Societe Generale : Climate Disclosure Report - December 2021

CLIMATE DISCLOSURE

Societe Generale's climate report aligned with the TCFD recommendations

Third Edition - December 2021

FOREWORD BY FRÉDÉRIC OUDÉA

FRÉDÉRIC OUDÉA

CHIEF EXECUTIVE OFFICER

In 2021, more than 450 companies representing 40% of the world's financial assets came together in the Glasgow Financial Alliance for Net Zero (GFANZ). These institutions have collectively committed to align with net zero carbon emissions trajectories using science-based guidelines. This is a pivotal decision for the transition of the financial system to supporting a more responsible future.

For Societe Generale, pioneering science-based approaches and alliances to achieve the objectives of the Paris Agreement is part of our convictions. Hence, it felt natural to contribute to join as a founding member the Net Zero Banking Alliance (NZBA) and as a member the Net Zero Asset Owner Alliance (NZAOA), both belonging to the GFANZ.

Our world calls for change, for evolution, by placing the challenges of sustainable development as drivers of the transformations of our economies and societies. The Covid-19 pandemic has further accelerated the necessary reinvention of our business models, with rising expectations by stakeholders notably on climate commitments.

As one of the leading European financial services groups, based on a diversified and integrated banking model, the Group combines financial strength and proven expertise in innovation with a strategy of sustainable growth. The restatement of our purpose was an opportunity to allow us to put our responsibility, including our climate and environmental considerations, at the heart of our long-term vision. Committed to the positive transformations of the world's societies and economies, Societe Generale and its teams seek to build, day after day, together with its clients, a better and sustainable future through responsible and innovative financial solutions.

As a reference bank in the energy sector, Societe Generale will be a natural leader of the energy transition. We have committed to align our credit and investment portfolios with trajectories aiming for carbon neutrality by 2050, starting with highly carbon emissive sectors, as we did for the coal sector, and will support our clients in their transition. We will keep on working on defining alignment trajectories in industries such as real estate, automotive, steel and aviation. In all our activities - retail banking, corporate & investment banking, insurance or car leasing and fleet management - we are developing positive impact solutions in advisory, financing or investing services.

2021 was a time for action. We have strengthened our policies to no longer finance activities involving the exploration and production of unconventional hydrocarbons. And we are now engaged to halving our own operations carbon emissions between 2019 and 2030.

The group has decided in 2021 to further intensify its efforts to embed ESG objectives throughout the organisation and to become ESG by design.

The collective challenge of the energy transition is finding the appropriate rhythm according to the reality of the different geographies and sectors, taking social impact into account. As an institution involved in economies and societies, Societe Generale has a responsibility to support their transformation. Our 2021 Climate Disclosure report is illustrating our commitment to building a better and sustainable future.

TABLE OF CONTENTS

INTRODUCTION ...........................................................................................................	4
1.	CLIMATE STRATEGY ...........................................................................................	4
	1.1. Societe Generale's climate materiality at a glance...................................................................	5
	1.2.	Societe Generale's climate strategy .........................................................................................	6
	1.3. Assessing the resilience of the Bank's strategy with scenario analysis...................................	11
2.	GOVERNANCE.....................................................................................................	13
	2.1.	Role of governance bodies .....................................................................................................	13
	2.2. Key policies and due diligence processes related to climate mitigation ................................	15
	2.3. Business Units and Service Units' roles ..................................................................................	15
	2.4. Training and access to expertise on climate-related issues ...................................................	16
	2.5. Remuneration linked to the Group's climate-related performance .......................................	17
3.	MANAGING CLIMATE RISKS.............................................................................	18
	3.1.	Climate-related risk terminology ...........................................................................................	19
	3.2. Integration of climate-related risks into the standard risk assessment framework ...............	20
	3.3. Processes and tools for identifying and managing climate-related risks ...............................	24
	3.4.	Participation to stress testing exercises .................................................................................	32
4.	MANAGING CLIMATE IMPACT ........................................................................	33
	4.1.	Own operations......................................................................................................................	33
	4.2. Business activities (via the products and services offered to customers) ...............................	35
5.	SUPPORTING THE SUSTAINABLE DEVELOPMENT OF OUR CLIENTS.....	40
	5.1.	Climate-related opportunities identified................................................................................	41
	5.2.	Sustainable and positive impact financing ............................................................................	41
	5.3.	Sustainable & responsible investing.......................................................................................	43
	5.4. Strategic advisory & business development...........................................................................	44
6.	METRICS AND TARGETS ..................................................................................	46
	6.1.	Managing climate-related risks ..............................................................................................	46
	6.2.	Managing impacts ..................................................................................................................	47
	6.3.	Managing climate-related opportunities................................................................................	51
APPENDIX 1 ................................................................................................................	54

INTRODUCTION

Climate change is accelerating, and urgent and unprecedented changes are needed more than ever. The summer of 2021 saw extreme heat events in north-western US and Canada, rainfall and flooding in Germany, wildfires in Russian Siberia and other extreme events across the world. As illustrated by the 6th assessment report of the Intergovernmental Panel on Climate Change (IPCC), the world needs urgent, global and coordinated action to contain the now inevitable global warming.

Societe Generale has been engaged in the fight against climate change for many years now. And the Bank remains committed to support an extensive shift towards a decarbonised and more resilient economy.

In this third edition of Societe Generale's Climate Disclosure report, the Group highlights efforts made not only to manage the financial impact of climate change on its activities, but also the impact of its activities on climate change. The Group's governance, strategy, risk management framework and key performance indicators have been complemented and improved up until the publication of this report.

The Climate Disclosure report is an ongoing document. That means that qualitative information is up to date as of the publication date of this report. But quantitative indicators are calculated for the period running from 1 January 2020 to 31 December 2020, with data taken on 31 December 2020, unless otherwise specified.

Societe Generale's Climate Disclosure report is based on the Task Force for Climate-related Disclosure (TCFD)1 recommendations and its four pillars (governance, strategy, risk management, metrics and targets).

1. CLIMATE STRATEGY

Societe Generale defined its corporate purpose in 2020 as "building together, with our clients, a better and sustainable future through responsible and innovative financial solutions". This purpose, which was valided by the General Management and approved by the Board, came out of an extensive work and co-construction with 85,000 contributions from a variety of stakeholders and steers the Group's strategic reflection. Sustainability is at the core of the Group's strategy and fighting against climate change is one of its key elements. The climate strategy is articulated around three axes:

• Managing climate-related risks (transition and physical);
• Managing the Group's impact on climate (via its own operations and the offer of financial products and services to customers);
• Supporting the transformation of its customers with its financing as well as investment products and services.

In this third edition, the Group's climate strategy and its commitments are presented against a granular mapping of its activities. This mapping illustrates how Societe Generale's financing activities and investment activities represent the bulk of the Group's climate materiality. This edition also offers disclosure on the Group's public commitments.

"Societe Generale has been committed to limiting global warming since the Paris Agreement and joined in April 2021 the Net Zero Banking Alliance as a founding member. In 2021, as a demonstration of the central role of CSR in the Group's strategy, Societe Generale has decided to appoint Hacina Py as Group Chief Sustainability Officer, reporting directly to General Management. Becoming ESG by design means ESG is embedded in all our business activities and processes, in particular in managing social and environmental risks. As a responsible bank we will continue playing our part in accompanying our clients and societies in the transition towards a sustainable and fair economy"

DIONY LEBOT

1https://www.fsb-tcfd.org/

DEPUTY CEO

Figure 1: Overview of Societe Generale's climate strategy

MANAGING		MANAGING
CLIMATE RISKS		CLIMATE IMPACTS
Using climate scenarios to		Managing direct impact
monitor climate risk on credit,		Internal carbon tax on our own
market and operational risks		operations
Monitoring climate-related risk		Managing indirect impact
impact on reputation risk		Aligning our activities
using E&S standards		(financing and investment)
		with the goals of the Paris
		Agreement

FINANCING THE TRANSITION TOWARDS A LOW- CARBON ECONOMY

Sustainable & positive impact solutions to support clients

CONNECTED TO OUR STAKEHOLDERS

Customers, employees, investors and shareholders, the regulators and supervisors, media, financial

and non-financial rating agencies, civil society

ESG BY DESIGN & ESG ANALYTICS

Support the operational implementation of ESG and E&S risk management, and develop ESG

reporting, metrics and data production

CLIMATE DISCLOSURE & CULTURE

TCFD reporting and developing a shared responsibility culture in the organisation

1.1. Societe Generale's climate materiality at a glance

Societe Generale is one of the leading European financial services groups. Active in the real economy since 1864 with a solid position in Europe and connected to the rest of the world, Societe Generale employs over 133,000 employees in 61 countries and supports daily 30 million customers, businesses, and institutional investors around the world as of December 2020.

Figure 2 maps out the impacts of Societe Generale's own operations and business activities (via the offer of financial products and services to customers). It illustrates that the Group has a good degree of influence in reducing the impact on its own operations, but that influence diminishes depending on the type of business activities involved (e.g., the Group has more influence on its credit products than on market activities).