Michelin : Response to CDP Climate Change questionnaire 2020

Michelin - Climate Change 2020

C0. Introduction

C0.1

(C0.1) Give a general description and introduction to your organization.

Since 1889, Michelin has constantly innovated to facilitate the mobility of people and goods. Today, the Group is setting the standard across every tire and travel-related services market, while leading a global strategy to drive responsible, sustainable and profitable growth. In short, Michelin is making mobility safer, cleaner, more connected and more accessible. Michelin enjoys exceptional geographic coverage and is stepping up its deployment in emerging markets. Currently operating in 26 countries at 117 production facilities and 9 research centers, and 7,600 dealerships and service centers in 30 countries. Michelin employs a total of 127,187 people worldwide. Net sales in 2019 were €24 billion. Michelin holds forefront positions in every segment of the tire market. Associated brands and services also include dealerships and service centers (Euromaster,TBC, TyrePlus), online retailing (Allopneus, Blackcircles), wholesalers (Euromaster and Ihle AG), truck driver assistance services (Michelin Euro Assist), fleet tire advice, maintenance and management services (Michelin fleet solutions in Europe and Michelin Business Solutions in North America), Michelin Travel Partner (maps and guides, ViaMichelin mobility assistance services) and Michelin Lifestyle products. In 2018 The Group expands its range of mining solutions and steps up growth in high-tech materials by acquiring Fenner PLC, a specialty manufacturer of conveyor belts and reinforced polymer products. Michelin strengthens its Specialty Businesses with the acquisition of Camso, a global leader in off-the-road mobility (farming, materials handling and construction industries). In 2019 Michelin acquires the leading Indonesian tire manufacturer Multistrada strengthening its presence in the Indonesian market. The Group also acquires Masternaut, stepping up the deployment of its telematics solutions across Europe. Faurecia and Michelin signed a joint venture that leads to the creation of SYMBIO, A FAURECIA MICHELIN HYDROGEN COMPANY, that will develop, produce and market hydrogen fuel cell systems for light vehicles, commercial vehicles, trucks and other applications.

Inspired by its founders, Michelin is dedicated to enhancing mobility through innovation and quality, by basing its development on the core values of Respect for Customers, Respect for People, Respect for Shareholders, Respect for the Environment and Respect for Facts. Our sustainable development approach, embodied in the 2002 Michelin Performance and Responsibility Charter, structures this corporate culture and coordinates our commitment to the principles of sustainable, balanced, responsible growth.

C0.2

(C0.2) State the start and end date of the year for which you are reporting data.

	Start date	End date	Indicate if you are providing emissions data for past reporting	Select the number of past reporting years you will be providing emissions data
			years	for
Reporting	January 1	December 31	No
year	2019	2019

C0.3

(C0.3) Select the countries/areas for which you will be supplying data.

Brazil

Canada

China

France

Germany

Hungary

India

Italy

Japan

Mexico

Poland

Romania

Russian Federation

Serbia

Spain

Thailand

United Kingdom of Great Britain and Northern Ireland

United States of America

C0.4

(C0.4) Select the currency used for all financial information disclosed throughout your response.

EUR

C0.5

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(C0.5) Select the option that describes the reporting boundary for which climate-related impacts on your business are being reported. Note that this option should align with your chosen approach for consolidating your GHG inventory.

Financial control

C1. Governance

C1.1

(C1.1) Is there board-level oversight of climate-related issues within your organization?

Yes

C1.1a

(C1.1a) Identify the position(s) (do not include any names) of the individual(s) on the board with responsibility for climate-related issues.

Position of	Please explain
individual(s)
Board-level	The Group Executive Committee (GEC) and the extended GEC known as the Group Management Committee (GMC) are the two, management board-level committees responsible for climate-related
committee	issues. The GEC includes the two general managers (the CEO and the Partner and Chief Financial Officer) and eight executive vice presidents (EVP Research & Development, EVP Engagement
	and Brands, EVP Manufacturing, EVP Automotive, Motorsport, Experiences, and Americas Regions, EVP Specialties and Africa/India/Middle East, China, East Asia & Australia Regions, EVP Chief
	HR Officer, EVP Services & Solutions, High Tech Materials, and EVP Road Transportation and European Regions). The GMC is comprised of the full GEC and the heads of the following entities:
	Strategy, Purchasing, Corporate Business Services, Finance, Legal Affairs, Quality, Audit, Internal Control and Risk Management, Supply Chain, Information Systems, and the China and North
	America Regions. The GEC focuses on strategic issues and decisions, such as corporate transformations, the business model, acquisitions, performance, brand strategy, sustainable growth and risk
	management. As such it oversees climate-related risks and opportunities through the annual strategic planning process for business units and operations. The GMC cross-functionally manages
	transformation, competitiveness, integration of acquisitions and the internal control, quality and risk management processes. It forms a panel of business units and regions to ensure that its decisions
	are widely embraced across the organization. As such it oversees climate-related risks through a dedicated process of risk management. It also tracks climate-related progress in operations and in
	external engagement on sustainable mobility at dedicated meetings led by the chief sustainability officer, held twice a year. These meetings ensure that all climate-change related issues overseen by
	two GEC sub groups -- Environment Governance body and the Sustainable Mobility Committee -- are reviewed at the highest level of the company. The GEC, and its extension as the GMC, is
	therefore responsible for overseeing assessment and management of risks and opportunities related to climate change for Michelin and its subsidiaries.

C1.1b

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(C1.1b) Provide further details on the board's oversight of climate-related issues.

Frequency	Governance	Scope of	Please explain
with	mechanisms	board-
which	into which	level
climate-	climate-	oversight
related	related
issues are	issues are
a	integrated
scheduled
agenda
item
Scheduled	Reviewing	<>	Reviewing and guiding strategy: The Group Management Committee (GMC), which brings together the Group Executive Committee and the heads of Strategy, Purchasing,
- some	and guiding	Applicabl	Corporate Business Services, Finance, Legal Affairs, Quality, Audit, Internal Control and Risk Management, Supply Chain, Information Systems, and the China and North
meetings	strategy	e>	America Regions, reviews all strategic actions related to climate change. To do this, it conducts a biannual review, organized by the corporate sustainability officer, of
	Monitoring		decisions made and issues handled by the Environment Governance body. This review enables the GMC to verify that steady progress is being made towards short-,
	and		medium- and long-term CO2 reduction targets and validate the strategic objectives for major climate-related issues and risks and their internal control. Monitoring and
	overseeing		overseeing progress against goals and targets for addressing climate-related issues: Twice yearly the GMC regularly reviews the indicators monitored by the Environment
	progress		Governance body, which include 2 KPIs on reducing Scope 1&2 and Scope 3 CO2 emissions, respectively, and reduction of resource consumption in both manufacturing
	against goals		and in tire design. As such, it decides on whether adjustments to targets or resources are required.
	and targets
	for
	addressing
	climate-
	related
	issues
Scheduled	Reviewing	<>	Reviewing and guiding business plans: The Group Executive Committee (GEC) conducts an annual review of how the business units' and corporate support functions'
- some	and guiding	Applicabl	strategic plans are integrating sustainability actions, including opportunities related to climate change, in their product and service offers and operating plans, respectively.
meetings	business	e>	This review, prepared jointly by the sustainability and corporate strategy departments, is based on the 4 pillars of the World Bank initiative "Sustainable Mobility for All"
	plans		(SuM4All): green mobility (cutting CO2 emissions and improving energy efficiency of transport systems), as well as efficiency, safety and universal access. The review
			focuses on the level of expectations of customers across market segments regarding each SuM4All pillar. The review also analyzes the positioning of Michelin's offers
			considering these expectations and highlights changes that are needed to develop opportunities and manage risks related to "green mobility". It allows for the GEC to
			provide the necessary guidance and directives on further developing opportunities and managing risks related to climate change.
Other,	Reviewing	<>	Setting performance objectives: Once a year the GMC reviews the indicators monitored by the Environment Governance body. As of 2018, these indicators include climate-
please	and guiding	Applicabl	change related objectives for emissions mitigation in manufacturing and product use as well as reducing resource consumption in both manufacturing and in product (tire)
specify	risk	e>	design. Overseeing major capital expenditures, acquisitions and divestitures: All major decisions on Capex and mergers/acquisitions/divestitures are overseen by the GEC in
(Annually)	management		dedicated meetings either at the conclusion of the annual strategic planning process, which covers all divisions and activities, or at dedicated ad hoc meetings. The decisions
	policies		are supported by information on 1) new business models and ventures in line with the Group growth strategy (energy-efficient & long-lasting tires, mobility services and
	Setting		solutions, mobility experiences, advanced materials) provided by business units and/or the activities carried out under the Corporate Innovation Board, and 2) CO2 mitigation
	performance		opportunities for own operations, provided by the Environmental Governance body. Reviewing and guiding risk management policies: The corporate risk management
	objectives		framework and the annual risk map are reviewed by the GMC. Climate-related risks policies are not reviewed in and of themselves but rather as factors that could impact 7
	Overseeing		different risk families in the risk map.
	major capital
	expenditures,
	acquisitions
	and
	divestitures

C1.2

(C1.2) Provide the highest management-level position(s) or committee(s) with responsibility for climate-related issues.

Name of the position(s) and/or committee(s)	Reporting	Responsibility	Coverage of	Frequency of reporting to the board on
	line		responsibility	climate-related issues
Chief Executive Officer (CEO)	<>	Both assessing and managing climate-related risks and		Quarterly
	Applicable>	opportunities
Other C-Suite Officer, please specify (Executive vice president of	<>	Both assessing and managing climate-related risks and		Quarterly
manufacturing operations)	Applicable>	opportunities
Other C-Suite Officer, please specify (Executive vice president of	<>	Both assessing and managing climate-related risks and		Quarterly
Research & Development)	Applicable>	opportunities
Other C-Suite Officer, please specify (Executive vice president of	<>	Both assessing and managing climate-related risks and		Quarterly
Engagement and Brands)	Applicable>	opportunities
Chief Risks Officer (CRO)	<>	Other, please specify (Assessing and managing climate-		Quarterly
	Applicable>	related risks)
Other C-Suite Officer, please specify (Chief Strategy Officer )	<>	Other, please specify (Assessing and managing climate-		Quarterly
	Applicable>	related opportunities)

C1.2a

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(C1.2a) Describe where in the organizational structure this/these position(s) and/or committees lie, what their associated responsibilities are, and how climate- related issues are monitored (do not include the names of individuals).

The positions of executive VP of manufacturing and executive VP of research and development, both members of the Group Executive Committee (GEC, or management board), serve as co-chairs of the Environment Governance body, which operates as a sub-group of the GEC, and as such they are empowered to make decisions for the GEC as a whole. Meeting twice a year at a minimum, the Environment Governance body oversees all climate-related issues impacting operations. They are assisted by the members of the Environment Governance body: chief procurement officer, chief risk officer, corporate EHS manager, chief sustainability officer, 2 vice-presidents of research and development, vice president of the advanced materials division, and norms and regulations manager. The 2 executive vice president chairs, supported by the transverse expertise of the members, jointly monitor climate-related issues with a focus on assessing their potential impacts to internal operations - manufacturing, marketing & sales of products and services, logistics and purchasing - and strategy for research and development. They are supported by several standing work groups that analyze and make recommendations on strategic issues related to energy use, carbon pricing, mitigation, adaptation, and current and future objectives, among others. Lastly, the Environment Governance body is particularly suited to bottom-up identification of emerging risk factors and analyzing their impacts over the short-, medium- and long-term. All major decisions on climate-related risks, opportunities and investments impacting operations that are not made by the GMC are made at this governance level. This approach ensures that major decisions are made at the highest level of the company with the relevant divisions and activities of the Group represented.

The positions of CEO and executive VP of engagement and brands, both members of the GEC, serve as co-chairs of theSustainable Mobility Committee, which operates as a sub-group of the GEC, and as such they are empowered to make decisions for the GEC as a whole. Meeting twice a year, the Sustainable Mobility Committee oversees the strategy for external engagement on sustainable mobility, in general, and decarbonizing transport, in particular. The latter is the most material climate change issue for Michelin. They are assisted by the chief sustainability officer and vice president of strategic anticipation and ecosystemic innovation. This committee jointly monitors climate-related issues with a focus on identifying and developing external partnerships and relations covering a diverse set of mobility ecosystems that are working on 2 fronts: 1) accelerating the systemic transformation of mobility into a "net zero emissions" system before 2050; and 2) actively putting in place new approaches to low-carbon and lower impact mobility. They are supported by internal experts representing Michelin in public-private sustainable mobility initiatives (Transport Decarbonization Alliance, Action towards Climate friendly Transport, SuM4All, International Transport Forum, WBCSD/Transforming Mobility) and internal experts involved in Michelin-developed ecosystems for sustainable mobility (Movin'on Sustainable Mobility Summit, Movin'on LABS). In addition, the CEO is actively involved in several of these initiatives, and the executive VP of engagement and brands monitors climate-related issues by directly supervising the sustainability, public affairs, norms and regulations departments who closely follow external developments. While the Sustainable Mobility Committee is more focused on identifying, developing and monitoring opportunities, it does allow for external risk factors to be identified. In conclusion, all major decisions on climate-related risks, opportunities and investments impacting external engagement on decarbonizing the transport sector and sustainable mobility ecosystems that are not made by the GMC are made within this high-level committee. This approach ensures that major decisions are made at the highest level of the company with the relevant divisions and activities of the Group consulted.

To ensure that decisions by the Environment Governance body and the Sustainable Mobility Committee are widely embraced across the organization, a biannual review is presented to the Group Management Committee (extended GEC) by the chief sustainability officer.

The chief risk officer reports to the GMC on climate-related risks.

The chief strategy officer runs the annual strategic planning process overseen by the GEC that focuses primarily on climate-related opportunities of business units' products and services offers.

C1.3

(C1.3) Do you provide incentives for the management of climate-related issues, including the attainment of targets?

	Provide incentives for the management of climate-related issues	Comment
Row 1	Yes

C1.3a

(C1.3a) Provide further details on the incentives provided for the management of climate-related issues (do not include the names of individuals).

Entitled to	Type of	Activity	Comment
incentive	incentive	inventivized
Chief Executive	Monetary	Emissions	A portion (15%) of the CEO's long-term incentive bonus is indexed on Michelin's Environmental Footprint (MEF) composite indicator. Energy consumption and CO2
Officer (CEO)	reward	reduction	emissions targets are part of this indicator. The 3-year average of this composite indicator must be below a defined threshold for the monetary reward to be triggered.
		target
Other, please	Monetary	Efficiency	Attainment of key milestones for tire development projects involving improvement of tire energy efficiency. An individual performance bonus takes into account progress
specify (R&D	reward	project	made through tire development projects: measured by passing key project milestones which assesses a new tire's energy efficiency and carbon footprint in addition to
employees and			safety and long lasting performance. Tire fuel efficiency as measured by rolling resistance is one of several tire performance indicators that drive product design and is
managers)			measured by the Michelin Total Performance (MTP) KPI.
Management	Monetary	Emissions	A group of managers covering environment, energy use and energy purchasing are evaluated at year-end on their performance in steering the implementation of energy
group	reward	reduction	and CO2 reduction targets and projects.
		project

C2. Risks and opportunities

C2.1

(C2.1) Does your organization have a process for identifying, assessing, and responding to climate-related risks and opportunities?

Yes

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