PSA_GROUP_REGISTRATION_DOCUMENT_2017

GROUPE PSA Risk Factors

ENVIRONMENTAL RISKS

1.5.1.8.

The Purchasing Department analyses the financial results of the Group’s main suppliers and compiles information about their industrial strategies, assesses the impact on the suppliers of Groupe PSA’s “make-or-buy policy”, analyses the socio-economic impacts of industrial choices and verifies that suppliers comply with the Group’s social and environmental specifications. This analysis has two benefits: first, avoiding awarding new markets to suppliers experiencing financial difficulties and secondly, identifying all suppliers at high risk of insolvency (financial soundness, probity of shareholders, exposure to natural risks, etc.). The situation of the suppliers at a high risk of default is reported to the Purchasing Management Committee on a monthly basis, which validates any action plans and may suggest measures to support supplier liquidity (temporary reduction of payment terms) or risk mitigation (doubling production, search for potential rescuers or investors, stockpiling, etc.). Groupe PSA has set up a flexible organisation and scalable processes to ensure that contractual payment terms agreed upon with its suppliers are strongly respected. It has also put in place a dedicated process to address late payments. This will identify any reasons for recurring delays and provide the necessary structural solutions. In 2017, the curative or preventive monitoring of high risk suppliers based on financial criteria covered 45 companies representing approximately 7.7% of annual purchases. Risk factors The occurrence of a major incident (such as fire, explosion or natural disaster) at a manufacturing site of the Group or of its supply chain could compromise the production and sale of several hundred thousand vehicles. Risk management and control processes The Group has implemented steps to lower the probability of occurrence of undesirable events and mitigate potential impacts on human, environmental and economic resources. Actions to manage risks and promote business continuity are conducted at each organisation by the operating entities assisted by risk management experts and the various business lines involved. The risk management processes and associated best practices are also implemented for the new technical centres or manufacturing sites. In the specific area of manufacturing processes, the regional risk management system is built on three pillars: the convergent trend towards the “Excellent Plant”, the Global Risk Management System and the Manufacturing Management Control System, all of which serve to cover, monitor and control throughout the year all the major risks identified within the industrial entities. Lastly, concerning the quality of manufacturing processes, the assembly plants have been ISO 9001 certified by UTAC (except for Section 7.3 “Design and Development”), to comply with the requirements of European Directive 2007/46/EC, Annex X, “Conformity of production procedures”. INDUSTRIAL RISKS 1.5.1.7.

Risk factors Groupe PSA may be exposed to environmental risks arising from its manufacturing and sales activities. It should be noted that no Group establishment falls within the scope of the regulation on industrial hazards (the Seveso Directive). Risk management and control processes The Industrial Environment Department coordinates the deployment of the Group’s environmental policy for manufacturing and research sites which aims to reduce the environmental impact of the Group’s facilities. This unit manages a centralised reporting system monitoring each facility’s environmental performance and promotes continuous improvement initiatives. At each major site, an “environment” team is dedicated to the operational management of all environmental risks – a specific annual investment plan accompanies the rollout of the certification programme and appropriate methodologies are deployed (ISO 14001, REACH European regulations, Classification, Labelling, Packaging regulation). For more information on the environmental risk provision and the Group’s ISO 14001 certification process, please refer to Section 2.2.2 below. 1.5.1.9. SAFETY RISKS Risk factors Groupe PSA is faced with a wide range of situations that could affect employee health, safety and well-being. Working conditions can cause situations of stress or discomfort that, in addition to their impact on health, can directly influence employee engagement. Shiftwork, involving physical demands, is the main cause of occupational illnesses. Moreover, commuting inside and outside of the Group’s facilities may cause workplace or commuting accidents. Lastly, the use or presence of certain chemicals in production processes may lead to risks related to air quality, generate pollution or create a risk of explosion. Risk management and control processes In line with its ambition to promote Responsible Development, the Group relies on an Occupational Safety and Health Management System (OSHMS) consisting of 22 requirements applicable to all entities and subsidiaries (see Section 2.4.4.1). The OSHMS aim: to reduce the risk of workplace accidents and occupational „ illnesses (for example, the implementation of a road risk prevention charter to prevent travel risk, ergonomic workstation design); to improve safety and well-being at work, particularly through „ stress detection measures (prevention of psychosocial risks). This system is based primarily on the firm, regularly renewed commitment from the executive management, a structured approach and ownership tools that allow all employees to take control of their health and safety during daily activities. Our total lost-time incident frequency rate is one of the best in the automotive industry (demonstrating the effectiveness of our management system). WORKPLACE HEALTH AND

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GROUPE PSA - 2017 REGISTRATION DOCUMENT