SAINT_GOBAIN_REGISTRATION_DOCUMENT_2017

Risks and control Internal control

INTERNAL CONTROL 2. Every Group company assesses the key risks affecting the application of its strategy, the effective conduct of operations, compliance with laws and regulations, and resilience to external events as quantified in a business continuity plan. The entities are responsible for their own internal control and for managing their process risks in their processes.

Departments help to define shared common guidelines with the Sectors and General Delegations. Priority measures, or “6 Essentials”, have been defined in connection with balance sheet and cash flow reviews, improved competitive bidding, analysis of inventory discrepancies, margin analysis and validation of sales policies, and excellence in managing travel expenses. The systematic addition of computer access rights management and risk management helps to ensure optimum performance and alignment of objectives. Internal control and risk management are all Group employees responsibility. It is up to each entity to implement an internal control system appropriate to its needs, under the personal responsibility of its manager.

They work collaboratively with teams under the umbrella of the shared service centers or comptency centers. It is essential that there is a segregation of tasks between these organizations for successful skills optimization and transaction security. In France, the shared service centers are managed by the Sectors and Activities; elsewhere, they are managed by the General Delegations. The Group Corporate

Compagnie de Saint-Gobain’s internal control 2.1 and risk management system

Saint-Gobain’s internal control and risk management system is based on the internal control and risk management framework defined by the French securities regulator (Autorité des marchés financiers - AMF), as updated in July 2010, and on the 2013 update to the framework from the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The system complies with the legal requirements applicable to companies listed on the Euronext Paris regulated market. Supported by a continuous improvement process and an Internal Control Reference Framework, Saint-Gobain Group’s internal control and risk management system is a whole set of means, behaviors, procedures and actions tailored to each company’s specific characteristics which: contributes to the control of its activities and the „ implementation of its strategy, the effectiveness of its operations and the efficient use of its resources; enables it to appropriately address material operational, „ financial, compliance and other risks. It is more specifically designed to provide assurance concerning: application of general management’s instructions and „ orientations; compliance with the laws and regulations applicable to the „ company; the efficiency and effectiveness of internal operating, „ industrial, marketing, financial and other processes; the protection of tangible and intangible assets, in „ particular the prevention of fraud; the reliability of financial information. „

The Saint-Gobain Group’s internal control and risk management system is therefore more than just a set of procedures and it extends beyond accounting and financial processes. It is in place in all Group entities, where it contributes to value creation and strengthens companies’ performance. The internal control and risk 2.1.1 management environment The foundations of the internal control and risk management system are as follows: adherence to the values and behavioral rules set out in the „ Saint-Gobain Principles of Conduct and Action (regarding the Principles, see Chapter 1, Section 2), which are distributed to all employees; clearly defined organization and allocation of „ responsibilities, supported by written procedures and ensuring effective segregation of duties; delegations of signature authority and other powers that „ are aligned with the effective allocation of responsibilities; policies for human resources management aimed at „ ensuring that new hires have the knowledge and skills needed to fulfill their responsibilities and training policies to help Group employees expand and update their skills and knowledge; written internal procedures distributed in an appropriate „ manner to employees;

7

191 SAINT-GOBAIN - REGISTRATION DOCUMENT 2017