04 Sustainability Statement General information 4.1.2.5 Risk management and internal controls over sustainability reporting Non-financial reporting has been an integral part of the Group’s risk management system since 2022 (see Chapter 3 on risk management in this document). The main milestones in the integration process were as follows: n creation in 2022 of a Sustainable Finance Governance Committee, chaired by the General Manager; n two internal audits commissioned by the General Manager and performed in 2022 and 2023 to assess the reliability of the non-financial reporting process, which led to the roll-out of two action plans; n addition of the risk “inaccurate or unfair reporting of nonfinancial data” to the Group’s risk database in 2023, making it an integral part of the risk management system; n deployment in 2024 of an internal control system for the downstream phases in the non-financial reporting exercise. In addition, the corporate risk management team has been involved in the CSRD project, helping to prepare double materiality assessments, define KPIs and their scope, and structure the internal control process. The first internal audit, performed in 2022, charted a prioritization matrix for non-financial indicators on two axes – sustainability matter and vulnerability – at each stage in the reporting process (definition, scope, capture, collection, control, consolidation and disclosure). Since then, all the metrics disclosed by the Group have been mapped, thereby enabling the team to: n target which of the high and very high risk and/or vulnerability metrics to audit in 2022 and 2023; n prioritize the initial stages in the internal control process. To mitigate the risks identified in the internal audits, a variety of action plans were undertaken to provide quality assurance for the reporting of quantitative and qualitative metrics, zero-base and re-equip the reporting process, inventory and identify materiality in every subsidiary, and design the internal control process. The fundamentals and control of sustainability data are now an integral part of the Group's internal control exercise. As described in Chapter 3 of this document, internal control is performed through self-assessments (first line of defense) and testing (second line of defense), which may identify cases of noncompliance. If so, within three months, corrective action plans are deployed under the leadership of line managers, with their alignment and outcomes validated by the Internal Control teams. Their effectiveness is measured the following year, using the internal control action plan performance metric. For the first year’s exercise, self-assessments were organized in association with the managers of the relevant data and internal controllers, to determine a shared baseline and to prepare the corrective action plans required to eliminate any cases of noncompliance. The findings of the 2022 and 2023 audits were presented to the Supervisory Board’s Audit Committee and their action plan outcomes were assessed and presented to the Audit Committee in July 2024. Every year, the preceding year’s internal control results and outcomes of the related action plans are presented to the Audit Committee in April. Lastly, note that the material matters identified in the 2024 double materiality assessment have been analyzed to identify gaps with the portfolio of risks and impacts tracked in the Group risk management system, thereby guaranteeing the comprehensive, seamless alignment between the two processes. 179 2024 UNIVERSAL REGISTRATION DOCUMENT_MICHELIN
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