4 _191 2023 UNIVERSAL REGISTRATION DOCUMENT_MICHELIN 4 NON-FINANCIAL STATEMENT Sustainable Development Report Climate scenarios used Scope 1 and 2 emissions pathways In 2019, the 2030 and 2050 reduction targets(1) were determined on the basis of the 1.5°C scenario: “In model pathways with no or limited overshoot of 1.5°C, global net anthropogenic CO2 emissions decline by about 45% from 2010 levels by 2030 (40-60% interquartile range), reaching net zero around 2050 (2045-2055 interquartile range)”. IPCC Special Report: Global warming of 1.5°C. In January 2023, the SBTi approved a revised short-term target, consistent with the “well below 2°C” global warming scenario and covering both the legacy scope of business and the most recent acquisitions. In January 2024, the Group submitted to the SBTi a new short-term target, consistent with a “1.5°C” scenario, which is still being assessed and was therefore not reflected in the 2023 reporting exercise. Physical risks Two global warming scenarios were used, RCP 4.5 and RCP 8.5, over two time frames, 2030 and 2050, in developing a physical risk assessment application for direct operations (production facilities) and indirect operations (key raw material suppliers). Strategy and innovation Working with international transition experts and applying state-of-the-art practices, the Group has prepared four possible climate change/ societal scenarios(2) for how its business environment could evolve under the impact of climate change and the policies likely to emerge as a result(3). The scenarios are distinct from one another and based on contrasting, yet equally plausible assumptions. Each is described by: a qualitative narrative built around both planetary boundaries and a range of desirable and undesirable, complex and paradoxical factors, covering political, technological, socio-economic and legal/regulatory issues; quantitative Kaya identity indicators (global population, GDP per capita, energy intensity and carbon footprint of consumed energy) and a set of public indicators representative of each scenario that enable us to identify their implications and assess their materiality over time; a global map displaying the scenario or blend of scenarios deemed most likely for each country. Use of scenarios In recent years, scenarios have been used by the business lines and operating units for strategic planning and/or innovation purposes. In 2021, the Executive Committee reassessed the Group’s strategy in light of the four scenarios and came to the following conclusions: 1. strategic fundamentals are validated in every scenario; 2. regardless of the scenario, connectivity and outside partnerships will play an important role; 3. trends in vehicle fleets, urban mobility, micro-mobility and intermobility will have a favorable impact and environmental degradation will have a negative impact; 4. there are several innovation priorities, including the development of end-of-life tire management solutions and the adaptation of products, services and operations to higher temperatures; 5. most of the organization would benefit from continuing to develop carbon emission reduction solutions for their customers and upgrading operations across the value chain to manage physical and transitional risks more effectively; 6. climate scenarios should continue to be analyzed and the five-year strategic plan adjusted accordingly. The Executive Committee decided to reassess the Group’s strategy in light of the latest scenarios at least every three years and/or in the event of one of the following events: a regulatory requirement, a new strategy or the failure of the current strategy, or the availability of likely new scenarios. The assessment will therefore be performed again in 2024. Summary of key assumptions and indicators Increase in global mean surface temperature: four global warming pathways ranging from 1.7°C to 3.7°C by the end of the century. Time horizons: 2035, with a qualitative description, a quantitative characterization based on a set of macro-indicators and a global representation of scenarios by country; 2050, with elaborate, situational narratives painting a vivid picture of life in each scenario. Contextual assumptions underlying all four scenarios: the coexistence of four CO2 pathways over the coming decades in the different countries of the world; a closer look at the key decade from 2024 to 2035; consideration of environmental issues other than climate change (resource depletion, collapse of biodiversity, impact of various forms of pollution). (1) See section 4.1.1.1 a) Transition plan: decarbonizing our operations. (2) An additional, extremely pessimistic alternative scenario was used to test the values attributed to the Group’s plant and equipment. The results are presented in note 2.6 to the consolidated financial statements. (3) See section 4.1.1.1 b) Transition plan: Company strategy.
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