AIRBUS - 2020 Universal Registration Document

Risk Factors / 4 Environment, Human Rights, Health & Safety Risks

Reputation : Reputational risks could be divided in several categories. Firstly, there is a risk that misperceptions about the Company’s environmental performance is used as a key decision-making criteria for consumers, investors, or even new talents. Secondly, there is a risk that the Company’s reputation is damaged by growing societal concerns about the climate change impact of aviation or by the lack of transparency on progress made to address climate-related issues. As an example, the Company was the first manufacturer to disclose its ambition to bring a zero-emission aircraft to the market. If the ambition is perceived as unattainable or if the Company is not able to deliver on its ambition it could result in reputational damage leading to reduced investment, loss of revenues and reduced attractiveness. A similar situation could occur if the Company’s environmental performance is not on par with its expressed ambition. Physical Risks The foreseen consequences of climate change include harsher average weather conditions and more frequent extreme weather events, such as hurricanes, hail storms, heat waves or extreme cold spells. To cope with degraded operational conditions, costly, time-consuming and more frequent redesigns may be required by the Company to improve its products to meet more stringent regulation and certification criteria or standards. The ef fects of climate change on weather conditions may impact operating conditions of the Company’s industrial activities (including the activities of its supply chain) with higher occurrence and severity of, for instance, hurricanes, hail storms or oods. As a consequence, industrial activities may be disrupted or interrupted if a part of the Company’s industrial system or its supply chain is affected or impaired by such events. The Company’s future installations may require more stringent requirements and planning to withstand more intense weather events. risk and claims against the Company that may result will also need to be managed and may lead to additional health and safety expenditure being required. In 2020, the Company introduced stringent COVID-19 risk management measures in the workplace. However, Company employees have inevitably faced additional physical and mental ill-health risks due to the COVID-19 crisis. The COVID-19 pandemic and associated public health controls, combined with reduced social contact, has led to health, financial and social uncertainty for many individuals. Environmental protection expenditures include costs to prevent, control, eliminate or reduce emissions to the environment, waste management, the content of the Company’s products, and reporting and warning obligations. Current trends indicate that regulatory pressure on the international scene to reduce the environmental footprint of industry is steadily growing (circular economy and resources efficiency, energy transition and climate change engagement, air and water quality improvement). Moreover, new laws and regulations, the imposition of tougher license requirements, increasingly strict enforcement or new

Market : Changes in societal expectations and growing concerns about climate change may impact market demand for air transport. In particular, a change in certain passengers’ behaviour or their transition to other transport modes could decrease the demand for the Company’s current and future generation of products, causing a loss of revenues. The development of future products based on the ZEROe concepts will require significant investments in both products and supporting infrastructure, which could directly impact the operating costs of such a product. The competitiveness of this next generation product will also strongly depend, among other factors, on the evolution of the price of carbon. It is therefore crucial for the Company to account at each step of development for market expectations, while staying affordable for its customers and competitive with regards to competitors’ portfolios. The failure to do so could result in the Company losing market share to competitors, as well as affecting the Company’s return on investment with regards to future commercial aircraft products. Policy and Legal : Aviation is a complex industry, with long product development cycles and where change takes a long time to be implemented. A rapid evolution of climate- related pol icies (such as carbon pr icing pol icies and sustainable aviation fuel policies) and regulatory frameworks (CO 2 standards, sustainable f inance, emissions trading systems, aircraft operation restrictions among others) could generate fast-changing requirements and could obstruct new product development pathways. As aviation is a global industry, policies and regulatory frameworks implemented at regional level rather than international level, or evolving at a different speed depending on the region, would unbalance a competitive level playing field for manufacturers and operators possibly creating market distortion. This could result in a loss of competitiveness for the Company. Regulatory Risks The Company’s expenditure associated with environmental, human rights, health and safety challenges may increase due to both increased costs of compliance with regulations in those areas as well as reputational and litigation risks. Given the scope of its activities and the industries in which it operates, the Company is subject to stringent environmental, human rights, health and safety laws and regulations in numerous jurisdictions around the world. The Company therefore incurs, and expects to continue to incur, significant capital expenditure and other operating costs to comply with increasingly complex laws and regulations covering the protection of the natural environment as well as occupational health and safety and human rights. Health and safety expenditures include investments in the identification and the prevention, elimination or control of physical and psychological risks to people arising from work, including chemical, biological, mechanical and physical agents. Risks that could arise from work activities include the possibility of injury, physical and mental ill-health, damage to equipment, business interruption and regulatory action. Any reputational

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Airbus / Registration Document 2020