_192 2023 UNIVERSAL REGISTRATION DOCUMENT_MICHELIN 4 NON-FINANCIAL STATEMENT Sustainable Development Report Constant assumptions: UN population forecasts; human beings are essentially driven by their own interests and the interests of their loved ones and communities; a world as politically and socio-economically fragmented as today’s, in which countries choose a variety of different strategies; an irreversibly digitalized world. Variable assumptions: the landscape of environmental crises and shocks having an impact on society; the economic system and economic growth; the pace of energy decarbonization; the development of technological inventions and strategies, particularly those supporting the climate transition and climate change adaptation; predominant lifestyles and consumer spending patterns; the political regime and its priorities. Main risks and opportunities and their potential financial impacts Transition opportunities Market: develop and promote mobility products and services that are low-carbon and/or suitable for use in adverse weather conditions, in response to market trends driven by legislation (emissions standards, minimum tire performance standards), technology (growing take-up of electric vehicles) or emerging new demand from corporate customers (fleet management) and consumers. See section 4.1.1.7 2023 report on the Michelin Group’s activities in respect of the European Taxonomy Regulation, Eligible Proportion of 2023 Sales, Capital Expenditure and Operating Expenditure/activities 3.6 and 8.2). Technologies: develop and bring to market hydrogen propulsion systems supporting the energy transition on a variety of vehicles. Annual revenue over the medium term estimated at €1,500 million. Transition risks Market: achieving net zero emissions by 2050, thereby meeting customer and investor expectations, entails higher costs to introduce or deploy new practices, technologies, processes and organizations. Over the medium term, the provisional average annual cost of reducing the Scope 1 and 2 carbon footprint is estimated at €90 million in capital expenditure. Legal and regulatory compliance: increasing CO2 allowance costs on regulated markets. Annual operating expenses over the short term are estimated at €22 million. Physical risks Extreme weather events: deterioration of production capacity in facilities operated by the Group and its suppliers caused by increasingly frequent and severe extreme weather events (production shutdowns, supply chain disruptions, damage to production assets). Over the short term, the maximum net impact on annual operating income is estimated at €150 million to €400 million. METRICS AND TARGETS Greenhouse gas emissions CO2 emissions, Scopes 1, 2 and 3: see section 4.1.1.1 a) Transition plan: decarbonizing our operations/Inventory of Scope 1, 2 and 3 CO2 emissions. Reduction targets Scopes 1 and 2: see section 4.1.1.1 a) Transition plan: decarbonizing our activities/Scopes 1 and 2: reaching net zero emissions in the manufacturing operations by 2050. Required Scope 3 (excluding the in-use phase): see section 4.1.1.1 a) Transition plan: decarbonizing our operations/Scope 3: reducing emissions from our transportation operations/Scope 3: reducing emissions from purchased raw materials and components/Scope 3: reducing emissions from upstream purchased energy and end-of-life treatment of sold products Optional Scope 3 (in-use phase): see section 4.1.1.1 b) Transition plan: company strategy/Designing ultra-energy efficient products. Spending Manufacturing operations: €114 million was invested in 2023 as part of the production plant decarbonization plan (Scopes 1 and 2). CapEx of environmentally sustainable activities (Taxonomy-aligned): €601.4 million was invested in 2023 to enable the introduction of technologies to improve the rolling resistance of our tire products and the installation of new tire lines that reduce rolling resistance compared to the previous generations. See section 4.1.1.7 2023 report on the Michelin Group’s activities in respect of the European Taxonomy Regulation, activity 3.6. Taxonomy reporting: See section 4.1.1.7 2023 report on the Michelin Group’s activities in respect of the European Taxonomy Regulation.
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