NATIXIS_REGISTRATION_DOCUMENT_2017

6 ENVIRONMENTAL AND SOCIAL RESPONSIBILITY Management of ESG risks in our business lines

Management of ESG risks 6.3 in our business lines

Assessing and monitoring E&S risks Equator Principles As a signatory of the Equator Principles since December 2010, Natixis applies an industry-wide methodology recognized by 89 member banks and financial institutions, aimed at evaluating the E&S risks of the projectsit financesand assessingthe quality of the management systems used by its clients to manage, minimize,and remedythe impactsthey cause as best they can. This methodologyapplies to the financingof investmentsin new projectsor the extensionof existingprojects.For Natixis it mainly concerns the infrastructure, energy (oil, gas), electricity and renewableenergy,miningand metalssectorsaroundthe world. It has set up an organizationin which the business lines and the ESR team are jointly involved in assessing and managing transactions.The process includes an assessmentof the quality of existing E&S documentation prepared by the client (or advisory services if such documentation has not yet been drafted),the measurementand classificationof the potentialE&S impacts and risks, and, if necessary,the consultationof external specialists. It also provides for the drafting of an action plan for impact mitigation and correctionmeasures,which is included in the financial documentation.Compliancewith the action plan is monitoredthroughoutthe lifetimeof the financingfacility. A summary of key issues used to assess a project is part of Natixis’credit approvalprocess. The detail of this analysisand decisionprocess,the means put in place and all the informationrequired on the operations audited under the process are presented in detail in the annual Equator Principles report (published every year before July 31 and availableon the Natixiswebsite): https://www.natixis.com/natixis/jcms/ala_5415/en/environmental- and-social-risk-management. Assessments performed beyond the scope of the Equator Principles Natixis is aware that it providesa wide range of transactionsand financing solutions to its clients, and applies the same level of diligenceto the E&S risks underlyingcertain types of transaction that fall outsidethe scopeof the EquatorPrinciples. Such transactions include external growth financing deals not associatedwith a physical investmentprogram, general-purpose corporate financing, portfolios of assets that are too large for a dedicatedassessment,or certainkinds of assets. In each of these cases, the quality of the governance and management of the E&S risks inherent to the industry in question are assessed on the basis of current internationalbest practicesand standards,and the servicesof externalconsultants are calledupon if necessary.

Natixis incurs a number of risks in the course of its business, includingcompliancerisk, corruptionrisk, and the risk of harming the environmentor violating human rights. The systems in place to manageand preventsuch riskswere expandedin 2017.

COMPLIANCE RISKS 6.3.1

Complianceand strict adherenceto professionalrules of conduct are vital concerns at Natixis. Through its preventative and monitoringactivities, the ComplianceDepartmentcontributesto the trust afforded by its customers, the markets and the regulators. Natixis’ Compliance Department oversees the systems governing the prevention of money laundering and terrorist financing, prevention of fraud, information system security, businesscontinuityand personaldata protection. For more information on these initiatives, see Chapter 3.10 of this registrationdocument. Corruption is a fraudulent and unethical act subject to heavy criminaland administrativepenalties. In 2007, Natixis signed the United Nations Global Compact, which states in Principle 10: “Businesses should work against corruptionin all its forms, includingextortionand bribery.”Natixis has thereforemade a public commitmentto combat corruption. Consequently,Natixisdenouncescorruptionin all forms and in all circumstances. It tolerates no act of corruption from its employeesor any personsacting for or on its behalf. To complywith the requirementsset out in Article 17of the law of December 9,2016 on transparency,prevention of corruption and the modernization of the economy (“Sapin II”), in 2017 Natixis carried out a campaign to strengthenand align the rules and procedures of its compliance framework with the top internationalstandardsin corruptionprevention. Further information on these initiatives is provided in Chapter 3.10.4. PREVENTION OF CORRUPTION 6.3.2

INCORPORATING SOCIAL 6.3.3

AND ENVIRONMENTAL CRITERIA IN FINANCING OPERATIONS AND INVESTMENTS

Environmental and social criteria in Corporate & Investment Banking’sfinancingbusinesslines are assessedby the new ESR Department, which ensures the quality of the assessment, monitors E&S risks in transactions,analyzes reputationalrisk of involved parties, and implements ESR policies in sensitive sectors.

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Natixis Registration Document 2017