EDF / 2020 Universal Registration Document

3 NON-FINANCIAL PERFORMANCE Carbon neutrality and the climate

Scenario-based approach to verify 3.1.3.2.3 corporate resilience Physical risk scenarios To assess the physical risks of climate change (chronic and acute), the EDF group uses long-term trajectories known as RCPs (Representative Concentration Pathways) developed by the IPCC (1) . These trajectories describe different climate futures, which are all considered possible depending on the quantities of greenhouse gases emitted in coming years. They are identified by the resulting 2100 radiative forcing value: the higher this value, the more energy the earth-atmosphere system absorbs and the more it warms. So an RCP of 2.6 is associated with radiative forcing of 2.6W/m 2 and is the only IPCC scenario enabling compliance with the Paris Agreement, whereas the most pessimistic scenario, RCP 8.5, results in estimated warming of between 2.6°C and 4.8°C. The EDF group systematically integrates the highest-impact climate scenario ( i.e. RCP 8.5) into risk assessments of its facilities. These assessments were carried out for all the Group’s nuclear facilities and are mandatory for all new nuclear or hydroelectric power plants. Several modifications were made based on these assessments, including the design of the water inlets at the British Hinkley Point C nuclear power plant to take account of the high sea level. Transition risk scenarios Worldwide, the electricity and heat production sector is the number one greenhouse gas-emitting sector, accounting on its own for 25% of global emissions (2) . In France, as a result of the EDF group’s carbon performance, the electricity and heat production sector accounts for only 6% of national man-made greenhouse gas emissions (3) . As demonstrated by the IPCC (4) , trajectories involving no exceeding, or minimal exceeding of the goal of 1.5°C, can be achieved only with increased electrification of uses combined with an accelerated switch to carbon-free electricity. As a result, the share of electricity in end energy use should rise Europe-wide from 22% today to more than 50% by 2050, in most of the scenarios (5) aiming to achieve carbon neutrality. To assess transition risks (legal, technological, market, reputation), the EDF group uses medium-term scenarios (2030-2050), in national scopes (such as the French National Carbon Strategy, adopted in 2020) or regional scopes (such as the European Union’s long-term strategy and the “Decarbonisation Pathways” sectoral study supervised by Eurelectric and to which the EDF group contributed in 2018). The EDF group has an atypical exposure profile to transition risks, and political risks in particular, compared to most other energy companies worldwide. In fact, with a >90% carbon-free production mix, bolstering of policies to achieve carbon neutrality, such as increasing European greenhouse gas market prices, constitute major opportunities for the Group to showcase its strengths. Use of the price of carbon 3.1.3.2.4 to guide investments The EDF group’s investment projects were analysed based on the CAP 2030 strategy and its commitment to achieve carbon neutrality for all its direct and indirect emissions by 2050. For all countries covered by the EU-ETS (European greenhouse gas emissions trading system), through which the majority of EDF group investments are made, the sensitivity of the profitability of projects in terms of production is also assessed based on medium- to long-term scenarios based on different 2050 emissions price trajectory forecasts.

These scenarios and the related carbon price trajectories are developed taking account of various parameters, particularly GDP growth, raw material prices, technology costs, and climate and energy regulations. In its response to the 2020 CDP questionnaire, EDF stated, for example, that the carbon price range currently taken into account in its scenarios was € 2019 24 to 100/t.CO 2 by 2040. By enabling identification of project risks and opportunities and testing their climate change resilience, this analysis, based on scenarios integrating different carbon price trajectories, contributes to guiding the Group’s investments. EDF and sustainable finance 3.1.3.3 Alignment with European taxonomy 3.1.3.3.1 The EU Taxonomy is the first and certainly most important measure of the “Financing Sustainable Growth” action plan, launched by the European Commission in March 2018. In the long term, it should enable regulation of the “green” or “sustainable” financial products market. It addresses a key issue, with the aim of channelling investments into essential technologies and projects to achieve European climate goals and carbon neutrality. Along the same lines, the Intergovernmental Panel on Climate Change (IPCC) as well as the International Energy Agency (IEA) have confirmed that nuclear power is one of the solutions to limit global warming and achieve the goals of the Paris Agreements. Based on both these observations and scientific studies, EDF considers nuclear power to have its place in the European taxonomy, because it enables reduction of CO 2 emissions, in Europe and worldwide, and makes a substantial contribution to mitigating climate change (1st goal of taxonomy). In 2020, nearly 94% of Group investments were made in accordance with the Group’s low-carbon goals (6) , with 51% investments in the nuclear sector, and 43% aligned with the European sustainable taxonomy (7) , particularly including production of renewable energy (hydroelectric, wind, solar, etc.), power grids and energy services. These figures are likely to be revised based on the “Taxonomy” regulation, particularly with the publication of delegated acts in 2021. Issue of Green Bonds 3.1.3.3.2 EDF is a leading issuer on the Green Bonds market. As such, since November 2013, it has issued the equivalent of approximately €6.9 billion Green Bonds (including €2.4 billion of convertible Green Bonds in 2020 (8) ) to support its development in renewable energies. After two first issues designed to finance the construction of new wind and solar projects by its EDF Renewables subsidiary, then extension in 2016 to financing of investments to renovate and modernise hydroelectric assets in mainland France, the EDF group updated its Green Bond Framework in January 2020 to integrate best market practices and extend the scope of investments eligible for energy efficiency and biodiversity projects, both in France and internationally. So far, EDF group Green Bond issues have contributed to financing about 30 wind and solar projects and more than 800 operations to renovate, modernise and develop existing hydroelectric facilities in France, enabling the avoidance of more than 6 million tonnes of CO 2 . Green Bonds are fully integrated into the Group’s financing policy. EDF is an active member of the governance of the Green Bond Principles (9) and co-founder of the Corporate Forum on Sustainable Finance (10) (see section 6.7 “Information on allocation of funds raised through Green Bonds issued by EDF”).

(1) Assessment Report no. 5, IPCC, 2014. (2) Assessment Report no. 5, IPCC, 2014 (2010 data). (3) SECTEN Inventory, CITEPA, July 2020, (2019 data). (4) IPCC special report Global Warming 1.5°C, October 2018. (5) EU Long Term Strategy scenarios, November 2018.

(6) Figures in line with the consolidated financial statements at 31 December 2020. (7) According to the currently-defined method based on the March 2020 TEG report. (8) See the EDF group press release of 8 September 2020. (9) www.icmagroup.org/assets/documents/Regulatory/Green-Bonds/Green-Bonds-Principles-June-2018-270520.pdf (10) https://www.edf.fr/groupe-edf/espaces-dedies/journalistes/tous-les-communiques-de-presse/les-principaux-emetteurs-europeens-d-obligations-vertes-lancent-le-corporate -forum-on-sustainable-finance

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EDF - UNIVERSAL REGISTRATION DOCUMENT 2020