04 Sustainability Statement Climate change (E1) 4.2.6 RESILIENCE OF THE STRATEGY The Group has prepared four climate change/societal scenarios for how its business environment could evolve under the impact of climate change and the policies likely to emerge as a result. Each scenario is described by: n a qualitative narrative built around both planetary boundaries and a range of desirable and undesirable, complex and paradoxical factors, covering political, technological, socioeconomic and legal/regulatory issues; n quantitative Kaya identity metrics(1) and a set of public metrics representative of each scenario that enable identifying their implications and assessing their materiality over time; n forward-looking scenarios mapped against IPCC warming scenarios, from the best to the worst case; n a global map displaying the scenario or blend of scenarios deemed most likely for each country. In recent years, the scenarios have been used by the business lines and operating units for strategic planning and/or innovation purposes. In 2021, the Group Executive Committee reassessed the resilience of the Group’s strategy in light of the four scenarios and came to the following conclusions: n strategic fundamentals are validated in every scenario; n regardless of the scenario, connectivity and outside partnerships will play an important role; n trends in vehicle fleets, urban mobility, micro-mobility and intermobility will have a favorable impact; n environmental degradation will have adverse knock-on effects. For example, climate change may harm biodiversity, which in turn could pose a risk to rubber tree farming, which could then have an impact on Michelin’s natural rubber procurement; n there are several innovation priorities, including the development of end-of-life tire management solutions and the adaptation of products, services and operations to higher temperatures; n there are benefits in continuing to develop CO2 emissions reduction solutions for the Group’s customers and upgrade operations across the value chain to manage physical and transition risks more effectively; n climate scenarios should continue to be analyzed and the five-year strategic plan adjusted accordingly. The Group Executive Committee has decided to reassess the Group’s strategy in light of these scenarios at least every three years. Initiated in 2024 with the Strategy, Sustainable Development and Strategic Anticipation Departments, the latest exercise supplemented the forward-looking scenarios with a variety of shocks – social, environmental, legislative, resource depletion. The shocks helped to identify the risks and opportunities for the Group in each scenario and to design proactive responses. The Group is currently reviewing the reassessment, which is based on the following new assumptions: n the coexistence of four CO2 pathways over the coming decades in the different countries of the world; n a closer look at the key decade from 2024 to 2035; n consideration of environmental issues other than climate change (resource depletion, degradation of biodiversity, impact of various forms of pollution). (1) For a discussion of the Kaya identity in French, see enseignementsup-recherche.gouv.fr | Ressource pédagogique : 8. L'équation de Kaya. 203 2024 UNIVERSAL REGISTRATION DOCUMENT_MICHELIN
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