EDF / 2018 Reference document

ENVIRONMENTAL AND SOCIETAL INFORMATION – HUMAN RESOURCES Other areas of the sustainable development policy

In 2018, the Group Purchasing Department continued its proactive programme of

organisational and technical (indirect gains, such as shortened construction times or

“Productivity Partnerships” with suppliers, in a win-win approach. This focuses on avoided costs, for example). improving contract performance through cooperation between EDF and its suppliers, and gives rise to “profit sharing”. Such profits may be financial (direct gains) or Results are up:

2018 96.4

2017 56.8

2016 50.0

Productivity gains (€m)

In 2017, EDF reinforced its monitoring mechanism for its suppliers, by setting up a undertaking by all tenderers involved. The undertaking covers the following themes: conformity undertaking. Bidding on all tenders is conditional on signature of this corruption, money laundering, financing of terrorism, absence of conflicts of interest. Assessment of suppliers 3.3.3.4.3

3.

In 2018, the Group Purchasing Department strengthened its supplier ethics and compliance control system, launched in 2017. These Level 1 checks aim to protect EDF against risks of sanctions or reputation risks linked to illegal practices by our suppliers. In 2018, the Group Purchasing Department conducted over 3,100 checks, up from 1,200 in 2017. Contracts contain clauses requiring suppliers to implement corrective action plans in the event of non-compliance or serious deviations from legal requirements, or from their sustainable development and social responsibility obligations. Compliance with these commitments is primarily ensured by a mechanism prioritising assessments based on risk mapping covering EDF's 253 purchasing segments. This risk mapping was prepared taking the following criteria into account: societal (impact of the quantity of labour, impact of the qualification of labour, impact of relocation of labour); environmental (risk in the development and use of the product or service, risk of non recycling); economic (risk of corruption). After they have been scored, these segments are classified into four risk categories (16 major risk segments, 33 strong risk segments, 149 average risk segments, 55 low risk segments). At the end of 2017, fewer than 500 suppliers belonged to the major (1/3) and strong (2/3) risk categories, representing purchases of over €400,000. In 2018, the EDF Group's Purchasing Department carried out 96 new “Sustainable Development – Social Responsibility” assessments divided between 43 questionnaires and 53 audits, based on the CSR risk mapping of the purchasing segmentation. The Group’s Purchasing Department uses Afnor’s Acesia internet assessment and dialogue platform to send these questionnaires. The questionnaires completed by the supplier are systematically (and independently) checked by the Afnor teams. For its on-site audits, the Group Purchasing Department appoints external auditors. These tools make it possible for purchasers and suppliers to share an approach of continuous improvement in corporate social responsibility. At the end of 2018, nearly 1,700 suppliers had been questioned by the ACESIA platform, and 770 had been assessed and controlled. The objective is to send a questionnaire to all suppliers with contracts for an amount of over €400,000, with a major or strong risk level. The assessments carried out proved to be “satisfactory” or “acceptable with comments” in more than 80% of cases for audits and in nearly 40% of questionnaires. The Group's Purchasing Department coordinates audits all over the world. In 2018, 60% of audits were carried out at supplier sites located in Europe (of which 72% in France), 25% in Asia and 15% in North Africa – Middle East. These audits have primarily made it possible to identify discrepancies in the following employment-related aspects: non-compliance with minimum wages, irregularities in the monitoring of working time, rest periods and overtime (mainly suppliers based in Asia, and one supplier in Europe); insufficient efforts to reduce gender pay gaps both in Asia and Europe; lack of industrial accident monitoring by subcontractors. For European suppliers, the main areas for improvement include the integration of the “duty of care” mechanism, which is still poorly developed locally, including at major groups. Progress is also expected in staff training content, which is still overly focused on “health and safety at work”, and in certification initiatives (ISO 9001 or

ISO 14001) which could be extended to the health and safety management system. Regarding environmental aspects, in both Europe and Asia, there are still discrepancies in waste sorting and disposal. In Asia, efforts still need to be taken regarding the regular monitoring of atmospheric emissions, effluent discharges, and the identification and storage of chemicals. All suppliers concerned by “unsatisfactory” or “insufficient” assessments must send EDF an improvement action plan. They corrected major environmental or social gaps as soon as possible. For suppliers in major risk segments, the results of audits considered as “unsatisfactory” or “insufficient” may lead to the termination of the contract. In 2018, the Purchasing Department conducted an audit at a supplier in China, as a follow-up to an audit carried out in 2017, the results of which were insufficient. This second audit, deemed “acceptable, with comments”, made it possible to approve the action plan presented last year, and to clear most of the 30 observations made initially, primarily relating to health and safety, working time and compensation. These audits also helped identify good practices and habits. For suppliers located in Asia, commitments have been made to improve employee safety and working conditions (free meals and transport, for example). In Europe, most management systems are certified and numerous initiatives have been rolled out to ramp up regional involvement, whether in terms of reducing or re-purposing waste (IT equipment donated to schools), protecting biodiversity, or developing employment areas. In Group companies that do not use the Acesia platform, various assessment modalities are used. Dalkia periodically assesses suppliers based on an assessment grid including sustainable development issues. The results are shared with suppliers and improvement actions or audits are implemented if required. Edison uses a self-assessment platform that focuses on the ten principles of the Global Compact and is shared with other companies. Coal and uranium supply chain 3.3.3.4.4 With regard to the responsible supply of coal, EDF was a founding member of Bettercoal, an initiative launched in 2011 that brought together energy providers, port institutions and coal-fired terminals. It is a mechanism aiming to promote CSR in the coal supply chain, particularly at mining sites, and to ensure that fundamental rights are respected. The operational approach (audits and self-assessments) is based on a code that sets out ethical, corporate and environmental principles and provisions relevant to mining companies. This code takes overall performance requirements into account, including management systems, as well as performance in relation to: ethical practices and transparency; ■ human rights, rights at work, and work-related matters, including health and ■ safety; the environment. ■ The code, as well as a range of resources, are freely accessible on the Bettercoal website. Audit results are shared between members, in compliance with anti-trust principles.

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I Reference Document 2018