EURAZEO_REGISTRATION_DOCUMENT_2017

2 CSR in the investment policy

EURAZEO’S CORPORATE SOCIAL RESPONSIBILITY

Analyses performed In carrying out this analysis, all “available” or “assembled” documents are reviewed: “available” documents can be internal documents made • available by the target company (investment memorandum, reports, legal, social, strategic and CSR due diligence, existing CSR reporting, insurance reports, site audit reports) or public documents (website, reports). Analysis of the competitive environment is also performed in order to fine-tune the identification of the target’s sector-specific issues, risks and opportunities; “assembled” documents are the result of interviews with the • management of the target company, as well as with various experts, using a standard questionnaire. Lastly, if the target company has an industrial activity involving production sites, site audits are carried out during the due diligence phase in order to assess the sites’ regulatory compliance and the challenges related to air, soil and water emissions, discharges and pollution.

The aim is to assess material challenges. To this end, Eurazeo relies on the Sustainability Accounting Standards Boards (SASB) tool to identify, by sector, the challenges indicated in this tool as “material”. Eurazeo also has a risk matrix developed jointly with its Risk Management and Legal Departments, which serves to identify and assess the main areas of diligence in the study of investment targets for the purpose of identifying the priority challenges to be investigated first. Risks and opportunities related to climate change Climate change risk is part of the risk matrix; it is analyzed for all prospective investments reviewed. Specific due diligence procedures can be performed to determine the Company’s exposure to physical risks (impacts related to natural risks) and transition risks.

KEY RISK FACTORS AND UNCERTAINTIES THAT INVESTMENT TARGETS MAY FACE

OBJECTIVES PURSUED BY EURAZEO IN THE DUE DILIGENCE PROCESS

RISK FACTORS

RISK ASSESSMENT METHODS

Short- and medium-term physical risks: • geo-climatic risks, floods, rising sea level (e.g. floods causing damage and partial or total shutdown of activity). Risks in the supply chain: sustainability of the • supply of critical resources. Risks on substitution capacity for potentially • scarce resources. Regulatory risks: total or partial prohibition of the • activity or the use of raw materials. Reputational risks or risks resulting from change • in consumer/customer behavior (e.g. NGOs campaigns). Risk of needing to adjust production and • distribution systems to address constraints in terms of regulations (e.g. pollution thresholds), energy (e.g. prohibition of coal) or supply chains (e.g. critical raw materials). Risks on the Company’s ability to maintain a level • of economic performance if it faces some or all of the risks mentioned above.

Assessment of the degree of exposure (potential • physical impacts liable to affect production, employee health and safety), the ability to implement risk mitigation measures (operational costs) and the existence of insurance coverage. Assessment of critical supply chains (shortages, • costs) and possible substitutions. Review of regulatory risk in light of new and draft • regulations. Analysis of consumer trends and NGO • campaigns (controversy mapping).

Assess site exposure to natural hazards

Physical risks

Assess the resilience of the business activity

Assessment of technical, technological and • financial feasibility.

Assess the resilience of the industrial model

Transition risks

Performance of stress tests on the business • model (e.g. increase in the price of carbon, substitution supplies at a higher cost, etc.).

Assess the resilience of the business model

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2017 Registration document

Eurazeo