Universal Registration Document 2021

c) Control actions

The following actions are in line with the Group’s raison d’être and its CSR commitments, responding to the needs of its customers and stakeholders :

• continued development and deployment of low-carbon solutions: supply and services, particularly for energy efficiency and decarbonisation of uses, low-carbon electricity generation, storage solutions, low-carbon hydrogen projects, flexibility solutions, with a view to sustainable development and proximity to customers and regions. This development concerns France, the “core” countries in Europe (United Kingdom, Italy, Belgium) and the other countries where the Group is present, in accordance with the CAP 2030 strategy. This strategy combines the search for growth drivers with the promotion of existing assets. The strategy and drivers of the Group’s transformation are described in section 1.3 “Group strategy and objectives”;
• in particular, the Solar Plan, the Electric Storage Plan, the Electric Mobility Plan and the Excell plan are major levers for developing and expanding the range of low-carbon energy solutions offered by the Group in addition to the generation plants already widely available within the Group, particularly wind, solar, hydro and nuclear power (see section 1.4.1.1.1);
• implementation of development, adaptation and transformation programmes and performance plans. These programmes may be complemented by a strategic analysis of assets which may itself lead to a requirement for additional financial agility, giving rise to disposals or acquisitions (see section 1.2.3 “Significant events of the year”);
• actions to mobilise work groups through transformation projects, including in particular the “work differently, manage differently” project within EDF.

3B – Adaptation to climate change: physical and transition risks

 According to the breakdown proposed by the TCFD (Task Force on Climate-Related Financial Disclosures), with which EDF complies (see section 3.1.3.2.1 “The EDF group and the TCFD”), climate change risks are structured into two parts: risks of not adapting to the physical effects of climate change (so-called “physical risks”), and risks induced by the transition to a low-carbon economy (so-called “transition risks”).

a) Main physical risks

The EDF group’s facilities are closely tied to water, wind and solar resources. The overall reliability of the electricity system depends on the resilience of the generation facilities and network infrastructure to climate change, whether it be chronic effects or an increase in the frequency and intensity of extreme weather events.

Extreme risks can potentially affect the safety and security of facilities and network infrastructure or generation. Chronic risks can potentially have consequences on the generation and the environment as well as on network capacities. These consequences can also lead to risks related to water resources (resource conflicts).

Due to this climate sensitivity and taking into account the many uncertainties associated with the effects of climate change, despite the control actions undertaken, climate change could have an adverse impact on the Group’s business continuity, operating performance, balance sheet and financial results.

b) Control actions for physical risks

• Periodic reviews are carried out on nuclear and hydraulic facilities, incorporating both feedback and climate change projections; this is a key cornerstone of the robustness of the facilities.
• As per the Group CSR policy, to address these risks, the operating entities regularly update their climate change adaptation plans, based whenever possible on IPCC scenarios, in order to review the measures taken and to be taken. To this end, a guide to implementing adaptation plans is available to the Group’s entities. These adaptation plans are particularly strong for nuclear entities in France and the United Kingdom, and hydraulic and island entities.
• Since the 1990s, the EDF group has been building up specific R&D expertise on climate change issues and invested in collaborative academic research projects to support these actions.
• The Group carries out numerous monitoring and anticipation actions on extreme and chronic effects so as to update its adaptation plans as much as necessary, both for production facilities and infrastructures, as well as to anticipate the consequences on the supply-demand balance.
• The Group coordinates internally and with external stakeholders on water uses.
• In connection with climate change and its potential consequences in terms of external threats (temperature, flooding, storms, etc.), a programme called ADAPT has been set up in France for the Group’s nuclear and thermal generation facilities in order to ensure the resilience of these industrial tools over time.
• The Group regularly renews or takes out specific insurance covers, even if this could prove increasingly difficult or expensive due to the impact, frequency and magnitude of natural disasters experienced in recent years.

c) Main transition risks

The Group’s long-term strategic directions are in line with the transition to a low-carbon economy. The EDF group’s raison d’être, adopted in May 2020, centres on the objective of “building a CO2-neutral energy future”. The majority of the Group’s investments are directed towards this low-carbon climate strategy (see section 3.1.1.4 “Roadmap for increasing the Group’s decarbonised production”).

In this seemingly favourable and promising context, there are several significant transition risks.

• this opportunity could be stalled by the external, societal, competitive, social, economic or industrial context. In particular, nuclear energy may not be recognised at the societal level as a key factor in enabling the low-carbon transition. For example:
  
  • the standards or taxonomies currently being put in place to recognise decarbonised energies could include criteria that would adversely affect nuclear energy, which would constitute a very significant risk for EDF and more generally for the achievement of national and European emission reduction objectives. In this respect, there is still a risk that decarbonised nuclear electricity will not be sufficiently recognised due to its classification as a transitional energy by the European taxonomy, with potential consequences for access to financing for new projects. This topic of European taxonomy is developed in risk No. 1A above “Political and legal risks”,
  • In France, in connection with the preparation of the 2019-2028 Multi-Year Energy Programme, the French government asked for a review of several scenarios between 2030 and 2050 “ranging from a 100% renewable scenario to one in which nuclear power remains a sustainable source of electricity generation integrated into the mix for reasons of production management and competitiveness”;
• achieving the objectives of reducing emissions and, more generally, ensuring the success of the Group’s low-carbon strategy depend primarily on the successful shutdown or adaptation of fossil fuel power plants and the accelerated development of renewable generation resources to complement nuclear and hydroelectric generation;