27 - 2020 INTEGRATED REPORT VISION AND STRATEGY A SYSTEM CONSTANTLY ADAPTED TO THE BUSINESS PRIORITIES Eco-design helps to control environmental risks Thales is committed to controlling cli- mate risk by seeking to anticipate changes in environmental standards by applying them to its products and services. In order to apply a sustai- nable approach, Thales is deploying a Group-wide eco-design policy that en- sures the consideration of environmen- tal issues throughout the life cycle of its innovations (limiting the use of mate- rials, reduction in size and mass, lower energy consumption, consideration of end-of-life and substitution of hazar- dous materials). In 2020, 44% of new products and systems incorporated eco-design and Thales has set itself the target of achieving 100% new eco- designed products by 2023. Further- more, Thales continues to develop solutions leading to a better understan- ding of environmental challenges. This approach also answers the need to create value for customers and to differentiate through innovation. Risk mapping Every year, Thales prepares and updates a map of the main risks to which the Group is exposed, regardless of their nature. This mapping is organised on the basis of a matrix of 19 risk factors. They break down into 56 independent, measurable risk scenarios, each attributed to a single line of responsibility. Thales also carries out thematic risk mapping, particularly regarding the prevention of corruption and influence peddling as well as cybersecurity. Finally, twice a year, the Group prepares a risk mapping by Global Business Unit and by Major Country, in addition to the risks already identified and managed by operational management. The operational managements concerned, the Quality Department and the Insurance Department are involved in this work. Audits INTERNAL The internal audit and advisory plan, updated on a half-yearly basis and approved by the Audit and Accounts Committee of the Board of Directors, draws from risk analysis as well as current issues (bids and projects, product policy, supply chain, etc.) in respect of which specific risk factors have been identified. Audits are also conducted regarding the prevention of corruption and influence peddling, export control, joint venture governance as well as the integration of newly acquired companies, within approximately 18 months after closing. Audit practices are regularly updated: by way of illustration, in 2019, for small entities recently acquired, a Welcome audit practice, focusing on compliance and internal control, was introduced; In addition, several audit practices were further strengthened in 2020 in terms of personal data protection and cybersecurity. In 2020, 51 internal audit assignments were conducted. EXTERNAL Two statutory audit firms are appointed by the Group, in addition to firms occasionally called upon locally. Their due diligence (in-depth reviews, limited reviews or statutory reviews) is scaled according to the size and risks to which Group companies may be exposed. Concerning the fight against corruption and influence peddling, as well as the actions carried out as part of the duty of vigilance, Thales carries out, with the support of specialist service providers, due diligence on third parties with which the Group is in contact, proportionate to the assessment of the risk identified. In particular, the internal anti-corruption mana- gement system was audited by AFNOR ( Asso- ciation Française de Normalisation ) in 2020. In March 2021, this assessment led to ISO 37001 certification for some of the Group’s activities. Clearly identified responsibilities 3 MAIN STRANDS OF RISK GOVERNANCE CORPORATE (6 functional departments) Governance and organisation of risks shared at Group level (cash flow, foreign exchange, insurance, etc.) Expertise 7 GLOBAL BUSINESS UNITS and their 30 business lines Risks related to major bids and projects, product policies, business strategy Entrepreneurship Operational 150 local operational ENTITIES Risks related to execution COVID-19 pandemic Faced with the unprecedented health crisis caused by the spread of the COVID-19 coronavirus, Thales has given complete priority to protecting the health of its employees and their families, its customers and the population at large. At the same time, the Group has restructured itself to ensure business continuity, for its civil and military customers whose activities are critical, particularly in the fight against the pandemic and its consequences. While the results for 2020 naturally reflect the Covid-19 crisis, the teams’ efforts around the world have demonstrated the Group’s human and economic resilience as well as its agility. V I S ION AND STRATE - I TE R T Compliance with laws, regulations and internal processes (Chorus 2.0)