04 Sustainability Statement Biodiversity and ecosystems (E4) Transition risks: The assessment concluded that none of the belowmentioned transition risks are material for the Group. The double materiality assessment addressed the transition risks related to: n the future introduction of regulations (i) limiting access to or increasing the price of raw materials with negative ecosystem and biodiversity impacts and/or seeking to protect and restore ecosystems and biodiversity; (ii) limiting soil sealing; or (iii) requiring full traceability and/or certification models for natural raw materials; n litigation and/or fines in the event of negative impacts on biodiversity; n stigmatization of the tire industry or reputational damage to the Group due to its inability to meet stakeholders’ biodiversity-related expectations (e.g., zero deforestation). Systemic risk reviewed: The destruction or degradation of tropical forests causes a loss of local biodiversity, thereby weakening ecosystems and making them less resilient. Deforestation also degrades ecosystem services, such as carbon sequestration and the water cycle, which aggravates global warming and locally alters the conditions required for growing food crops and farm commodities. Rubber tree farming could therefore be impacted by these systemic changes, with the emergence of new diseases or pests that could sharply reduce yields. In turn, this could reduce village smallholder income, worsening the living and economic conditions in the local communities. Declining output could also give rise to tensions between natural rubber supply and demand, which could drive up prices. Outreach to communities impacted by natural rubber production: Agricultural operations on the Group’s natural rubber production sites could affect its host communities by adversely impacting wildlife, plant life and surface and groundwater resources. In response, Michelin is committed to proactively reaching out and consulting with its stakeholders and the leading civil society organizations involved in these issues. The Group also regularly partners with local NGOs, researchers, academics and government agencies to assess and mitigate the impact of its operations on the environment and affected communities. In place since 2021, an easily accessible grievance mechanism(1) compliant with United Nations Development Program criteria and OECD guidelines enables stakeholders and affected communities to express their grievances independently. Furthermore, a Sustainable Natural Rubber Stakeholders Committee, in place since 2015, is providing a forum for constructive, open dialogue with civil society organizations and other value chain stakeholders from various backgrounds. It also keeps the Group attuned to the needs and expectations of society, while opening up new growth prospects. Formal meetings are held around every two years, with videoconferences organized as needed to address specific issues. The last formal meeting was held in 2022, but a special meeting was organized in May 2024 to discuss the implementation of the European Union Deforestation-free Regulation (EUDR). To avoid the negative impacts of deforestation on essential ecosystem services to local communities, Michelin has since 2015 pursued a “zero deforestation” commitment in its own natural rubber production operations and its natural rubber sourcing. In addition, the Group has deployed traceability systems and controls to ensure that its purchased natural rubber volumes come from deforestation-free areas. To avoid or attenuate the impacts on animal and plant life, wetlands and watercourses, the Group has undertaken a variety of preservation and restoration actions in its rubber tree farming operations in Brazil and Indonesia, including the deployment of forest rangers, active restoration programs in degraded areas and the creation of riparian buffers. In addition, a roadmap to curtail pesticide use by 2030 has been deployed in both the Group’s direct operations and in its joint ventures. (1) See the dedicated website, https://purchasing.michelin.com/en/natural-rubber-sustianbility-grievances/ 243 2024 UNIVERSAL REGISTRATION DOCUMENT_MICHELIN
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