_228 2023 UNIVERSAL REGISTRATION DOCUMENT_MICHELIN 4 NON-FINANCIAL STATEMENT Sustainable Development Report rated in the “Manufacture of Rubber Products” category. As regards compliance with minimum safeguards and the Group’s value chain, see section [4.1.4.2 “Demonstrating our CSR commitments through responsible procurement policies”] below. The Michelin Duty of Care Plan and the Master Policy on Human Rights may be found on the Michelin website: https://www.michelin.com/en/investor/regulatory-information https://www.michelin.com/en/sustainability/company/people In addition, section [4.1.4.1] below describes Michelin’s commitment to ethical business practices, including: ● the global ethical framework; ● preventing corruption; ● protecting employee privacy and personal data; ● combating tax evasion; ● upholding competition law. 4.1.1.7 e) Calculation principles, tables and conclusion The following paragraphs present in detail the principles used to calculate the three key performance indicators required by the European Taxonomy Regulations. 1. Sales KPI For activity 3.6, alignment is assessed for sales of Passenger car, Light truck and Truck tires with class A and B rolling resistance. To calculate the percentage of eligible and aligned sales, the amount of the above sales are divided by the Group’s total consolidated sales, as reported in the consolidated financial statements (see the consolidated income statement in chapter 5 below). 2. CapEx KPI The European Taxonomy defines the methods for calculating alignment ratios. By analogy, the Group reports its eligible capital expenditure, which may be: ● associated with the activity’s eligible sales; ● associated with a capital plan to expand eligible activities or to transform eligible activities into aligned activities within five years, or up to ten years if warranted by the features of the activity in question; ● individual capital outlays that are not associated with an activity intended to be marketed by the Group. Some of the Group’s capital expenditure is directly committed to each activity. For other capital expenditure (in infrastructure shared by several activities, for example, or in semi-finished goods production units serving several activities), the Group uses an allocation method based on each activity’s proportion of use of the assets concerned. The capital expenditure reported for a given activity is therefore all of the capital expenditure directly committed to it plus the indirect capital expenditure allocated to it, less capital expenditure on corporate projects. In the case where some capital expenditure is associated with an activity that is not marketed by the Group, these outlays are reported separately to avoid double counting. To assess aligned capital expenditure, the following criteria were used: For activity 3.6: ● capital expenditure committed to introduce technologies designed to improve the rolling resistance of our tire products; ● capital expenditure related to the molds for the new tire lines that reduce rolling resistance compared to the previous generations; ● indirect capital outlays enabling the production of the aligned proportion of sales. In accordance with Article 8 of the Delegated Act, the capital expenditure denominator used to calculate eligible and aligned portions includes additions to (i) tangible and intangible assets; (ii) right-of-use assets recognized under IFRS 16; and (iii) tangible and intangible assets resulting from business combinations (see notes 13 and 14 to the consolidated financial statements presented in chapter 5 below). As a result, it differs from the amount of capital expenditure usually reported by the Group. 3. OpEx KPI In accordance with the European Taxonomy, the only operating expenses disclosed in this report are direct non-capitalized costs relating to research and development, building renovations, maintenance and repair, short-term leases and any other direct expenses related to the day-to-day servicing of the property, plant and equipment assets. These expenses, which constitute the denominator by which the eligible and aligned expenses will be divided to determine the KPI, are recorded in the Group’s information systems at the level of the consolidated financial statements. They are not recorded on a more granular level, however, making it impossible to calculate the total amount included in the numerator to determine the proportion of eligible and aligned operating expenses without performing complex estimates, which would in any case be too approximate to be meaningful. Eligible/aligned operating expenses are therefore calculated proportionally to the percentage of eligible/aligned sales.
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