PSA - 2019 Universal Registration Document

GROUPE PSA Risk factors DPEF.B

Regulatory, legal and consumer risks 1.5.4.

RISKS ASSOCIATEDWITH INDUSTRIALEMISSIONS AND IMPACTS ON CLIMATE

1.5.4.1. CHANGE INCLUDINGSTRICTER CO 2 EMISSIONS STANDARDS HIGHRISK

Riskfactors

 Riskmanagement andcontrolprocesses

[DPEF.B] Industrial carbon footprint Groupe PSA’smanufacturingand sales activities may have an impacton climate change. CO 2 emissionsregulationsalso impactproduction facilities(vehicle manufacturing usesenergyfor a widerangeof industrialprocesses: casting,machining,paintcuring,heattreatment,etc.).GroupePSA must make its plants less energyconsumingto avoiddevaluation and increased credit costs.

The Industrial Environment Department coordinates the deploymentof the policy and managesa centralisedreporting systemmonitoringeach facility’senvironmentalperformanceand promotes continuous improvement initiatives. TheGrouphasan energymanagement planat all of its production sites, whch use the best availabletechniques.Therefore,at each major plant, an “environment”team is dedicated to complete operational riskcontrolof theenvironmental risks,a specialannual capital expenditureplan accompaniesthe deploymentof the certificationprogramme, andappropriatemethodologies areused. All plantsand the main R&D centresare ISO 14001 certifiedand are audited annually by third parties. For more information on the environmental risk provision and the Group’s ISO 14001 certification process, please ref rto Section 2.2.2below. 2 emissionsfrompassengercars, the Group is continuing to develop a range of low-carboncars, identifying the most cost-effectivetechnical solutions for its customers. A CO 2 Committee, led by the Chairman of the ManagingBoard, is held every monthwith the ManagingBoard andtheGlobalExecutiveCommittee. It is taskedwithdecidingon actionplans(technicaldrivers,adaptationof productandstrategy plans) to be implemented in order to achieve the Group's objectives. (See 2.2.1.1.) Purchasing: the Group selects suppliers on the basis of > environmentalcriteria such as ISO 14001 certification and requiresthemto monitorcurrentand futureCO 2 emissionsand to implement a reductionplan.(See 2.3.1.2.1.) Logistics: the CO 2 footprint for transportation is regularly > monitoredas part of a CorporateBusinessReviewby Groupe PSA and its strategicserviceproviderin this field. The service provider has committed,under a formal agreement,to make every effort to use the least pollutingtransportationmethods available, in line with the most stringent environmental standards, and to prioritise alternative methods to road transportation.(See 2.2.2.1.3.) The Group is keen to control the use and impacts of these substancesby meansof continuedsystematic implementation of the best availabletechnologyat cost-effectiveprices(e.g. rollout of clean paint processes,after-treatmentof residual emissions, etc.)(See 2.2.2.2.) As a pioneerin reducingCO

[DPEF.B] Vehicle CO 2 emissions Regulatory requirements in relationto CO 2 emissionsfromvehicles, such as the CAFE (CorporateAverageFuel Efficiency)standards, havebecomeestablishedworldwideandare increasinglystringent. Failureto complywithCO 2 emissionthresholdsmay lead to heavy fines or suspensionsof sales, depending on the geographical region. GroupePSAis specificallyexposedto thisregulatoryriskdueto its geographicaloperations,becausethe Groupsells light vehiclesin countries where regulations onfuelconsumption are very tight. [DPEF.B] [DV.10] Supply chain environmental performance Most of the Group'ssuppliersbelongto industriesthat are facing the sameenvironmental constraintsas the Groupitself. To ensure that its supplychainis sustainable, the Groupmustdriveinitiatives to reduceCO 2 emissionson two levels: Purchasing(extractionof raw materialsand productionof parts > purchasedby GroupePSA for its vehicles),whichis the Group's secondlargestsourceof CO 2 emissionsafter emissionsfrom its vehicles; Logistics (transportation ofmaterials and parts toGroup plants > and vehicle transportation), which hasbeenidentifiedas havinga major impact on the carbon footprintof the Group's industrial operations. [DPEF.B] [DV.6] Industrial dischargesand nuisances Automotive production processes use chemicals generating potentially polluting emissions such as sulphur oxide (SOx), nitrogen oxide (NOx) and volatile organic compounds(VOCs), whichaffectair quality,the naturalenvironmentand the qualityof life of communitiesliving near the plants. These atmospheric pollutantsare highly regulated.

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GROUPE PSA - 2019 UNIVERSAL REGISTRATION DOCUMENT