Groupe Renault - 2020 Universal Registration Document

GROUPE RENAULT: A COMPANY THAT ACTS RESPONSIBLY

ANNUAL GENERAL MEETING OF RENAULT ON APRIL 23, 2021

GROUPE RENAULT

CORPORATE GOVERNANCE

FINANCIAL STATEMENTS

RENAULT AND ITS SHAREHOLDERS

ADDITIONAL INFORMATION

INTERNAL CONTROL AND RISK MANAGEMENT

Risk management The Group applies and reinforces a comprehensive risk management system: prevention policy designed to make suppliers accountable for P their own risks and in particular the compliance and robustness of their own supply chain; use of Alliance standards for products in development by P suppliers; Alliance capability repository process aimed at controlling, within P a two-year timeframe, supply risks not covered by the existence of available industrial capacities; Alliance process for detecting non-compliance (quality, P traceability) of parts delivered; monitoring of intrinsic supplier risks: annual multi-criteria ratings, P financial and default risks (Alliance grid); monitoring of the risks created by the relationship between P Groupe Renault (or other customers) and its suppliers by analyzing indicators such as (i) the proportion represented by Groupe Renault or the main customer in revenues, (ii) the supplier’s market share in the Group panel, (iii) the range’s exposure to individual failure. Vigilance is especially reinforced insofar as Groupe Renault does not have a systematic policy of multi-sourcing; implementation of action plans on detection of non-compliance or P supplier risk. The prevention policy concerns both risks under human control such as those listed, and risks outside human control (natural disasters for example). Renault, Nissan and Mitsubishi thus have a business continuity plan program. All of these risks are dealt with in Purchasing Risk Committees, at Group level and for each local Purchasing department. A specific focus on the impact of the COVID-19 pandemic on the supplier base and its resilience has been set-up in 2020 and will be maintained as long as the consequences of the crisis last. With regard to supply disruptions of electronic components, the Groupe Renault has activated, in accordance with its usual management processes, an internal and external multi-business team which decides on the corrective measures to be implemented to minimize the impact on the production of its plants or on its sales. Interruption to supply or transport systems The risks identified relate to planning, production, transport or delivery interruptions of parts, upstream of vehicle production sites, or vehicles, downstream of these sites, which could impact sales, revenues, profits of the Group or customer satisfaction. Among these risks, we are seeing a steady increase in cybersecurity risk among our logistics suppliers. We have also seen a significant increase of these upstream and downstream units shut-downs in 2020 due to the COVID-19 pandemic related constraints.

These risks, which are assessed in the dual context of the interdependence of the Group’s industrial network extended to its global suppliers and the footprint of the distribution network (see in particular section 1.1.3.5 of this Document), are subject to a comprehensive prevention and protection system whose robustness is constantly being strengthened. This system, shared within the Alliance, is thus being strengthened, as described below. Risk management The Supply Chain is running a “Control Tower” program. Through the roll-out of digital processes and with an end-to-end vision, it aims to manage risks at the appropriate levels of the organizations and to apply consistent methods between the Group’s various regions and business lines. The program, which covers the risks of supplier default as well as within the supply and transport system, aims to: detect demand through an integrated sales and operational P planning process; manage supply capacity and supplier default; P manage the logistics capacities of transporters, warehouses and P parks; anticipate risks. P In addition, the COVID-19 crisis has demonstrated the ability of the Supply Chain to operate in a short loop to be more responsive to fluctuations in the environment. The commercial demand versus industrial response balancing process was able to operate efficiently on a weekly rather than monthly basis. This experience allowed us to validate the effectiveness of our digital tools. The Supply Chain crisis management system, which has been in place for many years, is the central tool for responding to occasional crises and contingencies (border blockages, weather crises, shortage of means of transport, cybersecurity, etc .). Interruption in supply of raw materials The risks identified relate to potential supply restrictions (imbalance between supply and demand, sourcing issues, geopolitical disturbances) and raw material prices, the variations in which can be significant and sudden. Purchases of raw materials account for approximately one-third of the total purchasing budget. Three-quarters of such raw material purchases are deemed strategic because they are liable to have a significant impact on production conditions or are experiencing significant imbalances between supply and demand. In addition, in 2020, the COVID-19 pandemic resulted in difficulties related to the production or extraction of materials due to lockdown measures or a shortage of personnel (on precious metals in South Africa for instance), or difficulties in adapting material production capacity to the uncertainties of demand (particularly for steel, with significant tension relating to the resumption of blast furnaces). Measures implemented by the company with its suppliers made it possible to avoid any major impact.

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GROUPE RENAULT I UNIVERSAL REGISTRATION DOCUMENT 2020