EDF / 2018 Reference document

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RISK FACTORS AND CONTROL FRAMEWORK Risks to which the Group is exposed

As a result of its activities, the Group is involved in several litigation and arbitration cases and regulatory investigations, of which material ones are described in section 2.4 “Legal proceedings and arbitration”. In the future, the Group may be involved or exposed to such proceedings. The potential adverse outcome of these proceedings may entail the payment of damages, or result in other civil or criminal adverse consequences (including financial consequences) for the Group. The implementation of class actions in France in 2014 and similar developments in other European jurisdictions, as well as recent or future regulatory changes, may increase litigation risks and related costs, which could have a negative impact on the Group’s results and reputation. Description 4G: The Group operates facilities for which accidents could, in the event of a failure in industrial safety, have serious consequences on the human or natural environment, particularly in terms of biodiversity and environmental capital. The Group operates or has operated facilities which, as part of their day-to-day operations, can, may or may have been the cause of industrial accidents or environmental and health impacts. The Group’s facilities may be located in industrial areas where other activities subject to similar risks are conducted, which means that the Group’s own facilities may be impacted by accidents occurring at neighbouring facilities owned by other operators and not under the Group’s control. Biodiversity issues concern all the Group’s facilities and projects, particularly in France where EDF is a landowner and a manager of natural resources of great importance. The Group is committed to biodiversity through its corporate responsibility goal no. 6 (see section 3.2.6.1 "EDF's commitment: to launch a positive approach to biodiversity, not to limit itself solely to knowledge in the long term, but to have a positive impact on biodiversity (CSRG no. 6)"). Measures taken for industrial safety and the control of these risks may not be fully effective, which could have consequences for people, property and business continuity. Protective measures may be taken on similar facilities. The Group may be held liable. Insurance policies for civil liability and damages taken out by the Group could prove to be significantly inadequate, and the Group cannot guarantee that it will always be able to maintain a level of cover at least equal to current cover levels and at the same cost. The risks specific to nuclear facilities are the subject of an additional explanation in section 2.1.5 “Specific risks related to the Group’s nuclear activities”. The impact of an industrial safety failure may have a negative impact on the Group's operational activity, its financial, legal or property position or its reputation, and may affect the Group's ability to achieve Corporate Responsibility Goal no. 6 with respect to biodiversity. GROUP'S NUCLEAR ACTIVITIES The EDF group is the world’s leading nuclear operator in terms of the number of reactors in operation (73 reactors for which the EDF group is the nuclear operator, among 453 operating reactors in the world) (1) . With 58 reactors in operation in France, nuclear electricity accounted for 47.8% of installed electrical power at the end of 2018, and accounted for 71.6% of total electricity output in France (2) during that year. EDF operates 15 nuclear reactors in the United Kingdom, accounting for 19.3% of electricity output in 2017 (3) . The Group has basic nuclear fuel cycle facilities and carries out activities in research, equipment manufacture and the supply of services to other nuclear operators, since the integration of the New NP subsidiary, now Framatome, within the scope of the Group in 2018. SPECIFIC RISKS RELATED TO THE 2.1.5

In addition, the Group holds minority stakes in nuclear power plants in operation in China, the United States, Belgium and Switzerland, which it does not operate. The Group is investing in new reactor projects in France, the United Kingdom and China and carries out its nuclear industrial activity in other countries, notably India and the United Arab Emirates, countries in which nuclear operators signed agreements with the Group in 2018. The share of nuclear energy, as a low-carbon form of energy and a part of the Group’s electricity mix, thus represents a significant industrial asset for the competitiveness and development of the Group. Given the low impact of the nuclear industry's fossil carbon dioxide emissions over the entire industrial life cycle, the performance and control of nuclear activities directly contribute to achieving corporate responsibility goals: committed to climate action (see CSRG no. 1); committed to human development (see CSRG no. 2); committed to supporting fragile populations (see CSRG no. 3), particularly in the fight against fuel poverty and access to clean, low-carbon and competitive energy, including for the most disadvantaged; committed to helping each customer consume better (see CSRG no. 4); committed to consultation (see CSRG no. 5); and committed to biodiversity (see CSRG no. 6). (see section 3.2 "EDF's corporate responsibility goals". The control and performance of nuclear activities are at the heart of EDF's sustainable development policy.) The nuclear activities of EDF are associated with the following issues: as with any nuclear operator, the latter’s obligations means giving ongoing ■ priority to nuclear safety, based on technical and organisational provisions in order to guard against a nuclear accident and, in the hypothetical event of an accident occurring, to limit the consequences of such an accident. The nuclear business is carried out under the control of nuclear safety authorities in countries where the Group exercises nuclear operator responsibility; failure to take into account the requisite number 1 priority dedicated to nuclear safety could have a significant or even vital impact on the Group; the Group's nuclear activity is subject to detailed and demanding regulations ■ with, particularly in France, a system in place that monitors and periodically re-examines basic nuclear facilities, which focuses, firstly on nuclear safety, protection of the environment and public health, but also on security considerations regarding malicious acts. These regulations may be significantly tightened by national or European authorities (see section 1.5.6.2.2 “Specific regulations applicable to basic nuclear facilities”). Furthermore, stricter regulations or possible non-compliance with current or future regulations could result in the temporary or permanent shutdown of one or more of the Group’s plants or financial penalties as stated in Article L. 596-4 of the French Environment Code. Cases of non-compliance with regulations or non-compliance with commitments undertaken, may also be used by third parties against EDF and brought before the courts. The increased number of requests emanating from the French Nuclear Safety Authority (NSA) and enhanced controls may increase EDF’s compliance costs and risks; although the nuclear business can contribute effectively to the security of energy ■ supply and to combating the greenhouse effect, it must also demonstrate its competitiveness and its acceptance over the different time scales in which it operates. Nuclear activity by its very nature requires substantial and long-term investments, sometimes spanning decades. The robustness and efficiency over time of maintenance and upgrading programmes for the operating fleet, new reactor projects, and the respect of very long-term commitments are inevitably subject to extreme vigilance, with industrial cycles that span a century or even beyond; the nuclear fuel cycle is part of this long-term industrial outlook. EDF has a ■ specific responsibility to develop a long-term strategy with the various stakeholders;

Source: International Atomic Energy Agency , Power Reactor Information System, https://www.iaea.org/pris, indicating that there were 453 nuclear reactors in operation in the (1) world on 23 January, 2019. Source: RTE, www.rte-france.com/fr/article/bilans-electriques-nationaux (2) Source: www.iaea.org/pris (3)

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EDF I Reference Document 2018