04 Sustainability Statement Workers in the value chain (S2) Impacts, Risks and Opportunities (IROs) Brief description Upstream value chain Downstream value chain Own operations Short-term Medium-term Long-term S2 – WORKERS IN THE VALUE CHAIN Human rights Violation of the rights of workers in the value chain, including child labor, forced labor and illegal labor practices Forced labor, child labor and illegal labor practices are risks in agricultural supply chains, including in the natural rubber industry. Negative impact Introduction The risk of forced labor, child labor and other human rights violations could have a negative impact on workers in the Group’s upstream value chain. Michelin has relationships with around 35,000 direct suppliers. The process of managing the related risks is based on the findings of an accountability assessment that measured the number and size of suppliers at each link in the value chain, Michelin’s weighting in the chain, and the human rights issues and risks in its component channels. The findings showed that the natural rubber value chain, with its laborintensive farming activities and broad geographical footprint, is the most exposed to the negative impact. Forced labor, for example, is particularly widespread in farm commodity supply chains, while rubber plantations are located in countries at risk of forced or child labor, such as Southeast Asia or West Africa, and are very labor-intensive. Although rubber-tree farming is relatively unaffected by child labor compared with other crops, some reports have noted the high risk of exploitation of migrant and other workers in natural rubberproducing countries. As a result, the Group is particularly alert to the risk of forced and child labor, especially since the tire industry accounts for around 70% of the global natural rubber market. The Group’s Duty of Care Plan also deals in depth with the management of these risks. 4.9.1 A VALUE CHAIN STRATEGY FOCUSED PRIMARILY ON NATURAL RUBBER SOURCING Natural rubber is a critical raw material in tire manufacturing. Harvesting is labor-intensive and the trees can be farmed only in tropical regions, in countries at risk of human rights violations. To date, there is no financially viable substitute for natural rubber. Rubber-tree farming requires a very large workforce, totaling some six million farmers worldwide. Of these, village smallholders produce 85% of the world’s output on small farms generally covering fewer than four hectares. The remaining 15% is supplied by large plantations or estates. The other raw materials required for tire production, such as synthetic rubber, reinforcing agents (like carbon black), metal and textile reinforcements and chemicals, are primarily sourced from the oil, chemical and steel industries whose workforces are much smaller and generally skilled. This means that the risk of forced labor is higher in the natural rubber supply chain. In addition, natural rubber accounts for around a quarter of the Group’s purchased inputs. For these reasons, this is where the Group has focused its efforts. Although Michelin directly or through joint ventures owns a small number of plantations, the vast majority of its natural rubber is supplied by external farms. Most value chain workers likely to be concerned by the risk of forced labor would therefore be found among people working for entities in the upstream value chain, with migrant workers being particularly vulnerable. Most of the world’s rubber-tree farms are located in Southeast Asia, West Africa and, to a lesser extent, Brazil. Upstream Downstream OP Upstream 273 2024 UNIVERSAL REGISTRATION DOCUMENT_MICHELIN
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