Saint-Gobain // Universal Registration Document 2021

Risks and control Risk factors

Lastly, the Group operates in an uncertain geopolitical climate where trade tensions such as those that may arise from the conflict between Russia and Ukraine or those between China and the United States, are becoming increasingly prominent. The Group mainly operates in local markets (see Chapter 2, Section 1.2.1), although some of its manufacturing activities have global value chains (see Chapter 2, Section 1.2.2) and could be subject to political and trade tensions, such as the automotive industry. Further deterioration of global trade relations could therefore have an adverse effect on the Group’s results and outlook in these business sectors. As of the date of this Universal Registration Document, the conflict between Russia and Ukraine has no significant negative impact on the value chains of the Group's activities. digital revolution The Group has placed innovation at the heart of its strategy (see Chapter 2, Section 3.3) in order to remain competitive and maintain a high level of operational excellence and financial and non-financial performance. Certain markets in which the Group operates have undergone rapid change with the introduction of new practices, products and solutions (for instance, off-site manufacturing, 3D printing and digital construction), new technologies and communication and distribution channels using digital tools and content (see Chapter 2, Section 3.3.2). The success of the Group depends on its capacity to keep pace with these changes at all times and integrate these new technologies into its product offerings, in order to respond effectively to customers’ needs. After the success, one year in advance, of the Transform & Grow program set up in November 2018, one of the challenges of which, in terms of innovation and digital transformation, was to optimally reconcile, on the one hand, initiatives and coordination of marketing policies and strategic innovations on a global scale, and, on the other hand, necessary local adaptations or initiatives to meet the needs of local markets and customers in the most relevant and efficient way possible (in particular sales channels, logistics offer, etc.), the new strategic plan Grow & Impact, announced to investors on October 6, 2021, continues this digital transformation objective. The Group may not be in a position to respond fully to these challenges, which could adversely affect its sales, results or outlook. The Group’s innovation policy notably also comprises an ambitious marketing approach which seeks to better understand, anticipate and respond to customer requirements, working where applicable directly with Research and Development to supply customized solutions. This policy of marketing innovation and operational excellence, which is based in particular on a specific strategic watch, requires significant investments in research and development (€447 million at December 31, 2021, i.e. 28% of the Group’s total investments as well as an appropriate recruitment and training policy, particularly in the new professions resulting from the digital boom (digital marketing, professions linked to the use of data, the development of digital platforms, and Industry 4.0 for example, see Chapter 2, Section 3.3.2.5), whose expected benefits cannot be guaranteed. Risks related to innovation and 1.1.3

The Group’s sales, operating margins and results could be affected if it fails to invest or invests insufficiently in appropriate technologies related to digital transformation, or its incapacity to rapidly bring new products to market, if the Group’s new products do not adequately address customer needs or if competing products are quickly introduced. Intellectual property risks 1.1.4 The growth in the Group’s activities relies on the protection of its manufacturing secrets, patents (more than 450 patents registered in 2021, brands and models, and other intellectual property rights (for a description of the Group’s portfolio of patents and brands, see Chapter 1, Sections 1.4 and 4). If the Group was unable to obtain, protect and preserve its intellectual property rights, or its freedom to operate, this could result in the loss of its exclusive rights to use technologies and processes, which could have a material adverse effect on its results. The Group has an active policy for the protection of its intellectual property rights but cannot rule out the risk of its products being counterfeited, the appropriation or illicit use of its intellectual property rights or an unfavorable ruling by the courts. 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. The Group’s industrial activities, some of which consume high levels of energy, such as Building and Automobile Glass, Insulation or Gypsum (see Chapter 1, Section 4 for a description of these activities), or are dependent on certain raw materials, could be impacted by a significant increase in prices resulting from difficulties in sourcing raw materials and/or energy ( e.g. natural gas or electricity), or by the occurrence of natural disasters, extreme weather conditions, or geopolitical circumstances such as the conflict between Russia and Ukraine. By way of illustration, as of December 31, 2021, the Group’s irrevocable purchase commitments relating to raw materials and energy represented €1.6 billion (see Note 5.5.1 to the consolidated financial statements, Chapter 8, Section 1). In the current context of accelerating energy cost inflation, Saint-Gobain has stated that it expects its energy and raw material costs to increase by around €1.5 billion in 2021 compared to 2020 (compared to a previous annual estimate made at the end of July 2021 of €1.1 billion), of which €1.1 billion for the second half of 2021 alone. This increase in inflation mainly concerns the cost of energy in Europe, where the Group has hedges for natural gas and electricity, up to 50% in the fourth quarter of 2021, 65% in 2022 and 25% in 2023, at prices slightly higher than in 2020. Risks related to the supply of energy and raw materials and changes in the cost of energy and raw materials 1.1.5

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