Universal Registration Document 2022

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 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 decarbonisation of fossil fuel power plants and the accelerated development of renewable generation resources to complement nuclear and hydroelectric generation;
• in addition, new low-carbon energy solutions may induce new societal questions (intrusive new technologies, land rights-of-way, new conflicts related to the use of water or scarce resources, etc.);
• the publication in May 2021 of the International Energy Agency’s (IEA) Net Zero scenario sets 2040 as the new target for decarbonising the electricity sector by 100% (or even 2035 for developed countries). This target has been taken up by many players, including Eurelectric, investor coalitions (e.g. IIGCC) and SBTI in its new Net Zero standard published in October 2021, and has led EDF to re-examine its carbon trajectory and its 2020 commitments. This new situation carries risks for the Group: the risk of certain development projects being jeopardised, the risk of having to make commitments that are more difficult to keep, and the risk to the Company’s profitability (by relinquishing profitable activities); 
• the new European Directive on the reporting of non-financial data (the CSRD Directive, adopted in November 2022) sets the goal for all European companies to be aligned with the 1.5°C target and for attaining carbon neutrality by 2050. The fact that the EDF group has not yet received 1.5°C labelling by the SBTi organisation is liable to provoke misunderstanding among our stakeholders;
• new legislative or regulatory changes brought about by climate change could also have a negative impact on EDF’s business and lead to new legal or compliance risks;
• the Group may also have to deal with the emergence of new technologies or disruptive solutions that are part of the efforts to meet the transition objectives.

Such situations could make it more difficult to carry out these transformations and achieve the desired objectives. These situations could directly or indirectly affect the Group’s business volumes, margins, asset value, financial position, reputation and/ or prospects.

d) Control actions to address transition risks

• Carbon trajectory. In 2018, the Group made a commitment to significantly reduce its carbon dioxide emissions, with a target of 30 million tonnes in 2030 instead of 51 million tonnes in 2017 (a 40% reduction). The EDF group also confirmed this goal in 2020 by joining the “Business Ambition for 1.5 degrees” initiative. The EDF group has made new commitments to contribute to achieve carbon neutrality by 2050, both in direct and indirect emissions (scopes 1, 2 and 3), with milestones set for 2023 and 2030. The SBTi organisation certified this approach in 2020 as going beyond the 2°C set out in the Paris Agreement. Thus, for the first time, the EDF group has set reduction targets for its indirect emissions, covering in particular the emissions associated with the sale of gas to end customers (see section 3.1.1 “Group Carbon trajectory”). The EDF group undertook discussions with the SBTi organisation in 2022 in order to obtain 1.5°C labelling for its trajectory.
• Deployment of low-carbon solutions. The Group has been particularly active in the development of renewable energy in France, electric storage and low- carbon electric mobility, which will make it possible to develop and promote the Group’s low-carbon energy solutions, particularly for the transport sector, which still emits a very high level of carbon dioxide in France and Europe.
• As a final step in the process of contributing to achieving neutrality, the Group favours so-called “negative emission” projects to offset its residual emissions by 2050 (see section 3.1.1.6 “Carbon offsetting solutions”).
• Control actions for risk No. 1A concerning changes in public policies and the regulatory framework consist of: monitoring the political, legislative and regulatory context; analysing the potential consequences of legislation in preparation; dialoguing with and lobbying the public authorities.

e) Overall control actions – summaries and mapping of climate risks

• In 2019, a summary on climate change and its impacts on EDF, integrating the accumulation of all the knowledge acquired by the EDF group and its scientific partners, was presented to EDF’s Scientific Council.
• Since the 1990s, the Group has had significant expertise in climate change, both in its R&D Department and in its engineering centres, and this expertise has been maintained over time. The precise resources allocated to this expertise are specified in section 3.1.2.4 “High level, internal Climat Department”.
• In 2019, a Group-wide climate risk mapping of all physical and transition risks was also established following the recommendations of the TCFD (Task Force on Climate-Related Financial Disclosures) and submitted to the Audit Committee. Climate risks are now identified, assessed and updated annually in accordance with the Group’s general risk mapping methodology (summarised in this risk factor and further detailed in section 3.1.3.2.2 “Identifying climate change risks and opportunities”).
• This mapping of climate risks, based in particular on the operational entities’ adaptation plans and the report to the Scientific Council, has led since 2020 to a “climate” action plan, included in the Cap 2030 strategic programme covering actions relating to emissions reduction and resilience. This action plan mobilises the Group both at the corporate level and at the entity level to guide and coordinate the various control actions.
• An audit on the adaptation of the EDF group resources to climate change was conducted between October 2021 and February 2022.
• Numerous actions are carried out internally to raise awareness of climate issues among all employees and to mobilise them in concrete ways. By way of example (these examples are developed in section 3.1.3.5.2 “Innovation and collective intelligence focused on climate action”):
  • the Climate Fresk, has been developed by the Group to all its teams since 2020. By the end of 2022, the Group had raised awareness among 60,000 employees using this tool (see section 3.1.3.5.2.2. “The “Climate Fresk”)",
  • the “Fighting CO₂ ”programme offers all employees in France the opportunity to become ambassadors for the energy transition by making a private commitment,
  • the Carbon Neutrality Passport enables employees to assess their carbon footprint and make a commitment to start taking action: obtaining this passport was one of the criteria of the profit-sharing agreement signed for 2020. Over 36,000 passports were obtained in 2022 (see section 3.1.3.5.2.1 “The carbon neutrality passport”).