EDF / 2019 Universal registration document

2. Risk factors and control framework Gestion des risques et maîtrise des activités

contributing to budget monitoring through general performance reviews in the ■ departments and controlled subsidiaries; conducting portfolio reviews and economic and financial optimisation ■ analyses; developing and disseminating financial management methods and processes, ■ contributing to the dissemination of management culture within the Group; managing the management cycle processes, summarising them and ■ suggesting decisions to management and subsidiaries; developing medium- and long-term financial trajectories. ■ Accountancy: ■ preparing EDF’s financial statements and the Group’s consolidated financial ■ statements; ensuring accounting compliance through Group reference frameworks based ■ on accounting standards and the chart of accounts; coordinating the Group’s internal accounting and financial control system, in ■ accordance with the system presented below. Taxation: ■ ensuring the consistency of tax practices, the requirements of which are listed ■ in the Group’s Tax policy. The precise provisions in this area are discussed in section 3.3.1.2.3 “Tax transparency” of this document; ensuring the proper implementation of legal and declarative obligations, ■ notably by monitoring the subject; ensuring the accounting follow-up of the deferred tax position and the ■ periodic justification of the accounts; identifying and controlling the Group’s tax risks. ■ Finance and Investments: ■ coordinating all the actions inherent in the Group’s balance sheet and ■ financial result, with the aim in particular of controlling the exposure of the Group’s hedging assets, debt and the Group’s overall balance sheet to financial risks; managing the investments and acquisitions and disposals as well as the listed ■ or unlisted dedicated assets, The Group Risk Department prepares an annual risk mandate and specific working frameworks which define the principles for managing risks and the risk limits that are acceptable for this portfolio; appraising the investment projects presented to the Group Executive ■ Committee Commitment Committee meetings to anticipate impacts and improve the reliability of the financial trajectories on the Group’s balance sheet and profit and loss accounts, as defined by the Commitments policy; ensuring that the Group is financed in accordance with the Financing, ■ Treasury and Financial Risk Management policy; verifying the proper application of the policy’s principles (drafting of frameworks, methodology, monitoring of exposures, regular calculation of risk indicators and checking that risk limits are complied with). The positions of the trading room in charge of cash management are monitored by the Group Risk Management Department. The policy on Financing, Treasury and Financial Risk Management requires all entities of the Group to continuously and systematically identify financial risks (in particular, liquidity, interest rates, foreign exchange and counterparty). The Group Risk Department exercises 2nd level control of these risks via : verification that the principles of the policy have been properly applied ■ (preparing work management frameworks, methodology, monitoring exposures, regular calculation of risk indicators and checking compliance with risk limits); the control of positions in the trading room in charge of cash management. ■ For these activities, a system of indicators and risk limits checked on a daily and a weekly basis is in place. The Markets Committee (a body that brings together the Finance and Investment Department and the Group Risk Department) checks and reviews on a quarterly basis, where necessary, requests for exemptions to the work management framework and requests for investment in new financial products. The policy on the constitution, management and control of the financial risks involving Dedicated Assets of EDF SA applies to the portfolio of dedicated assets which are managed by the Financial Department. The Group Risk Department prepares an annual risk mandate and specific working frameworks which define the principles for managing risks and the risk limits that are acceptable for this portfolio.

The Group Ethics and Compliance 2.1.2.2 program The Group Ethics and Compliance Department implements the Group Ethics and Compliance programme on the basis of the following reference frameworks (see section 3.1 “EDF, a responsible company”): the Group Ethics and Compliance Policy (PECG), validated by the Executive ■ Committee on 17 May 2016, which compiles the main rules that Managers must know, respect and ensure compliance within their entities, in strict accordance with the risks of these entities. The Group Ethics and Compliance Policy (PECG) is backed up by instruction notes and support guides designed to assist its deployment, including in particular monitoring the integrity of business relations, financial ethics, protection of personal data, the fight against fraud, the management of gifts and invitations and the prevention of conflicts of interest. The PECG is the supra-reference to the Group Ethics Charter and the ethics and compliance code of conduct, which can be updated according to new applicable regulations and is subject to audit; the Group Ethics Charter built around the Group’s three values (Respect, ■ Solidarity, Responsibility), which defines the requirements that should guide the actions and conduct of the Group employees on a daily basis. An updated version of the Charter, which dates from 2013, has been rolled out throughout the Group as of March 2019; the Code of Ethical Conduct and Compliance published on 1 June 2017 and set ■ out in the internal regulations of the entities, which constitutes the Universal Registration Document for the prevention of corruption and applies to all employees (requirements of the Sapin II Law); the EDF group ethics and compliance whistleblowing system, which allows ■ employees and external collaborators (temporary staff, employees of a service provider, etc.) or occasional employees (fixed-term contracts, apprentices, trainees, etc.) of the Group, to make a report in accordance with the “Sapin II” Law of 9 December 2016, relating to transparency, the fight against corruption and the modernisation of economic life. The same alert system is also made available to third parties for issues covered by the “Due Diligence” Act of 27 March 2017 relating to the due diligence obligations of parent companies and ordering companies; training and awareness-raising actions for executives, managers, employees, staff ■ who are exposed to the risk of corruption and support for the network of Ethics Before each commitment decision, the proposed projects undergo a risk analysis according to a methodological reference framework made available to the entire Group. Strategic projects (beyond the thresholds defined in the Commitments policy) are reviewed by the Group Executive Committee Commitments Committee (CECEG). Draft commitments are reviewed, where appropriate, by the Board of Directors as described in sections 4.2.2.3 “Powers and duties of the Board of Directors” and 4.2.2.8 “Activity of the Board of Directors in 2019”. Strategic disposal projects are investigated separately and supervised by the Disposals Committee to preserve confidentiality and responsiveness. Reliability of financial information – 2.1.2.4 internal accounting and financial controls Organisation of financial risk management The EDF group has organised its financial risk management around the following functions: Performance Management, reporting: ■ contributing to the management of the performance of the Group’s entities by ■ helping define the Group’s performance plans and by challenging the measures implemented by the entities and business lines. For this purpose, the Finance Department implements a set of management indicators adapted to the economic model of each of the Group’s activities; and Compliance Officers (EOC) to carry out their missions. Approval of commitments 2.1.2.3 The EDF group’s Commitments policy sets the framework for commitment decisions in terms of steering, governance and control. This policy applies to all commitment projects, regardless of their amount, for all EDF entities and subsidiaries, excluding regulated subsidiaries while respecting the governance of listed companies.

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EDF | Universal registration document 2019

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