Moët decided to build on the work of Dom Pérignon, a contemporary of Louis XIV; and to nineteenth-century Paris, famous for its imperial celebrations, where Louis Vuitton, a craftsman trunk-maker, invented modern luggage. Today, the LVMH group is the world’s leading luxury goods company, the result of successive alliances among companies that, from generation to generation, have successfully combined traditions of excellence and creative passion with a cosmopolitan flair and a spirit of conquest. These companies now form a powerful, global Group in which the historic companies share their expertise with the newer brands, and continue to cultivate the art of growing while transcending time, without losing their soul or their image of distinction.

From the 14th century to the present

Financial highlights

Key consolidated data

(a)  See the consolidated cash flow statement in the consolidated financial statements for the definition of “Operating free cash flow”.

(b)  Including minority interests.

(c)   Excluding “Lease liabilities” and “Purchase commitments for minority interests’ shares” included in “Other non-current liabilities”.

Information by business group

(a)  On a constant consolidation scope and currency basis. The net impact of exchange rate fluctuations on Group revenue was -4% and the net impact of changes in the scope of consolidation was negligible. The principles used to determine the net impact of exchange rate fluctuations on the revenue of entities reporting in foreign currencies and the net impact of changes in the scope of consolidation are described on page 39.

Information by geographic region

Data per share

(a)  For fiscal year 2023, amount proposed at the Shareholders’ Meeting of April 18, 2024.

(b)  Gross amount paid for fiscal year, excluding the impact of the tax regulations applicable to the recipient.

Executive and supervisory bodies; Statutory Auditors

(a)  Antonio Belloni will carry out these terms of office and functions until April 18, 2024.

(b)  Renewal of term of office as Director proposed at the Shareholders’ Meeting on April 18, 2024.

(c)   Until the close of the Shareholders’ Meeting of April 18, 2024.

(d)  Independent Director.

(e)  Proposed changes to this committee to be made by decision of the Board of Directors following the Shareholders’ Meeting of April 18, 2024.

Simplified organizational chart of the Group as of December 31, 2023

The objective of this chart is to present the direct and/or indirect control structure of brands and trade names by the Group’s main holding companies. It does not provide a complete presentation of all Group shareholdings.

■ Holding companies   ■ Brands and trade names

The LVMH group was formed from the merger of Moët Hennessy and Louis Vuitton in 1987. Bernard Arnault became the leading shareholder and Chairman and Chief Executive Officer in 1989, with the ambition of making LVMH the world leader in luxury.

Today, the LVMH group has built its leading position through a unique portfolio of 75 exceptional Maisons, operating in six business segments. Each of them creates products that combine high-level expertise with a strong heritage, drawing their momentum from a spirit of innovation and openness to the world.

The Group helps its Maisons grow over the long term, based on respect for their specific strengths and individuality, underpinned by common values and a shared business model. LVMH provides them with all of the resources they need to grow in terms of designing, manufacturing and selectively retailing their products and services.

LVMH is a committed group. In addition to being a responsible corporate citizen which conducts its business in the most exemplary way, the Group has decided, in conjunction with its Maisons, to implement a number of initiatives not directly related to their business activities in support of society, the environment and culture. These longstanding commitments contribute to a long-term vision and provide a powerful response to the role a group like LVMH should play within society.

1.     Business group overview

LVMH is the only group that operates simultaneously, through its Maisons, in all the following major luxury sectors:

Wines and Spirits: Based in Champagne, Bordeaux and other renowned wine-growing regions, the LVMH group’s Maisons – some of which are hundreds of years old – all have their own unique character, backed by a shared culture of excellence. The activities of LVMH in Wines and Spirits are divided between the Champagne and Wines segment and the Cognac and Spirits segment. This business group focuses on growth in high-end market segments through a powerful, agile international distribution network. LVMH is the world leader in cognac, with Hennessy, and in champagne, with an outstanding portfolio of brands and complementary product ranges. It also produces high-end still and sparkling wines from around the world.

Fashion and Leather Goods: LVMH includes established Maisons with their own unique heritage and more recent brands. Whether they are part of Haute Couture or luxury fashion, LVMH’s Maisons have based their success on the quality, authenticity and originality of their designs, created by talented, renowned designers. All the Group’s Maisons are focused on the creativity of their collections, building on their iconic, timeless lines, achieving excellence in their retail networks and strengthening their online presence, while maintaining their identity.

Perfumes and Cosmetics: LVMH is a key player in the perfume, makeup and skincare sector, with a portfolio of world-famous established names as well as younger brands with a promising future. Its Perfumes and Cosmetics business group boasts exceptional momentum, driven by growing and securing the long-term future of its flagship lines as well as boldly developing new products. The Maisons cultivate their individuality, a differentiating factor for their followers in a highly competitive global market. At the same time, they are all driven by the same values: the pursuit of excellence, creativity, innovation and complete control of their brand image.

Watches and Jewelry: The Maisons in Watches and Jewelry – LVMH’s youngest business group – operate in the high-end watchmaking, jewelry and high jewelry sectors. LVMH’s brands in this business group are positioned to complement each other’s strengths. These Maisons rely on their outstanding expertise, creativity and innovation to surprise their customers all over the world and respond to their aspirations.

Selective Retailing: The Group’s Selective Retailing brands all pursue a single objective: transforming shopping into a unique experience. From elegant interior design to a specialist selection of products and services, combined with personalized relationships, customers are the focus of their attention on a daily basis. Operating all over the world, the Maisons are active in two spheres: selective retail and travel retail (selling luxury goods to international travelers).

Other activities: The Maisons in this business group are all ambassadors for culture and an art de vivre that is emblematic of LVMH. This approach is taken by Maisons including the Les Echos group, which – in addition to Les Echos, the leading daily financial newspaper in France – owns several business and arts titles; the Royal Van Lent shipyard, which builds and markets custom-designed yachts under the prestigious Feadship name; Belmond, which has a large portfolio of hotels, trains, cruise lines and safari lodges that combine heritage, expertise, authenticity and impeccable service; and the exceptional Cheval Blanc hotels, which operate worldwide.

Key figures (as of December 31, 2023)

Geographic presence (as of December 31, 2023)

2.     Group values

Driven by the engagement of LVMH and its Maisons to craft dreams, our Group puts heart and soul into everything it does. Our core identity is based on the fundamental values that run through it and are shared by all of us.

Being creative and innovative: Creativity and innovation are part of LVMH’s DNA; throughout the years, they have been the keys to the Maisons’ success and the basis of their solid reputations. These fundamental values of creativity and innovation are pursued in tandem by the Group’s Maisons as they focus on achieving the ideal balance between continually renewing their offer while resolutely looking to the future, always respecting their unique heritage.

Delivering excellence: Within the Group, quality can never be compromised. Because the Maisons embody everything that is most noble and accomplished in the world of fine craftsmanship, they pay extremely close attention to detail and strive for perfection: from products to services, it is in this quest for excellence that the Group differentiates itself.

Cultivating an entrepreneurial spirit: The Group’s agile, decentralized structure fosters efficiency and responsiveness. It encourages individuals to take initiative by giving everyone a significant level of responsibility. The entrepreneurial spirit promoted by the Group makes risk-taking easier and encourages perseverance. It requires a pragmatic approach and the ability to motivate staff to achieve ambitious goals.

Taking action to make a difference: Every action taken by the Group and its employees reflects our commitment to ethics, corporate social responsibility and respect for the environment. These commitments drive our Maisons’ performance and ensure their longevity. Firmly convinced that truly desirable products can only come from sustainable businesses, we are committed to ensuring that our products and the way they are made have a positive impact on our entire ecosystem and the places we operate, and that our Group is actively working to build a better future.

3.     Operating model

LVMH has implemented a unique operating model based on six pillars, which contributes to the Group’s long-term success by combining profitable growth, sustainability and a commitment to excellence:

Decentralized organization: The structure and operating principles adopted by LVMH ensure that Maisons are both autonomous and responsive. As a result, they are able to build close relationships with their customers, make fast, effective and appropriate decisions, and motivate Group employees for the long term by encouraging them to take an entrepreneurial approach.

Internal growth: The LVMH group prioritizes internal growth and is committed to developing its Maisons, and encouraging and protecting their creativity. Staff play a critical role in a model of this kind, so supporting them in their career and encouraging them to exceed their own expectations is essential.

Vertical integration: Designed to cultivate excellence both up- and downstream, vertical integration ensures control of every stage of the value chain, from sourcing to production facilities and Selective Retailing. It also guarantees strict control of each Maison’s brand image.

Creating synergies: Resources are pooled at Group level to create intelligent synergies while respecting each Maison’s independence and autonomy. The combined strength of the LVMH group is leveraged to benefit each of its Maisons.

Securing expertise for the long term: The Maisons that make up the Group cultivate a long-term vision. To preserve their distinctive identities and excellence, LVMH and its Maisons have developed a range of initiatives to pass down skills and expertise, and promote craft trades and design professions among younger generations.

Balance across business segments and geographies: The LVMH group has the resources to sustain regular growth thanks to the balance across its business activities and a well-distributed geographic footprint. This balance means that the Group is well-positioned to withstand the impact of shifting economic factors.

1.     Wines and Spirits

In 2023, revenue for the Wines and Spirits business group represented 8% of the LVMH group’s total revenue. Champagne and wines made up 52% of this revenue, while cognac and spirits accounted for 48%.

1.1         Champagne and Wines

1.1.1       Champagne and Wine brands

LVMH produces and sells a very broad range of high-quality champagnes. Beyond the Champagne region, the Group develops and distributes a range of high-end still and sparkling wines produced in nine countries spanning four continents: France, Spain, the United States (California), Argentina, Brazil, Australia, New Zealand, India and China.

Moët & Chandon was founded in 1743 by Claude Moët and elevated to international renown by his descendant Jean-Rémy Moët, who dreamed of “sharing the effervescence of champagne with the world”. From royal court to red carpet and from Studio 54 to grand slams, Moët & Chandon brings people together to share thrilling and extraordinary moments. With the region’s largest and most diversified vineyards, the Maison offers a universal and versatile portfolio of champagnes to suit every occasion and palette. Easy to love, each creation – from the iconic Moët Impérial to the exquisite Grand Vintage collection, from the innovative Moët Ice Impérial to the smooth Nectar Impérial, and the multifaceted Collection Impériale, which represents a new expression of the Maison’s “Haute Œnologie” (high winemaking) expertise – amazes with a broad range of flavors and aromas capturing the full extent of its terroir. Through its long-term sustainable development program, Natura Nostra, Moët & Chandon is working to protect biodiversity in the region. The Maison has also been supporting philanthropic initiatives through Toast for a Cause since 2009. For nearly three centuries, Moët & Chandon has been the champagne of choice to mark key events in history and personal celebrations, adding a spark of effervescence to each toast.

Dom Pérignon is driven by a creative ambition – a relentless quest to achieve perfect harmony. This vision has guided Dom Pérignon from the outset: in 1668, Dom Pierre Pérignon, the 17th-century Benedictine monk, made it his ambition to produce “the best wine in the world”. Today, Vincent Chaperon, the Maison’s Cellar Master, brings that same creative ambition to each vintage champagne he crafts, fully embracing the three dimensions having built Dom Pérignon’s renown: the year and the character of its seasons; the successive windows of expression, called Plénitudes, requiring long maturation on lees; and color, through the hues captured in white and rosé styles.

Founded in 1772, Veuve Clicquot, has been spreading its joyful, sun-kissed “Culture Solaire” all over the world for more than 250 years, always driven by daring, creativity and innovation. When she took over the management of the Maison in 1805, Madame Clicquot became one of the first businesswomen of modern times. Staying true to her motto, “Only one quality: the finest”, this great lady changed the face of Champagne through a series of creative breakthroughs, including the first vintage champagne, the first riddling table, and the first blended rosé champagne, all still holding sway today. As part of this quest for excellence, the Maison continues to apply its unique expertise grounded in a love for Pinot Noir and a deep understanding of the art of aging. Drawing on more than two centuries of know-how, Veuve Clicquot’s constancy of style has given rise to iconic cuvées like Brut Yellow Label as well as the prestige cuvée La Grande Dame, the epitome of the Maison’s wine-making prowess. The gold-yellow color used on its labels since 1877 is also that of the rising sun, evoking at once Veuve Clicquot’s unique heritage, its radiant vision and its optimistic mindset. Paying tribute to its history and the extraordinary destiny of an exceptional woman, in 1972 the Maison established what is known today as the Bold Woman Award, taking shape as an impactful program offering tangible support throughout the year to women entrepreneurs around the world.

Ruinart, founded in 1729, is the oldest of the champagne houses. Each of its cuvées expresses the distinctive personality of Chardonnay, the Maison’s dominant grape variety. Born in 1843 out of the dream of one man with a vision, Krug stands out for the indisputable excellence of its expertise and its unending quest to deliver poetic sensory experiences. Joseph Krug dreamed of offering the most generous expression of champagne each and every year, whatever the vagaries of the climate. Krug Grande Cuvée is the embodiment of this raison d’être: the Krug family has created a new edition of this cuvée every year going back six generations. Mercier, founded in 1858, offers the simplest of tasting experiences. A reflection of its era, it adapts traditional ways of tasting, putting the focus on spontaneity over ceremony, while remaining faithful to the vision of quality espoused by its founder Eugène Mercier.

Armand de Brignac is the latest champagne house to join the Group’s portfolio, bringing unrivaled energy and innovation to the sector since 2006. Also known under the name Ace of Spades and reflecting the unique vision of Shawn “Jay-Z” Carter, Armand de Brignac upends conventions and encapsulates contemporary luxury, all while honoring the traditions of Champagne’s famed terroirs. Jointly owned by LVMH and Shawn “Jay-Z” Carter since 2021, the Maison is continuing to expand its reach by reaffirming its resolutely upscale positioning.

LVMH’s portfolio of wines from outside the Champagne region includes a number of prestigious appellations in France, Spain, America, Asia and Oceania.

LVMH owns the following wineries outside of France: Cloudy Bay in New Zealand; the iconic Colgin Cellars (founded by Ann Colgin 30 years ago and acquired by LVMH in 2017), Joseph Phelps (one of the most acclaimed wine estates in Napa Valley and acquired by LVMH in 2022) and Newton Vineyard in California; Terrazas de los Andes and Cheval des Andes in Argentina; Ao Yun in China; and Bodega Numanthia in Spain. The Cape Mentelle winery in Australia was sold in 2023. The Chandon brand (created in 1959 in Argentina) includes the Moët Hennessy sparkling wines developed in California, Argentina, Brazil, Australia, India and China by Chandon Estates.

In France, since 1999 LVMH has owned Château d’Yquem, the most celebrated Sauternes and the only Premier Cru Supérieur in the 1855 classification. Since 2009, the Group has held a 50% stake in the prestigious winery Château Cheval Blanc, Premier Grand Cru Classé A Saint-Émilion, accounted for using the equity method. In 2014, LVMH acquired Domaine du Clos des Lambrays, one of the oldest and most prestigious Burgundy vineyards, and Grand Cru of the Côte de Nuits. Château Galoupet (which has held the acclaimed Cru Classé des Côtes-de-Provence designation since 1955) and Château d’Esclans (the US market leader in Provence rosé wines) also joined the portfolio of wines in 2019. Lastly, in 2023 LVMH acquired Château Minuty, renowned worldwide for its rosé wine, which has also been a Cru Classé des Côtes-de-Provence since 1955, and is located in Gassin on the peninsula of Saint-Tropez.

1.1.2       Competitive position

In 2023, shipments of LVMH champagne brands were down 6.8% from 2022, while shipments from the Champagne region decreased by 8.2% (source: CIVC). LVMH’s market share thus rose to 22.9% of the total shipments, compared to 22.5% in 2022.

Champagne shipments, for the whole Champagne region, break down as follows:

(Source: Comité Interprofessionnel du Vin de Champagne – CIVC).

The geographic breakdown of LVMH champagne sales is as follows (as a percentage of total sales expressed in number of bottles):

1.1.3       The champagne production method

The Champagne appellation covers a defined geographic area classified A.O.C. (Appellation d’Origine Contrôlée), which covers the 34,000 hectares that can be legally used for production. There are essentially three main types of grape varietals used in the production of champagne: Chardonnay, Pinot Noir and Meunier.

In addition to its effervescence, the primary characteristic of champagne is that it is the result of blending wines from different years and/or different varieties and land plots. The best brands are distinguished by their masterful blend and consistent quality, achieved thanks to the talent of their wine experts.

Weather conditions significantly influence the grape harvest from one year to the next. The production of champagne also requires aging in cellars for two years or more for premium, vintage and/or prestige cuvées. To protect themselves against crop variations and manage fluctuations in demand, but also to ensure consistent quality year after year, LVMH’s champagne houses regularly adjust the quantities available for sale and keep reserve wines in stock, mainly in storage tanks. As maturation times vary, the Group constantly maintains significant champagne inventories in its cellars. As of year-end 2023, 241 million bottles were stored in LVMH’s cellars in Champagne, equivalent to about 3 years of sales; in addition to this bottled inventory, the Group has wines still in storage tanks waiting to be drawn (equivalent to 100 million bottles), including the quality reserve withheld from sale in accordance with applicable industry rules (equivalent to 10 million bottles).

The making of champagne involves extremely rigorous processes in order to ensure absolute consistency in quality from year to year. Moët et Chandon fully operates its Mont Aigu site, with its vat room, bottling line, cellars, disgorging area and packaging workshop supplementing the production capacity of Moët & Chandon’s historic facilities in Épernay, which are undergoing renovation work. The historic production sites of Veuve Clicquot, Ruinart and Krug are in Reims. Veuve Clicquot continued construction of its new Comète production facility located in Saint-Léonard, near Reims, while Krug finalized construction of a new winemaking site in Ambonnay.

In order to drive innovation and develop expertise in its production processes, the Group inaugurated its research and development facility in Oiry in 2021, which is open to all its Maisons.

1.1.4       Grape supply sources and subcontracting

The Group owns 1,650 hectares under production, which provide 21% of its annual needs. In addition, the Group’s Maisons purchase grapes and wines from winegrowers and cooperatives on the basis of multi-year agreements; the largest supplier of grapes and wines represents less than 10% of total supplies for the Group’s Maisons.

LVMH’s champagne houses, along with their partner grape suppliers, are steadily building up their use of sustainable winegrowing practices for Viticulture Durable en Champagne certification.

Since 1996, industry agreements have established a qualitative reserve in order to cope with variable harvests. The surplus inventories stockpiled this way can be bottled and sold in years with a poor harvest. Each year, the INAO (the French governing body for appellations of origin) sets the maximum harvest that can be made into wine and sold under the Champagne appellation, as well as the ceiling known as the PLC (plafond limite de classement), the quantity by which the appellation’s marketable yield can be exceeded. For the 2023 harvest, the marketable yield for the Champagne appellation was set at 11,400 kg/ha. The maximum level of the stockpiled reserve was revised at the time of the 2023 harvest and is now set at 10,000 kg/ha (up from 8,000 kg/ha previously).

The price paid for each kilogram of grapes in the 2023 harvest ranged between 6.25 euros and 7.35 euros depending on the vineyard, an average increase of 7.5% compared to the 2022 harvest. Premiums may be paid on top of the base price in line with the special conditions agreed under each partnership, in particular the additional work required for Viticulture Durable en Champagne certification.

Dry materials (bottles, corks, etc.) and all other components of containers and packaging are purchased from non-Group suppliers.

In 2023, the champagne houses also used subcontractors for about 42 million euros of services, notably pressing, co-packing, handling and storing bottles.

1.2         Cognac and Spirits

1.2.1       Cognac and Spirits brands

LVMH holds the most powerful brand in the cognac sector with Hennessy. The company was founded by Richard Hennessy in 1765. Historically, the brand was most prominent in the Irish and British markets, but Hennessy rapidly expanded its presence in Asia, which represented nearly 30% of its shipments as early as 1925. The brand became the world cognac leader in 1890. Hennessy created X.O (Extra Old) in 1870, and since then it has developed a range of high-end cognac for which it is highly renowned.

In 2005, LVMH acquired The Glenmorangie Company, which owns the single malt whisky brands Glenmorangie, distilled in northeastern Scotland in Europe’s tallest stills, and Ardbeg, distilled on the Isle of Islay in the southern Hebrides.

Since 2007, LVMH has owned the luxury vodka Belvedere, founded in 1993 in order to bring a luxury vodka for connoisseurs to the American market. It is made at the Polmos Żyrardów distillery in Poland, which was founded in 1910.

Since 2017, Volcán de mi Tierra tequila, which was created in collaboration with Mexican entrepreneur Juan Gallardo Thurlow, has been primarily available in the United States and Mexico. Volcán de mi Tierra is accounted for using the equity method.

Acquired in 2017, Woodinville Whiskey Company – which was established in 2010 by Orlin Sorensen and Brett Carlile and is now the largest craft whiskey distillery in Washington State – finished work on a major production capacity expansion program in 2022.

In 2020, the Group expanded its portfolio of spirits with the launch of Eminente, an exceptional Cuban rum aimed primarily at the European market.

1.2.2       Competitive position

In 2023, the volumes shipped from the Cognac region were down 22.3% from 2022 (source: BNIC), while volumes of Hennessy shipped decreased by 20.9%. Hennessy’s market share of volumes shipped from the Cognac region improved by 0.9 points to 49% in 2023 from 48% in 2022. The company is the world leader in cognac and premium international spirits, with particularly strong positions in the United States, China and other important markets for cognac (South Africa, Nigeria, the United Kingdom, etc.).

The leading geographic markets for cognac, both for the industry and for LVMH, on the basis of shipments in number of bottles, excluding bulk, are as follows:

(Source: Bureau National Interprofessionnel du Cognac – BNIC).

The geographic breakdown of LVMH cognac sales, as a percentage of total sales expressed in number of bottles, is as follows:

1.2.3       The cognac production method

The Cognac region is located around the Charente basin. The vineyard, which currently extends over more than 83,000 hectares, consists almost exclusively of the Ugni Blanc varietal which yields a wine that produces the best eaux-de-vie. This region is divided into six vineyards, each of which has its own qualities: Grande Champagne, Petite Champagne, Borderies, Fins Bois, Bons Bois and Bois Ordinaires. Hennessy selects its eaux-de-vie essentially from the first four vineyards, where the quality of the wines is more suitable for the preparation of its cognacs.

Charentaise distillation is unique because it takes place in two stages: a first distillation (première chauffe) and a second distillation (seconde chauffe). The eaux-de-vie obtained are aged in oak barrels. Cognac results from the gradual blending of eaux-de-vie selected on the basis of vintage, origin and age.

Hennessy – which carries out all of its production in Cognac – inaugurated a state-of-the-art bottling and packaging plant named Pont Neuf in 2017. With the inauguration of a second production line at the Pont Neuf plant in 2021, the Maison’s production capacity has been raised to 10 million cases per year. The design of this 26,000-square-meter facility reduces its environmental footprint and optimizes working conditions to an extent never achieved previously.

1.2.4       Supply sources for wines and cognac eaux-de-vie and subcontracting

Most of the cognac eaux-de-vie that Hennessy needs for its production are purchased from a network of approximately 1,600 independent producers, a collaboration which enables the company to ensure that exceptional quality is preserved as part of an ambitious sustainable winegrowing policy. Hennessy directly operates about 180 hectares, providing for less than 1% of its eaux-de-vie needs.

Purchase prices for eaux-de-vie are agreed on between the company and each producer based on supply and demand and the quality of the eaux-de-vie. Following an increase of 3.5% in 2021, and then 6% in 2022, Hennessy decided not to raise its purchase prices for eaux-de-vie in 2023.

With an optimized inventory of eaux-de-vie, the Maison can manage the impact of price changes by adjusting its purchases from year to year under the contracts with its partners. Hennessy continues to control its purchase commitments and diversify its partnerships to prepare for its future growth across the various quality grades.

Like the Champagne and Wine businesses, Hennessy obtains its dry materials (bottles, corks and other packaging) from non-Group suppliers. The barrels and casks used to age the cognac are also obtained from non-Group suppliers. Hennessy makes only very limited use of subcontractors for its core business: aging, blending and bottling eaux-de-vie.

1.2.5       The vodka production method, supply sources and subcontracting

Belvedere vodka is made using only two ingredients – Polish rye and pure water – and is produced at one of Poland’s oldest distilleries, which has been making vodka since 1910. Belvedere contains no additives, and is produced according to Polish laws governing vodka production, which stipulate that nothing may be added. Belvedere, an expert in rye distilling, draws upon more than 600 years of Polish tradition to produce extraordinary vodka with a distinct flavor and character. Belvedere has three main and long-standing raw eaux-de-vie suppliers, each accounting for around 30% of the Maison’s supplies. Belvedere began transitioning its star product, Belvedere Pure, to organic production in 2023, with the aim of achieving full conversion by 2025.

1.2.6       The Scotch whisky production method

As required by law to receive the Scotch whisky designation, the Glenmorangie and Ardbeg single malt whiskies are produced in Scotland from water and malted barley, fermented using yeast, and distilled and matured in Scotland for at least three years, in oak casks whose capacity may not exceed 700 liters. As single malt whiskies, they are the product of only one distillery. Glenmorangie’s stills are the tallest in Scotland at 5.14 meters and allow only the lightest vapors to ascend and condense. The spirit still at Ardbeg has a unique spirit purifier. Glenmorangie whiskies are normally matured for a minimum of 10 years in very high-quality casks, while Ardbeg whiskies can be sold earlier as their uniquely peaty flavor has already developed.

1.3         Wines and Spirits distribution

Moët Hennessy has a powerful and agile global distribution network, thanks to which the Wines and Spirits business group continues to expand the presence of its portfolio of brands in a balanced manner across all geographies. Part of this network consists of joint ventures with the Diageo spirits group⁽¹⁾, governed by agreements that have been in place since 1987, which help strengthen the positions of the two groups, improve distribution control, enhance customer service and increase profitability by sharing distribution costs. This mainly involves Japan, China and France. In 2023, 26% of champagne and cognac sales were made through this channel.

1.4         Highlights of 2023 and outlook for 2024

Highlights

Following an exceptional year in 2022, 2023 was marked by contrasting trends across different markets. Consumer demand waned in the United States and China, while Europe showed remarkable resilience, and Asia-Pacific, Latin America and the Caribbean continued to see strong growth, particularly in private sales and travel retail. Against this backdrop, Moët Hennessy pursued its value strategy, enhancing the appeal of its brands and diversifying its portfolio through product innovation and the integration of Château Minuty, confirming its leadership in the Provence rosé market. The desire to forge closer, more direct connections with end-consumers led to the opening of new points of sale, including the first Hennessy store in mainland China and the Cravan cocktail bar in the heart of Paris. Stepping up its commitment to sustainability, Moët Hennessy presented its Maisons’ sustainable farming practices at the ChangeNOW summit, the world’s largest event for sharing solutions for protecting the planet.

While maintaining a firm pricing policy as part of their value strategy, the champagne houses continued to achieve high sales volumes, achieving a record market share of Champagne-appellation shipments. Moët & Chandon benefited from the successful launch of its Grand Vintage 2015 in the first half of the year, celebrating the Maison’s 280 years of expertise and craftsmanship; in October, it unveiled Collection Impériale Création No. 1, the first cuvée of its “Haute Œnologie” (high winemaking) vision, inspiring a collaboration with American artist Daniel Arsham. Dom Pérignon had a record year, with the release of two new vintages and several creative collaborations, while Veuve Clicquot turned in an exceptional performance, buoyed by the launch of La Grande Dame 2015, and offered unforgettable experiences including a tasting of bottles aged underwater in the Baltic Sea. The Maison also reaffirmed its commitment to sustainable luxury and women’s entrepreneurship through a collaboration with Stella McCartney. Krug saw significant growth, with new editions paired with its signature sources of inspiration: fine dining and music. Ruinart unveiled a major collaboration with artist Eva Jospin and launched Blanc Singulier, a new cuvée that highlights the impact of climate change. Armand de Brignac continued its integration into the Moët Hennessy portfolio of brands and expanded its sales into strategic markets, starting with Japan.

The still wine Maisons continued to consolidate their market presence, against a backdrop of normalizing demand in the United States following the post-pandemic surge. Château d’Esclans consolidated its leadership in Côtes-de-Provence wines, Château Galoupet obtained organic certification and Château Minuty joined the Moët Hennessy portfolio. Chandon saw a slight decrease in sales volumes in 2023, despite the success of its all-natural aperitif, Chandon Garden Spritz.

In the first part of the year, Hennessy experienced a significant slowdown in sales in the United States, although the situation gradually recovered at the end of the year. The Maison was also affected by the effects of the Covid pandemic on Chinese New Year celebrations at the beginning of the year. Despite this, it still managed to extend its global leadership in the spirits category. The brand stepped up its commitment to sustainability through initiatives such as the decarbonization of its Cognac distillery and the “Living Landscapes” program aimed at planting hedges in the Cognac region.

Revenue for Glenmorangie and Ardbeg whiskies was affected by market conditions in the United States and China, but substantially exceeded pre-Covid levels, thanks to strong performance in travel retail and in dynamic markets such as Japan. The two Maisons continued to focus on innovation, with Ardbeg introducing gift sets showcasing its legendary history. Belvedere vodka reaffirmed its value strategy with the launch of Belvedere 10, an exceptional vodka designed for the nightlife market. The Maison also obtained organic farming certification in 2023. Woodinville expanded its retail presence in the United States, where it is now available in 35 states. Volcán de mi Tierra continued to develop its ultra-premium expression, partnering with Formula 1 in Las Vegas. Cuban rum-maker Eminente opened a “Casa Eminente” pop-up location in Paris.

Outlook

In an environment that remains uncertain, especially in the United States and China, and with shifts in consumer behavior, the business group is approaching 2024 with caution and pragmatism. It will continue to draw on the strengths of its dynamic teams and solid foundations, including its balanced geographic coverage and diverse portfolio of prestigious brands. The Maisons will continue to enhance their desirability through powerful product-focused initiatives including Armand de Brignac’s launch of the Blanc de Noirs cuvée and Hennessy’s release of new bottles, as well as promotional initiatives including Veuve Clicquot’s partnership with the legendary Venice Simplon-Orient Express and a new creative collaboration for Dom Pérignon. Mindful of their rich heritage and environmental responsibility, they will continue to pursue their sustainability-focused roadmap, aimed at protecting biodiversity and reducing their carbon footprint. In the second half of the year, Moët Hennessy will welcome the world’s leading experts in soil microbiology and sustainable winegrowing to its second World Living Soils Forum, to be held in October in Arles (southern France), aimed at sparking dialogue and stepping up the pace of scientific progress in these fields. Excellence, authenticity, innovation and sustainability remain the guiding principles for the Maisons in the Wines and Spirits business group: core values that reflect their mission – “Crafting Experiences” – as well as Moët Hennessy’s vision of being the leader in luxury wines and spirits.

2.     Fashion and Leather Goods

In 2023, the Fashion and Leather Goods business group represented 49% of the total revenue of LVMH.

2.1         The brands of the Fashion and Leather Goods business group

In the luxury fashion and leather goods sector, LVMH holds a group of brands that are primarily French, but also include Italian, Spanish, British, German and American companies.

Since 1854, Louis Vuitton’s success has been built on the flawless execution of its trunk-making craftsmanship, its complete control over distribution and its exceptional creative freedom, a source of perpetual renewal and innovation. By ensuring the right balance between new designs and iconic leather goods lines, between constantly perfected unique artisanal expertise and the dynamics of fashion designed in perfect symbiosis with the brand universe, the Maison is committed to surprising its customers, and making its stores inspiring. For over 150 years, its product line has continuously expanded with new models – from luggage to handbags and more – and new materials, shapes and colors. Famous for its originality and the high quality of its creations, today Louis Vuitton is the world leader in luxury goods and offers a full range of products: fine and high-end leather goods, ready-to-wear for men and women, shoes and accessories, watches, jewelry, eyewear and, since 2017, a collection of women’s and men’s fragrances.

Christian Dior was founded in 1946. Ever since its first “New Look” show, the Maison has continued to assert its vision through elegant, structured and infinitely feminine collections, becoming synonymous around the world with French luxury. Christian Dior’s unique vision is conveyed today with bold inventiveness throughout the Maison’s entire range, from Haute Couture, leather goods and ready-to-wear to footwear and accessories for both men and women as well as Watches and Jewelry. Parfums Christian Dior is included in the Perfumes and Cosmetics business group.

Founded in Rome by Adele and Edoardo Fendi in 1925, Fendi initially seduced its clientele of elegant Italian women, before conquering the rest of the world. Fendi has been part of the Group since 2000. Particularly well-known for its skill and creativity in furs, the brand is also present in accessories – including the iconic Baguette bag and the timeless Peekaboo – as well as ready-to-wear and footwear for men and women.

Loewe, the Spanish Maison founded in 1846 and acquired by LVMH in 1996, originally specialized in very high-quality leather work. Today it operates in leather goods, ready-to-wear and footwear. Perfumes Loewe is part of the Perfumes and Cosmetics business group.

Marc Jacobs, created in New York in 1984, is named after its founder and has been part of LVMH since 1997. Through its collections of men’s and women’s ready-to-wear, leather goods and shoes, it aims to be the symbol of an irreverent urban fashion movement that is culturally driven but also socially engaged.

Celine, founded in 1945 by Céline Vipiana and owned by LVMH since 1996, offers women’s and men’s ready-to-wear, leather goods, shoes, accessories and women’s and men’s fragrances.

Kenzo, formed in 1970, joined the Group in 1993. Renowned for its lavish prints and vibrant colors, the Maison operates in the areas of ready-to-wear for men and women, fashion accessories, shoes and leather goods. Its perfume business is part of the Perfumes and Cosmetics business group.

Givenchy, founded in 1952 by Hubert de Givenchy and part of the Group since 1988, is rooted in a tradition of excellence in Haute Couture, and is also known for its collections of men’s and women’s ready-to-wear and its fashion accessories. Parfums Givenchy are included in the Perfumes and Cosmetics business group.

Emilio Pucci, an Italian brand founded in 1947, is a symbol of casual fashion in luxury ready-to-wear, a synonym of escape and refined leisure. Emilio Pucci joined LVMH in 2000.

Berluti, an artisan bootmaker established in 1895 and held by LVMH since 1993, designs and markets very high-quality men’s shoes, as well as a line of leather goods and ready-to-wear items for men.

Loro Piana – an Italian company founded in 1924 and held by LVMH since 2013 – creates exceptional products and fabrics, particularly from cashmere, of which it is the world’s foremost processor. The brand is famous for its dedication to quality and the noblest raw materials, its unrivaled standards in design and its expert craftsmanship.

Rimowa, founded in Cologne in 1898, is the first German brand to be owned by LVMH since 2016. Renowned for its prestigious luggage, its products feature an iconic design and reflect its constant quest for excellence.

2.2         Competitive position

In the Fashion and Leather Goods sector, the luxury market is highly fragmented, consisting of a handful of major international groups plus an array of smaller independent brands. LVMH’s brands are present all around the world, and it has established itself as one of the most international groups. All these groups compete in various product categories and geographic areas.

2.3         Design

Working with the best designers, while respecting the spirit of each brand, is a strategic priority: the creative directors promote the Maisons’ identities, and are the artisans of their creative excellence and their ability to reinvent themselves. As a means to continually renew this precious resource, LVMH has always been committed to supporting young designers and nurturing tomorrow’s talent, in particular through the LVMH Prize for Young Fashion Designers, which each year honors the work of an up-and-coming designer displaying exceptional talent and outstanding creativity.

LVMH believes that one of its essential assets is its ability to attract a large number of internationally recognized designers to its Maisons.

In 2023, Pharrell Williams became Creative Director of Menswear at Louis Vuitton. He succeeded Virgil Abloh, who had been the Maison’s Creative Director of Menswear from 2018 until his tragic passing in late 2021. At Givenchy, after three years helming both its men’s and women’s collections, Matthew M. Williams is stepping down as the Maison’s Creative Director. In 2021, Tomoaki Nagao, known as Nigo, was named Creative Director of Kenzo, taking over from Felipe Oliveira Baptista who had been at the helm since 2019, while Camille Miceli became the first female designer to lead Emilio Pucci and Kris Van Assche departed as Creative Director of Berluti. In 2020, Kim Jones succeeded Karl Lagerfeld to continue driving the success of the Rome-based fashion house alongside Silvia Fendi. Since 2018, Kim Jones has been Creative Director of Menswear at Christian Dior and Hedi Slimane has been Artistic, Creative and Image Director at Celine. Since 2016, Maria Grazia Chiuri has been Dior’s first female Creative Director of Womenswear. At Louis Vuitton, Nicolas Ghesquière has been creating designs for women’s collections in perfect symbiosis with the values and spirit of the brand since 2013. Jonathan Anderson has been Loewe’s Creative Director since 2013. Marc Jacobs continues to lead the design team at the brand he founded in 1984.

2.4         Distribution

Controlling the distribution of its products is a core strategic priority for LVMH, particularly in luxury Fashion and Leather Goods. This control allows the Group to benefit from distribution margins, and guarantees strict control of the brand image, sales reception and environment that the brands require. It also gives the Group closer contacts with its customers so that it can better anticipate their expectations, thereby offering them unique shopping experiences.

In order to meet these objectives, LVMH has the premier international network of exclusive boutiques under the banner of its Fashion and Leather Goods brands. This network included more than 2,200 stores as of December 31, 2023.

2.5         Supply sources and subcontracting

As of 2023, Louis Vuitton has twenty-eight leather goods workshops – nineteen in France, four in Spain, three in the United States and two in Italy – which manufacture most of the Maison’s leather goods. In addition to manufacturing and model making for leather goods, Louis Vuitton’s workshops in Italy handle all development and manufacturing processes for all types of footwear, as well as development for certain accessories (textiles, jewelry and eyewear). In addition to leather goods manufacturing, Louis Vuitton’s workshops in Spain also handle all leather goods accessories (belts and straps). Louis Vuitton uses external manufacturers only to supplement its manufacturing.

Louis Vuitton purchases its materials from suppliers located around the world, with whom the Maison has established sustainable partnership relationships. The supplier strategy implemented over the last few years has enabled the Maison to meet its requirements in terms of volume, quality and innovation while engaging its suppliers in a CSR approach. This strategy is the result of a policy of focusing on and supporting the best suppliers while limiting Louis Vuitton’s reliance on them. Accordingly, the leading supplier in both the leather and metal parts markets accounts for around 20% of Louis Vuitton’s leather supplies and metal parts, respectively.

Christian Dior’s production capacity and use of outsourcing vary very widely depending on the product. In leather goods, Christian Dior works with companies outside the Group to increase its production capacity and provide greater flexibility in its manufacturing processes. In ready-to-wear and jewelry, it purchases supplies primarily from non-Group businesses.

Fendi and Loewe have leather workshops in their countries of origin, and in Italy for Celine and Berluti, which cover only a portion of their production needs. Rimowa manufactures a large proportion of its products in Germany. Generally, the subcontracting used by the business group is diversified in terms of the number of subcontractors and is located primarily in the brand’s country of origin, France, Italy and Spain.

Loro Piana manages all stages of production of its ready-to-wear collections, from the sourcing of natural fibers to the delivery of finished products to stores. Loro Piana procures its unique materials (Baby Cashmere from northern China and Mongolia, vicuña from the Andes, and extra-fine Merino wool from Australia and New Zealand) through exclusive partnerships with suppliers all over the world. Its exquisite textiles and products are then manufactured in Italy.

Moreover, in order to safeguard and develop the Fashion and Leather Goods Maisons’ access to the high-quality raw materials and expertise they need, the LVMH Métiers d’Art business segment created in 2015 invests in, and provides long-term support to, its best suppliers. In leather, for example, LVMH has been involved with the Heng Long tannery in Singapore since 2011 and has been present in Italy since 2022. Founded in 1950, it is now a leading crocodilian leather tannery. In 2012, LVMH acquired Tanneries Roux, founded in 1803 and one of the last French tanneries specializing in calfskin. More recently, LVMH has invested in the production of metal parts, notably in Jade Group, a manufacturer of metal jewelry and accessories with workshops in France and Portugal, which joined LVMH in 2021.

In 2017, LVMH formed Thélios, a joint venture with Marcolin, combining the latter’s eyewear expertise with the know-how of LVMH. At the end of 2021, LVMH purchased the stake held by Marcolin and became the sole owner of Thélios.

Lastly, fabric suppliers for the different Maisons are often Italian, but on a non-exclusive basis. The designers and style departments of each Maison ensure that manufacturing does not generally depend on patents or exclusive expertise owned by third parties.

2.6         Highlights of 2023 and outlook for 2024

Highlights

The Fashion and Leather Goods business group continued to achieve strong growth. Its Maisons’ ability to continuously reinvent themselves, its talented designers, its expert craftspeople, the quality-driven development of its stores and its teams’ quest for excellence in elevating the customer experience all contributed to this momentum.

Louis Vuitton had another excellent year, buoyed by its exceptional creativity, its expert craftsmanship and its cultural dimension. The captivating fashion shows, singular aesthetics and bold vision of Nicolas Ghesquière, whose contract was renewed for a further five years, continued to elevate the desirability of the Maison’s womenswear collections. Infusing ultra-contemporary romanticism with the spirit of sportswear, Louis Vuitton’s Cruise show was held at Isola Bella on Italy’s Lake Maggiore against a backdrop of baroque art and gardens, while the Maison’s Spring/Summer 2024 Collection was unveiled in October within the walls of its future location at 103 Avenue des Champs-Élysées in Paris. The arrival of Pharrell Williams as Creative Director of Menswear marked the start of an exciting new chapter. His first fashion show, set on the stage of the Pont-Neuf bridge in Paris, was met with huge enthusiasm, garnering over 1.1 billion views on social media, an all-time record for the fashion industry. Designed by the two creative directors, the “Voyager” shows – for womenswear, held on the iconic Jamsugyo Bridge in Seoul, and for menswear, under the starlit skies of Hong Kong’s Avenue of Stars – paid homage to Louis Vuitton’s spirit of travel. The Maison continued to innovate across all its product categories and forge links with art and artists. Malletage quilting – inspired by the interior of Louis Vuitton’s historic trunks – adorned the GO-14 leather goods line, while the Tambour watch, worn by brand ambassador Bradley Cooper, was reinvented with a movement designed by the Maison’s watch manufacturing facility. The fifth edition of Artycapucines revisited the iconic bag through the eyes of five international artists, and renowned architect Frank Gehry also lent his unique vision to an exclusive Capucines capsule collection released at Art Basel Miami Beach. The Maison held two highly successful exhibitions: LV Dream, which paid tribute to creative partnerships throughout its history, and Malle Courrier, which showcased the craftsmanship behind one of its most iconic models and was held at its founder’s historic family home in Asnières. In keeping with its “Our Committed Journey” roadmap, Louis Vuitton teamed up with Australian conservation charity People For Wildlife to protect biodiversity in a 400,000-hectare natural area.

Christian Dior continued to deliver remarkable growth in all its product categories. Season after season, its shows reinvent the magic of the Dior name. Maria Grazia Chiuri continued to forge ties with cultures and craftsmanship from around the world: the Fall/Winter Collection, shown in Mumbai, extolled the art of embroidery through a collaboration with the Chanakya Ateliers in India, while the 2024 Cruise collection celebrated Mexican culture and one of its iconic figures, Frida Kahlo. Continuing her dialogue with artists, the designer entrusted the decor for the Winter 2023 Haute Couture show to Marta Roberti and the set design for her ready-to-wear show in Paris to Joana Vasconcelos. The show was held again in Shenzhen, China, with the livestream garnering over 200 million views. At the École Militaire in Paris, Kim Jones celebrated five years as Creative Director of Dior Homme with a boldly staged new show that paid tribute to the Maison’s heritage. In another highlight, on the shores of Lake Como, Victoire de Castellane unveiled her new high jewelry collection, Les Jardins de la Couture, inspired by the encounter between two worlds close to Christian Dior’s heart: couture and flowers. The year’s innovations included the new Plan de Paris print, which was featured across a number of product categories and adorned the façade of the iconic Harrods department store in London during the summer. The end of the year saw store windows lit up with Dior’s spectacular seasonal displays, including a large-scale display at Saks Fifth Avenue in New York, whose facade was bedecked with a captivating “Carousel of Dreams” – a testament to the Maison’s long-standing ties with New York.

Celine had another record year, delivering strong growth in its established markets and taking direct control over distribution in South Korea. Driven by Hedi Slimane’s bold creative vision, the Maison continued to elevate its desirability. Growth was fueled by the success of leather goods, especially the iconic Triomphe line, as well as the steady rise in ready-to-wear and the increasing popularity of its range of accessories. Celine continued to expand and renovate its network of stores in strategic locations like Tokyo Omotesando and the Miami Design District.

Fendi opened “Palazzos” in Seoul and Tokyo, featuring the brand’s full range of products. At its Haute Couture show in July, the Maison debuted the first high jewelry collection designed by Delfina Delettrez-Fendi. In leather goods, the Maison unveiled new models including the C’mon and Origami bags. The Hand in Hand exhibitions, underscoring Fendi’s commitment to craftsmanship, were met with great interest. The Maison showcased its commitment to Italian art through a collaboration with Galleria Borghese and an exhibition of works by artist Arnaldo Pomodoro.

Loro Piana confirmed its excellent momentum and gained market share. Capitalizing on its exceptional raw materials and singular craftsmanship, the Maison was buoyed by growth in leather goods and continued to innovate through new capsule collections including Loro, its first line made from 100% recycled cashmere. A new digital certification service was launched with the Aura Blockchain Consortium for its The Gift of Kings® merino wool. The Maison began to upgrade its store concept, renovating and expanding its network, the highlight of which was the reopening of its flagship store in Dubai and a new flagship in Thailand.

Very strong growth at Loewe was driven by a combination of key factors: JW Anderson’s bold creativity, the Maison’s authentic craftsmanship, and its shift further upmarket, as exemplified by the launch of the Squeeze bag. The Maison boosted awareness of its brand, outfitting stars like Beyoncé and Rihanna at events with a global audience, and benefited from the success of its collaborations with Studio Ghibli and ceramic artist Suna Fujita. It continued to expand its store network, opening new Casa Loewe stores in Tokyo Omotesando and Dubai, in particular.

Marc Jacobs maintained the strong momentum seen in 2022. Alongside buoyant growth at directly operated stores in the United States and the wholesale business in Europe, online sales continued to grow. The Maison made a strong impact on social media. Growth was driven by its flagship lines, in particular the leather version of its Tote Bag.

Givenchy’s growth was driven by its directly operated stores, while its retail presence became more and more selective. 2023 saw the launch of the Voyou bag and continued growth in sales of the iconic Shark Lock boots. One of the highlights of the year was the joint presentation with Tiffany & Co. of the Maison’s Haute Couture and high jewelry collections.

Kenzo developed and promoted its new positioning. Highlighting links between East and West, Nigo’s Spring/Summer 2024 show was held in Paris between the Eiffel Tower and the Palais de Tokyo before stopping over in Shanghai.

Sustained growth at Berluti was fueled both by the Maison’s timeless collections and by new products launched during the year. The Lorenzo Drive reinterpreted the classic driving shoe; the Toile Marbeuf design, a tribute to the Maison’s rich heritage, adorned a new line of travel bags; and the Passe-Temps collection of exceptional items was launched in the run-up to the holiday season. The Maison also continued to expand its store network in China, South Korea and Japan.

As travel resumed, business at Rimowa picked up, buoyed by growing brand awareness and its iconic positioning, with communications focused on the sustainability of its products and the unconditional lifetime warranty offered on all Rimowa suitcases. A traveling exhibition celebrated the 125th anniversary of its founding. Highlights of the year included the launch of a new material for the Maison – leather – enveloping the Distinct carry-on suitcase.

At Pucci, Camille Miceli’s first show was held under the arches of the Ponte Vecchio in Florence, where the Italian fashion house was originally founded.

Outlook

As the Fashion and Leather Goods Maisons approach the future, their ambition remains unchanged: to further elevate their desirability and press ahead with their strategy of responsible growth. The outlook for Louis Vuitton over the next few years is very strong thanks to the Maison’s ongoing exceptional creative momentum and its constant reinvention through the lens of travel. Nicolas Ghesquière will continue to design the iconic collections and models that underpin the Maison’s success. Pharrell Williams, an artist whose work spans multiple creative universes, has ushered in a new and extremely promising chapter for menswear. With its unceasing desire to surprise and blaze new trails, the Maison is pursuing a number of innovation and development projects. These include plans to eventually open its new showcase premises at 103 Avenue des Champs-Élysées, heralded by the giant Monogram trunk that will cover the building while construction work is underway. Christian Dior will continue to highlight its timeless modernity while referencing its unique heritage. Its ongoing growth will be underpinned by compelling initiatives including new store openings, pop-up locations and high-impact events. For example, until May 2024, Dior’s gallery at its 30 Montaigne location in Paris will host a richly poetic exhibition dedicated to collaborations with women artists including Niki de Saint Phalle, Sarah Moon and Judy Chicago. Celine will focus on elevating its brand while maintaining its unique spirit of casual sophistication, and on expanding its stores. Fendi has several major store openings planned for 2024, including flagship stores in the Miami Design District and Cannes, and will expand its Selleria line of leather goods. Loro Piana will celebrate its 100th anniversary – an opportunity to look back on its history and showcase its exceptional materials and expertise. Loewe will highlight its Spanish roots and its creativity at its first exhibition outside Spain, to be held at the Shanghai Exhibition Center. Marc Jacobs will prioritize expanding its network of directly operated stores in the United States and ramping up its online sales. Berluti will be outfitting Team France for the opening ceremony of the Paris 2024 Olympic and Paralympic Games.

3.     Perfumes and Cosmetics

In 2023, the Perfumes and Cosmetics business group posted revenue of 8,271 million euros, representing 9% of LVMH’s total revenue.

3.1         The brands of the Perfumes and Cosmetics business group

Parfums Christian Dior – which was born in 1947, the year Christian Dior held his first fashion show – introduced the revolutionary concept of “total beauty” with the launch of Miss Dior perfume, followed by makeup with Rouge Dior lipstick in 1953 and Dior’s first line of skincare products in 1973. Today, Parfums Christian Dior allocates 1.4% of its revenue to research and is on the cutting edge of innovation. Dior’s perfumer Francis Kurkdjian, who took over from François Demachy, and Creative Director for makeup Peter Philips are building on Christian Dior’s rich heritage and legacy by combining bold vision and unique expertise, in harmony with the Maison’s couture collections.

Guerlain, founded in 1828 by Pierre-François-Pascal Guerlain, has created more than 700 perfumes since its inception, and enjoys an exceptional brand image in the world of perfume. Heir to an olfactory repository of more than 1,100 fragrances, the Maison’s perfumer Thierry Wasser travels the world today in search of the most exclusive raw materials. Violette, Creative Director of Makeup, aims to help women reveal and enhance their natural beauty. The Maison’s iconic perfumes include Aqua Allegoria, L’Art et La Matière, La Petite Robe Noire and Shalimar.

Founded in 1957, Parfums Givenchy continues to honor the values of its founder, Hubert de Givenchy, through its perfumes, makeup and skincare products. From L’Interdit to Givenchy Gentleman, the Maison’s fragrances embody Givenchy’s unique vision, inspired by the avant-garde spirit and sensual aura of the fashion house’s couture collections.

The first women’s fragrance by Kenzo Parfums was released in 1988. Kenzo Parfums went on to create a series of fragrances whose unique and offbeat spirit has made its mark on the world of perfume, including Flower by Kenzo, Kenzo Homme, and L’eau Kenzo.

Benefit Cosmetics, founded in San Francisco in 1976 by twins Jean and Jane Ford, joined LVMH in late 1999. Benefit has forged its own distinctive identity among cosmetics brands, thanks to the relevance and effectiveness of its products, bursting on the scene with playful, plucky names, creative packaging, and custom services.

Fresh, which started out in 1991 as a humble apothecary shop, joined LVMH in September 2000. Remaining true to its roots by using natural ingredients, the Maison continues to develop its unique approach combining innovative ingredients with time-honored techniques to transform everyday routines into holistic sensorial experiences.

Perfumes Loewe introduced its first perfume in 1972. Perfumes Loewe embodies the quintessentially Spanish spirit: elegant, refined, strong and unpredictable, with floral, woody and lemony essences.

Make Up For Ever, which was created in 1984 and joined LVMH in 1999, is a professional makeup brand with an innovative range of exceptional products designed for stage actors and other performers, makeup artists, and makeup lovers around the world.

Founded in Parma in 1916, Acqua di Parma was acquired by LVMH in 2001. Through its fragrances and beauty products imbued with elegance, Acqua di Parma – synonymous with Italian excellence and fine living – embodies discreet luxury.

Kendo is a cosmetics brand incubator set up in 2010, which now houses six brands: KVD Vegan Beauty, Ole Henriksen, Fenty Beauty by Rihanna, which was launched in 2017, Fenty Skin, Fenty Fragrance and Lip Lab. These brands are primarily distributed by Sephora, as well as increasingly via the Brands’ own sites.

Maison Francis Kurkdjian was founded in 2009 by the renowned perfumer to explore new territories for perfume by creating custom fragrances for his private clientele and by collaborating with artists for installation projects involving scents. This acquisition, which was completed in 2017, has established the LVMH group in the fast-growing field of niche perfumes.

Officine Universelle Buly passes on and updates the heritage of beauty every day, drawing on the excellence of the past to offer the best of the present. Boldness, precision and curiosity combine to create rare, planet-conscious and iconic products inspired by history and travel. The Maison, committed to French expertise and excellent service, was acquired by LVMH in 2021.

STELLA, launched in 2022, is a skincare range developed in partnership with designer Stella McCartney, a pioneer of responsible fashion. STELLA aims to offer a responsible alternative in the selective skincare market through an essential range of three products. The brand, launched in the United Kingdom on the Space NK website and at the designer’s flagship store, is also available internationally from the brand’s website.

3.2         Competitive position

The LVMH Beauty division has maintained its global competitive position thanks to the success of its perfumes, particularly in Europe and the United States, and the recovery in makeup in the United States, despite the ongoing impact on the skincare market of the public health situation in China.

3.3         Research

Established in 1981, the LVMH Recherche GIE (economic interest group) is a research and innovation center for the brands that make the LVMH group’s perfumes and cosmetics, including Parfums Christian Dior, Guerlain, Givenchy, Kenzo, Make Up For Ever and Fresh.

LVMH Recherche aims to create the sustainable digital beauty of the future by working on aspects as varied as well-being, social and environmental impact, personalized propositions, unrivaled product performance, brand new sensory experiences and new uses. LVMH Recherche is thus moving into not just one but many exciting new areas.

Spread across five sites around the world (Hélios in Saint-Jean-de-Braye, Kosmo in Paris, and Asian innovation centers in Tokyo, Shanghai and Seoul), LVMH Recherche’s 670 employees (including researchers, chemists, biologists, toxicologists and pharmacists) deliver over a thousand exceptional products in the skincare, makeup and fragrance categories every year. These very high-quality products are developed with the greatest respect for the environment and in keeping with each Maison’s sensory signature and unique identity.

Innovation and openness to the world are at the heart of the strategy pursued by LVMH Recherche (400 patent families), which works with a number of public bodies (including universities, the French National Scientific Research Center [CNRS] and the French National Institute of Health and Medical Research [INSERM]) and private-sector organizations (notably startups, SMEs and mid-tier enterprises) in France and abroad. LVMH Recherche has gradually created a genuine innovation ecosystem whose aim is to identify the most promising technological advances and accelerate their development by building strategic partnerships in new scientific fields as varied as agroecology, biotechnology, cellular biology, advanced materials, new processes, Big Data, artificial intelligence and more.

Through this strategy of fostering open innovation in multiple fields, LVMH Recherche aims to position itself at the cutting edge of innovation in areas relating to performance and sustainability, such as the following:

●   active ingredients sourced from regenerative agriculture and new environmentally friendly processing techniques (extraction, biotechnology, etc.);

●   packaging using recycled, recyclable and/or bio-sourced materials;

●   new biological approaches to gain greater insight into cellular longevity and identify new skin anti-aging treatments;

●   use of advanced diagnostics for a more personalized approach.

3.4         Manufacturing, supply sources and subcontracting

The six French production centers of Guerlain, Parfums Christian Dior and LVMH Fragrance Brands meet almost all the manufacturing needs of the four major French brands, including Kenzo Parfums, in fragrances as well as makeup and beauty products. Make Up For Ever, Maison Francis Kurkdjian, Acqua di Parma, Benefit, Perfumes Loewe and Fresh have some of their products manufactured by the Group’s other brands, with the remainder subcontracted externally.

Dry materials, such as bottles, stoppers and any other items that form the containers or packaging, are acquired from suppliers outside the Group, as are the raw materials used to create the finished products. In certain cases, these materials are available only from a limited number of French or foreign suppliers.

Most product formulas are developed at the LVMH Recherche laboratories in Saint-Jean-de-Braye (France), but the Group can also acquire or develop formulas from specialized companies, particularly for perfume essences.

3.5         Distribution and communication

The presence of a broad spectrum of brands within the business group generates synergies and represents a market force. The volume effect means that advertising space can be purchased at competitive rates, and better locations can be negotiated in department stores. The use of shared services by subsidiaries increases the effectiveness of support functions for worldwide distribution and facilitates the expansion of the newest brands and their access to new markets. These economies of scale permit larger investments in design and advertising, two key factors for success in the Perfumes and Cosmetics business group.

Excellence in retailing is key to the Group’s Perfumes and Cosmetics Maisons. It requires expertise and attentiveness from beauty consultants, as well as innovation at points of sale. The Group’s Perfumes and Cosmetics brand products are sold mainly through “selective retailing” channels (as opposed to mass-market retailers and drugstores), although certain brands also sell their products in their own stores and on their own e-commerce sites.

Parfums Christian Dior mainly distributes its products to selective retail chains, such as Sephora, and department stores, as well as increasingly to its own store network and e-commerce sites.

Guerlain’s products are mainly distributed through its network of directly operated stores, enabling it to develop its unique expertise, as well as through a network of partner retail outlets. In addition to sales through its exclusive boutiques around the world, Benefit currently retails in some 50 countries worldwide. Make Up For Ever products are sold through exclusive boutiques around the world, and through a number of Selective Retailing circuits, particularly in France, Europe and the United States (markets developed in partnership with Sephora), as well as in China, South Korea and the Middle East. Now based in Milan, Acqua di Parma relies on an exclusive retailing network, including its directly operated stores. The Kendo brands are primarily distributed by Sephora, as well as increasingly by their own sites. Maison Francis Kurkdjian mainly operates in department stores in the United States and through a network of department stores and proprietary stores in Europe.

To meet the expectations of younger generations, who are looking for originality, as well as demand for a connected in-store and online experience, all brands are accelerating the implementation of their online sales platforms, particularly on their own sites, and stepping up their digital content initiatives. Our brands are actively incorporating digital tools to enhance the customer experience and attract new consumers.

3.6         Highlights of 2023 and outlook for 2024

Highlights

In a fiercely competitive market environment, growth in the Perfumes and Cosmetics business group was driven by a dynamic innovation strategy – backed by the scientific excellence of LVMH’s research center – and an ongoing policy of highly selective retailing.

Parfums Christian Dior turned in a remarkable performance, reinforcing its leading positions in Europe, Japan and the Middle East, confirming its strong momentum in Southeast Asia, and continuing its advances in key countries like the United States and South Korea. Fragrances were buoyed by the Maison’s sustained innovation policy and the ongoing success of its iconic product lines. Sauvage confirmed its position as the world’s best-selling fragrance across all categories. J’adore and Miss Dior were enriched with new versions developed through the Maison’s top-tier innovation program: J’adore Parfum d’Eau, the first long-lasting alcohol-free fragrance; J’adore l’Or, launched at the end of the year; and Miss Dior Blooming Bouquet, which achieved excellent results, especially in Asia. The success of La Collection Privée Christian Dior – a key collection in elevating the Maison’s product range – was amplified by the summer launch of a new scent, Dioriviera, alongside the strong performance of star fragrance Gris Dior. Growth in makeup was fueled in particular by the new Dior Addict Lip Maximizer and Forever Skin Correct. Skincare performed well in the premium segment in Asia with the Prestige range, and was boosted by the launch of a new travel-friendly size for its Dior Le Baume multi-purpose cream. Parfums Christian Dior stepped up the expansion of its spa activity with several new spas, another edition of the “Dior Spa Cheval Blanc Cruise” experience on the Seine in Paris, and new pop-up locations, including the Splendido in Portofino and Timeo in Taormina. Backed by its omnichannel marketing strategy, which covers all traditional and digital channels and makes it one of the world’s most desirable beauty brands, Dior saw rapid growth in its online sales. The expansion of its network of directly operated stores enabled the Maison to showcase its full range and offer exclusive products, such as the exceptional pieces designed by artist Jean-Michel Othoniel for J’adore l’Or and by the Baccarat crystal works for Sauvage Elixir. The Maison joined forces with WWF – the world’s leading nature conservation organization – to help preserve and restore 15,000 hectares of wildlife habitats and green corridors in France and North America.

Guerlain continued its growth, buoyed in particular by solid momentum in fragrances and makeup. The sustainability-focused Aqua Allegoria collection was expanded with the Aqua Allegoria Forte range of intense scents. L’Art et la Matière also added a new fragrance, Jasmin Bonheur, available in a limited art edition designed in collaboration with Maison Matisse. This collection, which embodies the Maison’s excellence in high-end perfumery, has seen revenue double in just two years. Growth in makeup was driven in particular by the launch of Terracotta Le Teint, a foundation with an innovative texture, which was very successful in Europe. Skincare was buoyed in the second half of the year by the launch of the Abeille Royale day and night creams. Guerlain reaffirmed its commitment to important causes, developing its “Women for Bees” program in Mexico and Rwanda, in partnership with UNESCO and a number of local NGOs. It also launched major sustainable design initiatives focused on its products.

Parfums Givenchy achieved robust growth in fragrances. The brand’s star fragrance, L’Interdit, confirmed its excellent potential and helped it gained market share. The Maison also benefited from the successful relaunch of Gentleman, another iconic fragrance line, with its new Gentleman Society edition, and from strong sales of Irresistible, driven by its Rose Velvet version. Benefit confirmed its leadership position in brow beauty and mascara with its new Fluff Up and Fan Fest, and continued to successfully roll out its brow lamination service. The Maison innovated with The Porefessional Pore Care, a new collection of six skincare products developed to minimize the look of pores. Fresh launched Black Tea Age Renewal Cream and expanded its premium Crème Ancienne line with a new white truffle serum. In another initiative, Make Up For Ever expanded its star range, HD Skin, launching a powder foundation version developed in collaboration with the Maison’s community of professional makeup artists. At Kenzo Parfums, growth was driven by innovative new additions to Flower by Kenzo, the Maison’s star fragrance range, including the new Ikebana scent, inspired by the Japanese art of flower arrangement, and by the reinvented Kenzo Homme. Maison Francis Kurkdjian continued its ultra-selective expansion into new, high-potential markets. The successful launch of the Aqua Media eau de parfum enriched a fragrance wardrobe already buoyed by the popularity of Baccarat Rouge 540, Gentle Fluidity, Grand Soir and Oud Satin Mood. The Maison inaugurated the “Perfumer’s Garden” at the Palace of Versailles as part of a long-term corporate giving program. Acqua di Parma was boosted by the major success of its Zafferano fragrance, featuring a freshly original blend of warm saffron and bright citrus notes. The Maison celebrated exceptional Italian craftsmanship with its Arancia La Spugnatura limited edition. Loewe Perfumes achieved record-high revenue and launched a strategy aimed at elevating its brand, expanding internationally and gaining greater control over its distribution channels. Fenty Beauty posted solid growth, driven by successful product launches, in particular its Hella Thicc volumizing mascara. The Maison continued to expand its distribution channels. For Officine Universelle Buly, 2023 was a year of olfactory inventiveness, with the launch of a collection of water-based fragrances inspired by the botanical scents and flavors of a vegetable garden. The Maison opened a new boutique in Dubai and a Buly café in Kobe (Japan).

Outlook

While remaining vigilant, as called for by the current environment, LVMH’s Maisons will continue to invest selectively in their strengths: product excellence and desirability, accelerated innovation and a selective approach to retail networks. Parfums Christian Dior continues to be driven by its values of creativity and excellence, as well as its desire to inspire dreams, transforming each brand interaction into an unforgettable experience. The Maison will continue to infuse its icons with bold, passionate, elegant innovations: in fragrances, with Miss Dior, J’adore and Sauvage; in makeup, with Rouge Dior, Addict and Forever; and in premium skincare, with its flagship Prestige line. With regard to its retail channels, the Maison will remain highly selective and continue to elevate the customer experience in terms of both products and services. Starting in early 2024, Guerlain will benefit from innovations in its Abeille Royale and Orchidée Impériale skincare lines. Parfums Givenchy will aim to boost growth in fragrances. A number of innovations will drive growth at Kenzo Parfums. Acqua di Parma will reaffirm its positioning as a vibrant, sophisticated brand offering a range of exceptional fragrances, objects and services. Maison Francis Kurkdjian will continue to build on its ability to craft unprecedented olfactory experiences. Fresh will celebrate the 20th anniversary of its Crème Ancienne premium skincare line. Benefit will continue to innovate, particularly in its signature brow range, with new, ultra-high-precision tools. Make Up For Ever will reaffirm its expertise in foundation. Loewe Perfumes will expand its market presence in the United States.

4.     Watches and Jewelry

In 2023, the Watches and Jewelry business group represented 13% of the total revenue of LVMH.

4.1         The brands of the Watches and Jewelry business group

TAG Heuer, a pioneer of Swiss watchmaking since 1860, which was acquired by LVMH in November 1999, combines innovative technology with the ultimate in precision timekeeping and avant-garde designs to create extremely accurate watches. Its most coveted traditional and automatic watches and chronographs are the Carrera, Aquaracer, Formula 1, Link and Monaco lines. In 2010, TAG Heuer launched the first automatic movement developed and built in-house, followed, in 2015, by the launch of a smartwatch.

Hublot, founded in 1980 and part of the LVMH group since 2008, has always been an innovative brand, creating the first watch in the industry’s history fitted with a natural rubber strap. Relying on a team of top-flight watchmakers, the brand is widely renowned for its original concept combining noble materials with state-of-the-art technology and for its iconic Big Bang model launched in 2005. Along with the many versions of this model, Hublot has launched the Classic Fusion and the more recent Spirit of Big Bang lines.

Zenith, founded in 1865 and established in Le Locle near the Swiss Jura region, joined LVMH in November 1999. Zenith belongs to the very select group of watch movement manufactures. In the watchmaking sector, the term “manufacture” designates a company that provides the entire design and manufacturing of mechanical movements. The two master movements of Zenith, the chronograph El Primero and the extra-flat movement Elite, absolute benchmarks for Swiss watchmaking, are provided on the watches sold under this brand.

Tiffany & Co., founded in New York in 1837 and acquired by LVMH in 2021, is a global icon of luxury, famous for its innovative jewelry designs, extraordinary craftsmanship and unrivaled creativity. The brand’s optimism, legendary wit and distinctive New York energy inspire dreams that begin with the opening of one of its coveted Blue Boxes. In 1886, Charles Lewis Tiffany introduced the Tiffany® Setting, the world’s most iconic engagement ring. With this innovation, Tiffany & Co. quickly made its name as more than a jewelry house – it has become a destination for timeless designs and unparalleled craftsmanship.

Bulgari, founded in 1884, stands for creativity and excellence worldwide and is universally recognized as one of the major players in its sector. The long-celebrated Italian brand occupies a strong leadership position in jewelry, with an outstanding reputation for its expertise in combining colored gemstones and watches, while also playing an important role in the fragrance and accessories segments. Iconic lines include Serpenti, B.Zero1, Diva and Octo. LVMH acquired Bulgari in 2011.

Chaumet, a jeweler established in 1780, has maintained its prestigious expertise, which is reflected in all its designs, from high jewelry and fine jewelry to watch collections. Its major lines are Joséphine and Liens. The LVMH group acquired Chaumet in 1999.

Fred, founded in 1936 and part of the LVMH group since 1995, is present in high jewelry, fine jewelry and watchmaking. Since joining the Group, Fred has completely revamped its design, image and distribution. This revival can be seen in the bold, contemporary style exemplified by the brand’s iconic Force 10 line.

4.2         Competitive position

The jewelry market is highly fragmented, consisting of a handful of major international groups plus an array of smaller independent brands from many different countries. LVMH’s brands are present all around the world, and it has established itself as one of the international leaders.

4.3         Distribution

The business group, which enjoys a strong international presence, has reaped the benefits of its excellent coordination and pooling of administrative, sales and marketing teams. A worldwide network of after-sale multi-brand services has been gradually put in place to improve customer satisfaction. LVMH Watches and Jewelry has a territorial organization that covers all European markets, the American continent, northern Asia, Japan, and the Asia-Pacific region.

This business group is focusing on the quality and productivity of its retail networks and is also developing its online sales. It selects multi-brand retailers very carefully and builds partnerships so that retailers become genuine brand ambassadors when interacting with end-customers. In an equally selective approach, the Maisons also continue to refurbish and open their own directly operated stores in buoyant markets in key cities.

The Watches and Jewelry brands’ directly operated store network comprised 920 stores as of year-end 2023 at prestigious locations in the world’s largest cities. The Watches and Jewelry business group also developed a network of franchises.

4.4         Supply sources and subcontracting

In watchmaking, manufacturing has been coordinated through the use of shared resources, such as prototype design capacities, and by sharing the best methods for preparing investment plans, improving productivity and negotiating purchasing terms with suppliers. In jewelry, centralized checking has been introduced for diamonds, alongside technical cooperation between brands for the development of new products.

At its Swiss workshops and manufacturing centers, located in Le Locle, La Chaux-de-Fonds, Neuchâtel, Cornol, Tramelan, Le Sentier, Chevenez and Nyon, the Group assembles a substantial proportion of the watches and chronographs sold under the TAG Heuer, Hublot, Zenith, Bulgari, Montres Dior, Chaumet and Fred brands; it also designs and manufactures mechanical movements such as El Primero and Elite by Zenith, Heuer 01 by TAG Heuer, UNICO by Hublot and Solotempo by Bulgari; and it manufactures some critical components such as dials, cases and straps. Zenith’s manufacturing facility in Le Locle underwent a major renovation in 2012. In 2013, TAG Heuer inaugurated a new movement manufacturing facility in Chevenez, and in 2015 Hublot opened a second one at its Nyon site.

Bulgari opened a jewelry manufacturing facility in Valenza, Italy, at the end of 2016, and in 2019 inaugurated a new watch casing manufacturing facility in the Jura canton of Switzerland. It also operates a high jewelry workshop in Rome.

Tiffany operates several jewelry manufacturing workshops in the United States, as well as its own diamond polishing workshops in Belgium, Botswana, Cambodia, Mauritius and Vietnam.

Even though the Watches and Jewelry group can sometimes use third parties to design its models, they are most often designed in its own studios.

4.5         Highlights of 2023 and outlook for 2024

Highlights

The Watches and Jewelry business group maintained its strong growth momentum, driven by its bold innovation strategy and master craftsmanship. LVMH’s Maisons continued to focus on the selective expansion of their retail networks, promotional events and partnerships with artists and athletes in connection with their collections. They also actively developed their range of corporate social responsibility initiatives.

Tiffany & Co. embarked on a new chapter in its 187-year history with the reopening of its legendary New York flagship, which was fully renovated and is now known as “The Landmark”. The remarkable location offers a unique, immersive brand experience and received an enthusiastic welcome. Spanning 10 floors, The Landmark not only heralds a new era for Tiffany – it also raises the bar for the entire luxury industry. It has inspired a new aesthetic concept that the Maison has begun to roll out worldwide, starting with iconic locations including the Dubai Mall, Tokyo Omotesando and Palo Alto, California. The launch of Out of the Blue – the first Blue Book high jewelry collection designed by Nathalie Verdeille, Tiffany’s new Creative Director for Jewelry – reaffirmed the Maison’s preeminent position in the world’s most coveted diamonds and gemstones. The advertising campaign for this exceptional collection featured a series of pieces that paid tribute to the works of Jean Schlumberger, the Maison’s first jewelry designer, modeled by actress Anya Taylor-Joy. The Maison continued the global release of its new Lock collection, inspired by this modern symbol of love and its unbreakable bonds, introducing new styles accompanied by a revamped marketing campaign. With daring and ingenuity, Tiffany entered into new creative collaborations with brands, individuals and institutions that share its values of expert craftsmanship, creativity, integrity and excellence. The limited-edition Rimowa x Tiffany travel cases, with their diamond-inspired design, and the jewelry and sculpture collaboration with contemporary artist Daniel Arsham are just a few examples of this constant desire to collaborate to create beautiful designs and never stop surprising customers.

Bulgari had an excellent year, with especially strong growth in high jewelry and high-end watches. The new Mediterranea jewelry and watch collection, presented in Venice, was inspired by an imaginary journey exploring the vast range of beauty, cultures and traditions of the Mediterranean, and achieved record-breaking revenue. High-profile events celebrating the 75th anniversary of its iconic Serpenti line were held in a number of cities around the world, further elevating the Maison’s image. Bulgari introduced Cabochon, a new, highly contemporary and organic jewelry collection, directly inspired by ancient Roman jewelry, which had a great debut during the end-of-year holiday season. In watches, Bulgari expanded the Octo Finissimo collection and relaunched Octo Roma to target a younger, more urban demographic. To enhance its desirability among young Millennials, the Maison joined forces with the legendary racing simulation video game series Gran Turismo to create new editions of its Bulgari Aluminium watch. Serpenti continued to achieve strong growth, joining the ranks of the most iconic women’s watches, from more everyday models, like the Serpenti Tubogas and Seduttori, to the most exclusive, with Serpenti Misteriosi Cleopatra, which won the prestigious Geneva Watchmaking Grand Prix in the highly sought-after “Jewelry Watch” category. A new marketing campaign featuring Anne Hathaway, Zendaya, Lisa, YiFei and Priyanka Chopra was launched during the year. A flagship store was opened in Hong Kong at One Peking Road and several other stores were opened and renovated, including Ginza 6 and Omotesando in Tokyo, and Costa Mesa in California. The Maison scaled up its presence in the luxury hotel sector with new hotels in Tokyo and Rome.

TAG Heuer celebrated the 60th anniversary of its Carrera collection with the launch of the Carrera Glassbox and a media campaign built around the film The Chase for Carrera starring Ryan Gosling. Two new models were added to the Carrera Plasma line – a fusion of watchmaking and synthetic diamonds – while the addition of 42mm models rounded out the collection of smartwatches. The Chronosprint, available in gold and steel versions, was launched as part of the partnership with Porsche. The Maison relocated its Fifth Avenue store in New York and launched a new partnership with cutting-edge racing yacht Flying Nikka.

Highlights of the year for Hublot included a collaboration with artist Takashi Murakami on a collection of 13 unique NFTs, each one entitling the holder to one of 13 Classic Fusion Takashi Murakami watches, and the launch of the MP-15 Takashi Murakami high-tech masterpiece. The Maison enriched its collections with innovative high-tech and high-end timepieces such as the Big Bang Tourbillon Automatic Yellow Neon Saxem in bright, fluorescent yellow – a world first – the MP-13 Tourbillon Bi-Axis Retrograde and the Big Bang Tourbillon SR-A by Samuel Ross. Hublot served as the official timekeeper for the FIFA Women’s World Cup. At the end of the year, construction began on its new watch manufacturing facility.

Zenith enriched its Defy collection with the Defy Skyline Skeleton and a new version of its Defy Extreme, developed in partnership with the Extreme E electric vehicle racing championship. The year’s other highlights included the launch of the new Pilot line and a new marketing campaign for its best-selling Chronomaster Sport. As part of its “Horizon” CSR program, the Maison released a new timepiece to support the fight against breast cancer and announced the launch of a women’s mentoring project.

Chaumet continued to post significant growth. Reflecting the Maison’s love for nature, with iconic botanical motifs like wheat ears and contemporary designs based on the texture of bark, the new Le Jardin de Chaumet high jewelry collection generated record sales. The Bee My Love collection, interpreted across a diverse range of jewelry, saw more rapid growth, particularly among younger customers. Chaumet’s A Golden Age exhibition of designs from the 60s and 70s, held at its 12 Vendôme location, was a huge success. The Maison also launched several new cultural and social outreach initiatives, including the Chaumet Echo Culture Awards, celebrating women who promote culture, and a partnership with France’s Mobilier National (state furniture and furnishings agency) aimed at introducing children to the world of fine craftsmanship through encounters with the Maison’s artisans.

Fred achieved another year of strong growth. Highlights of 2023 included the Maison’s first collaboration with the French Open tennis tournament and the opening of the Fred: Jewelry Designer exhibition in Seoul. In June, the Maison lent its support to the World Games held in Berlin and organized by the Special Olympics, an organization dedicated to the empowerment of people with intellectual disabilities through sports.

Repossi was buoyed by marketing campaigns for its iconic Antifer, Serti sur Vide and Berbère collections. The new La Ligne collection joined the Maison’s range of high jewelry designs.

Outlook

In 2024, the Watches and Jewelry business group will aim to maintain its growth and continue gaining market share. Given the current tensions and uncertainties, the Watches and Jewelry Maisons will continue to manage costs and remain selective in their investments. The business group will continue to prioritize innovating and enhancing the desirability of its collections, opening and renovating directly operated stores, and expanding production capacity to accommodate the growth of its brands. Sustainability and responsibility will remain core components of their strategies. Tiffany & Co. will ramp up its store network renovation program, continuing the worldwide rollout of its new store concept inspired by The Landmark. Backed by upcoming marketing campaigns and inspiring new customer experiences, the Maison will maintain its strategy aimed at elevating its core collections to the status of icons and showcasing the unique creativity of its high jewelry designs. Bulgari will celebrate its 140th anniversary. A new high-end jewelry and watch collection will be unveiled. The Maison will continue to promote its iconic Serpenti line, while relaunching B.zero1 and expanding its new Cabochon collection. 2024 will also see the renewal of Bulgari’s partnership with Save The Children, which has helped over 2.5 million children in need since 2009 thanks to more than 100 million euros in donations from the Maison over the period. TAG Heuer will expand its range designed in partnership with Porsche while continuing to promote its Carrera and Aquaracer collections. The Maison will pursue its strategy of opening directly operated stores while gradually taking direct control over its distribution in South Korea. As the official timekeeper of UEFA Euro 2024, Hublot will launch a marketing campaign with its brand ambassador Kylian Mbappé. New models will be unveiled over the course of the year, particularly in the Big Bang collection. As well as adding innovative new designs to its Chronomaster and Defy lines, Zenith will expand upon its Icons collection of restored vintage pieces with the launch of a new theme inspired by its Pilot watches. Chaumet will continue to showcase its history and its rich creative heritage while promoting its iconic collections.

5.     Selective Retailing

In 2023, the Selective Retailing business group represented 21% of the total revenue of LVMH.

5.1         Travel retail

Duty Free Shoppers (DFS), which joined LVMH in 1997, is a pioneer and a world leader in the sale of luxury products to international travelers. Its activity is closely linked to tourism cycles.

Since it was formed in 1960 as a duty-free concession in the Kai Tak airport in Hong Kong, DFS has acquired an in-depth knowledge of the needs of traveling customers, built solid partnerships with international tour operators as well as with the world’s leading luxury brands, and has significantly expanded its business, particularly in tourist destinations in the Asia-Pacific region.

To accompany the rise of travel retail, DFS has also focused on the development of its city-center Galleria stores, which currently account for two-thirds of its revenue. The 20 DFS Gallerias, each with a floor area of between 6,000 and 12,000 square meters, are centrally located in top tourist destinations for airline passengers in the Asia-Pacific region, the United States (Hawaii), Japan and Europe. Each Galleria combines in one site, close to the hotels where travelers are lodged, two different but complementary retail spaces: a general luxury product offering (including perfumes and cosmetics, fashion and accessories) and a gallery of prestigious boutiques, some of which belong to the LVMH group (including Louis Vuitton, Hermès, Bulgari, Tiffany, Christian Dior, Chanel, Prada, Fendi and Celine).

While continuing with the development of its Gallerias, DFS maintains its strategic interest in the airport concessions if these can be obtained or renewed under good financial terms. DFS currently operates at around a dozen international airports in the Asia-Pacific region, the United States, Japan, Abu Dhabi and mainland China, where it opened its first location at Chongqing Airport in 2023.

Starboard Cruise Services, one of the world leaders in the sale of duty-free luxury items on board cruise ships, provides services to around 80 ships representing several cruise lines. It also publishes tourist reviews, catalogs and advertising sheets available on board. This business was disposed of in late 2023, with LVMH retaining a minority stake.

5.2         Selective retail

Sephora, founded in 1969, has developed over time a perfume and beauty concept that combines open-display beauty retail, services and customer assistance. This concept led to a new generation of stores with a sober and luxurious architecture, divided into areas mainly dedicated to perfume, makeup, skincare and haircare. Based on the quality of this concept, Sephora has gained the confidence of selective perfume and cosmetics brands. In addition, Sephora has offered products sold under its own brand name since 1995 and has developed a line of exclusive products thanks to its close ties with brands selected for their bold ideas and creativity.

Since it was acquired by LVMH in July 1997, Sephora has recorded rapid growth in Europe by opening new stores and acquiring companies that operated perfume retail chains. Sephora is present in 15 European countries. The Sephora concept also crossed the Atlantic in 1998, with a strong presence in the United States, the sephora.com website, and a network in Canada. Sephora entered the Chinese market in 2005. The retailer also has locations in the Middle East, Latin America (Brazil and Mexico) and Southeast Asia. In 2021, Sephora moved into the United Kingdom by acquiring the Feelunique website, which in October 2022 became sephora.co.uk, and opened its first two stores there in 2023.

Sephora is at the forefront of the retail industry’s unstoppable digital transformation. Sephora builds on the complementarity of its in-store and online shopping offerings and its strong social media presence to maximize customer touchpoints and opportunities to build loyalty. With its websites, digitally equipped stores, customer mobile apps and beauty consultants, the Maison creates an omnichannel beauty experience that is increasingly innovative and personalized and offers customers an interactive, seamless, flexible shopping journey.

Le Bon Marché Rive Gauche – the world’s first department store – opened its doors in 1852, with entrepreneur Aristide Boucicaut at the helm. Both a forerunner and trendsetter, Le Bon Marché Rive Gauche presents a selection of sophisticated and exclusive labels, in a space with a strong architectural concept. Customers from around the world looking for a true Parisian experience rub shoulders with locals, all drawn to the department store’s unique vibe and the quality of its service. The sole department store located on the Left Bank in Paris, it was acquired by LVMH in 1998.

Newly inaugurated in late 2013, La Grande Épicerie de Paris is a trailblazing gourmet food emporium. La Grande Épicerie de Paris offers its customers a culinary shopping experience like no other, made possible by the expertise of the artisans, architects and artists selected for this project, and has become an absolute must for food lovers. In 2017, La Grande Épicerie de Paris – historically located on the ground floor of Le Bon Marché – added a location on Rue de Passy in the 16th arrondissement of Paris.

5.3         Competitive position

In 2023, Sephora continued to gain market share in its key countries, in particular the United States, France, Canada, Italy and Spain.

5.4         Highlights of 2023 and outlook for 2024

Highlights

The Selective Retailing business group’s strong growth was mainly driven by exceptional momentum at Sephora and the gradual return of travelers to a number of key destinations for DFS.

Sephora achieved another historic year, both in terms of sales and profit, continuing to gain market share. It saw exceptional performances in most of its markets, with double-digit growth in North America, Europe, the Middle East, Southeast Asia and new fast-rising markets such as Latin America. Growth was driven primarily by makeup, followed by haircare, skincare and fragrances. In terms of channels, e-commerce growth remained very solid, but the strongest growth came from the store network, driven by higher traffic, new openings, renovations and an elevated customer experience. The Maison continued to invest in its omnichannel strategy and further expanded its store network, with more than a hundred store openings in 2023. In the United States, Sephora’s partnership with Kohl’s continued to be highly successful, well ahead of expectations and with major benefits for both companies. Sephora also continued to develop its new experience-focused store concept in Asia, with a major renovation of its Shanghai and Wuhan flagships in China. Another major event was the reopening of the Champs-Élysées flagship store in Paris, which was fully renovated for the first time in its history, reflecting the Maison’s special focus on sustainability and energy consumption. Sephora continued to invest in new markets. In the United Kingdom, two stores were opened – in the Westfield White City and Westfield Stratford City malls – with results that very substantially exceeded expectations. In India, an exclusive partnership was entered into with Reliance to operate a number of stores, with the aim of transforming the country’s promising prestige beauty industry. Throughout the year, Sephora pushed innovation to record levels to delight its ever-growing beauty community of over 160 million loyal customers. The “Sephoria” event launched in the United States became a global phenomenon, with successful events held in New York, Paris and Shanghai. The Maison also continued to innovate in digital and technology to optimize the customized beauty advice it can offer its customers, such as in identifying the perfect skin tone for their foundation. Sephora pursued its commitment to advance diversity, equity and inclusion, including a program in the United States aimed at supporting beauty entrepreneurs and founders of color by featuring their brands more prominently among the Maison’s range of products. For the first time, Sephora also partnered with Selena Gomez’s Rare Beauty to help people facing mental health challenges, with 100% of Rare Beauty sales made at Sephora on World Mental Health Day donated to the Rare Impact Fund. Sephora was also the sponsor of Woman, an immersive exhibition drawn from the movie by Anastasia Mikova and Yann Arthus-Bertrand, sharing the voice of thousands of women from across the world.

DFS focused its efforts on the gradual return of travelers from mainland China after borders were reopened following the Covid pandemic. Business rapidly recovered in nearby destinations Hong Kong and Macao, and did so more gradually in other Asian locations. Preparing for the full recovery expected in its key markets, the Maison rounded out its teams and its marketing initiatives. The year’s highlights included the celebration of the reopening of the iconic Waikiki Galleria in Hawaii, where DFS has been operating for the past 60 years; the launch of the “Explore New Dimensions” beauty initiative, featuring new interactive consultation experiences driven by artificial intelligence; the inauguration of the Maison’s concession at Chongqing Jiangbei Airport, its first location in mainland China; and the announcement of plans for its most ambitious project yet, to be completed by 2026, at Yalong Bay (Sanya) on the island of Hainan in China, where DFS will feature more than 1,000 luxury brands at stores spanning a total floor area of more than 128,000 square meters. DFS also unveiled the latest editions of its annual Masters of Wines and Spirits and Masters of Time exhibitions, held at Macao’s City of Dreams and Four Seasons, respectively. In Paris, La Samaritaine celebrated the second anniversary of its reopening and confirmed its appeal amid the increase in customer traffic driven by travelers from Asia. As part of its digital strategy, DFS launched a new customer loyalty program called DFS Circle.

Le Bon Marché, in addition to its highly loyal Parisian clientele, saw an influx of customers from elsewhere in France and international visitors. The department store’s revenue reached a record high. The year saw the opening of a new jewelry department, strong growth in the beauty department and the expansion of its range of responsible and sustainable products across all categories. L’Institut, its exclusive beauty and wellness center opened in 2022, turned in a very strong performance. Business was spurred by a rich array of events. The highlight of the beginning of the year was the Sangam exhibition by Indian artist Subodh Gupta. The Au Bonheur des Dames immersive theatre performance, which played to a full house for months in a row, was extended until the end of April. To celebrate the tenth anniversary of its founding, French fashion brand Sézane – the department store’s guest of honor – offered an exclusive pop-up collection as part of the Les Bons Marchés de l’Eté exhibition. Starting in September, Le Bon Marché welcomed Rossy de Palma and her colorful world for the Olé Olé Le Bon Marché exhibition. After nightfall, the store was the stage for an exclusive new show entitled Entre Chiens et Louves, co-produced with circus troupe Cirque Le Roux, featuring a masterfully poetic blend of art, theatre, dance and circus performance. In a resounding tribute to French cuisine, culinary expertise and authentic, local products, La Grande Épicerie de Paris celebrated its 100th anniversary with a flurry of creative collaborations and an eye-catching program of events.

In December, LVMH announced it had entered into a strategic agreement for the sale of its majority stake in Cruise Line Holdings Co. (the holding company for the Starboard & Onboard Cruise Services business). LVMH remains a substantial minority shareholder in this new company.

Outlook

The Selective Retailing Maisons are entering 2024 with the ambition of reaffirming their distinctive identities and continuing to offer the world’s best shopping experiences, innovating and building loyalty across all channels. Sephora will continue to build on its unique strengths: its vibrant community of passionate employees and loyal customers, its exceptional expertise in curating brands and products, and its omnichannel and in-store retail excellence. The Maison will pursue the global deployment of some of its most exciting brands and products while accelerating its commitment to clean and responsible beauty, with a new clean beauty program that will be progressively rolled out around the world. New stores will be opened in North America, China, Europe and Latin America, and a major store renovation program in the United States will help better reflect American customers’ new expectations. Sephora will continue to invest in technology and digital, with the ambition of offering the best app in the prestige beauty industry to its customers around the world. 2024 will also be an exceptional year for Sephora, a partner of the Torch Relay as part of LVMH’s partnership with the Paris 2024 Olympic and Paralympic Games. The Maison will also continue to step up its commitment to diversity, equity and inclusion, with initiatives dedicated to both its employees and its communities. While remaining vigilant and maintaining tight control over its allocation of resources, DFS aims to continue expanding in its key locations of Hong Kong and Macao. The opening of a new store on Senado Square in central Macao and the renovation of its stores in Hong Kong will contribute to achieving this objective. While continuing to invest in further elevating its range of products and services, the Maison will keep expanding its retail network, in particular at new spaces within Los Angeles International Airport. Le Bon Marché will continue to enhance the quality of its exclusive selection and its customer experience, while capitalizing on its profile as a trend-setting department store and its unique cultural dimension. The highlight of early 2024 will be the Aux Beaux Carrés: Travaux in situ exhibition of works by French artist Daniel Buren.

6.     Other activities

Les Echos group

LVMH acquired the Les Echos group in 2007. The Les Echos group includes Les Echos, France’s leading financial newspaper, LesEchos.fr, the top business and financial website in France, the business magazine Enjeux-Les Echos, as well as other specialized business services. The Les Echos group also holds several other financial and cultural media titles that were previously owned directly by LVMH: Investir – Le Journal des finances, resulting from the 2011 merger of two financial weeklies; Connaissance des Arts; and the French radio station Radio Classique. The Les Echos group also publishes trade journals, with titles produced by SID Presse, and is active in the business-to-business segment, with the organizations Les Echos Formation and Les Echos Conférences, the trade show Le Salon des Entrepreneurs, and Eurostaf market studies. Since late 2015, Les Echos has also encompassed the Le Parisien daily newspaper and its Aujourd’hui en France magazine.

La Samaritaine

La Samaritaine is a property complex located at the heart of Paris, beside the Seine river. Following a large-scale program to renovate and restore 70,000 square meters in space to the latest environmental standards, La Samaritaine reopened to shoppers in June 2021. With diversity at the heart of the redesign, the buildings now house an 80-crib daycare facility, plus 96 social housing units (operated by Paris Habitat). Designed and operated by DFS, the Samaritaine Pont-Neuf department store in Paris is guided by a bold vision: to create a rich blend of experiences and wonder, authenticity and modernity. In another of La Samaritaine’s projects, Cheval Blanc Paris, the Maison’s first urban hotel, welcomed its first guests in September 2021.

Royal Van Lent

Founded in 1849, Royal Van Lent designs and builds luxury yachts according to customers’ specifications and markets them under the Feadship brand, one of the most prestigious in the world for yachts over 50 meters.

LVMH Hotel Management

LVMH Hotel Management is the spearhead of the LVMH group’s business development in hotels, under the Cheval Blanc brand. The Cheval Blanc approach, based on the founding values of craftsmanship, exclusivity, creativity and hospitality, is applied at all of its hotels, whether proprietary or independently managed. Cheval Blanc has locations in Courchevel (France), Saint-Barthélemy (French Antilles) with the hotel acquired in 2013, the Maldives and Saint-Tropez. In 2021, Cheval Blanc opened its new luxury hotel in Paris at the La Samaritaine site.

Belmond

Founded in 1976, with the acquisition of Hotel Cipriani in Venice, Belmond is a pioneer in luxury tourism. For more than 40 years, the Maison has aimed to offer its customers one-of-a-kind trips and experiences in inspirational locations. Belmond has a large portfolio of hotels, trains, cruises and safaris that bring together heritage, expertise, authenticity and exacting customer service.

Le Jardin d’Acclimatation

Imagined as an emblem of modern Paris by Napoleon III and opened in 1860, the Jardin d’Acclimatation is the oldest leisure and amusement park in France. LVMH has held the concession to the park since 1984. Following the renewal of this concession in 2016, an ambitious modernization project was launched, culminating in the reopening of the entirely refurbished and redesigned park in June 2018.

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1.     Comments on the consolidated income statement

1.1         Breakdown of revenue

Change in revenue per half-year period (EUR millions and as %)

(a)  The principles used to determine the impact of exchange rate fluctuations on the revenue of entities reporting in foreign currencies and the impact of changes in the scope of consolidation are described on page 39.

(b)  0% in full-year 2023.

Revenue for the 2023 fiscal year was 86,153 million euros, up 9% from the previous fiscal year. It was adversely affected by 4 points as a result of many of the Group’s invoicing currencies weakening on average against the euro, in particular the Chinese renminbi, the Japanese yen and the US dollar.

The following changes to the Group’s consolidation scope took place after January 1, 2022: in the Wines and Spirits business group, the consolidation of Joseph Phelps Vineyards in August 2022 and of Château Minuty in February 2023; in the Perfumes and Cosmetics business group, the consolidation of Officine Universelle Buly as of January 1, 2022; in the Selective Retailing business group, the disposal of Starboard in December 2023. These changes in the scope of consolidation had a negligible effect on the Group’s full-year revenue growth.

On a constant consolidation scope and currency basis, revenue increased by 13%.

Revenue by invoicing currency

The breakdown of revenue by invoicing currency changed as follows with respect to the previous fiscal year: the contribution of the US dollar fell by 2 points to 28%, while the contributions of the euro and the Hong Kong dollar rose by 1 point each to 20% and 3%, respectively. The contributions of the Japanese yen and “Other currencies” remained stable at 7% and 42%, respectively.

Revenue by geographic region of delivery

By geographic region of delivery, the relative contributions of Europe (excluding France) and Asia (excluding Japan) to Group revenue rose by 1 point each to 17% and 31%, respectively, while the contribution of the United States fell by 2 points to 25%. The contributions of France, Japan and “Other markets” held steady at 8%, 7% and 12%, respectively.

Revenue by business group

The breakdown of Group revenue by business group changed as follows: the contributions of Wines and Spirits and of Perfumes and Cosmetics fell by 1 point each to 8% and 9%, respectively, while that of Selective Retailing increased by 2 points to 21%. The contributions made by Fashion and Leather Goods, and Watches and Jewelry held steady at 49% and 13%, respectively.

Revenue for Wines and Spirits decreased by 7% based on published figures. Affected by a negative 5-point exchange rate impact, which was partially offset by the impact of changes in scope arising from the consolidation of Joseph Phelps Vineyards and Château Minuty, revenue for this business group was down 4% on a constant consolidation scope and currency basis. Revenue from champagne and wines remained stable based on published figures and increased by 2% on a constant consolidation scope and currency basis, while revenue from cognac and spirits was down 13% based on published figures and 10% on a constant consolidation scope and currency basis. The United States and China were the countries most affected by lower consumer demand.

Revenue for Fashion and Leather Goods increased by 14% in terms of organic growth and by 9% based on published figures. Europe, Japan and Asia all delivered an excellent performance, while revenue in the United States declined. Virtually all the brands achieved outstanding results.

Revenue for Perfumes and Cosmetics increased by 11% in terms of organic growth and by 7% based on published figures. The United States, Japan, Europe and the Middle East were the regions where revenue increased the most.

Revenue for Watches and Jewelry increased by 7% in terms of organic growth and by 3% based on published figures. The jewelry Maisons posted solid growth. The most buoyant regions were Europe, Asia, the Middle East and Japan.

Revenue for Selective Retailing increased by 25% in terms of organic growth and by 20% based on published figures. Sephora turned in an excellent performance in most regions, particularly in Europe and the United States, while DFS benefited from the recovery in international travel.

1.2         Profit from recurring operations

The Group’s gross margin came to 59,277 million euros, up 9% compared to the previous fiscal year; as a percentage of revenue, the gross margin was 68.8%, up 0.4 points with respect to 2022.

Marketing and selling expenses totaled 30,768 million euros, up 9% based on published figures and up 13% on a constant consolidation scope and currency basis. The level of these expenses expressed as a percentage of revenue came to 35.7%, remaining stable with respect to the previous fiscal year.

This increase in marketing and selling expenses was mainly due to higher communications investments as well as the development of retail networks. Among these marketing and selling expenses, advertising and promotion expenses amounted to 12% of revenue, increasing by 10% on a constant consolidation scope and currency basis.

The geographic breakdown of stores is as follows:

General and administrative expenses totaled 5,714 million euros, up 14% based on published figures and up 15% on a constant consolidation scope and currency basis. They amounted to 6.6% of revenue.

Profit from recurring operations by business group

The Group’s profit from recurring operations was 22,802 million euros, up 8% from the previous fiscal year. The Group’s operating margin as a percentage of revenue was 26.5%, with no notable change with respect to the previous fiscal year.

Change in profit from recurring operations (EUR millions)

(a)  The principles used to determine the impact of exchange rate fluctuations on the profit from recurring operations of entities reporting in foreign currencies and the impact of changes in the scope of consolidation are described on page 39.

Exchange rate fluctuations had a negative overall impact of 672 million euros on profit from recurring operations compared to the previous fiscal year. This total comprises the following three items: (i) the impact of exchange rate fluctuations on export and import sales and purchases by Group companies, (ii) the change in the net impact of the Group’s policy of hedging its commercial exposure to various currencies, and (iii) the impact of exchange rate fluctuations on the consolidation of profit from recurring operations of subsidiaries outside the eurozone.

Wines and Spirits

Profit from recurring operations for Wines and Spirits was 2,109 million euros, down 2% relative to December 31, 2022. Champagne and wines contributed 1,095 million euros, while cognac and spirits accounted for 1,014 million euros. The business group’s operating margin as a percentage of revenue came to 31.9%.

Fashion and Leather Goods

Fashion and Leather Goods posted profit from recurring operations of 16,836 million euros, up 7% from the previous fiscal year. Louis Vuitton and Christian Dior Couture maintained an exceptional level of profitability. The business group’s operating margin as a percentage of revenue was 39.9%.

Perfumes and Cosmetics

Profit from recurring operations for Perfumes and Cosmetics was up 8%, influenced by a highly selective distribution policy, and totaled 713 million euros. The business group’s operating margin as a percentage of revenue was 8.6%.

Watches and Jewelry

Profit from recurring operations for Watches and Jewelry was 2,162 million euros, up 7% relative to December 31, 2022. The business group’s operating margin as a percentage of revenue was 19.8%.

Selective Retailing

Profit from recurring operations for Selective Retailing was 1,391 million euros, up 76% relative to December 31, 2022, reflecting the exceptional performance achieved by Sephora worldwide and the recovery in international travel, which benefited DFS. The business group’s operating margin as a percentage of revenue was 7.8%.

Other activities

The loss from recurring operations of “Other activities and eliminations” was 409 million euros, compared with a loss of 274 million euros in fiscal year 2022. In addition to headquarters expenses, this heading includes the results of the hotel and media divisions, Royal Van Lent yachts, and the Group’s real estate activities.

1.3         Other income statement items

“Other operating income and expenses” amounted to a net expense of 242 million euros, compared with 54 million euros in 2022. As of December 31, 2023, this item mainly included depreciation, amortization and impairment charges for brands, goodwill and investments in joint ventures and associates, as well as gains and losses on disposals, primarily that of Starboard carried out in December 2023.

The Group’s operating profit was 22,560 million euros, up 7% from the previous fiscal year.

“Net financial income/(expense)” amounted to a net expense of 935 million euros as of December 31, 2023, compared with a net expense of 888 million euros as of December 31, 2022. This item comprised the following:

●   the aggregate cost of net financial debt, which was a cost of 367 million euros, versus 17 million euros in the previous fiscal year, representing a negative change of 349 million euros, mainly due to the substantial and rapid increase in interest rates;

●   interest on lease liabilities recognized under IFRS 16, which increased in particular due to the change in interest rates, amounting to an expense of 393 million euros, compared with an expense of 254 million euros a year earlier;

●   other financial income and expenses, which amounted to a net expense of 175 million euros, compared to 618 million euros in fiscal year 2022. Included in this amount was the expense related to the cost of foreign exchange derivatives, 399 million euros, versus an expense of 358 million euros a year earlier. In addition, fair value adjustments of available for sale financial assets amounted to net income of 263 million euros, compared to a net expense of 225 million euros in 2022.

The Group’s effective tax rate as of December 31, 2023 was 26.2%, down 0.5 points from December 31, 2022. In addition, the consequences of the international tax reform drawn up by the OECD relating to the global minimum tax, known as Pillar Two, applicable in France starting in fiscal year 2024, are not material.

Profit attributable to minority interests totaled 778 million euros, compared to 667 million euros in the previous fiscal year; this total mainly includes profit attributable to minority interests in Moët Hennessy.

The Group’s share of net profit was 15,174 million euros, up 8% relative to 2022, when it totaled 14,084 million euros. This represented 18% of revenue, remaining stable with respect to fiscal year 2022.

The impact of exchange rate fluctuations is determined by translating the financial statements for the fiscal year of entities with a functional currency other than the euro at the prior fiscal year’s exchange rates, without any other restatements.

The impact of changes in the scope of consolidation is determined as follows:

-   for the fiscal year’s acquisitions, by deducting from revenue for the fiscal year the amount of revenue generated during that fiscal year by the acquired entities, as of their initial consolidation;

-   for the prior fiscal year’s acquisitions, by deducting from revenue for the fiscal year the amount of revenue generated over the months during which the acquired entities were not consolidated in the prior fiscal year;

-   for the fiscal year’s disposals, by adding to revenue for the fiscal year the amount of revenue generated by the divested entities in the prior fiscal year over the months during which those entities were no longer consolidated in the current fiscal year;

-   for the prior fiscal year’s disposals, by adding to revenue for the fiscal year the amount of revenue generated in the prior fiscal year by the divested entities.

Profit from recurring operations is restated in accordance with the same principles.

2.     Comments on the consolidated balance sheet

LVMH’s consolidated balance sheet totaled 143.7 billion euros as of end-December 2023, up 9.0 billion euros from December 31, 2022.

Intangible assets totaled 49.6 billion euros, down 0.6 billion euros from year-end 2022. The negative 1.2 billion euro impact of the revaluation of purchase commitments for minority interests and the negative 0.5 billion euro impact of exchange rate fluctuations on the intangible assets of entities outside the eurozone were partly offset by the positive 0.8 billion euro impact of changes in the scope of consolidation and by the 0.3 billion euro impact of investments, net of amortization charges and disposals. The impact of exchange rate fluctuations mainly arose from changes in the US-dollar-to-euro exchange rate over the period. The impact of changes in the scope of consolidation mainly resulted from the acquisition of a controlling interest in Château Minuty and in Platinum Invest during the fiscal year.

Property, plant and equipment were up 4.3 billion euros and totaled 27.3 billion euros as of the fiscal year-end. This increase resulted from 4.4 billion euros in investments, net of depreciation charges and disposals (the comments on the cash flow statement provide further information on investments), as well as an additional 0.2 billion euro increase due to changes in the scope of consolidation during the fiscal year. These effects were partly offset by the 0.4 billion euro impact of negative exchange rate fluctuations in the period.

Right-of-use assets totaled 15.7 billion euros, up 1.1 billion euros from December 31, 2022. The 0.4 billion euro adverse effect of exchange rate fluctuations between January 1 and December 31, 2023 was offset by the effect of new leases entered into and of updating lease liabilities during the terms of leases, which was 1.6 billion euros higher than depreciation for the fiscal year. Store leases represented the majority of right-of-use assets, for a total of 12.2 billion euros.

Other non-current assets increased by 0.3 billion euros, amounting to 7.4 billion euros, due to the 0.2 billion euro increase in the market value of non-current available for sale financial assets and the 0.3 billion euro increase in deferred tax assets.

Inventories were up 2.6 billion euros, mainly due to increased business activity during the fiscal year, partially offset by the negative 0.6 billion euro impact of exchange rate fluctuations. See also the “Comments on the consolidated cash flow statement” section.

Other current assets increased by 0.9 billion euros, mainly due to the following changes: 0.5 billion euros resulting from the increase in trade accounts receivable, and 0.4 billion euros from the increase in tax receivables.

Lease liabilities recognized in accordance with IFRS 16 were up 1.1 billion euros relative to December 31, 2022, with a 1.6 billion euro increase arising from net new leases offset by a 0.4 billion euro decrease arising from exchange rate fluctuations, in particular.

Other non-current liabilities totaled 22.8 billion euros, down 0.5 billion euros from 23.3 billion euros as of year-end 2022. This change included the 0.6 billion euro impact of the decrease in the liability in respect of purchase commitments for minority interests’ shares, which amounted to 11.9 billion euros, following changes in the metrics used to measure these commitments. It also included the 0.1 billion euro increase in deferred tax liabilities.

Lastly, other current liabilities increased by 0.2 billion euros to 19.7 billion euros. This increase mainly resulted from the increase in operating payables, related to the Group’s increased business activity.

Net financial debt and equity

Total equity amounted to 62.7 billion euros as of end-December 2023, up 6.1 billion euros from year-end 2022. Net profit for the fiscal year, after the distribution of dividends, contributed 9.2 billion euros to this increase. Conversely, (i) the 1.1 billion euro impact of exchange rate fluctuations, particularly with regard to the US dollar; (ii) the 1.4 billion euro impact of net purchases of LVMH shares, mainly due to the share buyback program set up during the fiscal year; and (iii) the 0.7 billion euro impact of the revaluation of purchase commitments for minority interests’ shares had a negative impact on equity.

As of end-December 2023, net financial debt came to 10.7 billion euros and was equal to 17.1% of total equity, compared to 16.3% as of year-end 2022, up 0.8 points.

Gross borrowings after derivatives totaled 22.0 billion euros as of end-December 2023, up 2.0 billion euros compared with year-end 2022. This increase arose from two opposing effects. The first was the repayment of 1.6 billion euros in two bonds maturing in the first half of 2023 (0.7 billion euro bond issued in 2019 and 0.7 billion pound sterling bond issued in 2020), offset by the issue of several bonds during the fiscal year (1 billion euro bond issued in April, maturing in 2025; 1 billion euro bond issued in September, maturing in 2025; 1.5 billion euro bond issued in September, maturing in 2033). The second was euro- and US dollar-denominated commercial paper (ECP and USCP) outstanding, which remained stable over the period. Cash, cash equivalents, and current available for sale financial assets totaled 11.3 billion euros as of December 31, 2023, remaining relatively stable with respect to their 10.8 billion euro level as of year-end 2022. Net financial debt thus increased by 1.5 billion euros during the fiscal year.

As of December 31, 2023, in addition to the amount of 11.3 billion euros in cash, cash equivalents and current available for sale financial assets, the Group had access to undrawn confirmed credit lines totaling 11.1 billion euros. The latter amount exceeded the outstanding portion of its euro- and US dollar-denominated commercial paper (ECP and USCP) programs, which came to 7.3 billion euros as of end-December 2023.

3.     Comments on the consolidated cash flow statement

Cash from operations before changes in working capital totaled 29,520 million euros for the fiscal year, up 2,749 million euros from 26,770 million euros a year earlier, mainly due to the increase in operating profit.

After tax and interest paid on net financial debt and lease liabilities, and after the change in working capital, net cash from operating activities amounted to 18,400 million euros, compared with 17,833 million euros in fiscal year 2022.

Interest paid on net financial debt amounted to a net cash outflow of 457 million euros, compared to 74 million euros a year earlier, due to the significant increase in interest rates over the past year.

Tax paid on operating activities came to 5,730 million euros, 125 million euros more than the 5,604 million euros paid in 2022, in connection with the increase in business activity and profit.

The change in working capital as of end-December 2023 resulted in a cash requirement of 4,577 million euros, 1,558 million euros higher than in 2022. The high change in working capital in 2023 mainly arose from the increase in inventories (4,230 million euros) and in trade accounts receivable (695 million euros); these effects were partly offset by the increase in trade accounts payable (434 million euros). The Fashion and Leather Goods, Watches and Jewelry, and Wines and Spirits business groups were the main drivers of these increases. These changes mainly arose from the surge in business activity during the fiscal year, except for Wines and Spirits, and in anticipation of future growth, which requires the Group to build inventories and secure access to certain critical supplies.

Operating investments net of disposals resulted in an outflow of 7,478 million euros in fiscal year 2023, up 2,509 million euros compared to the outflow of 4,969 million euros in fiscal year 2022. Purchases of property, plant and equipment mainly included investments by the Group’s brands – notably Louis Vuitton, Christian Dior, Tiffany and Sephora – in their retail networks. They also included purchases of buildings in Paris and London in particular, as well as investments by the champagne houses, Hennessy and Louis Vuitton in their production equipment.

Repayment of lease liabilities totaled 2,818 million euros in 2023, up 68 million euros with respect to 2,751 million euros in 2022.

In fiscal year 2023, “Operating free cash flow” ⁽²⁾ amounted to a net inflow of 8,104 million euros, down relative to fiscal year 2022, mainly due to substantial operating investments and the change in working capital.

In 2023, financial investments accounted for an outflow of 832 million euros, including an outflow of 721 million euros for purchases of consolidated investments, mainly in Château Minuty and Platinum Invest.

Equity-related transactions generated an outflow of 8,745 million euros. A portion of this amount, 6,251 million euros, arose from dividends paid during the fiscal year by LVMH SE, excluding the amount attributable to treasury shares, as well as tax related to dividends paid between Group companies for 376 million euros and 532 million euros paid to minority interests in consolidated subsidiaries. Other equity-related transactions generated an additional outflow of 1,584 million euros, mainly due to transactions in LVMH shares under the share buyback program set up during the fiscal year.

The cash requirement generated after all transactions relating to operating activities, investing activities and equity-related transactions thus totaled 1,474 million euros. Financing activities relating to loans and borrowings, as well as current available for sale financial assets, generated a net inflow of 2,167 million euros in the fiscal year, mainly due to bond issues during the period, net of repayments made in 2023. After the negative 273 million euro impact of exchange rate fluctuations on cash balances, the period-end cash balance was up 420 million euros compared to year-end 2022. It totaled 7,520 million euros as of the fiscal year-end.

4.     Financial policy

During the fiscal year, the Group’s financial policy focused on the following areas:

●   preserving the Group’s financial structure and flexibility, as evidenced by the following key indicators:

-   a significant reserve of undrawn confirmed credit lines totaling 11.1 billion euros;

-   the Group’s access to liquidity, notably under euro- and US dollar-denominated commercial paper and negotiable debt security programs (NEU CP), as well as its ability to tap the bond markets for medium- to long-term maturities, with issue spreads holding steady overall during the year in an environment of steeply rising interest rates and high volatility;

-   equity before appropriation of profit was on the rise, totaling 62.7 billion euros as of year-end 2023, versus 56.6 billion euros a year earlier.

●   preserving the Group’s assets:

-   maintaining a significant level of cash and cash equivalents with a diversified range of top-tier banking partners as well as money market funds and other short-term, very high-quality credit assets. With interest rates on the rise, particular attention was paid to the return on these investments;

-   maintaining a prudent foreign exchange and interest rate risk management policy designed primarily to hedge the risks generated directly and indirectly by the Group’s business activity and to hedge its debt. With regard to foreign exchange risks, the Group continued to hedge the risks of its exporting companies by buying options or collars, which protect against the negative impact of currency depreciation while retaining some of the gains in the event of currency appreciation;

-   continued concentration of Group liquidity owing to the rollout of cash pooling practices worldwide, ensuring the fluidity of cash flows within the Group and optimal management of surplus cash.

●   a dynamic dividend policy for shareholders, enabling them to share in the 2023 results:

-   an interim dividend for 2023 of 5.50 euros was paid in December 2023;

-   a proposed total dividend per share of 13.00 euros for fiscal year 2023 (i.e. a final dividend of 7.50 euros to be distributed in April 2024). The distribution to shareholders of LVMH SE in respect of 2023 thus totals around 6.5 billion euros.

Net debt came to 10.7 billion euros as of year-end 2023, as against 9.2 billion euros a year earlier. Net debt increased by 1.5 billion euros, resulting from increases in operating and real estate investments, working capital, the cost of net debt and tax paid. In November 2023, Moody’s upgraded LVMH’s long-term credit rating from A1 to Aa3 with stable outlook, applauding the Group’s excellent operating performance and financial strength.

5.     Operating investments

5.1         Communication and promotion expenses

Over the last three fiscal years the Group’s total investments in communication, in absolute values and as a percentage of revenue, were as follows:

These expenses mainly correspond to advertising campaign costs, especially for the launch of new products, public relations and promotional events, and expenses incurred by marketing teams responsible for all of these activities.

5.2         Research and development costs

The Group’s research and development investments in the last three fiscal years were as follows:

Most of these amounts cover scientific research and development costs for skincare and makeup products of the Perfumes and Cosmetics business group.

5.3         Investments in production facilities and retail networks

Operating investments are geared towards improving and developing retail networks as well as guaranteeing adequate production capabilities.

Acquisitions of property, plant and equipment and intangible assets for the last three fiscal years were as follows, in absolute values and as a percentage of the Group’s cash from operations before changes in working capital:

Following the model of the Group’s Selective Retailing companies, which directly operate their own stores, Louis Vuitton distributes its products exclusively through its own stores. The products of the Group’s other brands are marketed by agents, wholesalers, or distributors in the case of wholesale business, and by a network of directly operated stores or franchises for retail sales.

In 2023, apart from acquisitions of property assets, operating investments mainly related to points of sale. The total number of stores in the Group’s network rose from 5,664 in 2022 to 6,097 in 2023.

In Wines and Spirits, in addition to necessary replacements of barrels and production equipment, investments in 2023 were related to ongoing investments in the Champagne region (initiated in 2012) as well as the construction of cognac cellars, primarily for Hennessy and Glenmorangie.

6.     Main locations and properties

6.1         Production

6.1.1       Wines and Spirits

The surface areas of vineyards in France and abroad that are owned by the Group are as follows:

In the table above, the total number of hectares owned is determined exclusive of areas not usable for winegrowing. The difference between the total number of hectares owned and the number of hectares under production represents areas that are planted but not yet productive, and areas left fallow.

The Group also owns industrial and office buildings, wineries and distilleries, cellars, warehouses, offices and visitor and customer centers for each of its main Wines and Spirits brands or production operations in France, the United Kingdom, Poland, Argentina, the United States, Australia, China, New Zealand, Brazil, India and Spain. The total surface area is approximately 1,127,200 square meters in France and 363,138 square meters abroad.

6.1.2       Fashion and Leather Goods

Louis Vuitton owns thirty-five leather goods and shoe production facilities, in addition to its fragrance laboratory. Most of them are in France, but there are also major workshops located in Spain (near Barcelona), Portugal (near Porto), Italy (in Fiesso) and the United States (in San Dimas and Irwindale, California, and Alvarado, Texas). Overall, production facilities and warehouses owned by the Group represent approximately 243,600 square meters.

Fendi owns its leather goods and shoe manufacturing facilities near Florence and in Fermo, Italy, as well as the Palazzo Fendi building in Rome, which houses its historic boutique and a hotel.

Celine also owns manufacturing and logistics facilities as well as offices at Vigonza, Radda and Greve in Chianti (Italy).

Berluti’s shoe production factory in Ferrara, Italy is owned by the Group.

Loro Piana has several manufacturing workshops in Italy as well as a site in Ulaanbaatar, Mongolia.

Rimowa owns its offices, production facilities and warehouses in Germany, the Czech Republic and Canada. This property represents approximately 70,500 square meters.

Christian Dior owns six manufacturing workshops (four in Italy, one in Germany and one in France) and a warehouse in France. Overall, this property represents approximately 53,000 square meters.

LVMH Métiers d’Art owns several farms in Australia and the United States, with a total surface area of about 220 hectares, as well as a tannery and a production facility covering about 16,000 square meters in France. Thélios has a 20,000-square-meter eyewear factory in Italy.

The other facilities used by this business group are leased.

6.1.3       Perfumes and Cosmetics

Buildings located near Orléans and in Chartres, France, housing the Group’s Research and Development operations for Perfumes and Cosmetics as well as the manufacturing and distribution activities of Parfums Christian Dior, are owned by Parfums Christian Dior and total around 165,600 square meters.

Guerlain has a 20,000-square-meter production site in Chartres. The brand also owns another production site in Orphin, France, measuring 10,500 square meters.

Parfums Givenchy owns two plants in France – one in Beauvais and the other in Vervins – with a total surface area of 19,000 square meters. The Vervins plant handles the production of Givenchy and Kenzo product lines. The company also owns distribution facilities in Hersham, in the United Kingdom.

6.1.4       Watches and Jewelry

TAG Heuer has two workshops in Switzerland, one in Cornol and the other in Chevenez, together totaling about 4,700 square meters.

Zenith owns the manufacture which houses its movement and watch manufacturing facilities in Le Locle, Switzerland.

Hublot owns its production facilities in Switzerland and its office premises.

Bulgari owns its production facilities in Italy and Switzerland as well as around 54,300 square meters of land in Italy.

Chaumet owns a jewelry workshop in Valenza (Italy) that totals around 2,900 square meters.

Tiffany owns its production facilities in the United States, France, Cambodia, Vietnam, Mauritius and Botswana, as well as a warehouse in the United States. Overall, this property represents approximately 74,500 square meters.

Pedemonte owns four production facilities in Italy, together totaling around 8,700 square meters.

The facilities used by the business group’s other brands (Fred) are leased.

6.2         Distribution

Retail distribution of the Group’s products is most often carried out through exclusive stores. Most of the stores in the Group’s retail network are leased and only in exceptional cases does the LVMH group own the buildings that house its stores. During fiscal year 2023, buildings were acquired in Paris and London by the Group’s holding companies and Maisons, mainly in order to operate stores in them.

6.2.1       Fashion and Leather Goods

Louis Vuitton owns certain buildings that house its stores in Paris, Tokyo, Osaka, Hawaii, Guam, Seoul, Cannes, Saint-Tropez and Genoa, for a total surface area of nearly 24,000 square meters.

Christian Dior owns certain buildings that house its stores in France, South Korea, Japan, England, Australia, Switzerland and Spain, for a total surface area of more than 22,000 square meters.

Celine, Fendi and Berluti also own stores in Paris and Italy.

6.2.2       Watches and Jewelry

Tiffany owns the premises of one of its stores in the United States.

6.2.3       Selective Retailing

Le Bon Marché owns its stores, which total approximately 79,800 square meters.

La Samaritaine owns the store with around 30,700 square meters in space in Paris that is leased by DFS.

DFS owns its stores in Guam, the Mariana Islands, and Hawaii.

6.2.4       Other activities

The Group owns the Cheval Blanc hotels in Saint-Barthélemy and Paris and the Résidence de la Pinède in Saint-Tropez, France.

Belmond owns 26 hotels, 8 of which are in Italy.

As of December 31, 2023, the Group’s store network broke down as follows:

6.3         Administrative sites and investment property

Most of the Group’s administrative buildings are leased, with the exception of the headquarters of certain brands, particularly those of Louis Vuitton, Christian Dior Couture, Parfums Christian Dior, and Zenith.

The Group owns the building housing its headquarters on Avenue Montaigne in Paris. It also owns three buildings in New York with about 20,400 square meters of office space and four buildings in London with about 3,500 square meters of office space. These buildings are occupied by Group entities.

The Group also owns investment properties with office space in Paris, Osaka and London, which total about 3,400, 3,000 and 1,400 square meters, respectively. These buildings are leased to third parties.

La Samaritaine and Le Bon Marché own office space in Paris totaling 31,475 and 18,800 square meters, respectively.

7.     Option plans set up by subsidiaries

None.

8.     Subsequent events

No significant subsequent events occurred between December 31, 2023 and January 25, 2024, the date at which the financial statements were approved for publication by the Board of Directors.

9.     Recent developments and outlook

While the geopolitical and economic environment remains uncertain, LVMH is confident in its ability to continue to grow in 2024, in the highly distinctive quality and creativity that its products offer its customers, as well as in the professionalism of its management, to stand out and gain market share. LVMH will pursue its brand development-focused strategy, underpinned by continued innovation and investment as well as an extremely exacting quest for quality in its products, their desirability and selective distribution.

Driven by the agility of its teams, their entrepreneurial spirit and its well-diversified presence across the geographic areas in which its customers are located, LVMH therefore enters 2024 with confidence and sets an objective of reinforcing its global leadership position in luxury goods.

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1.     Background

The LVMH group is deeply committed to adopting and promoting ethical behavior and acting with integrity in all its relationships with its partners. This principle has led the Group to establish rules of conduct and principles for action relating to ethics, corporate social responsibility and respect for the environment that guide our relations with employees, business partners, suppliers and other stakeholders.

LVMH has always:

●   ensured that its practices reflect the highest standards of integrity, responsibility and respect for its partners;

●   offered a working environment that allows its employees to fully express their talents and implement their skills and expertise;

●   ensured that its Maisons define and adapt their production processes, habits and behaviors in order to continuously improve their response to the environmental challenges they face;

●   participated in the regional development of the areas in which the Group operates through its activities;

●   mobilized resources and skills to serve philanthropic initiatives and projects of general interest, and promoted access to art and culture for as many people as possible.

As a responsible and committed stakeholder, the Group seeks to anticipate and meet the expectations of civil society in relation to corporate social and environmental responsibility, which include the following:

●   taking into account changing career expectations and helping employees navigate new work challenges, technological changes and new demographics while respecting their individuality;

●   responding to environmental challenges in light, in particular, of urgent changes called for by climate change;

●   greater transparency in supply management to ensure that every stakeholder in the value chain offers satisfactory living and working conditions and uses environmentally friendly production methods;

●   demanding integrity in business, underpinned by the implementation of procedures to prevent corruption, money laundering and breaches of international sanctions and human rights;

●   sensitivity to the use of personal data, a key issue in safeguarding the fundamental right to privacy.

Information about the Group’s vigilance plan and statement of non-financial performance can be found in the cross-reference tables at the end of this section.

2.     Standards

The LVMH group stays true to its uniqueness through a meticulous dedication to excellence. This dedication requires an unwavering commitment to the highest standards in terms of ethics, corporate social responsibility and respect for the environment.

In recent years, the Group has supported or signed up for a number of international standards, implementation of which it promotes within its sphere of influence, as well as putting in place its own internal standards.

2.1         International instruments

For many years now, the LVMH group has demonstrated its desire to act as a responsible corporate citizen and align its operations and strategy to support various internationally recognized benchmarks, including the following:

●   the Universal Declaration of Human Rights;

●   the International Covenant on Economic, Social and Cultural Rights;

●   the United Nations Global Compact, to which the Group signed up in 2003, as well as the Caring for Climate initiative;

●   the 17 Sustainable Development Goals drawn up and developed by the United Nations;

●   OECD Guidelines;

●   the International Labour Organization (ILO)’s Fundamental Conventions;

●   the French Diversity Charter, signed by the Group in 2007;

●   the United Nations Women’s Empowerment Principles, signed by the Group in 2013;

●   France’s national biodiversity protection strategy;

●   the Kimberley Process, an international system for certifying rough diamonds;

●   the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES);

●   UNESCO’s intergovernmental scientific program, “Man and the Biosphere” (MAB), aimed at protecting global biodiversity;

●   the United Nations’ standards of conduct for business tackling discrimination against lesbian, gay, bi, trans and intersex (LGBTI) people;

●   the International Labour Organization (ILO) Global Business and Disability Network Charter.

2.2         Internal standards

The Group has developed its own framework of internal standards to guide the conduct of its employees and partners. Certain of the Group’s codes and charters described below are supplemented by existing codes, policies and procedures within the Maisons.

LVMH Code of Conduct

LVMH’s Code of Conduct is designed to provide a common ethical foundation for the Group and its Maisons, outlining the rules to be followed by all employees as they go about their work.

The Group revised its Code of Conduct in 2023 to reflect its heightened commitments to ethics and to social and environmental responsibility, in addition to related initiatives taken. An updated version will be published in the first quarter of 2024. The Code, which was completely overhauled with respect to the previous version, published in 2017 (which remained in force in 2023), is organized into three main sections:

●   a committed Group;

●   a responsible employer;

●   a Group with high standards of integrity.

The Code is specifically aimed at employees to foster accountability for the rules each individual is required to adhere to in performing their duties. It is signed by the members of the LVMH Executive Committee and endorsed by the Presidents of the Group’s Maisons. It includes references to Group internal charters and policies on ethics, environment and corporate social responsibility, which together form the framework that governs all actions taken by LVMH and its employees.

The Code of Conduct is available in 10 languages and is widely disseminated across the Group, in particular as part of the onboarding training for new hires.

Supplier Code of Conduct

The Supplier Code of Conduct sets out the Group’s expectations of its partners (suppliers, service providers, distributors, specialist trades, lessors and any third parties in a business relationship with a Group entity) and their subcontractors in various areas, including corporate social responsibility and upholding human rights (banning forced labor and child labor, banning illegal or undeclared work, harassment, discrimination, measures relating to wages, working hours, freedom of association, health and safety, protecting local communities), respecting the environment and integrity in business conduct (combating corruption and influence-peddling, combating money laundering, fair competition, preventing insider trading, customs legislation, protecting assets and personal information).

The Group’s partners are required to respect the principles of this Code and must also ensure that their own subcontractors and suppliers do the same when performing their activities for the Group. The Code, which has been translated into 18 languages, has been rolled out to all the Group’s Maisons.

The Code of Conduct also gives each Group entity the ability to check that its partners and subcontractors comply with these principles.

If a partner or one of its subcontractors should violate the Code, each Group entity in a business relationship with that partner reserves the right to demand that the compliance failures be remedied or that the business relationship be suspended or terminated, commensurate with the severity of the violations identified.

A new version of the Code, renamed the Business Partner & Supplier Code of Conduct, will be published in the first half of 2024, aimed at fostering a responsible approach across our network of partners.

Anti-Corruption Charter

In 2023, the Group developed its Anti-Corruption Charter, which will be published in the first quarter of 2024. This Charter reinforces LVMH’s zero-tolerance policy concerning corruption and influence-peddling and establishes a set of common rules for all Group employees aimed at preventing corruption.

LVMH and its Maisons rely on the commitment and vigilance of each of their employees worldwide in performing their duties. The Anti-Corruption Charter identifies employees as active participants in preventing corruption and influence-peddling. It defines and provides concrete examples prohibited behaviors, guiding employees on the appropriate behaviors to be adopted in different situations.

Privacy Charter

The LVMH Privacy Charter, which will be published in the first half of 2024, outlines the six key principles set out in the Code of Conduct regarding privacy and personal data protection: the principle of lawfulness, the principle of necessity, the principle of proportionality, the principle of security, the principle of transparency, and the principle of respecting the rights of the persons concerned. The Charter specifies that all employees, whatever their position, must ensure that any intrusion into their privacy must comply with these six key principles.

Responsible Lobbying Charter

LVMH is committed to and actively participates in public policy discussions, fostering constructive dialogue and cooperation with all relevant stakeholders. The Group’s contributions in the public space always abide by the laws and regulations applicable to the institutions and organizations in question, and LVMH is registered as an interest representative where its activities so require. The key principles of the Group’s commitment in the public space are integrity, transparency, and accuracy. These principles are detailed in the LVMH Responsible Lobbying Charter, which will be published in the first quarter of 2024.

Environmental Charter

Adopted in 2001, the Environmental Charter is the founding document for LVMH’s five main aims with regard to the environment:

●   striving for high environmental performance;

●   encouraging collective commitment;

●   managing environmental risks;

●   designing products that factor in innovation and environmental creativity;

●   making a commitment that goes beyond the Company.

It encourages the President of each Maison to demonstrate commitment to this approach through concrete actions.

The Charter was given a significant boost by the strategic LIFE (LVMH Initiatives For the Environment) program, launched in 2011, described in the “Environment and sustainability” section.

Recruitment Code of Conduct

The LVMH Recruitment Code of Conduct, implemented in 2009, has been widely disseminated to all employees involved in recruitment processes across the Group. It sets forth the ethical hiring principles to be observed at LVMH in the form of fourteen commitments. Special emphasis is placed on preventing any form of discrimination and on promoting diversity. Work on updating this Recruitment Code of Conduct has begun with the aim of better reflecting the changing recruitment environment and priorities: publication of this new version was pushed back to 2024 to bring it into line with the planned overhaul of the LVMH Code of Conduct, due to be published in the first quarter of 2024.

Charter on Working Relations with Fashion Models

In 2017, the Group drew up a Charter on Working Relations with Fashion Models in consultation with the Kering group and sector professionals motivated by a shared desire to promote dignity, health and well-being among fashion models.

The Charter, which applies to all Maisons worldwide, aims to bring about genuine change in the fashion world by rooting out certain behaviors and practices not in keeping with the Group’s values and raising awareness among fashion models that they are full-fledged stakeholders in these changes.

To help spread the principles laid down in the Charter, the LVMH and Kering groups have set up a dedicated website, wecareformodels.com. The site provides fashion models with best practice and advice from independent nutritionists and coaches.

Health and Safety Charter

Signed by the Group’s Executive Committee in April 2021, the Health and Safety Charter serves as the basis for a comprehensive approach across all the LVMH group’s operations with the aim of developing a “zero accident” culture.

The Group and its Maisons are committed to five key pillars: identifying priorities through a structured approach; drawing up and periodically reviewing an action plan; abiding by the approach, notably by submitting frequency rates to each Maison’s Management Committee; involving every employee in the approach, notably by raising awareness about first aid measures; and maintaining a virtuous culture through collaboration between the Group and the Maisons. Each commitment is associated with a target to be met by 2025. The charter will be covered by an annual reporting process, with results published in this document.

Animal-Based Raw Materials Sourcing Charter

In 2019, the Group launched its Animal-Based Raw Materials Sourcing Charter. This charter is the result of a long process of scientific research and collaboration between LVMH’s environmental experts, its Maisons and their suppliers. The exhaustive charter covers the full range of issues concerning the sourcing of fur, leather, exotic leather, wool and feathers. It allows the Group to make long-term commitments to achieving progress in three areas: full traceability in supply chains; animal farming and trapping conditions; and respect for local populations, the environment and biodiversity. Under the charter, a scientific committee has been formed, and each year it will support and supervise a number of research projects aimed at driving progress in this area.

Internal Competition Law Compliance Charter

In 2012, the Group formalized its commitment to uphold free and fair competition by adopting an Internal Competition Law Compliance Charter. The Charter aims to help develop a true culture of compliance with competition rules within the Group. This charter sets out the main rules with which all employees should be familiar as they conduct commercial relationships on a day-to-day basis and pragmatically defines the standards of conduct expected of them. In particular, LVMH prohibits any abuse of dominance, concerted practice or unlawful agreement, whether by way of understandings, projects, arrangements or behaviors coordinated among competitors concerning prices, territories, market shares or customers. The Charter is available on the Ethics & Compliance Intranet.

3.     Governance

Dedicated governance arrangements are in place to ensure the Group’s values and ethical standards are put into practice.

The Board of Directors’ Ethics & Sustainable Development Committee – the majority of whose members are Independent Directors – ensures compliance with the individual and shared values on which the Group bases its actions. Its principal duties are to:

●   help the Board of Directors define the Group’s broad strategic direction in terms of ethics and social and environmental responsibility, and help define rules of conduct to guide the behavior of senior executives and employees;

●   to ensure compliance with these rules; and

●   monitor the systems put in place.

The Chairman and Chief Executive Officer and the Executive Committee of LVMH uphold the Group’s strong commitment to ethics and social and environmental responsibility.

In addition, LVMH’s ESG Committee, which brings together the Group’s operational departments, supports and coordinates efforts to achieve strategic targets regarding ethics, environmental and social responsibility, and oversees international reporting and consolidated communication regarding performance. It relies on networks of expert correspondents who help deploy Group initiatives and submit useful information for consolidated reporting. In 2023, the ESG Committee met seven times.

The Privacy, Ethics & Compliance Department steers and coordinates LVMH’s procedures with regard to anti-corruption, personal data protection, respecting international sanctions and human rights and anti-money laundering. It is part of the Group’s General Administration & Legal Affairs Department, which reports directly to the Chairman and Chief Executive Officer and is represented on the Executive Committee.

Each year, the Privacy, Ethics & Compliance Department reports to the Ethics & Sustainable Development Committee about the Group’s progress on these issues. In 2023, the Group’s Privacy, Ethics & Compliance Director appeared twice before this committee to present the Group’s progress on anti-corruption, personal data protection, anti-money laundering, human rights and international sanctions.

The Maisons’ Presidents are responsible for disseminating the internal standards and principles within their respective organizations and ensuring they are effectively applied by employees. The Ethics & Compliance Committee of each Maison, under the leadership of its President, oversees the effective implementation of the compliance program within the Maison.

The role of Ethics & Compliance Officers at each Maison is to implement the Group’s ethics policy within their organization. Appointed by the President of each Maison, they regularly report on their activities at Ethics & Compliance Committee meetings. The Ethics & Compliance community consists of 140 correspondents and compliance officers within the Maisons, as well as 50 regional correspondents (figures as of December 31, 2023). LVMH’s Privacy, Ethics & Compliance Department coordinates this network both globally and through local initiatives thanks to its dedicated teams in the Americas and Asia-Pacific.

In addition, various communities have been set up to foster coordination between the Maisons and drive shared initiatives in the areas of ethics and environmental, social and societal responsibility, in particular:

●   the network of CSR Officers in place within the Maisons, whose role is to structure their Maison’s CSR approach around the LVMH 2025 CSR roadmap, share best practice, and implement and adjust actions in keeping with their Maison’s specific priorities. The international network of CSR Officers meets once a month, on “CSR Wednesdays”. This network includes CSR Officers in all major geographic areas;

●   the Environment Committee, which brings together a network of Environment Officers from the Maisons. This body provides a forum for reflection and discussion about major objectives (LIFE 360 program), environmental challenges and opportunities;

●   the network of Internal Control Officers led by the Audit & Internal Control Department, which coordinates the implementation of internal control and risk management systems. These officers are responsible, within the Maisons, for ensuring compliance with the Group’s internal control procedures and preparing controls tailored to their business.

4.     Risk identification

The Group’s activities involve exposure to various risks that are the object of regular risk management and identification, notably within the context of regulatory reforms.

A risk analysis focused primarily on risks associated with the Group’s supply chain was carried out with the assistance of Verisk Maplecroft, an external service provider specialized in analyzing political, economic, social and environmental risks. A new general risk analysis exercise was conducted in 2022 on the basis of figures for 2021.

The approach is based on an assessment comparing external assessments of risk levels by this external service provider with the quantitative information provided internally by a number of the Group’s Maisons, especially the amount of purchases by category and supplier. This work has allowed the Group to categorize its suppliers by criticality (a critical supplier is one playing a major role in a company process, i.e. any supplier that if affected by a failure, disruptions or other issues would lead to a complete or partial suspension of the company’s operations).

The exercise analyzes a wide variety of factors by geography and sector:

●   human rights: Decent pay and working hours, workplace discrimination, freedom of association and trade union membership, health and safety, forced labor, etc.

●   environment: Air quality, waste management, water stress, water quality, deforestation, climate change, risk of drought, CO₂ emissions indicator, etc.

The analysis of all these risk factors highlights the severity of potential risks arising from the Group’s activities and those of its supply chain.

Beyond this exercise focused on the Group’s supply chain, the Maisons’ Ethics & Compliance functions identify and prioritize corruption risk scenarios specific to their own business through dedicated risk mapping exercises based on interviews with representatives of the various functions and regions. These risk maps show their “gross” and “net” exposure to corruption risk (to take into account risk management measures in place) and allow for the development of action plans to manage the risks identified. The risk maps and resulting action plans are presented to the governing bodies of the Maisons. This exercise is repeated periodically. These risk maps were consolidated by business sector in 2022.

In addition, the list of risks classified by representatives of the Group’s central functions and Executive Management as “key risks” in the statement of non-financial performance in light of the Group’s activities has remained unchanged this year:

●   impact on ecosystems, the climate and natural resources;

●   setting up and maintaining responsible supply chains;

●   safeguarding health and safety at work;

●   transfer of key skills and expertise;

●   implementation of a policy to promote employee inclusion and fulfillment;

●   breaches in the implementation of personal data protection rules;

●   breaches in the implementation of business practice compliance arrangements.

5.     Risk management

In keeping with its aim of continuous improvement, the Group has set up a system for regularly monitoring risks relating to ethical, social and environmental responsibility.

The general risk analysis exercise (described in the previous section) helps the Maisons identify which countries and types of purchases are particularly at risk with respect to human rights violations and environmental impact. This exercise is now one of the key components of the Group’s Convergence program. The aim of this program is to ensure the best possible alignment between the gross risks identified by the risk-mapping exercise and supplier audit programs as well as risk mitigation actions.

The policies put in place to manage the key risks identified above, together with their results, where relevant, are set out in this section. Readers are referred to the “Attracting and retaining talent” and “Environment and sustainability” sections where applicable.

5.1         Comprehensive program to protect ecosystems and natural resources

Because its businesses celebrate nature at its purest and most beautiful, LVMH sees preserving the environment as a strategic imperative. The fact that this imperative is built into all the Group’s activities constitutes an essential driver of its growth strategy, enabling it to respond to stakeholders’ expectations and constantly stimulate innovation.

Built around four key aspects of the Group’s environmental performance, the global LIFE (LVMH Initiatives For the Environment) program provides a structure for this approach, from design through to product sale. It is presented in detail in the “Environment and sustainability” section.

5.2         Constant focus on employee inclusion and fulfillment

LVMH is constantly seeking to create conditions that enable its employees to realize their full potential and succeed within the business. At a time of shifting career expectations, it is vitally important to foster employees’ aspirations and their fulfillment and to promote diversity.

This is why ensuring safety and well-being at work, offering career guidance, respecting uniqueness, reducing gender inequality, promoting employment for people with disabilities and retaining older employees are all priorities within the Group’s human resources policy, detailed in the “Attracting and retaining talent” section.

5.3         Unrelenting focus on quality and safety

LVMH is continuously looking to offer products of the highest quality, through research and innovation and high standards in the selection of materials and the implementation of expertise in its activities. The Group is motivated by a constant desire to protect the health and safety of its stakeholders.

As regards its own employees, LVMH pursues a health, safety and well-being at work policy that is set out in the “Attracting and retaining talent” section.

As regards its suppliers’ employees, the assessment criteria used in workforce audits of suppliers at Tier 1 and above include aspects related to health and safety (see §5.5).

As regards its customers, the Group is particularly attentive to two key issues: prudent use of chemical compounds in production processes and promoting responsible consumption of wines and spirits.

Prudent use of chemical compounds in production processes

LVMH is committed to safeguarding against risks inherent in the use of chemical compounds, and complies with regulations, industry group recommendations and opinions issued by scientific committees in this field. The Group is constantly seeking to anticipate changes in this area, drawing on its employees’ expertise to produce only the safest products.

The Group’s experts regularly take part in working groups set up by domestic and European authorities and play a very active role within industry groups. Their ongoing monitoring of changes in scientific knowledge and regulations has regularly led LVMH to prohibit the use of certain substances and make efforts to reformulate some of its products.

The Group’s Maisons have customer relations departments that analyze customer complaints, including those relating to adverse effects.

The Perfumes and Cosmetics business group has a dedicated team of specialists who provide the Maisons with access to a European network of healthcare professionals able to quickly respond to help consumers experiencing side effects. Such post-market surveillance makes it possible to explore new avenues of research and constantly improve the quality and tolerance with respect to the Group’s products. The Maisons in this business group comply with the most stringent international safety laws, including the EU regulation on cosmetic products. Their products must meet very strict internal requirements covering development, quality, traceability and safety.

Maisons in the Fashion and Leather Goods, and Watches and Jewelry business groups abide by the LVMH Restricted Substances List, an in-house standard that prohibits or restricts the use of certain substances in products placed on the market, as well as their use by suppliers. This standard, which applies to all raw materials used by the Maisons, goes beyond global regulatory requirements and is regularly updated in response to ongoing monitoring of scientific developments. In 2019, LVMH joined the ZDHC (Zero Discharge of Hazardous Chemicals) trade association, which aims to promote best practices concerning the use of dangerous substances and the quality of discharged wastewater at textile and leather manufacturing sites. The actions implemented in 2023 by the Group and the Fashion and Leather Goods Maisons are presented in §3.3 “Pollution” in the “Environment and sustainability” section.

To help suppliers eliminate the substances on this list, the Group’s Environment Department has produced specific technical guides suggesting alternatives. Training is regularly offered on this subject.

Another in-house tool, the LVMH Testing Program, reinforces the control system of Maisons in the Fashion and Leather Goods business group, allowing them to test the highest-risk substances for different materials at nine partner laboratories.

Moët Hennessy: An ambassador for responsible consumption of wines and spirits

The Group’s Wines and Spirits Maisons promote the art of enjoyment of their drinks and invite their consumers to learn about their heritage and expertise. These Maisons are also fully aware that their primary responsibility to society is to safeguard against risks relating to the harmful use of alcohol.

Moët Hennessy has made a commitment to promote moderate consumption and responsible choices with regard to alcohol among its employees and consumers.

The Maisons need to help consumers who are old enough to consume the Group’s products to make responsible choices when drinking, such as deciding whether or not to drink and choosing when and how much to drink.

Raising awareness and educating its consumers, customers and employees about risky behaviors such as excessive alcohol consumption is a priority for the Group.

Some people should not consume alcohol at all. Moët Hennessy has adopted a firm stance against alcohol consumption amongst minors and also believes that pregnant women should be better informed about the risks of alcohol consumption for their child.

Moët Hennessy fully supports the World Health Organization’s goal of reducing harmful use of alcohol by 20% worldwide by 2030.

In October 2021, Moët Hennessy joined the IARD (International Alliance for Responsible Drinking), a group bringing together leading names from the beers, wines and spirits industry, dedicated to promoting responsible consumption. Moët Hennessy is committed to abiding by the standards set by the IARD in relation to its digital marketing practices, the information it shares with consumers (particularly in its product labeling), online sales and home deliveries. The Group is also committed to working with the industry as a whole to take the concept of responsible consumption even further.

Action plans are rolled out based on prior commitments.

For example, Moët Hennessy developed a Responsible Marketing & Communications Code more than 15 years ago. This code has been regularly updated and recently incorporated the IARD’s digital principles and principles for influencers. Marketing teams are trained on the basis of this code, which is also systematically shared with external agencies. In addition, Moët Hennessy is a member of the World Federation of Advertisers’ Responsible Marketing Pact, an industry standard aimed at preventing minors from being exposed to alcohol marketing.

Moët Hennessy’s company culture is based on moderation and responsible enjoyment of its products. Its employees are responsible and exemplary ambassadors of this.

Moët Hennessy is aware of the need to raise awareness within the company about responsible consumption and has developed specific training programs for employees, as well as individual instructions for events held within the Maisons and on the markets.

Moët Hennessy participates in industry-level initiatives and is involved in the “Wine in Moderation – Art de Vivre” program, which brings together wine industry professionals from all over the world around a social responsibility agenda, offering information and tools to help industry professionals serve wine responsibly and encouraging consumers to have a responsible relationship with wine and wine culture, in a spirit of sharing.

On a local level, Moët Hennessy also supports national industry initiatives to promote responsible consumption such as Responsibility.org in the United States, Prevention & Moderation in France, and other initiatives around the world.

5.4         Integrity in business

Integrity and responsibility have always been central to the LVMH group, which is committed to ensuring ethical behavior in all its activities and business relationships, and requires exemplary performance from its employees and partners in this regard.

The LVMH group is steadfast in its determination to adhere to its ethical principles at all times and act in accordance with applicable laws and regulations concerning preventing corruption and money laundering, respecting international sanctions and human rights and personal data protection. It implements compliance programs devised and rolled out by the Group’s Privacy, Ethics & Compliance Department and its network of officers within the Maisons.

Since 2022, rolling out and strengthening the Ethics & Compliance function has been one of the criteria used to determine the Group Managing Director’s compensation. The Governance & Compensation Committee of the Board of Directors recommended including these targets in the 2023 qualitative criteria for the Group Managing Director’s variable compensation. In addition, since 2023, targets related to ethics, environmental and social responsibility have been included in the criteria for payment of the Chairman and CEO’s variable compensation.

Accordingly, the Group’s Privacy, Ethics & Compliance Department develops and coordinates the rollout of cross-departmental initiatives to strengthen compliance programs already in place within the Group and ensure their consistency. It implements shared tools and rules to help to prevent, detect and address prohibited conduct, in terms of combating corruption as well as preventing money laundering, respecting international sanctions and human rights and personal data protection. Given the diversity of the LVMH ecosystem and its decentralized organizational model, Maisons have developed their own policies, procedures and tools adapted to their specific business contexts in compliance with the framework established by the Group.

The Group also undertakes communications, awareness and training activities aimed at instilling a culture of integrity and boosting employee vigilance.

Risk identification and management

As noted in Section 4, “Risk identification”, the Group’s activities are subject to regular risk analysis to ensure that appropriate prevention and detection measures are in place, particularly as regards combating corruption and respecting human rights (as part of the Group’s vigilance plan – see Section 7.2). These risk maps enable the Maisons to efficiently manage the rollout of the Group’s ethics and compliance systems based on the appropriate knowledge.

Internal rules and procedures

LVMH has in place procedures to prevent and detect breaches of probity in financial life and follows a zero-tolerance policy on corruption and influence-peddling. The Group’s Code of Conduct reflects LVMH’s commitment to combating corruption and sets out the principles of conduct that must be respected by Group employees.

Alongside the LVMH Code of Conduct, the internal guidelines serve as a reference guide to help employees adopt appropriate behaviors in various areas to do with business ethics:

●   preventing corruption and influence-peddling by defining these concepts and providing examples of prohibited behaviors against which staff should be on their guard;

●   mandatory rules on gifts and entertainment;

●   rules for preventing, reporting and resolving conflicts of interest; in this regard, annual conflict of interest reporting campaigns are undertaken within the Group and the Maisons;

●   preventing money laundering, financial fraud and violations of economic and trade sanctions;

●   use of assets belonging to the Group and the Maisons, including the fact that such assets are made available only for a temporary period and the requirement that they be used in a professional and conscientious manner;

●   loans of clothes and accessories by Maisons to employees or individuals outside the Group.

From the first quarter of 2024, the LVMH Anti-Corruption Charter will replace the guiding principles on anti-corruption, gifts and entertainment, as well as the management of conflicts of interest. The new charter will define and provide examples of behaviors to be avoided as they may constitute acts of corruption or influence-peddling.

This Charter helps employees recognize risky situations and act responsibly and appropriately, by drawing their attention to a number of key points to watch out for. It provides practical examples of prohibited behaviors and guides Group employees on the appropriate conduct to take in various situations they may face. The Anti-Corruption Charter also sets out LVMH’s anti-corruption compliance program.

Policies and guidelines drawn up by the Group in various areas of compliance provide a useful complement to the Code of Conduct, notably as regards the prevention of money laundering and compliance with international sanctions.

To take things further and adapt these rules to their specific contexts, the Maisons have implemented their own rules and procedures, particularly with regard to gifts and entertainment, and conflicts of interest.

Failure by employees to abide by rules laid down in the Code of Conduct, the Anti-Corruption Charter or the applicable policies of their employing Maison, will lead to the appropriate steps being taken to put an end to the infringement in question, including disciplinary sanctions proportionate to the severity of the infringement, in accordance with the provisions of the Rules of Procedure (or equivalent document) and all applicable laws and regulations.

Communications, awareness and training

The above-mentioned rules and policies are made available to all employees.

In particular, the Code of Conduct is published on the Group’s website and is communicated to employees, notably when they first join the Group. A module designed to raise awareness of the principles underpinning the Code of Conduct is set to be rolled out to the Maisons starting in the first half of 2024.

In addition to the training and awareness initiatives implemented by the Maisons, the Group has also developed a specific online training module on combating corruption, which is available to all Maisons and is meant for all employees. Between its launch in late 2018 and the end of 2023, the module, updated in 2021 and available in 13 languages, was completed by over 40,000 employees all over the Group (figure estimated in 2023). A new version of this module is to be rolled out to the Maisons starting in the first half of 2024. Drawing on various case studies, this module provides employees with guidance on how to deal with the main corruption scenarios they may encounter. It also:

●   reiterates LVMH’s zero-tolerance policy on corruption;

●   defines and illustrates the notions of corruption and influence-peddling;

●   spells out the penalties that apply.

The Group and its Maisons have also developed specific training programs for certain roles that are most exposed to the risk of corruption and influence-peddling. Employees in those roles most exposed to these risks receive training from their Maisons based on risks specific to each Maison. For example, in 2023 the Maisons rolled out dedicated training for buyers.

The Group’s internal control staff are also informed each year about the Group’s compliance and anti-corruption procedures.

Lastly, the Group’s Ethics & Compliance Officers receive ongoing in-depth training through dedicated work sessions as well as regional and global events. Since 2022, the Ethics & Compliance Academies have been bringing together officers from the Maisons for regional training days focused on the Group’s anti-corruption procedures. In 2023, these Academy gatherings took place in April for the Europe and Asia-Pacific regions and in May for the Americas region.

Annual Compliance Days also provide an opportunity for the Privacy, Ethics & Compliance Director to bring together the Ethics & Compliance team, review the previous year and set out future priorities and objectives. At these events, the Privacy, Ethics & Compliance Director invites the Maisons to share best practice and asks experts from the compliance world to talk about their experience and share their views on future challenges and opportunities. In 2023, this event was held in Paris on November 9 and 10 and brought together around 130 people (Ethics & Compliance Officers and, more broadly, representatives of functions involved in rolling out the Group’s ethics program). Also in attendance were a number of members of LVMH’s Executive Committee and two members of the Board of Directors.

In addition, the Group’s Privacy, Ethics & Compliance department regularly communicates with its network of officers, notably through work sessions organized, for example, when new guidelines or regulations affecting the Group’s activities are published.

Lastly, the Group’s Privacy, Ethics & Compliance department shares a range of resources (summary documents, guides, best practice, communication materials, awareness videos, etc.) via an Ethics & Compliance Intranet and a dedicated communication channel.

Alongside this, various training and awareness initiatives are undertaken by the Maisons.

Group whistleblowing system

LVMH encourages a culture of dialogue and communication within the Group. Any employees and external stakeholders who have questions about how to interpret internal regulations or have any ethical concerns are invited to make this known or ask for advice.

In addition to the existing warning channels within the Group’s Maisons, LVMH has set up the “LVMH Alert Line”, a secure centralized whistleblowing system that guarantees confidentiality, available in 14 languages. This online platform, which can be accessed from the Group’s website (https://www.lvmh.fr/lvmh-alert-line/), serves to collect and process reports submitted by employees or external stakeholders concerning situations liable to constitute infringements of laws, regulations, the LVMH Code of Conduct or charters and policies put in place by the Group or its Maisons.

The system includes coverage of the following behaviors:

●   corruption and influence-peddling;

●   conflicts of interest;

●   money laundering;

●   fraud and falsification of accounting records, embezzlement;

●   anti-competitive practices;

●   data protection breaches;

●   discrimination;

●   harassment;

●   infringements of workers’ rights and labor law;

●   violation of health and safety standards;

●   violation of environmental protection laws;

●   human rights violations;

●   reprisals connected with a previous whistleblowing report;

●   other violations of the LVMH Code of Conduct.

The Group’s Maisons issue regular communications about this whistleblowing system, notably when welcoming new employees. Employees are informed in particular about how they can access the system and the fact that the Group strictly prohibits any retaliation against whistleblowers (and anyone who helps them or is connected to them) using the system in good faith.

In 2023, 561 reports were received through the Group’s whistleblowing system (LVMH Alert Line), of which 63% had to do with human resources matters. These reports are handled in accordance with the applicable law and result in an inquiry if applicable.

In March 2023, LVMH published its Group Whistleblowing Policy setting out rules on gathering and processing reports received by the Maisons and other Group entities. This policy has been published on the Group’s website and communicated to each Maison’s employees.

Once alerts have been handled, they can be used to help improve risk identification and prevention procedures, as part of a continuous improvement approach.

Compliance control procedure

Since 2019, each Maison has reported annually to the Group’s Privacy, Ethics & Compliance Department on progress made on its compliance program via a detailed reporting questionnaire.

In addition, LVMH’s internal control framework includes a set of second-level verifications for ethics, which are checked through assessments concerning design and efficiency by the Group’s various entities (as described in the “Financial and operational risk management and internal control” section).

The following aspects of the anti-corruption system are verified annually under the “ERICA” approach (an overview of which can be found in the “Financial and operational risk management and internal control” section):

●   observance of the Code of Conduct and its communication to employees of the Maisons;

●   appointment of an Ethics & Compliance officer and an Ethics & Compliance Committee within each Maison;

●   the existence of a corruption risk map validated by the Maisons’ governing bodies;

●   providing information about the existence of the internal whistleblowing system and how it works;

●   the existence of a procedure for declaring conflicts of interest and gifts and entertainment;

●   completion of an anti-corruption module by employees identified as particularly exposed to corruption risk;

●   the existence of a third-party evaluation procedure to assess the risk of corruption;

●   the existence of anti-corruption accounting control procedures.

There are also specific mandatory control points covering measures put in place to safeguard against the risks of money laundering and violation of economic sanctions.

Lastly, the Internal Audit department, responsible for third-level controls, carries out compliance audits on certain aspects of the ethics and compliance program. Specific audits were conducted in 2023 to ensure that the program had been properly rolled out within Maisons and their subsidiaries.

5.5         Supplier assessment and support

The LVMH group considers it very important that the Maisons and the Group’s partners abide by a shared body of rules, practices and principles in relation to ethics, corporate social responsibility and environmental protection. The complexity of global supply chains means there is a risk of exposure to practices that run counter to these rules and values.

The Group’s responsible supply chain management approach therefore aims to motivate suppliers and every link in the supply chains involved to meet ethical, social and environmental requirements.

Supporting suppliers has long been a strategic focus for LVMH, with a view to maintaining sustainable relationships based on a shared desire for excellence. The Group pursues an overarching approach aimed at ensuring that its partners adopt practices that are environmentally friendly and respect human rights.

This approach is based on a combination of the following:

●   identifying priority areas, informed in particular by the multiple non-financial risk-mapping exercises covering the activities of the Group and its direct suppliers by type of activity;

●   site audits of our suppliers (Tier 1 and higher) to check that the Group’s requirements are met on the ground, and implementation of corrective action programs in the event of compliance failures;

●   supplier support and training;

●   actively participating in cross-sector initiatives covering high-risk areas.

To a large extent, actions implemented address issues connected with the environment, human rights and risk of corruption.

Identifying priority areas

The non-financial general risk analysis exercise described under §4 helps determine which suppliers should be audited as a priority. It takes into account risks related to the country, purchasing category and amount of purchases in question.

As part of its Convergence project, the Group continued to expand its use of the EcoVadis platform in 2023. Following the completion of the risk-mapping exercise each year, the main suppliers identified as at risk may be assessed using the EcoVadis methodology. This allows for the assessment of their ethical, social and environmental performance through the collection of documentary data, external intelligence and online research.

More than 2,000 suppliers were invited to join the platform in 2023: 77% of suppliers were reassessed and 69% of these improved their score. The average improvement since the first assessment is now 57 points (compared with the overall EcoVadis average of 46 points). Joining the platform’s existing participants – Group Purchasing, Louis Vuitton, the Beauty business group, Sephora, the Wines and Spirits business group, Bulgari, Fendi, Loewe, Celine, Christian Dior Couture and Chaumet – new participant Loro Piana came on board in 2023.

Assessment and corrective action plans

LVMH is unique in that it undertakes much of its own manufacturing in-house, with subcontracting accounting for only a small proportion of the cost of sales. The Group is therefore able to directly ensure that working conditions are safe and human rights respected across a significant part of its production.

The Maisons apply reasonable due diligence measures and audit their suppliers – and, above Tier 1, their subcontractors – to ensure they meet the requirements laid down in the LVMH Supplier Code of Conduct.

Contracts entered into with suppliers of raw materials and product components with whom the Group maintains a direct relationship include a clause requiring them to be transparent about their supply chain by disclosing their subcontractors.

Some Maisons, such as Loewe, use preselection questionnaires.

Maisons maintain collaborative, active working relationships with direct suppliers by helping them conduct audits and draw up any corrective action plans that might be required.

The Group uses specialist independent firms to conduct these audits. In 2023, 2,021 audits (not including EcoVadis assessments) were undertaken at 1,725 suppliers and subcontractors. Thanks to an improvement in the health situation in the countries where production facilities are located, this figure was higher than in 2022, when 1,625 audits were carried out.

Of all the audits undertaken, 76% covered both workforce-related aspects (health and safety, forced labor, child labor, decent pay, working hours, discrimination, freedom of association and collective bargaining, the right to strike, anti-corruption, etc.) and environmental aspects (environmental management system, water usage and pollution, gas emissions and air pollution, management of chemicals, waste management, types of raw materials used, etc.). A total of 10% of audits covered only workforce-related aspects, and 14% only environmental aspects. There was a significant increase in the number of audits covering all environmental aspects thanks to the introduction of new LVMH guidelines in January 2022.

The figures shown below are for 2021:

The last mapping of Tier 1 suppliers was undertaken in 2022 based on 2021 data; a new mapping exercise will be undertaken in 2024 using 2023 data.

Some Maisons have supplemented their audits using measures to directly ask their suppliers’ employees about their working conditions. These surveys help gain a clearer vision of working conditions at the sites concerned and check for problems such as forced labor or harassment, which may not be detected during audits. These fully anonymous, confidential surveys are offered through a mobile instant messaging application.

In 2023, 6% of suppliers audited failed to meet the Group’s requirements based on a four-tier performance scale that takes into account the number and severity of critical compliance failures. The majority of compliance failures identified had to do with health and safety. In such cases, the Group always works with the supplier to draw up a corrective action plan, implementation of which is monitored by the buyer responsible for the relationship within the relevant Maison. Some Maisons, such as Berluti, Fendi, Tiffany & Co. and Parfums Christian Dior, also offered personalized coaching to help suppliers correct compliance failures identified during audits.

In 2023, relations with 17 suppliers were terminated following adverse audit findings. In addition, five potential suppliers failed to secure approval following unsatisfactory pre-approval audits.

Following work carried out in 2020 with the aim of establishing a shared set of workforce-related audit guidelines for all the Group’s Maisons, these guidelines – which also include a section concerned with the assessment of environmental and anti-corruption risks – were applied starting in January 2021. Environmental audit guidelines were updated in January 2022 in order to collect essential data for the purposes of the LIFE 360 initiative.

Supplier and buyer training

In keeping with its aim of providing support and fostering continuous improvement, the Group regularly offers its suppliers training opportunities.

In addition to training on responsible purchasing practices held at certain Maisons in previous years, the decision was made in 2021 to create an LVMH-wide training program on this subject. Delivery of this training program, developed with the support of consulting firm Des Enjeux et Des Hommes, began in 2022, and was further reinforced in 2023, with sessions having taken place in France, Italy, North America and Asia.

Furthermore, buyers at the Maisons are trained in corruption prevention through dedicated training modules focused on the risks associated with their roles.

Lastly, with the announcement of the LIFE 360 Business Partners program at the LIFE 360 Summit in December 2023, the Group is now in a position to help its suppliers reduce their carbon, water and biodiversity footprints. From 2024 onwards, LVMH will be running Sustainability Business Partners Days to listen to partners’ needs and expectations so as to support the environmental goals of the Group’s various supply chains. The Group will also share its environmental knowledge and training programs as well as regulatory intelligence, and will encourage the sharing of solutions and expertise through a dedicated platform.

Participation in multi-party initiatives in high-risk areas

In addition to its actions aimed at direct suppliers, LVMH takes part in initiatives intended to improve visibility along supply chains and throughout subcontractor networks, to ensure that it can best assess and support all stakeholders.

Working groups have been put in place and targeted programs rolled out to address issues specific to the Group’s individual business groups. To maximize efficiency and optimize influence over subcontractors’ practices, preference is generally given to sector-specific initiatives covering multiple purchasing entities.

For Maisons in the Watches and Jewelry business group, the mining sector, which is highly fragmented and relies substantially on the informal economy, carries significant risks to human rights. As such, the Maisons have formally committed under the LIFE 360 program to ensuring that all gold supplies are certified by the Responsible Jewellery Council (RJC).

The Group and its Maisons are also involved in the Coloured Gemstones Working Group (CGWG) with other sector stakeholders. The CGWG aims to roll out environmental and social best practice across the colored gemstone sector by making all tools developed by the initiative available to the industry on an open-source basis and allowing industry players to assess the maturity of their practices.

Maisons in the Perfumes and Cosmetics business group have signed up for the Responsible Beauty Initiative run by EcoVadis, working with major sector players to develop action plans in response to business-specific issues. Since 2022, the business group has also been involved in the Responsible Mica Initiative, which aims to pool sector stakeholders’ resources to ensure acceptable working conditions in the sector. Work to map Indian mica supply chains began in 2015, followed by a program of audits down to the individual mine level. Over 80% of the supply chain has been covered to date.

The business group also joined Action for Sustainable Derivatives (ASD), a collaborative initiative jointly managed and overseen by BSR and Transitions. ASD brings together large companies in the cosmetics sector and the oleochemical industry to achieve their shared goal of improving traceability, working conditions and practices throughout the entire palm derivatives supply chain.

For Maisons in the Fashion and Leather Goods business group, specific traceability requirements applicable to the leather and cotton sectors have been incorporated into the LIFE 360 program. Leather traceability is taken into account via the score resulting from audits of the Leather Working Group standard. An LVMH leather coordination group drawn from all the Fashion and Leather Goods Maisons meets twice a year. Targets for the certification of raw materials like cotton and leather were set as part of the LIFE 360 program; the results are presented in the “Environment and sustainability” section under §3.1.2, “Key achievements in 2023: Biodiversity”.

For all Maisons, particular attention is paid to purchases of packaging materials due to fragmentation of production processes in this sector. Specific tools are used to assess and improve the environmental performance of packaging.

In 2021, LVMH set up a team to establish a pay equity policy applicable to all its employees and suppliers. These principles were adopted by the Human Resources Department in 2022.

Since 2018, LVMH has taken part in Utthan, an embroidery industry initiative bringing together major luxury brands. This initiative aims to empower artisans in Mumbai’s hand embroidery cluster, where many of the embroiderers partnering with the Maisons are based, and help them gain recognition for their skills. The initiative also includes an on-site training program for embroiderers. Audit guidelines and levels of compliance were reviewed and simplified in 2021, and updated to be brought in line with new regulations in India. In 2023, the initiative put in place a protocol to ensure that each and every embroiderer receives a living wage and health insurance.

5.6         Responsible management of personal data

The Group places great importance on respecting its customers’ and employees’ privacy and, in particular, protecting their personal data.

That being the case, the Group is to roll out six broad principles, laid down in the Code of Conduct and elaborated in the LVMH Privacy Charter, both due to be published in the first quarter of 2024. These principles are key to ensuring that individuals’ fundamental rights are protected whenever their data is collected, processed or transferred, regardless of geographical location. Each of the Group’s Maisons, regardless of location, is thus careful to abide by these six broad principles in addition to complying with applicable laws and regulations.

To ensure compliance with these principles and with applicable laws, each of the Group’s Maisons has appointed a Privacy Leader who oversees compliance in this area within his or her Maison. These Privacy Leaders belong to a community that meets at least monthly to discuss and share experience relating to shared issues to do with the protection of personal data.

To support LVMH and its Maisons, the Group provides Privacy Leaders with various tools to help them oversee and document compliance in this area. These tools help Data Protection Officers within the Maisons ensure compliance with the European Union’s General Data Protection Regulation.

To monitor the level of compliance of the Group and its Maisons, the ERICA system includes optional control points relating to the protection of personal data. There are plans to increase the number of these controls to make them more effective. An initial GDPR compliance self-assessment campaign was also run in 2023, the findings of which were shared with the Group’s top management. This self-assessment process will be repeated each year covering GDPR and any other regulations applicable to the Group and its Maisons.

6.     REPORT BY THE STATUTORY AUDITOR DESIGNATED AS AN INDEPENDENT THIRD PARTY ON THE VERIFICATION OF THE CONSOLIDATED STATEMENT OF NON-FINANCIAL PERFORMANCE

To the Shareholders’ Meeting,

In our capacity as Statutory Auditor of your company LVMH Moët Hennessy Louis Vuitton (hereinafter “the Company”), designated as an Independent Verifier (“third party”) accredited by COFRAC (COFRAC Inspection Accreditation No. 3-1886; scope available at www.cofrac.fr), we undertook work with the aim of expressing a reasoned opinion reflecting a limited assurance conclusion on the historical information (whether recorded or extrapolated) included in the consolidated statement of non-financial performance, prepared in accordance with the Company’s procedures (hereinafter “the Guidelines”), for the fiscal year ended December 31, 2023 (hereinafter “the Information” and “the Statement”, respectively), as set out in the Group’s Management Report pursuant to the provisions laid down in Articles L. 225-102-1, R. 225-105 and R. 225-105-1 of the French Commercial Code (Code de commerce).

It is also our responsibility to express, at the Company’s request and outside the scope of our accreditation, a conclusion of reasonable assurance that certain information selected by the Company and set out in the Statement is, in all material respects, fairly presented in accordance with the Guidelines.

1.     Limited assurance conclusion on the consolidated statement of non-financial performance in accordance with Article L. 225-102-1 of the French Commercial Code

On the basis of the procedures we performed, as described in the “Nature and scope of work” section, and the information we obtained, we found no material misstatements that might have led us to believe that the statement of non-financial performance is not compliant with applicable regulatory requirements or that the Information, taken as a whole, is not fairly presented, in accordance with the Guidelines.

2.     Reasonable assurance conclusion on a selection of information included in the Statement

In our opinion, the following information selected by the Company and identified by the ✔ sign in Appendix 1 is, in all material respects, fairly presented in accordance with the Guidelines.

Preparation of the Statement

The lack of a generally accepted and commonly used framework or established practice on which to base the assessment and measurement of Information allows for the use of different, but acceptable, measurement techniques that may affect comparability between entities and over time.

The Information should therefore be read and understood in relation to the Guidelines, the key elements of which are set out in the Statement and available upon request at the Company’s head office.

Limitations inherent in the preparation of the Information

The Information may be subject to uncertainty inherent in the state of scientific or economic knowledge and the quality of external data used. Some information is sensitive to methodological choices, assumptions and/or estimates used in its preparation and set out in the Statement.

Responsibility of the Company

It is the responsibility of management to:

●   select and define appropriate criteria for the preparation of Information;

●   prepare a Statement compliant with legal and regulatory requirements, including an overview of the business model, a description of key non-financial risks and an overview of the policies adopted in light of those risks, together with the results of those policies, including key performance indicators and furthermore the information provided for in Article 8 of Regulation (EU) 2020/852 (green taxonomy);

●   and for such internal control as management determines is necessary to enable the preparation of Information that is free from material misstatement, whether due to fraud or error.

The Statement was prepared by applying the Company’s Guidelines as mentioned above.

Responsibility of the Statutory Auditor designated as an Independent Verifier

It is our responsibility, on the basis of our work, to express a reasoned opinion reflecting a limited assurance conclusion that:

●   the Statement complies with the requirements laid down in Article R. 225-105 of the French Commercial Code;

●   the information provided is fairly presented in accordance with Point 3 of Sections I and II of Article R. 225-105 of the French Commercial Code, namely the results of policies, including key performance indicators, and actions in relation to key risks (hereinafter “the Information”).

As it is our responsibility to reach an independent conclusion regarding the Information as prepared by management, we are not allowed to be involved in the preparation of this Information, as this could compromise our independence.

It is not our responsibility to express an opinion on:

●   whether the Company complies with other applicable legal and regulatory provisions, notably concerning the information required by Article 8 of Regulation (EU) 2020/852 (green taxonomy), the vigilance plan and the prevention of corruption and tax evasion;

●   the fair presentation of the information required by Article 8 of Regulation (EU) 2020/852 (green taxonomy);

●   whether products and services comply with applicable regulations.

Regulatory provisions and applicable professional guidelines

The work described below was carried out in accordance with our audit program and the provisions of Articles A. 225-1 et seq. of the French Commercial Code, the professional guidelines of the French National Institute of Statutory Auditors (Compagnie Nationale des Commissaires aux Comptes), and ISAE 3000 (revised – Assurance Engagements Other than Audits or Reviews of Historical Financial Information).

Independence and quality control

Our independence is defined by the provisions of Article L. 821-31 of the French Commercial Code and the French Code of Ethics for Statutory Auditors (Code de déontologie de la profession de commissaire aux comptes). In addition, we have implemented a quality control system, including documented policies and procedures designed to ensure compliance with applicable laws and regulations, ethical standards and professional guidelines of the French National Institute of Statutory Auditors applicable to this engagement.

Means and resources

Our work was undertaken by a team of eleven people between July 2023 and January 2024, for a period of about twenty weeks.

We conducted around fifteen interviews with those responsible for preparing the Statement, notably representing Executive Management and the Administration & Finance, Risk Management, Privacy, Ethics & Compliance, Human Resources, Environmental Development and Purchasing Departments.

In the course of our work, we made use of information and communication technologies to conduct work and interviews remotely, with no adverse effect on the performance of the work.

Nature and scope of work

We planned and performed our work with due regard to the risks of material misstatement of the Information.

We consider that the procedures we performed using our professional judgment allow us to formulate a limited assurance conclusion:

●   we familiarized ourselves with the business of all entities falling within the scope of consolidation and the key risks;

●   we assessed the suitability of the Guidelines in terms of their relevance, completeness, reliability, objectivity and comprehensible nature, taking the sector’s best practices into consideration, where applicable;

●   we checked that the Statement covers each category of information laid down in Section III of Article L. 225-102-1 with regard to social and environmental impact, as well as compliance with human rights and the prevention of corruption and tax evasion;

●   we checked that the Statement provides the information required by Section II of Article R. 225-105 wherever relevant with respect to the key risks and, where applicable, includes an explanation of the reasons for the absence of information required by Section III, Paragraph 2 of Article L. 225-102-1;

●   we checked that the Statement provides an overview of the business model and a description of the key risks associated with the business of all entities falling within the scope of consolidation, including, where relevant and proportionate, risks arising from business relationships, products and services as well as policies, actions and results, including key performance indicators related to key risks;

●   we consulted source documents and conducted interviews to:

-   assess the process used to select and validate key risks, as well as the consistency of results, including key performance indicators related to the key risks and policies presented,

-   corroborate what we considered the most important qualitative information (actions and results) set out in Appendix 1. For all risks, our work was carried out at the level of the consolidating entity and on a selection of the entities listed below:

-   for environmental risks: Wines and Spirits: MHCS Maison and sites (Épernay, France); Hennessy Maison and sites (Cognac, France); Glenmorangie: Maison and site (Ardbeg, Scotland); Chandon Argentina: Maison and site (Chandon Argentina estate, Argentina). Perfumes and Cosmetics: Parfums Christian Dior: Maison and site (Saint-Jean-de-Braye, France); Guerlain: Maison and site (Chartres, France). Fashion and Leather Goods: Louis Vuitton Malletier: Maison and site (France); Christian Dior Couture: Maison and site (France); Marc Jacobs: Maison (United States); Fendi: Maison (Italy); LVMH Métiers d’Art: site (Heng Long tannery, Singapore). Watches and Jewelry: Tiffany & Co.: Maison and sites (United States); Bulgari: Maison (Italy); Chaumet: Maison (France). Selective Retailing: DFS stores (Hong Kong); Sephora Europe & Middle East stores (Europe and Middle East); Sephora North America stores (United States). Other activities: Belmond hotels (La Samanna, France; Copacabana Palace, Brazil; Hotel das Cataratas, Brazil); Royal Van Lent: site (Amsterdam),

-   for social risks: Responsible supply chains: Fashion and Leather Goods: Fendi (Italy). Watches and Jewelry: Bulgari (Italy),

-   for workforce-related risks: Wines and Spirits: Moët Hennessy (United States). Perfumes and Cosmetics: Benefit Cosmetics (United States). Fashion and Leather Goods: Christian Dior Inc. (United States); Christian Dior Commercial Shanghai Co. Ltd (China); Louis Vuitton (United States and Japan); Loro Piana SpA (Italy). Watches and Jewelry: Tiffany & Co. (United States). Selective Retailing: Sephora (Canada); Other activities: Le Parisien (France),

-   for risks relating to privacy, ethics and compliance: Fashion and Leather Goods: Louis Vuitton (Maison and Louis Vuitton US). Watches and Jewelry: Tiffany & Co. (Maison and Tiffany US);

●   we checked that the Statement covers the scope of the consolidated Group, i.e. all entities falling within the scope of consolidation in accordance with Article L. 233-16, within the limits set out in the Statement;

●   we reviewed the internal control and risk management procedures put in place by the Company and assessed the collection process aimed at ensuring that the Information is complete and fairly presented.

●   for key performance indicators and those other quantitative results we considered the most significant, set out in Appendix 1, we carried out the following:

-   analytical procedures that consisted in checking that all data collected had been properly consolidated, and that trends in that data were consistent,

-   detailed, sample-based tests or other means of selection that consisted in checking that definitions and procedures had been properly applied and reconciling data with supporting documents. This work was carried out on a selection of contributing entities and covers between 10% and 59% of the consolidated data selected for these tests (10% of the workforce, 25% of energy consumption, 59% of certified supplies and 21% of warnings received through the LVMH Alert Line);

●   we assessed the Statement’s overall consistency with our knowledge of all the entities falling within the scope of consolidation.

The procedures performed for a limited assurance engagement are less extensive than those required for a reasonable assurance engagement performed in accordance with the professional guidelines of the French National Institute of Statutory Auditors; a higher level of assurance would have required more extensive audit procedures.

At the Company’s request, we carried out additional work to enable us to express a reasonable assurance conclusion on the information identified by the ✔ sign in Appendix 1.

This work was of the same type as that described above in the section on the limited assurance conclusion but more in-depth, in particular with regard to:

●   analytical procedures that consisted in checking that all data collected had been properly consolidated, and that trends in that data were consistent;

●   detailed, sample-based tests that consisted in checking that definitions and procedures had been properly applied and reconciling data with supporting documents.

The selected sample thus represents between 25% and 79% of the information identified by the ✔ sign

Paris-La Défense, March 21, 2024

One of the Statutory Auditors

French original signed by

Deloitte & Associés

Appendix 1: Information considered the most important

7.     Cross-reference tables

7.1         Statement of non-financial performance

Like any other economic actor, the LVMH group is exposed to a number of non-financial risks that may affect its performance, cause harm to its reputation, and impact its stakeholders and/or the environment. The following risks have been classified by representatives of the Group’s central functions and Executive Management as “key risks” in light of the Group’s activities (see §4 of the “Ethics and responsibility” section):

●   impact on ecosystems, the climate and natural resources;

●   setting up and maintaining responsible supply chains;

●   safeguarding health and safety at work;

●   transfer of key skills and expertise;

●   implementation of a policy to promote employee inclusion and fulfillment;

●   breaches in the implementation of personal data protection rules;

●   breaches in the implementation of business practice compliance arrangements.

LVMH is committed to addressing each of these risks by putting the appropriate policies in place. The cross-reference tables below provide a summary presentation of the information constituting the Group’s statement of non-financial performance, as required by Article L. 225-102-1 of the French Commercial Code, indicating for each item the section of this Management Report where further details may be found. They include cross-references to the specific disclosures required by this article with regard to respect for human rights and measures to combat corruption, climate change, and discrimination.

The remaining disclosures required by this article may be found in the following sections:

●   with regard to the Group’s business model, in the sections entitled “The LVMH business model” and “Business overview, highlights and outlook” in the introduction to this report;

●   with regard to the presentation of the workforce for each business group and geographic region, in §1.3 of the “Attracting and retaining talent” section;

●   with regard to collective bargaining agreements signed at the level of companies across the Group, in §3.2 of the “Attracting and retaining talent” section;

●   with regard to actions aimed at promoting relations between the nation and its armed forces and supporting involvement in the armed forces reserves, in §3.3 of the “Attracting and retaining talent” section;

●   with regard to actions aimed at promoting physical and sports activities and measures in support of people with disabilities, in §3.3 of the “Attracting and retaining talent” section;

●   with regard to efforts to promote the circular economy, in §2 of the “Environment and sustainability” section;

●   with regard to combating food waste, in §2.2.4 of the “Environment and sustainability” section;

●   with regard to social commitments to promote sustainable development, apart from the topics covered by the cross-reference tables below in terms of social consequences, respect for human rights and the environment, in §1 and §2 of the “Outreach and giving back” section;

●   with regard to protecting animal welfare, in §3 of the “Environment and sustainability” section.

Lastly, given the nature of the Group’s business activities, topics relating to the fight against food insecurity or efforts to promote responsible and sustainable food production as well as fair food systems are not discussed in this Management Report.

7.1.1       Social consequences

7.1.2       Respect for human rights

7.1.3       Environmental consequences

7.1.4       Fight against corruption

7.2         Vigilance plan

The LVMH group is unique in terms of the variety of business areas in which it operates around the world. Risk management needs to be appropriate to the diverse range of situations encountered. The Group coordinates the actions of its Maisons in order to prevent any human rights violations that may occur within the framework of their operations or those of their suppliers and subcontractors.

The Group’s duty of care policy aims to set out the frameworks for action and shared commitments, ensure that these are implemented and help the Maisons to identify and manage their risks. This is coordinated across the Group, with each Maison implementing its own specific measures.

This chapter aims to provide a summary presentation of the information constituting the Group’s vigilance plan, as required by Article L. 225-102-4 of the French Commercial Code.

7.2.1       Organization and governance

The Group’s duty of care policy relies on a coordinated approach among the CSR, Environment, Purchasing and Privacy, Ethics & Compliance departments to identify and manage risks associated with the duty of care.

7.2.2       Risk identification

Analysis of gross risks is regularly undertaken. This analysis is based on comparing external risk indicators (supplied by Verisk Maplecroft) with quantitative information provided by the Group’s Maisons (location, number of employees, volume of purchases, types of suppliers, etc.).

This data enables each Maison to map its gross risks in terms of human rights and the environment in order to prioritize its risk control measures. The exercise was undertaken for the first time in 2018 and the data was updated in 2020, with purchasing data again updated in 2022. Another exercise will be carried out in 2024 based on 2023 purchasing data.

In addition and in order to refine this analysis, the Privacy, Ethics & Compliance Department appointed a law firm in 2021 to review existing practices within the Group and their compliance with duty of care requirements in terms of human rights. Following on from this review, since 2022, specific analysis has been conducted with a selection of Maisons representing the business sectors in which the Group operates in order to define an operating roadmap for the Group.

Comprehensive analysis of the environmental risks associated with the Group’s various operations was also carried out in 2023, particularly with regard to climate-related risks (see §1.1.2, “Risk identification” of the “Environment and sustainability” section).

7.2.3       Risk control and assessment procedures

Risks associated with the Group’s duty of care are managed within the framework of its own commitments as well as internal and external standards regarding ethics, human rights and the environment (see §2, “Standards” of the “Ethics and responsibility” section).

The Group ensures that these are correctly applied by means of ethics compliance procedures and its responsible supply chain management policy helps to prevent and address any risks. In addition to these general measures, specific measures have been developed for certain business areas that are particularly exposed to risk.

The table below summarizes all of these risk control measures (for more details, refer to the corresponding sections).

Risk mitigation and prevention measures

Follow-up and assessment measures

7.2.4       Management of whistleblowing

The LVMH group has set up the “LVMH Alert Line”, a secure centralized whistleblowing system that guarantees confidentiality. Available in 14 languages and accessible on the Group’s website (https://alertline.lvmh.com), it is open to both employees and external stakeholders. In 2023, 561 reports were received through the Group’s whistleblowing system (LVMH Alert Line), of which 63% had to do with human resources matters.

In general and in addition to this system, the Group’s Privacy, Ethics & Compliance Department helps the Maisons to deal with any reports concerning human rights and ensures that appropriate corrective measures are taken.

1.     General environmental policy

In 2023, which again saw record-breaking heatwaves leading to droughts, floods and fires, the expectations of civil society worldwide with respect to the protection of biodiversity and natural resources and the fight against global warming were communicated more clearly and strongly than ever before. With a fourth value of commitment (to inclusiveness and solidarity and to the environment) now added to the Group’s three enduring values of creativity, excellence and entrepreneurial spirit, the Group unveiled its new environmental roadmap, LIFE 360 (LVMH Initiatives For the Environment 360), at its Shareholders’ Meeting on April 21, 2021. This new phase in the Group’s environmental policy, which itself dates back as far as 1992, follows on from LIFE 2020, LVMH’s program of commitments covering the period 2016-2020. To speed up progress, LIFE 360 includes 2023, 2026 and 2030 targets for all the Group’s Maisons, with the aim of nurturing the emergence of a new vision for luxury as a balanced combination of nature on the one hand and creativity and artisanal excellence on the other. Upon producing the report on the achievement of its 2023 targets, LVMH supplemented its environmental strategy by adding two new programs, one focused on water resources and the other on suppliers.

1.1         Organization of the Group’s environmental approach

1.1.1       Governance

Reporting directly to Antoine Arnault, a member of LVMH’s Board of Directors, the 12-member Environmental Development Department has the following objectives:

●   implement the four action plans (circular design, traceability, biodiversity and climate) of the LIFE (LVMH Initiatives For the Environment) program across all Maisons;

●   guide Group companies’ environmental policies, in compliance with the LVMH Environmental Charter;

●   report on the Group’s environmental strategy through a dedicated report and specific impact indicators;

●   identify world-class environmental analyses, tools and methodologies and share them with the Maisons;

●   build the environment into design processes and nurture innovation;

●   carry out forward-looking analysis to help the Maisons safeguard against risks and seize opportunities in each main business group (Wines and Spirits, Fashion and Leather Goods, Perfumes and Cosmetics, Watches and Jewelry, and Selective Retailing), and in hotel activities;

●   train employees and raise environmental awareness at every level of the organization via the LIFE Academy in particular;

●   share LVMH’s environmental experience at international summits and build proactive partnerships;

●   uphold the Group’s reputation and contribute to its non-financial performance.

Each Maison also draws on its own in-house expertise in environmental matters. These experts make up a network of nearly 200 Environment Officers from Maisons, known as the Environment Committee, which meets several times a year, in particular to share and discuss best practices.

In 2003, the Group joined the United Nations Global Compact, which aims to promote responsible corporate citizenship through business practices and policies based on ten universal principles, including the following three relating to the environment:

●   adopt a precautionary approach to environmental challenges;

●   promote greater environmental responsibility;

●   encourage the development and widespread adoption of environmentally friendly technologies.

In 2023, the Group was included in the main indices based on responsible investment criteria: FTSE4Good Global 100, Moody’s ESG (66/100) and S&P Global ESG (66/100). LVMH was included on CDP’s 2023 A List.

1.1.2       Risk identification

In 2023, LVMH began carrying out a double materiality analysis of climate-related impacts, risks and opportunities for the Group so as to refine the identification of key environmental challenges:

●   As regards the climate impact, in 2023 LVMH carried out a survey to identify the main risks to its value chain. This survey followed the TCFD (Task Force on Climate-Related Financial Disclosures) recommendations by assessing risks using the scenario analysis method, including warming trajectories ranging from 1.5°C to 4°C. The analysis covers both physical risks associated with increasingly frequent and intense extreme weather phenomena (heat waves, droughts, extreme rainfall, cyclones, etc.) and risks triggered by the transition to a low-carbon economy (carbon pricing, regulatory changes, rising costs, shifting consumer preferences, etc.). Climate change issues are addressed using a double materiality approach that aims to reduce the Group’s impact on the climate while also making the Group more resilient to physical and transition risks. This analysis helps align the Group with European regulations (CSRD) by fulfilling the requirement to assess sustainability issues from a double materiality perspective and to anticipate the financial implications of physical and transition risks as well as climate-related opportunities. Through this survey, 200 different processes were mapped and reviewed, enabling the Group to identify priority risks across its entire value chain. Furthermore, LVMH has put in place a digital platform for assessing and visualizing the vulnerability of its sites to 28 types of extreme weather phenomena.

●   LVMH has been calculating its water and biodiversity footprint for over five years. These are updated annually using the most advanced methods. These footprints serve to identify and quantify the most significant water and biodiversity impacts across the Group’s entire value chain. Methodologies and key findings are set out in Sections 3.1, 3.2 and 3.3. LVMH is also involved in the work of the Taskforce on Nature-related Financial Disclosures (TNFD), which aims to develop a framework for identifying and measuring the financial dependencies and impacts of activities on nature and biodiversity.

The main environmental impacts and risks identified at the Group level relate to the following topics:

1.     Risks related to climate change;

2.     Impact on water resources;

3.     Impact on biodiversity and ecosystems (including deforestation and desertification risks as well as dependency on healthy ecosystems);

4.     Depletion of natural resources (including waste production and circularity issues);

5.     Soil and water pollution.

The policies implemented, the actions taken and their results are set out in the following sections.

Summary of the Group’s key environmental issues by business group

Source: double materiality analysis of climate-related impacts, risks and opportunities; results of 2023 climate, water and biodiversity footprints for all sectors (except hotels).

1.1.3       Environmental expenses

Environmental expenses are recognized in accordance with the recommendations of the Autorité des Normes Comptables, France’s accounting standards authority. Operating expenses and capital expenditure are recognized against each of the following items:

●   air and climate protection;

●   wastewater management;

●   waste management;

●   soil protection and purification;

●   noise and vibration reduction;

●   conservation of biodiversity and other environmental protection measures;

●   research and development.

In 2023, expenses related to environmental protection broke down as follows:

●   operating expenses: 66 million euros (2022: 42.5 million euros);

●   capital expenditure: 30 million euros (2022: 17.3 million euros).

Coverage for environmental risks amounted to 3 million euros as of December 31, 2023. This amount corresponds to the financial guarantees required by law for Seveso upper-tier establishments.

Furthermore, in accordance with Regulation (EU) 2020/852 establishing criteria for determining whether an economic activity qualifies as environmentally sustainable, LVMH has identified those of its activities that qualify under the six environmental objectives and as contributing to climate change adaptation and mitigation objectives (see §6, “Environmental taxonomy”).

1.2         The LIFE program

Signed in 2001 by the Group’s Chairman and Chief Executive Officer, the Environmental Charter is the founding document for LVMH’s five main aims with regard to the environment:

●   striving for high environmental performance;

●   encouraging collective commitment;

●   managing environmental risks;

●   designing products that factor in innovation and environmental creativity;

●   making a commitment that goes beyond the Company.

The Environmental Charter also encourages all Maison Presidents to become directly involved in the approach through concrete actions, and requires each Maison to set up an effective environmental management system, create think tanks to assess the environmental impacts of its products, manage risks, and adopt environmental best practices. The Environmental Charter has guided LVMH’s environmental commitments and its program of actions.

1.2.1       Overview of the LIFE program

Launched in 2011, the LIFE (LVMH Initiatives For the Environment) program is designed to reinforce the incorporation of environmental concerns into brand strategy, facilitate the development of new coordination tools, and take into account developments and improvements arising from innovative practices at Maisons.

The Maisons have incorporated the LIFE program into their strategic plans since 2014. The LIFE program was implemented by a Steering Committee at each Maison and is based on nine key aspects of environmental performance:

●   taking account of the environment in product design;

●   securing access to strategic raw materials and supply chains;

●   traceability and compliance of materials;

●   suppliers’ environmental and social responsibility;

●   preserving critical expertise;

●   reducing greenhouse gas emissions;

●   environmental excellence in manufacturing processes;

●   product life span and reparability;

●   keeping customers and key stakeholders informed.

1.2.2       The LIFE 360 program

Preparations for the new program

LIFE 2020, the first roadmap resulting from the LIFE program and risk mapping, which in 2016 set out four targets common to all the Maisons, was completed in 2020. Preparations for the Group’s new program of commitments, drawn up from November 2020 with the intention – shared by the Maisons – of making even faster progress, included analyzing the results of LIFE 2020.

Other work was involved in preparing the new program:

●   priorities set jointly with the Maisons and via the various consultative bodies: the LVMH Science Committee; the Future of Luxury Commission (established in July 2020 and made up of leading outside figures from various disciplines); and work sessions with students and young employees;

●   updates to the analysis of risk factors;

●   analysis of the Sustainable Development commitments made by certain Maisons. This is the case for Louis Vuitton, which has committed to achieve the following by 2025: set up or maintain responsible supply chains for 100% of its raw materials; map out a climate trajectory approved by the Science Based Targets initiative; and promote circular design by committing to sustainable design for all its products. At the end of 2020, Moët Hennessy had made all of its own vineyards in the Champagne region herbicide-free as part of its Living Soils program and plans to do the same by 2028 for its independent grape suppliers;

●   the calculation of the Group’s environmental footprint for its entire value chain, including Scope 1, 2 and 3 emissions, covering issues relating to climate change, biodiversity and water;

●   analyzing the extent to which LVMH’s environmental policy has contributed to the achievement of the United Nations Sustainable Development Goals (SDGs), in particular SDG 3 (“Good health and well-being”), SDG 6 (“Clean water and sanitation”), SDG 9 (“Industry, innovation and infrastructure”), SDG 12 (“Responsible consumption and production”), SDG 15 (“Life on land”) and SDG 17 (“Partnerships for the goals”);

●   securing approval for the prioritization of objectives and their terms of implementation at presentations to members of the Executive Committee and the Ethics & Sustainable Development Committee.

LIFE 360 objectives

LVMH’s new LIFE 360 roadmap, the fruit of this work, was unveiled at the 2021 Shareholders’ Meeting and the results for fiscal year 2022 were presented at the Shareholders’ Meeting of April 20, 2023. It sets out 2023, 2026 and 2030 targets and charts a course for creating products that embody the Group’s environmental ambitions: products that exist in harmony with nature, do not damage biodiversity or the climate, and mobilize stakeholders. It is structured around four strategic action plans:

●   Circular Design: Harnessing the circular economy (sustainable design, repair, reuse and upcycling) and innovation (research into new materials) to fuel creativity, with a target of all new products being sustainably designed by 2030 and having a managed environmental footprint from extraction of materials through to their transformation. Packaging strategy will follow this same trajectory, with a target of zero fossil-based virgin plastics by 2026.

●   Biodiversity and Ecosystems: The Group’s activities are intimately linked to nature. The targets laid down in this action plan are designed to limit impacts and restore to the environment whatever is taken from it: zero deforestation and conversion of ecosystems within its operations and supply chains by 2025; all strategic supply chains to be subject to the most rigorous standards by 2026; a regenerative agriculture plan to restore 5 million hectares of flora and fauna habitats between now and 2030. The Group continues to roll out its Animal Welfare Charter published in 2019. The Biodiversity program was supplemented in 2023 by adding a dedicated water resource protection policy aimed at achieving a 30% reduction in the Group’s water withdrawal by 2030.

●   Traceability and Transparency: The action plan aims to roll out dedicated traceability initiatives covering all strategic raw materials by 2030 and tools for sharing environmental and/or social information at product level (see §4.2.2).

●   Climate: LVMH’s new carbon trajectory, in line with the Paris Agreement was approved by the Science Based Targets initiative (SBTi) in December 2021. It aims to achieve a 50% reduction in the Group’s Scope 1 and 2 energy-related greenhouse gas emissions by 2026 (baseline: 2019) and a 55% reduction in Scope 3 emissions per unit of added value by 2030. Actions to achieve these targets are concentrated in four key areas: exclusive use of renewable or low-carbon energy by production sites, distribution hubs, administrative sites and stores, an action plan dedicated to green e-commerce, increase in the share of maritime transportation for freight, and a supplier carbon footprint plan.

These four strategic action plans are broken down to business segment and individual Maison level. They are accompanied by targets designed to mobilize stakeholders around the LIFE 360 priorities, in particular:

●   employees, with the aim of designing environmental training programs tailored to the specific characteristics of the Group’s businesses;

●   customers, with a target of all new products having a dedicated information system by 2026;

●   strategic suppliers, with CSR clauses to be included in all contracts and subject to verification by 2030. Targets have been set for the certification of purchased raw materials and production sites, the environmental management of water and hazardous substances (see §3.2.3), and the energy transition;

●   researchers, with a dedicated sustainable luxury research and innovation program for 2023.

The report on the achievement of 2023 LIFE 360 targets was presented at the LIFE 360 Summit at the UNESCO headquarters on December 14, 2023. The Summit brought together over 500 Group senior executives as well as key partners and sector operators and was attended by Christophe Béchu (France’s minister of sustainability and regional cohesion), Virginijus Sinkevičius (European Commissioner for the Environment, Oceans and Fisheries), Bernard Arnault, Chairman and CEO of LVMH, and Antoine Arnault, Chief Image & Environment Officer of LVMH. At this event, the Group presented the LIFE 360 Business Partners program, a new program to help the Group’s suppliers reduce their carbon, water and biodiversity footprints.

1.3         Training and launch of LIFE Academy

LVMH’s ability to drive continuous improvement in its environmental performance is closely tied to the Group’s success at making sure that its 213,268 employees understand their role as active participants in achieving this goal. The Environmental Development Department thus works to inform, train and raise awareness among employees as well as members of the management bodies with regard to the conservation of natural resources, biodiversity, and climate change.

In 2023, the Maisons continued with their environmentally focused employee awareness and training programs. For example, Parfums Christian Dior continued to roll out Climate Fresk workshops, with over 3,000 employees receiving training – nearly 90% of the workforce in France including the Executive Committee; Berluti trained all its creative teams in environmental issues, understanding leather/textile certifications, and sustainable design, delivering nearly a thousand hours of training; and Moët Hennessy trained 900 employees in the fundamentals of sustainable development in 2023 via an e-learning module. A growing number of Maisons now include an environmental training target in their incentive agreements.

The LIFE 360 Summit held at the UNESCO headquarters on December 14, 2023 was an opportunity to run awareness workshops: around 200 people took part in Biodiversity Fresk, Living Soils (developed jointly with Moët Hennessy) and collective intelligence workshops, while more than 40 Maison Presidents and Executive Committee members attended a CEO Masterclass covering, in particular, risks and opportunities associated with climate change.

These training programs totaled 68,140 hours in 2023, double that of 2022 (31,238 hours).

Number of hours environmental training and awareness-raising over time

In keeping with its LIFE 360 target of putting in place training programs tailored to the environmental issues facing the Group’s key business lines, in 2023 LVMH launched LIFE Academy, a Group-level educational body offering a new catalog of training, designed with input from subject matter experts around two priority areas:

●   Essentials: generalist training for all employees aimed at developing an overview of environmental issues (climate, biodiversity, resources, etc.);

●   Expert: specialized training aimed at specific business lines to boost skills and reinvent professional practices.

Examples of specialized Expert training include the following: sustainable product design and packaging for stylists, developers and those in marketing roles; responsible sourcing for buyers; managing chemicals for quality and compliance teams; sustainable store construction for architects; etc.

Launching LIFE Academy enabled the Group to set itself another 2026 target: training all employees in Essential or Expert environmental subjects.

What is unique about the LIFE Academy approach is that it is not just about learning but about putting that learning into practice. This is reflected in the design of the training programs, in which thinking together about real-life cases, sharing best practice among peers and drawing up action plans all play an important role.

Some of LIFE Academy’s training programs will run at a location well suited to experimentation: Vallée de La Millière, a nonprofit chaired by Yann Arthus-Bertrand based at a biodiversity reserve near Paris.

1.4         2023 reporting scope

The scope of environmental reporting has been aligned more closely with that of financial reporting in view of the implementation of CSRD. Moreover, coverage of production sites, warehouses, hotels, administrative sites and stores has increased significantly.

The rules for including entities (Maisons and sites) in this scope are as follows:

●   Maisons: a Maison is included in environmental reporting if it is included in financial reporting. Following an acquisition, the acquired entity is included in environmental reporting one year after its inclusion in financial reporting.

●   sites: the Group’s new sites are added to the reporting scope in the year following their acquisition or their opening.

●   divested entities (Maisons and sites): entities disposed of during the fiscal year (between January 1 and December 31 of Year N) are excluded from the reporting scope for Year N.

In 2023, as the scopes of financial and environmental reporting were brought into closer alignment, Maisons covered by environmental reporting accounted for 99% of Group revenue.

Coverage of production sites, warehouses, hotels and administrative sites

(a)  Includes certain sites of Belmond, Bulgari, Christian Dior Couture, Guerlain, Loro Piana, Louis Vuitton, Parfums Christian Dior and Tiffany & Co., as well as Domaine des Lambrays and Château d’Esclans.

(b)  Main components: certain regional administrative sites of Louis Vuitton, Moët Hennessy, Parfums Christian Dior as well as administrative sites with fewer than 20 employees.

96% of production sites are covered. The production, logistics and administrative sites that are not covered by environmental reporting are essentially excluded for operational reasons and their environmental impact is not material. A plan to gradually include them is underway.

The total store floor space used to calculate energy consumption and greenhouse gas emissions is as follows, expressed as a percentage of the Group’s total store floor space:

(a)  The reporting scope does not cover the stores operated under franchise by Fashion and Leather Goods, Perfumes and Cosmetics, and Watches and Jewelry.

In 2023, Sephora South East Asia, Rimowa, Maison Francis Kurkdjian and Parfums Givenchy stores have been included in the reporting scope.

For the 17% of stores not taken into account in calculating energy consumption and greenhouse gas emissions, data is estimated and presented separately.

2.     LIFE 360 – Circular Design

2.1         Overview of the Circular Design policy

LVMH’s Maisons work to limit the impact of their products on the natural environment by taking each product’s entire life cycle into account. Through its LIFE 360 strategy, LVMH is bringing together all its Maisons around the concept of circular design. This concept is underpinned by four convictions:

●   inventiveness: selecting innovative new materials such as those that are recycled, bio-sourced, certified and/or sourced from regenerative agriculture (see §2.1.1 and §3.1);

●   simplicity: selecting the most demanding transformation and manufacturing processes at Maisons’ and suppliers’ sites to reduce environmental impacts (climate, water, waste, biodiversity) (see §2.1.4);

●   eternity: guaranteeing long product life by ensuring high quality thanks to expertise in repairs and the art of patina, new technologies such as product recharges, refills and refurbishment, and the promotion of new services (see §2.1.3);

●   rebirth: helping give materials and products a new lease of life through reuse, recovery, recycling and upcycling (see §2.2.2 and §2.2.4).

These convictions are translated into action plans with tangible targets:

●   all new products sustainably designed by 2030;

●   zero fossil-based virgin plastic to be used in packaging by 2026;

●   new circular services to be rolled out;

●   as key drivers of circular design, Maisons’ production sites are also subject to specific targets, for example to roll out certified environmental management systems across all production and logistics sites by 2026. Ambitious policies are also in place covering water consumption, wastewater and general waste.

2.1.1       All products to be covered by a sustainable design process

To meet this sustainable design challenge, the Group and its Maisons have together identified criteria encompassing at least the following:

●   use of raw materials that are certified, recycled or sourced from regenerative agriculture;

●   traceability: knowing the supplier and the country of origin for each primary material;

●   product life span and end-of-life treatment.

Each business group has tailored these sustainable design criteria to its own specific environmental challenges; tools are currently being rolled out to monitor performance against these criteria and assess each product and its associated packaging’s environmental footprint:

●   Perfumes and Cosmetics: The Maisons have implemented the EFI (Eco-Formulation Index) and the EPI (Environmental Performance Index for packaging). The EFI score spans seven dimensions:

-   natural origin: an assessment based on an internationally recognized method (ISO 16128);

-   traceability: knowledge of the ingredient value chain;

-   Clean Beauty: taking consumer expectations into account and anticipating potential regulatory restrictions;

-   Smart Formulation: a calculation methodology for minimizing the number of ingredients used in a formula;

-   environment score: categorizing impacts using the European PEF (Product Environmental Footprint) methodology;

-   social score: assessing the social impact of operations using a methodology developed by the United Nations Environment Programme;

-   environmental impact: using a methodology based on the EU Ecolabel and REACH to calculate the end-of-life biodegradability and ecotoxicity of ingredients.

The EPI score takes into account a number of criteria including packaging weight and volume, recycled and bio-sourced raw material content, recyclability and refill capability. The EPI calculation methodology has been updated to bring it into line with the LIFE 360 targets and various regulations.

●   Fashion and Leather Goods: Maisons in this business group are required to follow sustainable design criteria structured around three pillars: raw materials, traceability and end of life. The first pillar requires that a minimum of 50% of raw materials used must be certified, recycled or sourced from regenerative agriculture. The second pillar, traceability, aims to ensure that all suppliers in the value chain are identified. Tier 1 and 2 suppliers must be known for a product’s main ingredient and the country of origin must be known for plant- and animal-based materials. Lastly, the third pillar, end of life, is about verifying and monitoring services offered by Maisons to customers designed to lengthen their products’ life spans (including a repairability index). A dedicated tool for monitoring these indicators and criteria has been developed in conjunction with an expert partner. It also ensures compliance with the requirements of France’s new anti-waste law for a circular economy, known as the AGEC law, and specifically its Article 13 relating to the sharing of environmental and traceability information at the time of purchase, as well as calculating the environmental impact of a product for environmental labeling in France (Climate and Resilience law) and in Europe (Product Environmental Footprint).

●   Wines and Spirits and Watches and Jewelry: After being defined, sustainable design criteria are tested by the Maisons. The Wines and Spirits business group updated its method for calculating its EPI in 2023 and is testing a tool to assess the environmental footprint of packaging.

2.1.2       Zero fossil-based virgin plastics in customer packaging by 2026

LVMH aims to have stopped using fossil-based virgin plastic in customer packaging by 2026. To achieve this target, the Maisons are working on an action plan that aims to:

●   use recycled plastics;

●   use bio-sourced plastics;

●   replace plastics with other materials.

This target requires reinforcing the action plan. LVMH has also set the following targets for 2030: 70% of packaging materials used by the Maisons (in customer packaging) is to be recycled, and all customer packaging is to be recyclable, compostable or reusable.

2.1.3       Results for new circular services

LVMH’s 75 Maisons offer a vast range of opportunities to explore potential new cross-sector circular design practices, a priority action of LIFE 360. They have given rise to new services, which were implemented at a faster pace in 2023:

●   to make products more sustainable through repairs and refills;

●   reusing unsold and defective products and strategic materials in accordance with the established regulatory hierarchy:

-   donation: any operation whereby products or materials have their branding removed and are donated to a donor organization,

-   reuse: any operation by which products or materials are used again for the purpose for which they were initially designed,

-   repurposing: any operation whereby products or materials that have become waste are used again,

-   recycling: any operation by which products and materials are processed to create new products or materials that can be used for the same purpose as before,

-   downcycling: any operation whereby an unused product or material is transformed into a new high-quality or lower-value material;

●   to exchange raw and other materials between Maisons through innovative projects (See §2.2.4).

2.1.4       All production and logistics sites to have certified environmental management systems by 2026

The Maisons’ products are mainly manufactured at 292 production sites and distribution hubs. Reducing their environmental impact and fostering a circular approach also helps shrink products’ environmental footprint.

The Group has set a target of having all its sites covered by environmental certification by 2026; this kind of certification is a dynamic, unifying and motivating approach for continuously improving performance in building use. This approach to certification is not new for the Maisons: the LVMH Environmental Charter already requires that they put in place an environmental management system reporting to Executive Management. Hennessy has played a pioneering role in this regard, becoming the world’s first wines and spirits company to obtain ISO 14001 certification in 1998.

2.2         Key achievements in 2023: Circular Design

2.2.1       Sustainable product design

The business groups use various systems to check compliance with sustainable design criteria put in place by the Group. In 2023, the Fashion and Leather Goods Maisons began to roll out a system for monitoring sustainable design criteria and calculating environmental performance in accordance with reference frameworks in place in France and, soon, Europe (see §2.1.1). Over 300 products were assessed in 2023 across five of the Group’s Maisons, achieving 61% compliance with sustainable design criteria. In 2023, Christian Dior Couture developed the Dior Denim menswear collection made from 100% RegenAgri-certified regenerative cotton. The denim fabric was washed and finished using technologies that reduce water consumption and the consumption of chemicals by 83% and 75%, respectively. For the second year running, Dior also teamed up with environmental organization Parley for the Oceans to present the Beach Capsule, a Fall 2023 Dior collection made from 96% recycled fabrics. In 2019, Dior and Parley kicked off a joint research effort that gave rise to brand new materials made from Parley Ocean Plastic®, created from plastic debris and fishing nets recovered off the coasts of countries and islands around the world.

The Perfumes and Cosmetics Maisons use the EFI to assess the environmental performance of formulations (see §2.1.1).

2.2.2       Sustainable packaging design

The Maisons are working on sustainable packaging design to reduce the amount of raw materials used, facilitate recycling and help put a stop to the use of fossil-based virgin plastics. For example, the Perfumes and Cosmetics business group is involved in a number of partnerships and initiatives such as those with Origin Materials (bio-sourced PET), the Avantium consortium (bio-sourced PEF), Aliplast (recycled PET), Eastman (recycled copolyester) and Dow (bio-sourced and recycled Surlyn). Some of the Group’s Maisons also use plastic alternatives, for example by working with Woola, which makes packaging from waste wool. The Maisons remain committed to their sustainable design processes: for example, each of the jars in the Haute Réparation twin pack of Guerlain’s Abeille Royale creams is refillable.

The quantities of packaging consolidated by the Maisons concern the following items:

●   Wines and Spirits: bottles, boxes, caps, etc.

●   Fashion and Leather Goods: boutique bags, pouches, cases, etc.

●   Perfumes and Cosmetics: bottles, cases, etc.

●   Watches and Jewelry: cases, boxes, etc.

●   Selective Retailing: boutique bags, pouches, cases, etc.

Packaging used for transport is not included in this breakdown.

The amount of packaging used Group-wide was 8% lower than in 2022. This reduction stemmed from the change in business volumes as well as sustainable packaging design efforts.

Perfumes and Cosmetics and Wines and Spirits business groups – EPI scores

(a)  Maisons included: Guerlain, Parfums Christian Dior and LVMH Fragrance Brands.

The weight of packaging that reaches customers changed as follows between 2022 and 2023:

(a)  Value and change at constant scope.

(b)  Change as a result of both changing business volumes and sustainable design processes.

The total weight of customer packaging, by type of material, broke down as follows in 2023:

(a)  Other packaging materials notably include ceramic and wood.

2.2.3       Reducing and recovering waste

The weight of waste generated changed as follows between 2022 and 2023:

(a)  Data includes production sites, distribution centers and some offices. Stores are not included.

(b)  Waste that must be sorted and processed separately from non-hazardous waste (such as cardboard, plastic and paper).

(c)   Data includes Le Bon Marché and some DFS.

Waste was recovered as follows in 2023:

The Maisons are working to reduce and recycle production waste. As regards circular waste management, in 2023, 94% of waste was recovered (95% in 2022). Recovered waste is waste for which the final use corresponds to, listed in descending order of interest in accordance with European and French laws: reuse, recovery of materials (i.e. recycling, composting or land treatment) or incineration for energy production.

As another example, LVMH has set a target of ensuring that all site waste from store construction and renovation is locally recycled or reused by 2026. To achieve this, the Maisons complete the store construction process by implementing a recycling indicator for construction waste.

2.2.4       Results for new circular services

Since 2019, 97% of the Group’s Maisons (excluding Wines and Spirits) have put in place new circular services focused on sustainability and/or recovery.

As regards sustainability services, the Repair and Care working group brings together 14 of the Group’s Maisons to define standards for their repair and care services and speed up their rollout. Rimowa now offers a lifetime manufacturer’s warranty for suitcases purchased from July 2022 onwards; Le Bon Marché’s alterations workshop has been Refashion accredited ever since it opened in November 2023 to facilitate textile repairs for customers; and Loewe has a store dedicated to repairs (ReCraft in Osaka).

As regards reuse and recycling services, in France, the Perfumes and Cosmetics Maisons and Sephora use the CEDRE recovery and recycling facility to handle all the materials and products generated by the manufacturing, packaging, distribution and sale of perfumes and cosmetic products. CEDRE accepts several types of articles: obsolete packaging, obsolete alcohol-based products, advertising materials, store testers, and empty packaging returned to stores by customers. The various materials (glass, cardboard, wood, metal, plastic, alcohol and cellophane) are resold to a network of specialized recyclers.

CEDRE now handles textile waste from the fashion Maisons, for which it has become the core – along with Nona Source and Weturn (winning startup of an LVMH Innovation Award that produces 100% recycled fabric) – of a new ecosystem of closed- or open-loop fabric recycling facilities offering a new range of recovery services. By partnering with L’Agence du Don en Nature and taking on and training people from companies specifically employing people with disabilities in the couture sector, the Maisons have been able to add donation, repurposing and recycling services so as to more effectively recycle unsold products. In line with developments in technology, this system will involve new partners to handle larger volumes of material and to be able to use the upcycled and recycled materials to create new products.

This ecosystem is the first building block of LVMH Circularity, the launch of which was announced at the LIFE 360 Summit. This initiative aims to organize all packaging, product and component recycling processes and facilitate the reintroduction of recycled materials into production processes so as to maximize the reduction in the Group’s environmental impact.

LVMH Circularity enabled several major accomplishments in 2023, including Christian Dior Couture and Louis Vuitton’s launch of recycling projects to transform their materials, via WeTurn, into new, fully traceable high-quality European thread and materials. In the first quarter of 2024, Dior is launching its first ready-to-wear item manufactured from textile recycled in a closed loop.

Making something new from something old is the idea behind Prelude, a 100% upcycled collection designed by Creative Director Kevin Germanier using unsold products from LVMH’s Fashion Maisons and fabrics from Nona Source, a platform that resells unused fabrics from the Group’s Maisons, and WeTurn. This deliberately disruptive project exemplifies the Group’s ability to blend sustainability, creativity and desirability. The unsold products used were completely disassembled, unstitched or cut into strips, then reassembled and resewn into a new fabric. The new collection – and these new techniques, which the Group intends to develop – was unveiled as part of a show at the LIFE 360 Summit in December 2023.

In 2023, Nona Source, the platform developed by the Group to facilitate the resale of unused textiles by its Maisons, confirmed its status as a circularity accelerator in the fashion industry and as an effective means to support young designers by offering high-quality fabrics at very competitive prices. Over 280,000 meters of fabric (versus 190,000 meters in 2022) from more than 12 of the Group’s fashion Maisons was upcycled in this way in 2023.

Dior Couture has converted a production line at one of its plants into a dismantling and recycling line for footwear and leather goods. Sephora has kicked off the VM 360 project to carry out closed-loop recycling of three types of items used in point-of-sale advertising: upcycling product display modules into new displays; turning merchandising visuals into gift boxes for customers; and recovering transport boxes and turning them into shipping boxes for use in e-commerce.

In 2023, around 3,561 metric tons of materials and products were recycled (3,144 metric tons in 2022) by CEDRE.

To help combat food waste and promote food donations, La Grande Épicerie de Paris put in place a process to accurately monitor sales so that production can be adjusted accordingly. The French Red Cross collects any unsold products each day. In 2018, a partnership was launched with Too Good To Go, an app that lets stores give their unsold items to its users. In light of the Group’s business activities, food insecurity and actions promoting responsible, fair and sustainable food use do not constitute key risks.

2.2.5       Environmental management

In 2023, the Group continued to roll out certified environmental management systems across its production sites and distribution hubs. By the end of 2023, on a like-for-like basis (excluding Tiffany & Co. and Belmond), 75% of its industrial sites and distribution hubs were ISO 14001 certified. Biodiversity protection is a key part of these environmental management systems. In 2023, Acqua di Parma passed the first ISO 14001 audit of its headquarters.

Sustainable design and environmental management are also relevant to the Group’s stores. For instance, the Sustainable Store Planning working group is encouraging all the Maisons to use the LIFE in Architecture in-house rating system, the fifth version of which was released in March 2023. Today, the Stores community has over 800 members around the world, led by a group of forty ambassadors. Monthly committee meetings are held to assess the level of achievement of LIFE 360 targets and to explore the best ways to disseminate tools. A dedicated platform was developed in 2023 to speed up the rollout of internal certification and improve knowledge of the system and associated standards. This electronic document management system is used to exchange the 200 or so supporting documents with external auditors as laid down in the guidelines.

2.2.6       Summary of LIFE 360 “Circular Design” achievements in 2023

(a)  Data from a report currently under development.

(b)  Baseline = 300 new products.

(c)   Item not reported in 2022.

3.     LIFE 360 – Biodiversity and Ecosystems

3.1         Biodiversity

3.1.1       Overview of the Biodiversity policy

Protecting natural ecosystems is of vital importance to LVMH, whose business is heavily dependent on natural raw materials (such as flowers, grapes, cotton, leather and gems). This concern is part and parcel of a long-term view that places a priority on preserving nature, from which the exceptional quality of the Group’s Maisons’ products is ultimately derived.

The first step in the process is to measure impacts. This can serve as a powerful lever for identifying priorities, targets and actions; measuring impacts on biodiversity remains a complex issue. LVMH undertakes to update and improve its measurement of impacts on a yearly basis, and to take part in the improvement of methods, in particular by sharing its results with the scientific community. In 2023, LVMH updated its biodiversity footprint and its deforestation intensity using specific, recognized pressure and sensitivity indicators such as the EF 3.0.2 and IMPACT 2002+ databases, tools provided by Trase and Global Forest Watch, the Biodiversity Integrity Index and the Dryad tool. LVMH has also rolled out the Global Biodiversity Score.

LVMH’s commitments and actions are in keeping with the reference framework drawn up by Science Based Targets for Nature, which is currently under development. The framework aims to align companies’ actions with international biodiversity protection goals. LVMH is taking part in official testing of the SBT Nature approach, which began in 2023, notably for cashmere production in Mongolia and China and grape production in the Cognac region.

Taking into account the results of these measurements, LVMH is taking action and making protecting and regenerating biodiversity a major focus of its LIFE 360 environmental strategy, with three main targets:

●   zero deforestation and conversion of natural ecosystems within its operations and supply chains by 2025 (using the baseline provided by Science Based Targets for Nature for the definition of natural ecosystems in 2020);

●   all strategic raw materials to be certified by 2026;

●   5 million hectares of flora and fauna habitat to be preserved, regenerated or restored by 2030.

Lastly, LVMH is as an active member of the TNFD Forum of the Taskforce on Nature-related Financial Disclosures (TNFD), a grouping of over 900 partners, including a broad range of institutions. Its mission is to develop a specific risk management framework to be used by its members to better map positive and negative actions relating to nature to help guide their strategic planning and asset allocation decisions. As a member of the TNFD Forum, LVMH takes part in the development of standards, including in particular the one for the “Consumer Goods” category, with a focus on textiles. LVMH has undertaken to have its disclosures in respect of fiscal year 2024, for the first time, aligned with TNFD recommendations.

3.1.1.1              Avoiding and reducing impacts on biodiversity

Zero deforestation and conversion of natural ecosystems within operations and supply chains by 2025

Among the raw materials considered at risk in terms of deforestation, LVMH makes use of wood and wood derivatives (paper, cardboard and viscose), palm oil derivatives and leather. These materials were identified using environmental footprint measurements of LVMH’s value chain. In 2023, LVMH quantified the potential deforestation intensity of its supply chains for these three materials in relation to their countries of origin and production methods: the result was 200 hectares per year (including animal feed). This analysis helps the Group prioritize remedial actions and measure the progress it makes.

In addition, LVMH continues to take proactive steps:

●   in spring 2021, LVMH entered into a partnership with Canopy, an NGO whose program aims to avoid deforestation in the wood, cardboard and viscose sectors;

●   like many of the Group’s Maisons, LVMH is a member of FSC France, whose strategy is aimed at certifying sustainably managed forests, transforming markets and acting as a catalyst for change;

●   the Group’s Maisons ask their partner tanneries not to accept any hides sourced from the Amazon basin;

●   LVMH pursued its agroforestry projects in the Indonesian palm oil sector with other industrial partners. Over 400,000 hectares of forest are protected and covered by the project.

All strategic raw materials to be certified by 2026

The LVMH group has put in place a strategy for sourcing and preserving raw materials, covered by LIFE 360 targets for 2026. These targets commit the Maisons to ensuring that all strategic raw materials they purchase and produce are certified as complying with the most stringent environmental standards covering both the materials themselves and production sites. These standards guarantee that ecosystems and water resources are properly protected. At the close of the LIFE 2020 environmental program, the list of strategic raw materials was expanded. This list now includes the following:

●   grapes, rye and barley;

●   sheep and cow leathers, raw lamb and calf skins, exotic leathers and furs;

●   cotton;

●   wool;

●   down and feathers;

●   viscose;

●   silk;

●   wood, paper and cardboard;

●   gems and precious metals;

●   palm oil and its derivatives;

●   soya and its derivatives for cosmetic use;

●   alcohol;

●   iconic ingredients used by Maisons in the Perfumes and Cosmetics business group.

Furthermore, the Maisons have implemented procedures to ensure that all of their products comply with CITES, a convention on international trade in endangered species. Through a system of import-export permits, this convention was set up to prevent overexploitation of certain species of endangered fauna and flora. In keeping with the Animal-Based Raw Materials Sourcing Charter published in 2019, the Maisons committed not to source any supplies of materials listed in Appendix 1 of CITES or identified as under threat by the International Union for Conservation of Nature (IUCN) with effect from 2020.

The Group proactively supports certification programs not only by purchasing certified materials but also by sitting on expert committees, in partnership with other stakeholders.

Wines and Spirits

The Wines and Spirits business group is actively committed to sustainable, organic and/or regenerative winegrowing, both of which are helping to considerably reduce its environmental impact, in particular by limiting the use of plant protection products.

Stepping up the roll-out of sustainable, organic and/or regenerative winegrowing at the Maisons’ vineyards and among independent grape suppliers has thus been adopted as a LIFE 360 target. Various certification systems have been established across winegrowing regions: Viticulture Durable en Champagne for champagne houses, environmental certification for cognac (Haute Valeur Environnementale), organic farming for certain vineyards, Napa Green in California, etc. LIFE 360 targets are as follows:

●   for vineyards owned by the Group: all grapes to be from sustainable, organic or regenerative winegrowing by 2026;

●   for partner/supplier vineyards (champagne, cognac, wines): 50% of grapes to be from sustainable, organic or regenerative winegrowing by 2026.

Fashion and Leather Goods

The Fashion and Leather Goods business group has adopted nine major targets for 2026:

●   90% by volume of supplies of cow, sheep and exotic leathers to be purchased from Tier 1 LWG-certified tanneries, with 50% to be purchased from Tier 2 and above LWG- or ISO 14001-certified tanneries. LWG certification is a standard created by the Leather Working Group to improve the environmental performance of tanneries (energy, water, waste, traceability);

●   supplies of exotic leather to be purchased from abattoirs and/or farms certified in accordance with standards covering animal and human welfare and care for the environment, such as the LVMH Standard for Responsible Crocodilian Production, the International Crocodilian Farmers Association (ICFA), the South African Business Chamber of Ostriches (SAOBC) and the forthcoming standard to be issued by the South East Asian Reptile Conservation Alliance (SARCA). The Group is also seeking SRCP certification for all crocodile farms supplying the Group’s tannery;

●   all supplies of pelts to be purchased from certified fur farms, notably by rolling out certifications recognized under the FurMark program;

●   all supplies of cotton to be purchased from sustainable cotton sources. Organic, regenerative and recycled cottons are preferred;

●   all supplies of wool to be purchased from sustainable sources. Sustainable wool is either recycled or sourced from farms certified as complying with animal welfare and environmental protection standards such as the Responsible Wool Standard (RWS), the Responsible Mohair Standard (RMS), the Code of Practice of the Sustainable Fibre Alliance (SFA) and the Global Recycle Standard (GRS);

●   all supplies of viscose to be sustainable, whether recycled or purchased from suppliers with a Canopy “green shirt” rating;

●   all supplies of silk to be purchased from sustainable sources (certified GOTS or a mix of GOTS and GRS);

●   all supplies of feathers and down to be either recycled or purchased from suppliers certified in accordance with the Responsible Down Standard (RDS);

●   Animal-Based Raw Materials Sourcing Charter to be incorporated into supplier relationships. LVMH shares civil society’s aim of improving animal welfare, as reflected in the charter unveiled by the Group in 2019. It is supported by a consultative Science Committee that helps support scientific research. This work is the result of a long process of research and collaboration between LVMH’s environmental experts, its Maisons and its suppliers. Taking a comprehensive approach, the charter addresses the full range of issues involved in the sourcing of fur, leather, exotic leather, wool and feathers, with commitments to achieving progress in three areas: full traceability in supply chains; animal farming and trapping conditions; and respect for local communities, the environment and biodiversity.

Perfumes and Cosmetics

The Perfumes and Cosmetics business group has set itself three key LIFE 360 targets in relation to its supply chain to be achieved by 2026:

●   all supplies of palm oil to be purchased from sustainable sources, including RSPO-certified palm oil and palm oil from regenerative agriculture;

●   all supplies of alcohol to be purchased from sustainable sources, including organic beet and regenerative agriculture as well as alternative and innovative solutions;

●   all iconic ingredients used by the Maisons to be EUBT-certified.

The business group also takes part in specific initiatives related to the sourcing of mica (RMI). The Group’s Research & Development Department and Maisons have been carrying out ethnobotanical studies for a number of years. They seek to identify plant species with a particular interest as components of cosmetic products while contributing to the preservation of these species and to local economic development. This partnership can take a variety of forms such as financial support, technical or scientific assistance, or skills sponsorship, sharing the expertise of LVMH’s staff with its partners. As part of this initiative, Parfums Christian Dior’s Dior Gardens are plots dedicated to cultivating plant species chosen for their exceptional properties. Guerlain has also launched a number of partnerships focused on orchids in China, vetiver in India, honey in Ouessant in France, sandalwood in Asia and lavender from the south of France.

Watches and Jewelry

The Watches and Jewelry business group has set itself three key LIFE 360 targets in relation to its supply chain to be achieved by 2026:

●   all supplies of gold to be purchased from sustainable sources, including Responsible Jewellery Council (RJC) certification for suppliers (RJC Code of Practices at minimum) and refiners (RJC Chain of Custody) for all gold used by the Maisons. The Group is currently working to recognize other standards for future adoption, particularly those covering mining activities, such as the World Gold Council’s Responsible Mining principles, the Initiative for Responsible Mining Assurance (IRMA), Fairmined, Fairtrade and the CRAFT and Swiss Better Gold Association (SBGA) initiatives;

●   all supplies of diamonds to be purchased from RJC CoP-certified suppliers;

●   all supplies of colored gemstones to be purchased from suppliers certified RJC CoP or equivalent or verified via the Gemstones and Jewellery Community Platform (GJCP).

All of the Watches and Jewelry Maisons have received certification under the Responsible Jewellery Council’s Code of Practices standard, known as RJC CoP. As part of the LIFE 360 targets, and in line with this certification, which applies to their gold and diamond supply chains, they expanded their responsible sourcing efforts. Bulgari is particularly committed and has prioritized rolling out RJC CoC certification to all its jewelry and refining partners. The Group and its Maisons are also involved in the Coloured Gemstones Working Group (CGWG) with other sector stakeholders. The CGWG aims to roll out environmental and social best practice across the colored gemstone sector by making all tools developed by the initiative available to the industry on an open-source basis and allowing industry players to assess the maturity of their practices.

All business groups

Regulated chemicals: All the Maisons have incorporated the requirements of international regulations, including REACH, into their contractual documents so as to engage all suppliers in this undertaking. LVMH has also implemented many tools to improve and monitor the use of chemicals in relation to:

●   the finished products and raw materials supplied to the Maisons, by maintaining its Product Restricted Substances List (PRSL), which details the chemical restrictions applicable to these products and materials (updated at least twice a year);

●   supply chains, by monitoring the compliance of chemical formulations with the Manufacturer Restricted Substances List (MRSL) maintained by the multi-stakeholder organization ZDHC, of which LVMH is a member.

Additional information is provided in §3.3.

Wood and wood derivatives: Given its strong commitment to combating deforestation, the Group has set an additional target applicable to all business groups: “All supplies of wood, paper and cardboard to be FSC-certified (including FSC Mix and FSC Recycled) by 2026”. For example, all wood for use in store fittings and decorations will be FSC-certified by 2026.

3.1.1.2              Protecting and restoring biodiversity

The Group is committed to restoring, protecting or regenerating the equivalent of 5 million hectares of flora and fauna habitat by 2030, either within its supply chains by rolling out regenerative agriculture programs for strategic agricultural commodities like grapes, cotton, wool and leather, or by contributing to collective efforts to regenerate and preserve ecosystems and protect particularly endangered plants and animals.

Regenerative agriculture

Regenerative agriculture is defined as agriculture that can regenerate soil health and ecosystem function (biodiversity/water cycle) while ensuring socioeconomic stability for stakeholders (farmers and communities) and yielding high-quality raw materials. LVMH has selected a number of raw materials for which the Group is keen to roll out regenerative agriculture practices. These include grapes for Wines and Spirits, cotton, wool and leather for Fashion and Leather Goods, and palm, beet and iconic ingredients for Perfumes and Cosmetics. Since 2022, LVMH has been a member of One Planet Business for Biodiversity (OP2B), a business coalition focused on scaling up regenerative agriculture and protecting high-value ecosystems.

LVMH developed practical guides on how to put regenerative agriculture into practice and surrounded itself with a network of experts such as Biosphères, Renature, Earthworm, Circular Bioeconomy Alliance, Pour une Agriculture du Vivant and Hectar. The overall approach and individual projects are signed off by a Science Committee, made up of independent outside experts, which meets annually. Practice and performance indicators have been put in place for each raw material. Lastly, suppliers are beginning to roll out certifications such as RegenAgri and ROC.

Preserving and restoring ecosystems

As responsible corporate citizens keen to make a net positive contribution to biodiversity, LVMH and its Maisons are committed to funding projects that help preserve or restore ecosystems that fall outside their supply chains. In this context, LVMH and UNESCO have launched a program with 5 million euros of funding over five years to combat causes of deforestation in the Amazon. The program aims to attack the root causes of deforestation and water pollution in the Amazon basin by working with eight biosphere reserves in Bolivia (Pilón-Lajas and Beni), Ecuador (Yasuní, Sumaco and Podocarpus-El Cóndor), Brazil (Central Amazon) and Peru (Manu and Oxapampa-Asháninka-Yanesha). Other programs of the same type are run by the Group or its Maisons in Africa, Asia and Oceania.

3.1.2       Key achievements in 2023: Biodiversity

LVMH has been active for more than 10 years alongside many partners working to conserve biodiversity. The Group was the first private-sector entity to join the eight public research bodies on the Board of Directors of the French Foundation for Research on Biodiversity (FRB). In 2019, LVMH stepped up its involvement by signing a five-year partnership with UNESCO to support its intergovernmental scientific program, “Man and the Biosphere”. This tool for international cooperation is aimed at protecting global biodiversity. For example, the Group’s Maisons draw on UNESCO’s scientific expertise and its network of 686 biosphere reserves to develop their sustainable sourcing policies. LVMH is actively involved in the Act4Nature International initiative. In June 2023, LVMH shared its biodiversity commitments at the Future Fabrics Expo in London. At the 42nd UNESCO General Conference in November 2023, LVMH and UNESCO ran a special session with Audrey Azoulay, Director-General of UNESCO, and Antoine Arnault, Chief Image & Environment Officer of LVMH, on protecting biodiversity in the Amazon basin. The event was an opportunity to share the results of the Amazon project and launch the UNESCO biodiversity portal, backed by Italy.

3.1.2.1              Certification of strategic supply chains

In 2023, the level of certification continued to increase in supply chains, for example sheep and cow leather (up from 91% in 2022 to 96% in 2023) and cotton (up from 71% in 2022 to 75% in 2023). As part of the LIFE 360 program, the Group has set certification targets for supply chains in which standards may have yet to stabilize. This is the case, for example, of the wool and cashmere supply chains. Against this backdrop, the Group’s Maisons are working in partnership with their suppliers to ensure that wool and cashmere is purchased from farms certified as complying with animal welfare and environmental protection standards.

In the fur sector, the Group and its Maisons are actively involved in drawing up new certification standards under the FurMark program (which follows the ISEAL rules ⁽¹⁾).

As regards exotic leather, all hides purchased by the Heng Long tannery now come from farms certified as complying with the standard developed by LVMH in 2018 and which evolved in 2021 (Standard for Responsible Crocodilian Production) to take into account the latest research findings on the welfare of farm-reared crocodilians so as to align with the International Crocodilian Farmers Association (ICFA) standard.

Along with other luxury brands, LVMH is taking part in the Responsible French Calfskin initiative (CVFR). This initiative which was launched in 2020 aims to pool and roll out animal welfare verification audits across the entire French calfskin production chain, in collaboration with stakeholders (breeders, integrators, slaughterhouses) in France, and to help improve the living conditions of the animals and people by making training and investing programs available. Thanks to efforts by nonprofit Imagin’Rural to foster constructive dialogue between brands and operators in the sector, the approach has gradually been adopted by integrators representing nearly 60% of France’s calf farms.

In 2023, 280 third-party audits were performed on the basis of the shared audit protocol jointly created by all those having signed on to the initiative, along with veterinary experts and the Institut de l’Élevage (Idele), raising the number of operators having undergone a third-party audit to 400 since the initiative was launched. The initiative aims to roll out its audit program nationally at 1,200 farms by 2025.

In 2023, thanks to the support of integrators who joined the initiative and to training efforts, 76% of audits resulted in a “satisfactory” rating. Audit findings and dialogue with sector operators will help drive continuous improvement and optimize the allocation of funds and expert training.

LVMH continues to roll out certifications such as FSC and PEFC guaranteeing that none of the wood or wood derivatives used by the Group’s Maisons are derived from illegal deforestation.

The Group has also established three committees focused on the responsible sourcing of gold, diamonds and colored gemstones. These committees – chaired by Chaumet, Tiffany & Co. and Bulgari, respectively – bring together all LVMH Maisons actively involved in these industries with the goal of defining and further developing responsible sourcing criteria for use by the Maisons as well as monitoring certain initiatives focused specifically on traceability and the development of virtuous industry practices. In 2023, Tiffany & Co. aligned its responsible sourcing criteria with the recommended standards, enabling the Maison to improve its performance regarding certification indicators, particularly RJC CoP certification for its suppliers.

Lastly, in 2023 the Berluti Mall of the Emirates became the world’s first full-project FSC®-certified luxury goods store (standard FSC-STD-40-006 V2, license code FSC-P001977), guaranteeing that all wood and wood derivatives used in its construction, fixtures and fittings came from sustainably managed forests.

Certification of strategic supply chains: LIFE 360 achievements in 2023

(a)  It should be noted that, since the reporting process is currently under development, data reported by the Maisons is subject to a high degree of uncertainty.

(b)  Scope excluding Tiffany & Co., i.e. the same as in 2022. With Tiffany & Co. included, the certification rate is 98%.

3.1.2.2              Regenerative agriculture and preserving ecosystems

The Group has committed to restore, protect or regenerate 5 million hectares between now and 2030 by implementing regenerative agriculture practices across its supply chains or contributing to programs that preserve or restore endangered ecosystems outside of its value chain.

In 2023, the Maisons are continuing the roll out of projects in Turkey and Chad for cotton, in Australia for merino wool, in Indonesia for palm oil, and in France for some iconic perfume ingredients. For example, Parfums Christian Dior has set itself a target of implementing regenerative agriculture practices for each of the essences in its Dior Gardens program: nine essences for skincare (such as Granville rose, longoza from Madagascar and red hibiscus from Koro) and four for perfumes (such as rose, jasmine and neroli from Grasse). The Maison is also partnering with the Hectar project, which runs a center for dedicated research into horticulture and regenerative practices. In 2023, Parfums Christian Dior, Parfums Givenchy and Kenzo Parfums announced that they would be working with Cristal Union (a French agricultural cooperative of over 9,000 beet growers) to improve agricultural practices in the beet industry, from which the alcohol used in the Group’s fragrances is derived. They are financing a project aimed at supporting the transition to sustainable farming of 380 hectares of beet crops in France’s Grand Est region, to produce the equivalent of 45% of their requirements in alcohol. In 2023, LVMH also entered into a partnership with Chargeurs as part of its Nativa program aimed at more quickly rolling out and sourcing supplies of regenerative wool from Australia. LVMH pursued its agroforestry projects in the Indonesian palm oil sector with other industrial partners. Over 400,000 hectares of forest are protected and covered by the project.

Now a partner of the Circular Bioeconomy Alliance, established in 2020 by His Majesty King Charles III when he was Prince of Wales, LVMH supports a regenerative agroforestry and cotton production program around Lake Chad. The project, launched in late 2022, made significant progress in 2023, training over 500 farmers in two regions of Lake Chad and setting up a 12-hectare nursery to supply farmers with the plants they need.

Lastly, all Moët Hennessy vineyards have also launched regenerative agriculture programs to expand the practice of cover cropping, for example. Having partnered with the non-profit organization Pour une Agriculture du Vivant, some wines Maisons are testing its regeneration indicator, designed to measure soil regeneration and biodiversity and guide the development of actions. LVMH is also working with Genesis to measure the impact of regenerative agriculture programs in the Fashion, Perfumes and Wines supply chains on the environmental quality of soil.

Outside these supply chains, LVMH and its Maisons are committed to financing projects that help preserve or restore ecosystems, such as the joint LVMH and UNESCO program to combat the causes of deforestation in the Amazon. Since 2021, this project has already supported 42 initiatives aimed at restoring ecosystems and developing sustainable job opportunities for local communities by combining indigenous and local knowledge with scientific knowledge to reduce adverse impacts on biodiversity and improve resilience to climate change. The Amazon project made significant progress in 2023: more than 480 people were trained and equipped to fight fires, and agroforestry methods were developed for the production of essential oils and cacao, having a positive impact on more than 1,000 families. This project also allows field data across 11 categories and 48 indicators to be collected to improve scientific knowledge relating to the protection and regeneration of ecosystems. This approach is in keeping with the launch of the UNESCO biodiversity portal.

At COP28 in 2023, LVMH kicked off a new project with the Foundation for Amazon Sustainability (FAS), which works to combat deforestation in the Amazon. LVMH committed 1 million euros to the FAS partnership to help protect the environment while also pursuing sustainable development and respecting the local cultural context. The project has three key priorities: to conserve biodiversity and the ecosystem; to educate and build capacity; and to build sustainable supply chains across the region.

Moët Hennessy upheld its partnership with Reforest’Action to launch reforestation programs in Kenya, China, the United States and South Africa as well as on its own vineyards. Louis Vuitton contributed to protecting natural resources by entering into a five-year partnership with nonprofit People For Wildlife as well as local communities to maintain and regenerate biodiversity in a 400,000-hectare natural area of Australia.

A total of 3.1 million hectares was regenerated, preserved or restored in 2023, of which 26,000 hectares covered by regenerative agriculture practices belonging to the Group’s supply chain (LIFE 360 target).

3.2         Water

3.2.1       Overview of the Water policy

Under pressure from both population growth and the consequences of global warming, water is a resource in high demand. Restrictions on its use mean specific action plans – such as the one announced by the French Government in March 2023 – are needed. As well as being an essential component of the Group’s activities, for example in Wines and Spirits, water is a critical ingredient of Perfumes and Cosmetics as well as of raw materials used in Fashion and Leather Goods products. This makes it a strategic resource that contributes directly to the quality of products developed by LVMH, and the Group has a responsibility to take action to preserve it. To this end, in 2023 the Group unveiled the first part of its plan to protect global water resources by adopting a concerted approach to managing this precious natural resource. The plan aims to achieve a 30% reduction in water withdrawal arising from LVMH’s operations and value chain by 2030 (baseline: 2019), particularly in water-stressed regions. Some Maisons have already made significant headway: for example, Hennessy and Loro Piana have reduced their water withdrawal by 28% and 25%, respectively, since 2019.

The first step in the plan to protect water resources is to measure impacts. This can serve as a powerful lever for identifying priorities, targets and actions. In 2023, LVMH updated its water footprint using specific, recognized pressure and sensitivity indicators such as the EF 3.0.2 and IMPACT 2002+ databases and the Aqueduct, WWF Water Risk Filter, Plasteax (Mismanaged Waste Index) and AWARE methodologies. LVMH is always working to improve measurement of water consumption across the Group’s value chain using constantly refined pressure indicators and increasingly accurate geolocation methods to plan its operations and supply chains. By calculating its water footprint in this way, the Group is able to identify the highest-impact and highest-risk sites and materials located in water-stressed regions, both within LVMH’s operations and across the Group’s value chain. Details are provided in Section 3.2.2.

The second phase involves a number of action plans across LVMH’s operations and the Group’s value chain to achieve the target of a 30% reduction in water withdrawal by 2030.

3.2.1.1              Reducing water withdrawal arising from LVMH’s operations

LVMH is rolling out a plan consisting of actions designed to reduce water withdrawal arising from its operations. Examples of actions include the following:

●   production processes that use less water are being introduced, such as water recycling systems at the Group’s distilleries and at Loro Piana’s workshops. The Group’s tanneries, farms and hotels are also implementing the most efficient technologies;

●   the Group continues to roll out the regenerative agriculture program, launched in 2021, across its vineyards, with the aim of improving the quality of soil and thereby its ability to capture and retain water;

●   best practice is being rolled out to limit the use of irrigation on vineyards, notably in Argentina and California.

3.2.1.2              Water withdrawal arising from LVMH’s value chain

A dedicated action plan is also in place covering the Group’s value chain, which accounts for 95% of its water footprint. Actions include the following:

●   using the most efficient technologies to reuse treated wastewater and recover rainwater within the value chain, while supporting partner livestock farmers, growers and vineyard operators;

●   continuing with the Group’s raw materials certification and regenerative agriculture program, launched in 2021, across the cotton, wool, leather and beet supply chains;

●   raising awareness among customers through environmental labeling, which is in the process of being rolled out across the Group’s products.

Lastly, in 2023 LVMH joined the CEO Water Mandate, a United Nations organization aimed at sharing and implementing best practice in water management. As it did for biodiversity, in 2023 LVMH took part in official testing of the SBT Nature approach, which includes defining specific targets for some watersheds.

3.2.2       Key achievements in 2023: Water

3.2.2.1              Water withdrawal arising from LVMH’s operations

Water withdrawal is used for the following requirements:

●   process requirements: Use of water for cleaning purposes (tanks, products, equipment, floors), air conditioning, employees, product manufacturing, etc. Such water consumption generates wastewater.

●   agricultural requirements: Use of water for vineyard irrigation, for the most part outside France. Water is taken directly from the natural environment for irrigation purposes, with water use from year to year closely linked to changes in weather conditions. However, it should be noted that water withdrawal for agricultural requirements is assessed by sites with a higher level of uncertainty than water withdrawal for process requirements.

Water withdrawal changed as follows between 2022 and 2023:

(a)  Value and change at constant scope.

(b)  Increase due to a drought year for the Group’s Argentine vineyards as well as the transition to cover cropping, which raises water requirements.

Water withdrawal broke down as follows by business group:

(a)  Data includes production sites, distribution centers and some offices. Stores are not included.

(b)  Data includes Le Bon Marché and some DFS locations.

(c)   Value and change at constant scope.

(d)  This change is mainly due to the introduction of best practice and technology at some farms and tanneries.

(e)  This change is mainly due to activities at Glenmorangie.

(f)   This increase is mainly the result of new sites having been included in the reporting scope (Belmond, Château d’Esclans, Loro Piana production site in Mongolia and Tiffany & Co.).

The updated 2023 water footprint brought to the fore the fact that four vineyards whose water withdrawal is significant relative to the Group as a whole are located in areas where water stress is close to 100%, meaning that water requirements in these areas are close to the level of available resources:

●   the Domaine Chandon Argentina vineyards (Agrelo and Terrazas), which represent 79% of the Group’s agricultural water requirements;

●   the Domaine Chandon California and Newton vineyards, which represent 8% of the Group’s agricultural water requirements.

Vineyard irrigation requires authorization and is regulated in California and Argentina due to the climate. Such irrigation is necessary for winegrowing. Nevertheless, the Group has taken the following measures to limit water withdrawal: harvesting rainwater; implementing protocols to measure and specify water requirements; standardizing drip irrigation practices in California; using weather forecasts to optimize irrigation; and adopting the “regulated deficit irrigation” technique, which reduces water consumption and improves grape quality and grapevine size, yielding an enhanced concentration of aroma and color.

Best practice is rolled out across all Maisons. For example, Belvedere achieved a 30% reduction in the Maison’s water withdrawal in 2023 by rolling out a system that filters and recycles distillation wastewater.

3.2.2.2              Water consumption arising from LVMH’s value chain

The water footprint updated in 2023 based on 2022 data put water consumption associated with the Group’s value chain at 129 million cubic meters. Of this amount, over 95% related to the production of raw materials, chiefly metals (24%) wool (18%), grapes (17%), cotton and other textiles (10%) and leather (7%). Water withdrawal is the total amount of water taken from the natural environment, whereas water consumption is the amount of water taken, consumed and absorbed that cannot be returned directly to the natural environment after use. To achieve the target of a 30% reduction by 2030, it will be vital to continue with the raw materials certification and regenerative agriculture program (to reduce agricultural water withdrawal) and to improve transformation and production processes used by the Group’s suppliers, for example through LWG certification for tanneries supplying to the Group (see §3.1.2).

3.3         Pollution

3.3.1       Description of the water, soil and air pollution prevention policy

LVMH has a policy in place to prevent water, soil and air pollution by reducing or prohibiting the use of the highest-risk substances within its operations and value chain and reducing as far as possible organic and inorganic sources of pollution, notably in the areas set out below.

3.3.1.1              Tanning and finishing of leathers and textiles

LVMH joined the ZDHC (Zero Discharge of Hazardous Chemicals) trade association, which aims to promote best practices concerning the use of dangerous substances and the quality of discharged wastewater at textile and leather manufacturing sites, in particular for dyes. LVMH has drawn up a detailed roadmap that encompasses LVMH’s production sites as well as key suppliers of Maisons in the Fashion and Leather Goods business group. The following targets are in place for 2026:

●   rollout of ZDHC’s Supplier to Zero program, designed to ensure awareness and implementation of sustainable chemical management by suppliers, with a minimum coverage rate of 65% (of which 20% at Level 2, Progressive) by volume of ZDHC-certified leather and textiles purchased by the Group’s Maisons;

●   verification of compliance of chemical formulations with ZDHC MRSL, with a recommended compliance rate of 60%;

●   control on wastewater quality at targeted sites operated by the Group’s suppliers, with at least one ZDHC ClearStream report per year. The aim is to cover at least 65% by volume of leather and textiles purchased by the Group’s Maisons, with a minimum MRSL compliance rate of 85%.

LVMH has also implemented many tools to improve and monitor the use of chemicals in relation to the finished products and raw materials supplied to the Maisons, by maintaining its Product Restricted Substances List (PRSL), which details the chemical restrictions applicable to these products and materials (updated at least twice a year).

3.3.1.2              Vineyards and agricultural commodities

Moët Hennessy has for many years been committed to reducing and optimizing the use of chemicals at its vineyards. This is reflected in particular in its target of completely halting the use of herbicides at all Group-owned vineyards by 2024. This target was achieved for vineyards in the Champagne region in 2020 and for those in the Cognac region in 2021. By 2022, this target had, on average, been achieved at 86% of Moët Hennessy vineyards worldwide by area. The aim is also to encourage independent grape suppliers to adopt this approach by 2028-2030.

Major efforts are being made to reduce the use of other pesticides (insecticides and fungicides), in particular by using biocontrol agents, which notably stimulate plants’ natural defense mechanisms. Maisons monitor progress calculating the Treatment Frequency Indicator for both conventional products and biocontrol agents. In 2022, 37% of interventions to combat disease involved the use of biocontrol agents. There are also opportunities to make progress by improving phytosanitary treatment equipment. For example, confined sprayers with recovery panels can reduce the amount of product used by 30-40% while allowing for much more targeted treatment.

As regards fertilization, the number of units of nitrogen used at the Maison’s vineyards is also monitored. In 2022, a total of 163 metric tons of nitrogen were used on vineyards owned by the Group, with the quantities applied tailored as closely as possible to the specific needs of each plant. Nitrogen is applied taking into account weather conditions so as to minimize runoff into the soil and the water table. Moreover, efforts are being made to prioritize the use of organic rather than synthetic fertilizers, as doing so offers benefits for soil structure as well as water quality.

For other agricultural commodities, LVMH is rolling out a regenerative agriculture certification program (see §3.1.1 and §3.1.2) to limit the use of pesticides, herbicides and fertilizers.

3.3.1.3              Organic wastewater discharge

The only significant, relevant indicator related to preventing organic pollution is the release of substances into water by Wines and Spirits, Fashion and Leather Goods, and Perfumes and Cosmetics operations contributing to eutrophication. The Group’s other activities have only a very limited impact on organic water pollution. Eutrophication is the excessive buildup of algae and aquatic plants caused by excess nutrients in the water (particularly phosphorus), which reduces water oxygenation and adversely affects the environment. The parameter used is the Chemical Oxygen Demand (COD) calculated after treatment of effluents from the Group’s own plants or external plants with which the Group has agreements. The following operations are considered treatment: city and county wastewater collection and treatment, independent collection and treatment (aeration basin), and land application. All of LVMH’s operations that generate the highest COD are equipped with facilities for treating and minimizing organic pollution.

3.3.2       Key achievements in 2023: preventing water, soil and air pollution

With regard to organic wastewater discharge, COD after treatment changed as follows between 2022 and 2023:

(a)  Value and change at constant scope.

(b)  Change related to the upturn in business and exceptional cleaning operations at a distillery.

Measurement frequencies at the highest-contributing Maisons are compliant with local regulations but remain limited with regard to the changes observed in quantities discharged.

In 2023, the Maisons pursued the rollout of the ZDHC program with targeted suppliers using wet processes. The results are detailed in the table below:

Three of the four ZDHC targets set for 2023 were achieved, notably in respect of the quantity of leather from certified suppliers and the quantity of leather and textiles from suppliers having generated a ClearStream report. This performance reflected the commitment of the Fashion and Leather Goods Maisons, which have been working with their suppliers to speed up the rollout of the ZDHC roadmap. The delay in certifying textile suppliers is mainly down to the very large number of suppliers involved; the backlog will be cleared over the next few years. In 2023, LVMH hosted the ZDHC annual conference, a key opportunity to summarize and share best practice.

Volatile Organic Compound (VOC) emissions are addressed through specific action plans, notably for Perfumes and Cosmetics operations and the tanneries.

4.     LIFE 360 - Traceability and Transparency

4.1         Overview of the Traceability and Transparency policy

Tracing a material – be it gold, cotton or leather – from source through to finished product is no simple matter. However, it is a vital step in ensuring the adoption of responsible practices. If the Group is to reduce its carbon impact, introduce ecosystem-friendly farming practices and ensure that its suppliers use responsible practices, it must first have end-to-end knowledge of the value chains of all materials that go into the exceptional products made by the artisans and manufacturers it works with. Traceability is thus a prerequisite for identifying issues, implementing responsible practices and transparently sharing those practices with stakeholders. This is known by LVMH as the Chain of Custody system, defined by ISEAL ⁽²⁾ as “the complete set of documents and mechanisms used to verify the traceability between the verified unit of production and the claim about the final product”.

Building on the formal certification policy put in place for its supply chains as early as 2016, LVMH set itself the following additional targets in 2021 to perfect product traceability and boost its progress in relation to customer transparency:

●   all strategic supply chains to be covered by a dedicated traceability system by 2030;

●   all new products to come with a dedicated customer information system by 2026.

4.1.1       Traceability

What action is required to ensure traceability across the entire upstream value chain depends on the characteristics of the supply chain in question: whether or not it is integrated (one of the Group’s distinctive features is that it owns a large number of manufacturing businesses and farms for the Group’s strategic materials, enabling it to ensure traceability and responsible practices through direct control); how structurally mature it is; and whether the materials produced are compound.

Traceability is a key concern for the following strategic raw materials:

●   grapes, rye and barley;

●   sheep and cow leathers, raw lamb and calf skins, exotic leathers and furs;

●   cotton;

●   wool;

●   down and feathers;

●   viscose;

●   silk;

●   wood, paper and cardboard;

●   gems and precious metals;

●   palm oil and its derivatives;

●   soya and its derivatives for cosmetic use;

●   alcohol;

●   iconic ingredients used by Maisons in the Perfumes and Cosmetics business group.

To ensure that all strategic supply chains are covered by a dedicated traceability system enabling full traceability from raw material to finished product by 2030, three sub-goals have been put in place:

●   2023: the origin (country or mining company) to be known for all strategic supply chains;

●   2026: all strategic supply chains to have a dedicated traceability system;

●   2030: all strategic supply chains to be fully traceable from raw material to finished product with the help of the dedicated traceability system.

To achieve these targets, LVMH is implementing an ambitious certification process for its strategic supply chains based on the most stringent standards, as described in §3.1.1, which are mainly based on Chain of Custody models and strengthen the upstream traceability process for the most complex supply chains. Moreover, the goal of working to standardize traceability practices in the industry will be one of the key priorities underpinning the LIFE 360 Business Partners program.

4.1.2       Transparency

Sharing information about products’ environmental performance with customers has become a key requirement for the Group, which has set a target of ensuring that each product comes with a dedicated information system by 2030. With this in mind, LVMH is involved in ongoing discussions on environmental labelling at both the French and European levels, notably in respect of fashion products where quality and lifespan are of critical importance. All the associated targets are set out in §1.2.2. These initiatives are part of a broader Group strategy aimed at eventually rolling out Digital Product Passports. These Digital Product Passports will offer Maisons’ customers greater assurance as to the origin of raw materials and components as well as products’ authenticity, composition, environmental footprint, sustainability and details of how products are recycled.

4.2         Key achievements in 2023: Traceability and Transparency

4.2.1       Adoption of new traceability tools

The Group continued the rollout of a system for mapping its strategic supply chains. The objectives of this system are to monitor flows of materials along value chains, to collect information directly from the parties involved in supply chains and to identify and mitigate environmental and social risks as well as risks to ethics and animal welfare. Following the findings of a working group on upstream traceability in 2021, the Environmental Development, Purchasing and IT Departments kicked off a raw materials industrial traceability pilot for leather and cotton. On the strength of this experience, the Group is now ready to roll out custom supplier mapping solutions specific to each supply chain.

In 2023, efforts to raise awareness of traceability requirements and methods continued. A comprehensive review of existing standards, given the goal to strengthen upstream traceability, was carried out for gold suppliers in particular.

For each newly obtained and individually registered diamond it sets, Tiffany & Co. provides its customers with information about its source – its region, country of origin or the company that mined it – as well as the production process used. All rough diamonds used by Tiffany & Co. in its pieces are fully traceable all the way back to the mine of origin. They come mainly from Botswana, Canada, Namibia and South Africa. Stones not polished by Tiffany & Co. are covered by the guarantee of origin system, whereby suppliers are required to issue a warranty statement specifying the country of origin and/or approved mining source of each diamond. This system enables the Maison to provide information about the origin of individually registered diamonds along with their other specifications.

For colored gemstones, Tiffany & Co. published the Colored Gemstone and Pearl Source Warranty Protocol in 2021 to serve as an operational tool shared with suppliers to help them improve traceability. LVMH is also a member of the Coloured Gemstones Working Group (CGWG), an industry stakeholder organization involved in improving social and environmental practices at mines and promoting transparency as to the sourcing of colored gemstones.

At the beginning of the year, a consortium of 15 cosmetic industry firms, brands and suppliers, notably including Chanel, Clarins, Dior, Estée Lauder, L’Oréal, Shiseido and Sisley, announced that they were joining forces to set up the TRaceability Alliance for Sustainable CosmEtics (TRASCE). This new body is tasked with improving the traceability of supply chains for key components used in cosmetic formulas and packaging. The French federation of beauty firms, FEBEA (Fédération des Entreprises de la Beauté), is also supporting the project as a sponsor.

The founding members have committed to work together to map their supply chains across the entire value chain using a shared digital platform, Transparency One, with the aim of mapping each stakeholder in the chain as far upstream as possible, as well as stepping up the sustainable transformation of the perfumes and cosmetics supply chains.

Ultimately, the consortium aims to come up with a consolidated shared approach to analyzing associated corporate social responsibility risks so as to interpret the data collected and draw up shared improvement plans.

In 2023, Fendi was still one of the highest-ranking companies in the Fashion Transparency Index, with a score of 58/100. This index evaluates performance with regard to transparency, environmental and societal policies together with impacts in their own operations and in their supply chains. Fendi has adopted ambitious goals in these areas and reports on its progress via its website.

In keeping with the Animal Materials Supply Charter published in 2019, the Group’s Maisons are working to ensure that their raw materials are traceable; in 2023, the source of materials of animal origin was known for 99.9% of exotic leathers, 99.9% of furs and 88% of wools.

Summary of LIFE 360 “Traceability and Transparency” targets for 2023

(a)  Data declared by suppliers.

(b)  Item not reported in 2022.

4.2.2       New information systems

The Group and its Maisons have begun rolling out systems that measure the environmental impact of products; monitor the sustainability of their design (see Section 2.1.1); and consolidate traceability information. This information is shared with consumers either on Maisons’ websites via a QR code or directly on product labels. In 2023, more than 30,000 products sold (9,500 in 2022) by the Group’s Maisons were already covered by an information system. For example, as part of its Patou Way approach, Patou published environmental performance and traceability indicators on its website for its “Les Essentiels” collection of over 64 products.

For several years, LVMH has taken part in French and European methodological work on environmental labelling, in the fashion industry in particular. LVMH and its fashion Maisons began the rollout of a tool to meet the requirements of France’s new anti-waste law for a circular economy, known as the AGEC law, and specifically its Article 13 relating to the sharing of environmental and traceability information at the time of purchase.

LVMH is also one of the founding members of the Eco-Beauty Score Consortium, which aims to develop a shared methodology for measuring and communicating the environmental footprint of cosmetic products. The development of this methodology continued in 2023.

In 2021, LVMH, together with Prada Group and Cartier, announced the launch of the Aura Blockchain Consortium, which more than 40 Maisons from the industry have since joined. The Consortium’s mission is to create a standard for the luxury industry, using blockchain technologies, to preserve, secure and tamper-proof data about the life cycle of materials and products. This unique initiative is open to all luxury brands worldwide, providing them with a way to ensure responsible sourcing, transparency and authentication.

In 2023, some LVMH group Maisons kicked off projects in partnership with the Aura Blockchain Consortium to incorporate blockchain technology into their businesses. These projects were designed to guarantee the traceability and authenticity of raw materials used in the exceptional products sold by the Maisons. For example, Loro Piana focused on the traceability of the extra-fine wool fibers in its Gift of King range, taking traceability to a whole new level all along its supply chain. Similarly, Dior aimed to guarantee the traceability and authenticity of its B33 sneakers, providing customers with visibility as to the origin and history of these iconic products. Louis Vuitton took advantage of this partnership to launch the LV Diamonds certificate, a unique and secure digital certificate that lists the main characteristics of the central diamond set in a piece of jewelry and tracks its journey from its extraction to the final purchase.

5.     LIFE 360 – Climate

Combating climate change is a major focus of LVMH’s environmental policy. The Group has often played a pioneering role in this area. In the early 2000s, for example, it took part in testing the carbon assessment method that would later become the Bilan Carbone^®. In 2015 it was also the first luxury company to set up an internal carbon fund.

5.1         Overview of the Climate policy

Based on its overall carbon footprint updated annually by an outside firm, LVMH mapped out a carbon trajectory in line with the Paris Agreement. This carbon trajectory was approved in December 2021 by leading international third-party organization the Science Based Targets initiative (SBTi), a coalition that brings together the Carbon Disclosure Project (CDP), the United Nations Global Compact (UNGC), the World Resources Institute (WRI) and the World Wildlife Fund (WWF). In July 2022, LVMH pledged to submit its net-zero pathway for approval by the SBTi within the next 24 months, and to set a target in relation to two new frameworks, the SBTi’s FLAG Guidance and the GHG Protocol’s Land Sector and Removals Guidance.

Over and above the Group’s overall commitment, seven of its Maisons – Louis Vuitton, Moët Hennessy, Parfums Christian Dior, Guerlain, Make Up For Ever, Tiffany & Co. and Stella McCartney – have now secured approval from the SBTi for their carbon trajectories across their own scopes, confirming their goals built into each Maison’s strategy: “Our Committed Journey” for Louis Vuitton, “Living Soils” for Moët Hennessy, “Beauty as a Legacy” for Parfums Christian Dior and “In the Name of Beauty” for Guerlain. In 2023, they were joined by Make Up For Ever, whose targets were approved by SBTi. For its part, Tiffany & Co. has pledged to reach net zero by 2050, in particular by procuring 100% of electricity for its own operational requirements from renewable sources and removing commodity-driven deforestation from all its supply chains.

The Group’s current targets are to:

●   reduce energy-related greenhouse gas (GHG) emissions at its directly operated stores and sites by 50% in absolute terms by 2026 (baseline: 2019) thanks to a policy of 100% renewable and low-carbon energy;

●   reduce or avoid 55% of Scope 3 GHG emissions (raw materials, purchases, transportation, waste, product usage and end-of-life treatment) per unit of added value by 2030 (baseline: 2019).

5.1.1       Key levers for reducing Scope 1 and 2 emissions

The Group’s actions to mitigate the impact of its activities on energy consumption are concentrated in two key areas:

●   the improvement in the environmental profile of stores, which represent the main source of the Group’s energy consumption;

●   greater use of renewable energies at production and logistics sites, administrative sites and stores.

To halve GHG emissions from stores (CO₂ emitted by energy generation and refrigerant gases used in air conditioning systems), the Group has set tangible and ambitious targets for the first two milestones in 2023 and 2026:

●   2023: all sites and stores to have the ability to report their energy consumption (bills or meters);

●   2026: all stores to be equipped with LED lighting, with stores over seven years old undergoing partial renovation of their lighting systems.

Alongside actions to reduce its fossil fuel consumption, LVMH is rapidly expanding its use of renewable energy with a target of exclusive use of renewable or low-carbon energy by 2026. Framework agreements signed with energy suppliers in different regions have been one of the main drivers of the Group’s progress in the area of electricity and gas since 2015.

In addition, the Group sets an electricity consumption threshold for its stores. In 2020, the relevant threshold was 700 kWh per square meter. Set at 600 kWh/m² in 2021 and 2022, at 500 kWh/m² 2023, this will fall to 400 kWh/m² in 2026 and 300 kWh/m² in 2030.

In 2023, the Sustainable Store Planning (SSP) team strengthened the approach to change management by rolling out a policy underpinned by five pillars:

●   managing the network of buyers, including in particular by holding coordination events in Miami in June and in Shanghai in October;

●   training: a total of 1,400 hours of training were delivered in 2023 and 20 new training modules were created;

●   managing the network of partners by rolling out framework agreements and recognizing Labeled Partners;

●   managing Maisons’ Store Planning Purchases data;

●   innovation: highlighting innovative materials, specific technologies, designers and architects committed to sustainable design.

5.1.2       Key levers for reducing Scope 3 emissions

In 2022, Scope 3 GHG emissions (raw materials, purchases, transportation, waste, product usage and end-of-life treatment) per unit of added value were reduced by 15.1% (baseline: 2019). The Group’s efforts to reduce Scope 3 emissions are concentrated in three key areas:

●   a lower carbon footprint for raw materials, products and packaging: dedicated policies on sustainable product design and packaging (see §2.1.1) and the sourcing of certified raw materials (see §3.1.1) are being implemented by each business group, with the involvement of suppliers, such as independent grape suppliers, livestock farmers and growers. With the announcement of the LIFE 360 Business Partners program at the LIFE 360 Summit in December 2023, the Group is now in a position to help its suppliers reduce their Scope 3 emissions. From 2024 onwards, LVMH will be running Sustainability Business Partners Days to listen to partners’ needs and expectations in order to support the environmental goals of the Group’s various supply chains. The Group will also share its environmental knowledge and training programs as well as its regulatory intelligence, and will encourage the sharing of solutions and expertise through a dedicated platform;

●   sustainable transport, using several different methods: an emphasis on local sourcing, use of trains and boats where possible, supply chain optimization, biofuel use for air freight and electric vehicles for last-mile deliveries;

●   reducing the carbon footprint of computing: in keeping with the LIFE 360 program, the Green IT program has set itself a target of achieving a 20% reduction in the environmental footprint of the LVMH group’s IT and digital technology by the end of 2026 (baseline: 2021). In 2023, 60 of the Group’s Maisons joined the program and rolled out the Green IT charter. At the same time, an action plan was kicked off to lengthen the life span of equipment, reduce the number of purchases and optimize energy consumption. A best practice guide for e-commerce packaging has also been shared with the Maisons.

LVMH is also continuing with its work in the following areas: the adoption of a green e-commerce approach; collaboration with the livestock industry to establish a position on methane, which has significant warming potential; and the implementation of a responsible advertising policy.

5.1.3       Key levers for adapting to climate change

Thanks to its analysis of climate-related risks and its work on the EU Taxonomy, the Group is able to identify exposed sites and draw up adaptation plans. More generally, the Group is also conducting an analysis of the various issues involved in adapting to climate change. Winegrowing activities are notably included in the review. In the medium term, changing winegrowing practices is the main component of the Group’s adaptation strategy.

Several solutions are available for European vineyards depending on the climate scenario, from altering harvest dates to developing different methods of vineyard management (such as widening rows, increasing the size of grapevine stocks and employing irrigation in certain countries) and testing new grape varieties. For vineyards in Argentina and California, the main issue is the availability of water (see §3.2.3).

More broadly, innovation – a key component of the Group’s mitigation policy – also plays a part in LVMH’s adaptation policy: new regenerative farming practices (see §3.1.2), the switch to new materials derived from biotechnologies and the use of biomimetics provide opportunities for reducing greenhouse gas emissions while simultaneously diversifying procurement sources and reducing the Group’s exposure to climate change. The Matières à Penser (Food for Thought) materials library and the Maison/0 partnership with Central Saint Martins dedicated to innovation and sustainable creativity will help drive new solutions at the Group’s Maisons.

These ambitious reduction and adaptation objectives have raised questions as to the relevance of certain solutions, notably carbon offsetting. To maximize leverage in reducing emissions, LVMH had previously refrained from making use of large-scale carbon offsetting (i.e. buying carbon credits linked to projects to avoid or sequester emissions to offset those emissions still produced by the Group). However, the goal of achieving global net-zero emissions by 2050 raises the question of the role of carbon credits, which the SBTi Net Zero standard proposes should be used once reduction targets have been met. Against this backdrop, the Maisons are trialing various types of offsetting.

5.2         Key achievements in 2023: Climate

At a time when combating climate change is of vital importance, and corporate citizens must play a decisive role in this fight, LVMH participated in COP28 to present its actions and engage in dialogue with stakeholders:

●   the Group signed a new agreement to combat deforestation with the Foundation for Amazon Sustainability (see §3.2.2).

●   Stella McCartney and LVMH presented the most innovative materials from regenerative agriculture, biotechnology and the circular economy at the Sustainable Market, a pavilion inside the Green Zone at COP28.

●   the Group entered into a new partnership focused on environmental store management. Following an initial partnership between LVMH and an owner of top-tier shopping malls in China, Hang Lung Properties (the first tangible results of which were recognized at the 2023 Green Point Awards), the Group kicked off two new partnerships with commercial landlords at COP28:

-   the first is with the top five local landlords in the United Arab Emirates. This innovative alliance between Chalhoub Group, EMAAR Malls Management (LLC), Majid Al Futtaim Properties LLC, Aldar Properties PJSC and LVMH reflects the shared commitment of key players in selective retailing in the United Arab Emirates in support of sustainability. Clear targets will be set for shopping malls, with innovative and ambitious environmental practices implemented covering water consumption, the efficient use of air conditioning, the use of clean energy, and design and construction practices;

-   similarly, LVMH and the Miami Design District (MDD) – the iconic neighborhood dedicated to innovative fashion, design, art, architecture and fine dining – entered into an agreement reflecting their shared commitment to sustainable development. The partnership between the Group and the MDD covers the 15 LVMH Maisons that rent retail space in the Miami Design District, which include in particular Louis Vuitton, Dior, Fendi, Berluti, Tiffany & Co., Bulgari and Hublot. The agreement is focused on tangible, measurable steps towards achieving 100% use of renewable energy in these stores. A key element will be the involvement of the Group’s Maisons and Miami Design District Associates, which develops and runs the district, in the SolarTogether solar energy program run by Florida Power & Light (FPL). Other store tenants in the MDD have been invited to join the initiative.

In 2023, LVMH began carrying out a double materiality analysis of climate-related impacts, risks and opportunities for the Group so as to refine the identification of key environmental challenges (see §1.1.2, “Risk identification”).

In 2023, LVMH’s Carbon Fund invested around 20 million euros in 192 innovation projects that would together avoid more than 256,000 metric tons of CO₂ equivalent. Lastly, to bring creativity and innovation to the fore in the development of climate change adaptation strategies, the Sustainable Store Planning team proposed partnerships with two design schools, Central Saint Martins in London and Strate in Lyon and Paris, to the Maisons. Workshops attended by representatives of various Maisons resulted in the development of many ideas, including a proposal for a store using only 5 watts per square meter and ways to keep stores cool without air conditioning. These two projects were presented at the LIFE in Stores Awards.

5.2.1       Energy consumption

Improving energy efficiency and expanding the use of renewable energy are the main thrusts of LVMH’s strategy to limit its carbon footprint, an approach that also entails better energy management, which is vital to help reduce overall energy consumption. Measures to reduce these emissions have been in place for a number of years at Maisons’ production sites. Responding to the French government’s call to action, LVMH announced the adoption of its energy conservation plan in September 2022, in order to contribute rapidly and in a concrete manner to the national effort. The plan includes three key measures aimed at reducing energy consumption by 10% between October 2022 and October 2023, first in France, then in Europe and finally around the world:

●   turning off lights in all stores operated by the Group’s Maisons between 10 p.m. and 7 a.m. and those at administrative sites at 9 p.m.;

●   changing thermostat temperatures for all industrial sites, administrative sites and stores, lowered by 1°C in the winter and raised by 1°C in the summer;

●   adopting new energy efficiency measures such as reducing screen brightness and deleting unused documents.

The initial results of this energy efficiency plan are promising. The Group has reduced energy consumption at its European stores and production sites by 10%. Some Maisons have gone even further, with Sephora, for example, achieving a 15% reduction in energy consumption at its French stores since the plan was launched.

In 2023, total energy consumption amounted to 1,939,763 MWh in for the Group’s subsidiaries included in the reporting scope. This corresponds to primary energy sources (such as fuel oil, butane, propane and natural gas) added to secondary energy sources (such as electricity, steam and ice water) mainly used for the implementation of manufacturing processes in addition to buildings and stores’ air conditioning and heating systems. Power consumption by directly operated stores not covered by reporting (17% of the total sales floor area) as well as offices and distribution hubs not covered by reporting, estimated based on consolidated figures stands at 167,692 MWh.

The target of measuring consumption across all retail space was partially achieved in 2023, with 83% of the total sales floor area covered. Recent partnerships entered into with department store owners are focused in particular on improving transparency and the exchange of environmental data.

Average store energy consumption fell from 356 kWh/m²/year in 2022 to 349 kWh/m²/year in 2023. LED lighting is now used across 79% of the total sales floor area.

Certifying stores is one way to make performance more objective, whether through the LIFE in Architecture in-house rating system or LEED, one of the world’s best-known systems. At the end of 2023, 55 stores had achieved LIFE in Architecture certification, 7 of them at Silver level, and 142 projects had secured LEED certification, two of them at Platinum level (Bulgari Shanghai IFC and the Loewe flagship stores in Paris and Madrid).

Alongside action to reduce consumption and boost energy efficiency, LVMH increased the proportion of renewable and low-carbon energy in its energy mix, with renewable and low-carbon energy making up 63% of the proportion in 2023, compared with 47% in 2022 and 1% in 2013. Framework agreements signed with energy suppliers have been one of the main drivers of the Group’s progress in this area. The first of these dates back to 2015 and supplies green electricity to more than 90% of LVMH’s sites in France, belonging to 23 of its Maisons. A similar agreement was signed in 2016 for the supply of electricity to a number of the Group’s Italian Maisons, while some sites in Spain and Portugal now use renewable energy. In 2023, a coordinated push to buy Renewable Energy Certificates for a number of Maisons, totaling over 220,000 MWh, also helped increase the proportion of renewable energy used by the Group. Many sites have also installed solar panels or geothermal systems.

The other driver is the use of biogas, which is either produced from production waste (Glenmorangie since 2017) or purchased (biomethane with a regional guarantee of origin sourced by Hennessy in 2020 and Guerlain in 2021). LVMH has chosen SAVE Energies, France’s second-largest buyer of biomethane, to supply all its French production facilities and sites with biomethane for three years starting in 2023, enabling the usage of biogas within the Group to be doubled during in its first year. Biomethane, which is produced from organic waste, generates 81% fewer greenhouse gas emissions than conventional gas. To maximize local benefits, methanation units will be located as close to Maisons’ sites as possible.

In 2023, among others Maisons, the champagne houses, Hennessy, Louis Vuitton. Christian Dior Couture and Parfum Christian Dior used biogas exclusively as fuel at all of its administrative and industrial sites. For its part, Belvedere now generates enough renewable energy to cover 98% of its needs thanks to its biomass capture facility and the solar panels installed at its distillery.

In view of the entry into force of CSRD, efforts were made in 2023 to expand the scope across which energy consumption is reported so as to align it with the scope of financial reporting. As well as increasing coverage of stores (notably to include Sephora), Belmond trains and boats were included in the Group’s energy footprint, together with the Clos des Lambrays and Château d’Esclans estates.

Energy consumption by business group changed as follows between 2022 and 2023:

(a)  Estimated power consumption by sites and stores not covered by reporting (17% of total store floor area).

(b)  Value and change at constant scope.

(c)   Excludes estimated power consumption.

Energy consumption by business group and by energy source was as follows in 2023:

(a)  Not including estimated data for sites not covered by reporting.

5.2.2       Greenhouse gas emissions

5.2.2.1              Direct emissions (Scope 1) and indirect emissions (Scope 2)

Scope 1 emissions are those generated mainly through the combustion of fuel oil and natural gas, as well as the leaking of refrigerant fluids. Scope 2 emissions are those generated indirectly from energy use, mainly electricity used in stores and at the Group’s production sites. In 2023, the emissions factors were updated on the basis of the most recent databases (IEA, Defra, Ecoinvent, etc.).

Energy-related CO₂ emissions by business group changed as follows between 2022 and 2023:

(a)  Excludes estimated power consumption.

(b)  CO₂ emissions by sites not covered by reporting (of which 17% of total floor area).

(c)   Value and change at constant scope.

(d)  Updated emissions factors.

5.2.2.2              Scope 3 emissions

Every year, LVMH enlists the services of an external firm to assess the carbon footprint of its entire value chain as well as the 2019 baseline in order to incorporate SBTi-aligned emission items and scope changes.

In 2022, the total carbon footprint thus stood at 6.4 million metric tons of CO₂ equivalent (tCO₂e), including 6.1 million metric tons from Scope 3 emissions, broken down as follows:

A breakdown of Scope 3 for 2023 as a whole, in accordance with the GHG Protocol, can be found in the Social and Environmental Responsibility Report. Emissions from upstream and downstream transportation in 2023 are broken down below.

Greenhouse gas emissions generated by inbound transport (transport of raw materials and components toward production sites; only the main components and raw materials are taken into account) broke down as follows in 2023:

Greenhouse gas emissions generated by outbound transport (transport of finished products from production sites to distribution centers and points of sale) broke down as follows in 2023:

DFS, Sephora North America, Royal Van Lent and Pucci did not report their data for the transport-related indicators.

The reporting process for upstream and downstream transportation was reviewed in full in 2023 so as to more effectively map transportation flows and improve measurement accuracy.

As regards upstream transportation at Hennessy, the Maison’s entire fleet of trucks runs on either biofuel or electricity. Its modal share of rail transport in France rose by 3% year on year in 2023. Lastly, 2023 marked a major step forward for the partnership with Neoline, with construction beginning on the first ship at the RMK Marine shipyards in Turkey and the Saint-Nazare shipyards in France. The first transatlantic vessels are expected to be ready in summer 2025.

Louis Vuitton entered into a partnership with SF Group in China focusing in particular on the impact of transportation. Louis Vuitton and SF are set to kick off three innovative projects:

●   creating a platform for measuring the carbon footprint of the entire logistics chain;

●   conducting scenario analysis and developing a portfolio of solutions aimed at stepping up the development of emissions reduction projects;

●   proactively sharing carbon impact information between the Maison and its carriers so as to optimize modes of transportation, support the implementation of emissions reduction actions and improve the resilience of low-carbon logistics operations.

Louis Vuitton has been sustainably managing its supply chain for over ten years now; this partnership is yet another example of the Maison’s desire to put in place continuous improvement targets with its partners.

5.2.3       Results for LIFE 360 “Climate” targets

With LIFE 360, the target reduction in energy-related greenhouse gas emissions (Scopes 1 and 2) is measured relative to the baseline year 2019. The baseline value will be recalculated at each significant change in scope to better reflect changes, in accordance with the GHG Protocol.

Between 2019 and 2023, Scope 1 and 2 emissions declined by 28% and the proportion of renewable energies rose from 47% to 63%. The reduction in greenhouse gas emissions was mainly the result of the higher proportion of renewable energy used and energy efficiency improvements by stores.

Energy efficiency at the Group’s stores has been steadily improving since 2013 thanks to a specific lighting policy, audits of the least energy-efficient stores and a sustainable design policy (see §5.1.1). To drive continued strong performance, the LIFE 360 program has endeavored to set more ambitious targets such as full LED lighting across all of the Group’s retail floor space.

Summary of LIFE 360 “Climate” targets for 2023

(a)  Value and change at constant scope. In accordance with the GHG protocol, performance between 2019 and 2023 is based on a recalculated 2019 scope that takes into account changes since 2023: inclusion of emissions from Maisons that joined the LVMH reporting scope; inclusion of emissions related to new sites opened since 2019; exclusion of emissions from sites present in 2019 but absent in 2023; inclusion of changes since 2019 in retail floor space, to which average 2019 emissions per square meter are applied. For entities for which 2019 data is not available, emissions for 2020, 2021, 2022 or 2023 are used instead, constituting a relatively conservative approach.

5.3         Supporting the principles of the Task Force on Climate-Related Financial Disclosures (TCFD)

In June 2017, the Financial Stability Board, established by the G20, published recommendations issued by the Task Force on Climate-Related Financial Disclosures (TCFD) aimed at providing a clear, comparable and consistent framework for the assessment and disclosure of climate-related information while enabling companies to disclose more information to stakeholders. Understanding that inadequate information can lead to assets and capital allocation being incorrectly assessed, financial decision-makers are increasingly asking companies to (i) manage their exposure to climate-related risks and (ii) reduce their contribution to climate change.

In 2019, as part of its previous LIFE 2020 program, LVMH commissioned a survey to establish how closely the Group’s practices were aligned with the TCFD recommendations. This survey highlighted both the robustness of the targets that had been set and how much progress remained to be made on incorporating climate-related issues into governance, corporate strategy and risk management. These conclusions were taken into account when the LIFE 360 action plan was drawn up.

At the end of 2020, LVMH committed to support the TCFD principles and embarked on a process of continuous improvement to implement its recommendations. In 2022, LVMH updated its analysis of physical and transition risks relating to climate change by applying the scenario analysis method and studying the related financial consequences. The disclosures resulting from this update are provided in this report, in the public response to the CDP Climate Change 2022 Questionnaire, for which LVMH earned an A score (https://www.cdp.net/en/responses), and in the Group’s most recent social and environmental responsibility report, available on LVMH’s website.

A breakdown of the corresponding information is set out in the following table:

6.     Environmental taxonomy

In accordance with Regulation (EU) 2020/852, supplemented by Regulation (EU) 2023/2486 (environmental commission delegated regulation) establishing criteria for determining whether an economic activity qualifies as environmentally sustainable (“the Regulation”), LVMH has:

(i)     identified those of its activities that qualify under the six environmental objectives (the “Environmental Objectives”/“Objectives”);

(ii)    analyzed the contribution made by eligible activities to the Environmental Objectives, while ensuring that this contribution does not cause significant harm to any of the other Environmental Objectives (“DNSH”) and that the activity complies with the minimum safeguards outlined below, thus permitting the validation of the activity’s “alignment”.

Activities considered as eligible in relation to the Environmental Objectives established by the Regulation are in particular those having the greatest impact on climate change, thus offering the greatest potential for reducing greenhouse gas emissions. Given the activities targeted at present in relation to these objectives, only LVMH’s operating investments in the real estate sector have been analyzed for the purposes of this reporting as of December 31, 2023. In accordance with the Regulation, they correspond to the total of:

●   acquisitions of property, plant and equipment and intangible assets;

●   capitalized fixed lease payments; and

●   property, plant and equipment and intangible assets as well as capitalized fixed lease payments relating to changes in the scope of consolidation (excluding goodwill).

The Regulation calls for the disclosure of two key performance indicators (KPIs) determined in relation to financial items and defined as follows:

●   KPI 1: Capex relating to eligible activities (“eligible capex” or “real estate capex”);

●   KP1 2: Eligible capex meeting the criteria for substantial contribution to an Environmental Objective without causing significant harm to any other Objectives and while complying with the minimum safeguards (“aligned capex”).

Climate change mitigation is the main environmental objective on which the Group has focused when analyzing the eligibility and alignment of its operational objectives. For activities covered by more than one objective, the Group has also carried out its analysis from the perspective of the “Climate change adaptation” and “Transition to a circular economy” objectives (see above).

Eligible capex and aligned capex are presented below, as amounts and percentages of total capex and, for aligned capex, as a percentage of eligible capex.

LVMH’s environmental actions are only reflected to a limited extent in the Group’s business activities and the indicators to be disclosed at this stage under the Regulation, which are presented below (further information on LVMH’s actions to promote the circularity of its products and to protect biodiversity, in particular, is presented in §2, “LIFE 360 – Circular Design” and §3, “LIFE 360 – Biodiversity and Ecosystems”).

6.1         KPIs relating to operating investments (capex)

In completing the exercise required by the Regulation, LVMH adopted a cautious approach so as to abide by both the spirit and the stipulations of the text as closely as possible.

Real estate capex amounts were determined and alignment analyzed at the level of each individual item of eligible capital expenditure. The alignment analysis consisted of systematically reviewing compliance with the substantial contribution criteria and the DNSH criteria. No conclusions reached for a given item of capital expenditure were extrapolated to any other item of real estate capex.

6.1.1       Overview of the analysis with the respect to the climate change mitigation objective

In accordance with the criteria set out in the Regulation, the contribution to climate change mitigation of activities corresponding to real estate capex was evaluated on the basis of the energy efficiency of buildings involved in purchases, leases and renovation projects during the fiscal year. For buildings whose building permits were issued prior to December 31, 2020, only the premises purchased, leased or built whose energy efficiency is at least equivalent to that of 15% of the most energy-efficient buildings in the countries where they are located and those with proof of a top energy efficiency assessment score for premises in France are included in KPI 2. For buildings where the building permit was issued on or after January 1, 2021, only buildings with “Net Zero Buildings – 10%” certification are included in KPI 2. For renovations, evidence must be provided demonstrating a 30% improvement in energy consumption for the criterion to be considered met. The thresholds applicable in France were used to evaluate the energy efficiency of buildings located in countries that lack data relating to the energy efficiency of their buildings as a whole.

The figures presented below in the “Real estate capex deemed energy-efficient” columns correspond to aligned capex, i.e. meeting all of the criteria. In the absence of documentary evidence demonstrating that the technical criteria (“substantial contribution” or “DNSH”) have been met, the item of real estate capex is considered non-aligned.

KPI 1 and KPI 2 relating to real estate capex break down as follows for fiscal year 2023:

(a)  Since a breakdown of acquisitions of property, plant and equipment in respect of Taxonomy-eligible activities is not available within the Group’s financial reporting, this information has only been collected for those Maisons contributing significantly to purchases during the period; these Maisons accounted for 88% of the Group’s total capex in 2023 (compared with 88% of the Group’s total capex in 2022 and 60% in 2021). No extrapolations were performed for the other Maisons, whose acquired fixed assets were considered “ineligible” for the requirements of this reporting.

(b)  The analysis of real estate capex taken into account for KPI 2 confirmed that, in addition to compliance with an energy consumption threshold, the corresponding activities:

-  meet the DNSH criteria applicable to each eligible activity;

-  comply with the minimum safeguards stipulated in the Regulation in the areas of human rights (including labor and consumer rights), bribery and corruption, fair competition and taxation.

(c)   The analysis of the energy efficiency of leased premises for the fiscal year was only carried out for the Maisons contributing significantly to capitalized fixed lease payments, corresponding to 91% of the Group’s capitalized fixed lease payments in 2023 (compared with 84% in 2022). The capitalized fixed lease payments of the remaining Maisons were deemed as not aligned for the purposes of this reporting.

(d)  When a building is acquired, the land is considered ineligible. Its acquisition cost is included in total capex.

(e)  See Notes 3, 6 and 7 to the consolidated financial statements.

Most of LVMH’s purchases or leases involve its network of stores, which are generally situated in buildings in historic city centers. However, the building standards in force when they were constructed made little or no mention of energy efficiency and they have for the most part not recently undergone thermal renovation work, which results in a low rate of compliance with the energy efficiency levels stipulated by the Regulation. For this reason, KPI 2 for purchases and leases of buildings in 2023 respectively stood at 0.5% and 1.7% of total capex (compared with 0.4% and 2.0% in 2022), and 1.3% and 4.4% of real estate capex (compared with 0.8% and 4.0% in 2022).

Nevertheless, whenever buildings with inadequate energy efficiency are purchased or leased, LVMH aims to include energy efficiency improvement as part of the renovation projects for these buildings to the extent possible. This applies in particular to production sites, recent out-of-town offices and, in a few rare cases, completely renovated city-center complexes. These efforts should be reflected in the improvement in KPI 2 relating to building renovation and construction. In 2023, construction and renovation projects complying with the thresholds for energy efficiency set out in the Regulation together accounted for 1.2% of total capex and 3.1% of eligible capex (compared with 1.3% and 2.6%, respectively, in 2022).

6.1.2       Details on the analysis carried out for the other environmental objectives

Climate change adaptation objective

Given the lack of a precise definition of adaptation capex, when carrying out the multi-objective analysis required by the Regulation, LVMH considered the following as being eligible: operational investments housed in buildings whose building permits were issued after December 31, 2020 (including acquisitions, new buildings and leases), major renovations in the European Union and energy efficiency equipment. Other investments were considered “ineligible” for the requirements of this reporting.

For each item of real estate capex, analysis of alignment for the purposes of the climate change adaptation objective begins with an analysis of physical climate-related risks, followed by an energy efficiency analysis. Analysis of other DNSH criteria is similar to that set out above for the climate change mitigation objective.

Circular economy objective

Operational investments in renovation considered eligible for the climate change mitigation objective were also considered eligible for analysis in respect of the “Transition to a circular economy” objective.

No alignment analysis is required in respect of this objective for the purposes of this reporting. Such analysis will become mandatory with effect from 2024.

6.2         Indicators relating to turnover and maintenance, R&D and rental expenses (opex)

Since LVMH’s main activities are not at this stage covered in the Regulation in relation to the achievement of the Environmental Objectives, the turnover indicators are presented as nil for LVMH in respect of fiscal years 2023 and 2022.

Maintenance of real estate assets, R&D and rental expenses (in respect of short-term leases) represent a non-material proportion of the Group’s total operating expenditure. That being the case, LVMH has applied the materiality exemption to opex.

The tables required by the Regulation are set out in the Appendices below.

Table 1 – Revenue

Proportion of revenue from products or services associated with Taxonomy-aligned economic activities – Disclosure for 2023

Table 2 – Capex

Proportion of capex from products or services associated with Taxonomy-aligned economic activities – Disclosure for 2023

Table 3 – Opex

Proportion of opex from products or services associated with Taxonomy-aligned economic activities – Disclosure for 2023

Since this data is not available within the Group’s financial reporting, it has been extrapolated based on the 2021 analysis undertaken on a sample of the main Maisons.