Groupe Renault - 2019 Universal Registration Document

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RISK FACTORS GROUPE RENAULT

risks related to supply with impact regarding the Group’s product P strategy: To identify the materials on which Renault is the most exposed and prepare upstream strategies to secure resources, a criticality matrix is used to evaluate objective criteria. These might include supply and demand scenarios for the materials concerned, the number and exposure of producers and Renault’s capacity to recycle and replace them if necessary. The Group has been recognized for its commitment to the development of channels to recycle materials from the dismantling of end-of-life vehicles. All of these operations help secure the Group’s supplies of materials (recycled polypropylene, aluminum, copper, platinum, palladium, rhodium, etc.). They are led by Renault Environnement, in particular through its subsidiary Indra (a joint-venture with Suez Environnement): collection and processing of parts and materials, through its subsidiaries Gaïa (automotive sector) and Boone Comenor Metalimpex (metal waste), through innovative partnerships. The expertise developed by Renault on criticality analysis methodology has become a benchmark. The Group remains strongly involved in associated national and international initiatives through cross-functional “sector” committees alongside public authorities. This enables a holistic, forward-looking approach to risk management, with public authorities providing support for priority actions. Supplier default The risks identified by the Group concern the temporarily insufficient compliance by its suppliers with their commitments, particularly quality standards applicable to supplies, timely production capacity and delivery as well as possible manifestations of vulnerabilities related to their operational, financial or social and environmental responsibility performance. The Group applies a full risk control system concerning all aspects of the supplier relationship: design and development – manufacturing, logistics and quality – economic and financial sustainability. Supplier risk control is based on the following main systems, which rely on the coordinated action of several departments (management and control of supplier risk, financial analysts’ network) working closely together with the operating purchasing managers of the Alliance Purchasing Organization (APO) as well as with other departments that could be impacted (in particular Engineering, Manufacturing and Supply Chain): prevention policy aimed at making suppliers responsible for their P own risks, particularly with regard to their supply chain; the use of Renault-Nissan-Mitsubishi standards for the processes P of design, validation and compliance with the specifications of the products being developed: control of risks linked to the compliance of the products designed and developed by suppliers is based on the Alliance New Product Quality Procedure (ANPQP) with which all suppliers comply; an Alliance Data Repository process to ensure supply capacity risk P management in serial manufacturing, with a two-year horizon;

processes for detection of non-compliance relating to the quality P of parts delivered and their traceability: quality control of mass-produced products is based on a management system common to Renault, Nissan and Mitsubishi based on the model of ISO TS 16949; supplier risk monitoring on operational, financial and CSR (in P particular health/safety, social and environmental risks) aspects: annual multi-criteria rating of suppliers that assesses the quality of shareholding and management, the competitiveness of sites, their investment capacity, technological risks, and strategy and commercial dependence on major customers. Financial risks are monitored by a network of analysts who assess the risk of default by suppliers using a common grid of Renault-Nissan-Mitsubishi criteria and compare their conclusions with those of the rating agencies, Banque de France scores, recommendations of credit insurers, etc. Finally, supplier CSR risks may, in particular, be identified through risk mapping of specific risks, supplemented by an annual audit program; a system to implement action plans in the event that supplier P non-compliance or risk is detected. In addition to the prevention and detection of risks “subject to human control”, the prevention policy also covers risks “beyond human control”, such as natural disasters. Renault, Nissan and Mitsubishi thus deploy a Business Continuity Plans program. These risks are presented and handled in Purchasing Risk Committees at Group level and for each local Purchasing department. These multi-disciplinary bodies, in which all the functions affected participate (financial, legal, audit, logistics, communication, public affairs and Human Resources), are chaired by the Purchasing department. The Purchasing Risk Committee determines the action plans to be implemented in collaboration with suppliers in order to reduce their risks, improve their competitiveness and ensure the long-term security of the supply chain. Failure in supply or transport systems In the Alliance’s supply chain, teams of specialists are responsible for the prevention of the aforementioned risks. These preventive methods include: demand sensing via a sales and operational activities planning P process; supply capacity management in conjunction with the Alliance P Purchasing Organization & Supply Chain Quality department; supply chain capacity management for carriers and vehicle P compounds; risk detection and mitigation via a “control tower” type P organization; implementation of an operational team in the event of a crisis P

inherent to the aforementioned external factors; IT teams to counter events such as cyberattacks; P implementation of crisis exercises. P

102 GROUPE RENAULT I UNIVERSAL REGISTRATION DOCUMENT 2019

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