SAINT_GOBAIN_REGISTRATION_DOCUMENT_2017

Risks and control Risk factors

The Group may be forced to take legal action against third parties suspected of breaching its rights. Any such proceedings may give rise to significant costs and hamper growth in sales of the products manufactured using the rights concerned, or force the Group to incur additional expenses to develop other technologies that do not use the disputed technology. Risks associated with the cost 1.1.5 and supply of raw materials The Group’s businesses, some of which are heavy consumers of energy, may be affected by a significant increase in prices and difficulties in obtaining a supply of raw materials and/or energy (such as natural gas). Its ability to pass on these cost increases to its customers depends to a large extent on market conditions and practices. If the Group’s ability to immediately and/or fully pass on increases in raw materials and/or energy costs were limited, this could have a material adverse effect on its businesses, financial position or results. Industrial and environmental 1.1.6 risks The Group could incur significant expenses and be exposed to environmental liabilities as a result of its operation of past, present or future industrial sites. The industrial and environmental risks arising from the operation of some sites primarily relate to the storage of certain hazardous substances. As at December 31, 2017, five sites were classified under Directive 2012/18/EU on the control of major-accident hazards involving dangerous substances, known as “Seveso III”. These industrial sites are subject to specific regulations and close supervision by the competent authorities and the Group’s Environment, Health and Safety Department. Of these facilities, the Balsta (Gypsum) site in Sweden, which stores liquid natural gas, the Etolikon (Gypsum) site in Greece, which stores liquid petroleum gas, and the Mannheim (Flat Glass) site in Germany, which stores oil products, are classified as “lower-tier” under the Seveso III Directive. Two other facilities are classified as “upper-tier”: Bagneaux-sur-Loing (Flat Glass) in France, which stores arsenic (AS2O3) and Carrascal del Río (Flat Glass) in Spain, which stores, among other things, hydrofluoric acid (HF). In France, under the Law of July 30, 2003 on the prevention of technological and natural risks and the remediation of contaminated sites, specific risk prevention and safety policies have been implemented at all of the French sites

listed above. After identifying accident risks and their potential impact on the environment, preventive measures were implemented at these facilities, covering the design and construction of storage areas, as well as the manner in which they are used and maintained. Internal contingency plans have been developed to respond to incidents. The financial consequences of personal injury and damage to property that may arise by accident from plant operations are covered by the current Group civil liability insurance program, except for the Bagneaux-sur-Loing plant, which is insured under a specific policy subscribed by the joint venture operating the facility. In the event of a technological accident, compensation payments to victims would be organized jointly by the joint venture, the insurance broker and the insurer. The Saint-Gobain Group also has to deal with risks relating to chronic pollution, and could therefore be required to incur expenses to restore industrial sites or clean up the environment. 72 Group sites are classified as “IED” installations as defined by Directive 2010/75/EU on industrial emissions, and are subject to integrated pollution prevention and control regulations. Breach of these regulations could result in fines or other civil, administrative or criminal penalties, specifically the withdrawal of permits and licenses needed for the activities in question to continue operations. Lastly, changes in environmental regulations, including their interpretation, and consideration of climate change risks (see Sections 2.3.2 c) and 2.3.6 of Chapter 4 and Section 3 of Chapter 7) could cause the Group to incur significant expenses and/or investments. The Group’s strategy is based, in part, on external growth, in particular by acquiring businesses or assets, taking equity interests or establishing joint ventures in the Group’s business lines and in geographic regions where the Group seeks to establish or strengthen itself. The Group may, however, not be able to identify attractive targets or enter into transactions at the optimal time and/or under satisfactory conditions. The expected benefits of these external growth operations depend, in part, on the realization of expected synergies and integration of the activities of the acquired companies, and on relationships with other participants in the joint ventures. The Group gives no guarantees as to these objectives, which, if not fulfilled within the expected timeframes and at the expected levels, could affect the Group’s financial position, results and outlook. Risks associated with external 1.1.7 growth

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