BPCE - 2018 Registration document

NON-FINANCIAL PERFORMANCE REPORT Sustainable and responsible value creation

Procurement managers at Groupe BPCE entities may apply this due diligence system on a voluntary basis, teaming up with the CSR manager to prepare a joint procurement-CSR action plan. BPCE Procurement has provided training to familiarize the procurement and CSR functions with the new tools (risk mapping, CSR assessment, implementation of appropriate risk prevention or mitigation plans). Furthermore, an indicator will be defined to monitor the percentage of Requests for Proposals (RFPs) including a CSR assessment of bidding suppliers. The indicator will be calculated using the number of RFPs that include a CSR rating in the overall supplier rating out of the total number of RFPs targeted in the due diligence action plan. Another indicator will be used to keep track of the percentage of RFPs significantly incorporating CSR criteria in the assessment of a supplier’s overall performance. Whistleblowing Groupe BPCE has a whistleblowing framework in place setting out the applicable procedure at all Group entities, as provided for in the act of December 9, 2016 ( i.e. the Sapin 2 Act) and the Ministerial Order of November 3, 2014 on internal control of banking sector companies. The current whistleblowing procedure applies to all internal employees, as well as to external and interim staff, who may use the procedure should they become aware of any crime, offence, major legal offence, threat or major breach of general interest or any conduct or situation that breaches the code of conduct. Groupe BPCE entities protect whistleblowers. Under no circumstances may they be subject to any disciplinary action or legal proceeding, provided they have acted impartially and in good faith. The current whistleblowing procedure will be supplemented by the effective implementation of the obligations arising from the French Due Diligence Act in the first half of 2019. Combating tax evasion Groupe BPCE conducts most of its activities in France, in accordance with a regional cooperative business model. Through its subsidiary Natixis, the Group serves multinational enterprises and has thus established commercial operations all around the world. Its presence in different jurisdictions is justified for such commercial reasons and not for the purpose of enjoying any specific tax advantages. Groupe BPCE transfer pricing policy Groupe BPCE’s transfer pricing policy observes OECD recommendations and does not give rise to indirect profit shifting. The general underlying goal is for profits to be taxed where the value is created, in line with OECD transfer pricing guidelines and with local tax rules. Groupe BPCE applies the arm’s length principle to ensure that the parties to intragroup transactions are paid the amount they would normally receive on the open market, that transfer pricing methods are applied consistently and that transactions are performed responsibly and transparently.

“data security”. Measures have been taken to mitigate this risk in the Group information systems security policy (PSSI-G), which sets out the Group’s security requirements (see Chapter 2.4.3, “Data protection and cybersecurity” section). More generally, as part of its business as a banker, ESG criteria are gradually being incorporated into the Group’s risk policies. A paragraph on climate risk and strengthening CSR principles was added to the Group’s credit risk policy in 2018. A new paragraph on the ESG risk assessment has also been added to round out sector policies (agri-food, automotive, construction and public works, communications and media, transport, etc.). The non-financial performance report covers this risk under “ESG risks” (see Chapter 2.3.3, “Integration of ESG criteria in retail banking sector lending policies” section). In its financing activities, for several years now, Groupe BPCE and Natixis have addressed the human rights and environmental risks incurred by some of its financing activities, most notably by applying the Equator Principles for project financing and policies applied to sensitive sectors (see Chapter 2.3.3, “Measurement and monitoring of E&S risks and management systems by Corporate & Investment Banking” section). In 2018, a new paragraph on the assessment of ESG risks was added to the Group credit risk policy (see Chapter 2.3.3, “Integration of ESG criteria in retail banking sector lending policies” section). To round out this due diligence, in 2018, Natixis began working on a way to measure its clients’ ESG risks at the onboarding stage. This project seeks to build an environment and social risk analysis solution for sectors of activity identified as being particularly at risk. The tool is based on questionnaires specific to each sector and gradually rolled out to existing and new customers. Risk mapping specific to the procurement function In accordance with the French Due Diligence Act, and in a bid to adopt a concerted approach in the bancassurance business, BPCE Procurement (for Groupe BPCE) and three other banking groups decided to map out their CSR risks by procurement category. The CSR risk map and the corresponding due diligence plan were presented to the procurement and CSR functions in the last quarter of 2018. The map identifies risks of serious violations of human rights and fundamental freedoms, personal health and safety, and the environment, and prioritizes the necessary actions in each category. It also incorporates the risk associated with the country in which the majority of the added value on each product or service is generated. For high-risk and very high-risk procurement categories exceeding a given threshold, the suppliers involved in RFPs organized by BPCE Procurement are assessed for their CSR performance. They are required to complete a questionnaire specific to their category and to provide details of the actions taken to mitigate risks and prevent major violations of human rights and fundamental freedoms, personal health and safety and the environment. BPCE Procurement assesses these actions and determines a CSR rating, which is included in the supplier’s overall rating. Depending on the results, an improvement plan can be established with the winning supplier, subject to review at the six-month point.

2

91

Registration document 2018