PSA - 2019 Universal Registration Document

GROUPE PSA Risk factors DPEF.B

NON COMPLIANCE RISKS HIGHRISK 1.5.4.2. Regulatory risks 1.5.4.2.1.

Riskfactors

Controlmanagement process

The natureof the Group’sactivitiesand its internationalpresence makeit subjectto a set of wide-ranging regulations. In particular, the developmentof newvehiclesand subassemblies also exposes the Groupto risksarisingfromconstantchangesin Europeanand global regulations,particularly in the areas of safety and the environment. The overall trend is towards increasingly strict regulations.The Group’s activities may be impactedby public authoritypolicyincentivesto purchasenewvehicles,as well as by unfavourablechanges in tax and/or customs regulationsin the countries withwhich the Group trades. [DPEF.B] Ethics in business practices Groupe PSAmust ensurethat its activities,includingin countries classifiedas being “at high risk”, do not expose it to regulatory offences. In the light of ethical risks or risks of corruption, convictions for non-compliancemay lead to heavy fines, in particular,becausethe scopeof some nationallegislations( i.e . in the UnitedStates,the UnitedKingdomand France)extendsright thewayalongtheCompany’sentirevaluechain,in all thecountries wheretheyoperate.Thismayalsohavea long-term impacton the Group’s presence in one, or more, markets. [DPEF.B] [DV.9] Human rights in the supply chain Stakeholder expectations are getting higher in terms of information on production conditions and the origin of the products that they purchase. Groupe PSA’sability to evidence transparencyright the way along the supply chain is, therefore, crucial.The failureof suppliersand subcontractors to complywith employmentstandardsmay have serious repercussionsfor the Group: significant damage to its reputation, which could reduce its > revenue and its pricing power; potential disruptions to supplies n the eventof local crises; > cost ofremedial measures. > [DPEF.B] Vehicle impact on airquality The harmfuleffectsof atmosphericpollutantson ecosystemsand on humanhealthare of majorpublicconcern.In lightof themedia coverage, this issue may constitute a major reputationalrisk. Regulations limiting atmospheric emissions (like the Euro X standards) have been significantly tightened. An increasing numberof cities have now restrictedtraffic zones which do not permit entry by vehicles with the highest emissions. Because vehicles cannot be sold unless they comply with regulations, substantial R&D investment is required. [DPEF.B] Responsible customer data and relationship management The general public, having little awarenessof the legal issues surrounding the confidentiality of information, is becoming increasingly distrustful. The challenge for Groupe PSA is to reassure its customersthat all their personal data will remain confidential. In addition,the financialpenaltiesprovidedfor by the EuropeanGeneralData ProtectionRegulationmay be as high as 4% of corporaterevenuein the eventof non-compliance. Beyond compliancewiththe regulations, theprocessingof personaldatais an issueof trust and competitiveness.

Theserequirements are takenintoaccountas soonas possiblein the developmentof vehicles and subassembliesat the project leveland in themarketingof thesevehicles.For this purpose,the Group has implemented policies and procedures at the appropriatelevels to ensure compliancewith these regulations. The Group also participatesin permanent dialogue with the nationaland regionalauthorities in chargeof specificregulations for automotive industryproductsso as to preventrisksrelatedto regulatory changes. The strengthening of the complianceschemeset out in 2016and the Group-wide launchin 2019 of the workplacewhistleblowing system also contribute to preventing the occurrenceof and limitingregulatory risks. The Group’s ethical requirements have led to collective agreements with its various stakeholders. To meet these commitments,managersand all employeesmust comply with commonethical directives.These rules, set out in the Group’s Codeof EthicsandAnti-Corruption Charter,areorganisedaround the following requirements:respect for the law, respect for peopleand the environment, respectfor customersand respect for the Company. The Group’s ethics and compliance policy is based on: a dedicatedethicsandcompliancestructure;referencedocuments; prevention and control systems; results in line withexpectations. (See 2.3.3) Managing the social impactson its supply chain is a priority for Groupe PSA, givenits international expansion, particularly in emerging countries. The Group ensures that standards set out by supranational bodies are fully integrated intopr cesses. The Group is careful to ensure that forced and child labour are not tolerated in its supplychain, including by raw materials suppliers. (See 2.3.1.2)

Groupe PSAhas incorporatedthe issue of air quality into its research and developmentprogrammesfor many years now, enabling it to roll out engine ranges that drastically reduce particulate and nitrogen oxide emissions. (See 2.2.1.2)

For a numberof yearsnow,Groupe PSAhas beencommittedto taking a proactiveapproachwith the French Data Protection Authority(CNIL- Commissionnationalede l’informatiqueet des libertés ). Groupe PSAhas a data protectionpolicy, the main purposeof which is to ensureGroupe PSAsets up appropriate governanceand control structures, methods and procedures, regardingthe protectionof personaldata. The Group has also appointed two Data Protection Officers. (See 2.3.2.2)

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GROUPE PSA - 2019 UNIVERSAL REGISTRATION DOCUMENT