Risk management Risk factors specific to Michelin, description and related management systems 03 Risk 3 - Environmental transition risks and environmental impacts from our operations Risk factors This risk concerns the possible repercussions for the Group if the environmental transition is inadequately managed, including the policy, regulatory, legal, technology, market and reputational aspects defined in the Task Force on Climate Related Financial Disclosures (TCFD) nomenclature. It also covers certain environmental impacts, potentially from our operations, such as pollution, resource depletion, biodiversity loss and impacts on water resources. See sections 4.2 to 4.6 of the Sustainability Statement (Environmental Matters). Specific nature of the risk Mobility, which is the Group’s main market, is a sector that has a significant impact on the environment and climate change. As a result, it is heavily regulated at both local and international levels, and is also shaped by the continuous fast pace of technical and social change. Recognizing the high expectations of stakeholders and the Group's leadership position, Michelin is firmly committed to protecting the environment. Environmental transition risks could arise, in particular, from: n the failure or inability to comply with environmental regulations; n failure to prepare for scientific and social changes; n non-compliance with the Group’s environmental commitments; n third-party challenges to the Group on environmental issues. Governance and risk management response A governance structure is in place to address this risk factor – the Environmental Governance body (see Risk 1). The main levers already in place for managing these risks may be summarized as follows: n the definition of a holistic environmental policy, certain aspects of which have been shared with third-party organizations; n policy deployment, including in new business operations, and progress towards its targets are being managed using appropriate indicators reviewed by the Environmental Governance body; n a structured regulatory watch has been deployed to provide assurance that current and emerging regulations are identified and applied; n long-term technological and social changes are addressed through the foresight projects carried out by the Group; n a continuous and structured process of contact with external stakeholders (NGOs, customers, suppliers, investors) exists through the Stakeholders Committee and the systematic consideration of issues or controversies facing the Group. Risk 4 – Manufacturing business interruption Risk factors This risk is primarily related to tire production, which involves two main stages. First, semi‑finished products are manufactured for use as components, which are then processed and assembled to produce the finished products corresponding to the different types of tires sold by the Group. Consequently, the risk of business interruption at a semi-finished product facility could be significant, given that its output may be used by several different finished product plants. In either type of production facility, operations could be interrupted by a variety of factors, both external (natural disasters, the impact of climate change or new legislation, geopolitical events) and internal (fires, IT outages, technical failures). Specific nature of the risk Business interruption risk is especially acute in the semi-finished product facilities due to Michelin’s historical manufacturing model, under which semi-finished production is concentrated in certain plants that sometimes supply several different finished product facilities. Governance and risk management response The governance structure in place to address this risk factor comprises the Corporate Manufacturing Department, the Corporate Planning, Prevention and Protection Department and the Supply Chain Operational Department. To anticipate this risk, Michelin has set up a specific plan focused on the following four action areas: n strategically selecting plant locations to limit the probability of the risk occurring; n prevention, with fire safety programs and technical inspections performed by trained personnel; n protection, by applying preventive and corrective maintenance policies, multi-sourcing the production of finished and semi-finished products, and striking the right balance between component insourcing and outsourcing; n preparing teams to manage crisis situations requiring the deployment of disaster recovery and business continuity plans. 162 2024 UNIVERSAL REGISTRATION DOCUMENT_MICHELIN
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