SOCIÉTÉ GÉNÉRALE Free translation - In the event of discrepancies between the French and the English versions,
the French one shall prevail.
Société Générale SA - General Meeting of 22 May 2024
Responses to written questions from shareholders
The text of the following questions has been summarised (without changing the meaning) when it is unnecessary to quote them in full to ensure their proper understanding.
Questions fromForum pour l'Investissement Responsable, an association governed by a French Act passed in 1901 | |
- Have you published or plan to publish quantitative indicators to report on the biodiversity-related risks and opportunities posed or offered to your company (asset values, liabilities, income and expenditure deemed vulnerable to nature-related risks, CAPEX, financing or investment allocated to nature-related opportunities, etc.)? If so, what are they and have you set yourself any targets?
Give reasons for the choice of these indicators. If not, why? | |
3. a) What place does the circular economy have in the company's strategy? | 11 |
b) How do you encourage the development of circular economy business models (through investment or financing strategies, client | |
services, commitments with suppliers, etc.)? | 12 |
c) What is the share of your investments/financing or offer related to the circular economy? | 13 |
Social | 13 |
4. a) In France, the "Climate and Resilience Law" of 22 August 2021 and the national interprofessional agreement (ANI) on the ecological transition and social dialogue of 11 April 2023 extended the environmental prerogatives of Social and Economic Committees and strengthened the role of local representatives. What initiatives give a clear illustration of changes in the operation
of these bodies within your group over the last twelve months based on these provisions? | 13 |
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- As part of these new prerogatives, the training and expertise of the social partners is fundamental. Are there any programmes that have been developed recently or which are planned in the near future specifically aimed at enhancing the environmental expertise
of the social partners which go beyond the legal obligations? | 14 |
- International framework agreements help to strengthen the quality of labour relations within a group. Does your group have a framework agreement that goes beyond the scope of the European Union? If so, how have you incorporated the issue of the ecological transition and, more broadly, environmental issues? If not, do you envisage such a project? In all cases, on your five main geographical markets outside of France, can you give a list of the major initiatives that have helped to strengthen the involvement
of social partners in the company's environmental policy in the recent period? | 14 |
5. a) For each of the last five financial years, can you indicate, on the one hand, the number of shares purchased (specify also the number of shares in liquidity contracts) and, on the other hand, the number of shares created, and the number of treasury shares at the start and the end of each year? For each of these financial years, can you give a breakdown of the number of shares cancelled, the number of shares awarded as performance shares (and the number of beneficiaries and their proportion compared with all of the Group's employees), the number of shares distributed under employee shareholding schemes (and the number of eligible employees, the number of beneficial owners and their proportion compared with all Group employees) as well as other uses (giving
details)? | 14 |
b) In relation to share award plans, and where relevant, how do you "neutralise" the effects of treasury shares or cancelled shares | |
when calculating the achievement of targets? | 15 |
- What investment amounts (R&D and capex) have you allocated over the last five financial years (year by year)? How much of the capital have you bought back and cancelled over the same period? To help with your response, you can complete the table in Appendix 3. As part of the overall approach to value sharing, do you measure the amount allocated to share buybacks against the amount of investments made by the company - in particular investment for the ecological transition (a vital element for the creation of value and sustainability of the company)? If so, do you have rules in this regard? If not, can you explain why you do not take
investments into account when setting share buyback amounts? | 15 |
6. a) Have you adopted a definition of the living wage that is similar or equivalent to that mentioned above? If so, what is it? Have you developed a policy/commitment in relation to the living wage (public commitments, accreditation as a Living Wage Employer,
etc.)? | 16 |
- Based on your definition of a living wage, have you started to calculate the latter and what methodologies do you use? If so, in which region(s) and for what scope (employees as well as independent workers, small farmers, etc. and/or the employees of your
suppliers)? What information do you disclose on this subject? | 17 |
Have you observed a gap between the minimum wage and the living wage? | 17 |
- Can you describe the actions taken to implement a living wage? (e.g. set-up of an internal management function covering the living wage together with training, engagement with social partners and/or your suppliers, improvement in purchasing practices,
promotion of the freedom of association and collective bargaining, etc.) | 17 |
d) How do you measure the implementation of a living wage for your employees and suppliers? | 17 |
- Have you identified potential obstacles to the payment of a living wage to your employees and the employees of your suppliers (for example, in a country in which the accreditation rights and regulations are less strict)? If so, what do you do to mitigate them?
…………………………………………………………………………………………………………………………………………..17
Additional question: Do you communicate the results of any studies carried out and have you implemented a whistleblowing system | |
for your employees and suppliers? | 18 |
7. a) France scope: What funds are proposed to your employees apart from employee shareholding plans through your employee savings plans? What funds and related amounts proposed to your employees are SRI labelled (please give their names and the name
of the related label)? What is the total amount of SRI assets per fund? | 18 |
Could you also indicate the amount of total assets and the amount of assets excluding shareholding plans that are not SRI assets? | |
……………………………………………………………………………………………………………………………………………18 | |
b) If certain funds are not SRI funds but incorporate ESG criteria, explain how robust and selective these criteria are (indicate the | |
selectivity rate and/or theme of these funds)? | 18 |
Have you made plans with social partners to opt for more SRI funds over the next three years? | 18 |
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c) How do you include your social partners in the selection of responsible funds (e.g. training, an expert that oversees educational | |
support for employees, time granted to social partners to question the responsible funds selected)? | 18 |
How do you include your social partners in checking the responsibility commitments of the funds (training of the members of the supervisory board in addition to the three days of regulatory training, implementation of an employee savings committee, etc.)? 18
Governance | 19 |
8. a) Do you publish a detailed chart describing your commitments in relation to tax transparency (tax practices that are deemed unacceptable, tax havens)? How often is it reviewed and approved by the Board? How does the Board oversee the application of this
chart? | 19 |
- Do you disclose your tax reporting country-by-country for all your countries of operation, i.e. beyond the requirements of the EU directive, which is limited to tax reporting for EU Member States and countries on the list of non-cooperative jurisdictions? If not,
could you please explain why? Does the Board discuss the country-by-country tax breakdown? | 20 |
c) Can you explain your effective tax rate for 2023? In what way is it consistent with your tax responsibility commitments? | 21 |
Will special attention be paid to companies with a particularly low (equal to or less than 20%) or particularly high (around 30%) tax | |
rate? | 21 |
9. a) What are the main interest activities (top 3, for example) that you are prioritising based on your practical ESG challenges? Can | |
you specify all the jurisdictions in which you are conducting these advocacy activities? | 21 |
- How do you ensure your ESG targets are aligned with the positions of professional associations? How do you manage any misalignment? (Examples: attempting to realign the positioning of associations with your own ESG targets or considering to leave a professional association that is clearly not aligned with your ESG strategy.) What do you publish on this type of alignment or
misalignment? | 22 |
c) What role does the Board of Directors play in implementing your advocacy policy (e.g. activities, budget, meetings)? | 22 |
d) Do you train internal or external (e.g. firms) people in responsible advocacy? If so, what criteria do you apply when selecting the | |
firms that assist you in this matter? | 23 |
10. a) How many Board directors have CSR skills? Who are they and how did they acquire these skills (studies, training, professional experience)? Are these skills specific to the challenges of your sector (biodiversity, energy transition, labour issues and vlue chain,
financial impact of the climate crisis, etc.)? | 23 |
Do you publish a matrix of the specific skills of each board member? | 23 |
b) How do you ensure that Board members' knowledge of CSR issues is kept up to date (internal or external training processes, | |
presentations by experts, updates on regulatory developments or key issues, etc.)? How frequently? | 24 |
c) How do you assess the directors' CSR expertise? Based on what criteria? How frequently? Is this assessment carried out on an | |
individual or collective basis? | 24 |
d) Do you incorporate a CSR component into the process for appointing new directors? | 24 |
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Questions from Forum pour l'Investissement Responsable, an association governed by a French Act passed in 1901
(questions sent by email on 29 April 2024):
Response of the Board of Directors:
Environment
1. a) Could you specify your decarbonisation objectives for the short, medium and long terms across your three scopes (in absolute terms and in intensity)? For each of your objectives, explain the principal actions planned to achieve these objectives (please specify the percentage contribution of each action to the objective).
In your strategy, what is the share dedicated to negative emissions (absorption and storage, etc.), to avoided emissions and carbon credits (as opposed to your decarbonisation objectives)?
To facilitate your answers, you can fill in the table in Appendix 1.
Societe Generale Group's climate ambition focuses on accompanying our clients in their environmental transition, reducing the potential impact of our activities on the climate and managing climate change risks. The Group has set itself decarbonisation objectives as part of these ambitions.
Day-to-day activities (Scope 1 and 2, and Scope 3 upstream and waste): After having achieved its target to reduce GHG emissions per occupant by -25% between 2014 and 2019, the Group set itself a target to halve its absolute carbon emissions between 2019 and 2030 related to its own operations by acting on the energy required for its premises, IT, reducing airline travel and its vehicle fleet. By the end of 2023, the Group had reduced its own overall carbon footprint by 34% compared to the 2019 level, in line with the target.
Scope 3: As a member of (i) the Net Zero Banking Alliance (NZBA) and (ii) the UNEP-FI Net Zero Asset Owner Alliance since 2021, the Group's objective over the short, medium and long term is to align its own corporate credit portfolio and its investment portfolio with trajectories compatible with limiting global warming to 1.5°C. To achieve this goal, it has set specific targets for each of the sectors.
On the investment side, Societe Generale Assurances has committed to reduce the carbon footprint of its equity and corporate bond portfolios by 30% by 2025 compared to 2018.
In relation to the credit portfolio, the Group makes a distinction between the carbon and oil and gas sectors, for which a reduction is expected in absolute terms, and other industrial sectors for which CO2 intensity targets have been set, beginning with targets out to 2030. Keen to accompany its clients in the financing of their transition, the Group is prioritising its action on the most carbon-emissive sectors and which have a role to play in the transition to a low-carbon economy.
At end-2023, the Group set targets on 9 sectors out of the 12 priority sectors identified by the NZBA. A detailed description of each of these sectors appears in our Climate and Alignment Report (pages 58-87,Climate and Alignment Report - December 2023 (societegenerale.com)), which sets out the decarbonisation imperatives of the sector, as well as the levers identified for the actors of these sectors.
The summary below outlines the targets that were set in 2023 for these main sectors, including the complete phase-out from thermal coal in 2030 in EU and OECD countries and by 2040 in the rest of the world, and a 50% reduction of exposure to upstream oil and gas by 2025 and an 80% reduction by 2030. Concrete measures have been taken in respect of the latter targets: for example, the Group will stop providing financial products and services associated with greenfield upstream Oil & Gas fields, it will phase out exposure on upstream Oil & Gas private pure players by winding up exposures, and will reinforce engagement with energy sector clients, particularly on their climate strategy.
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In 2024, the Group worked on the Aviation, Agriculture and Residential Real Estate sectors, and set a new target on the carbon intensity of the aviation sector of 775g de CO2 equivalent per Revenue Ton Kilometer by 2030, i.e. -18 % vs. 2019. Owing to factors outside the Group's control which we detailed on our website,the targets for the Agriculture and Residential Real Estate sectors were unable to be published, but Group is committed to closely monitor trends where it is able to.
The Group does not calculate negative or avoided emissions and does not use carbon credits.
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Free translation - In the event of discrepancies between the French and the English versions,
the French one shall prevail.
The table belowsummarises the progress ofoursectoral alignmentwork as atApril 2024.
Societe Generale's Decarbonization targets and attributed emissions
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- Could you please indicate the amount of investment required for each of the main actions across the three scopes?
Please state the time frame covered by these investments.
More often than not, the information expected here is different from the amount of CAPEX/OPEX aligned with the European taxonomy, which only concerns investments in your sustainable activities and not those for your decarbonisation plan as a whole.
With regard to the objectives of reducing Scope 3 indirect emissions, the Group's investments take the form of projects to implement decarbonisation objectives within each entity, which must integrate these challenges into its operations (decarbonisation targets, sectoral policies, client E&S analysis questionnaires, monitoring tools and resources, etc.).
To coordinate these changes, the Group introduced in 2022 a four-yearcross-business transformation plan called ESG by Design, the objective of which is to operationalise ESG changes. The programme to operationalise our medium- to long-term ambitions includes significant budgets to manage the transformation, as well as investments in people, data, tools and information systems (see page 17 of our Climate and Alignment Report).
For the past three years, we have also set up a strategic partnership with a consultancy firm specialising in energy transition to help us draw up our roadmap for decarbonising the Group's various businesses.
In 2023, we invested in specialist skills to significantly strengthen our team dedicated to decarbonisation work.
A wide-reaching programme called "The Shift" was implemented in the business lines at Global Banking and Advisory (GLBA), which houses our financing and advisory activities for corporate clients, to support the transformation of the Group's large clients, using inter-sectoral approaches and bringing together 400 staff working together on 12 strategic activities (see page 27 of our Climate and Alignment Report).
The Group invests in developing skills and introduced an ambitious ESG training plan adapted to the various levels of expertise to embed ESG culture throughout the company, and to foster employees' expertise on ESG themes in order to offer new products that are in line with our clients' needs (see pages 15-16 of our Climate and Alignment Report). For example, we set ourselves the target of training 30% of staff on the Climate Fresk, using more than 600 specially trained moderators.
As regards its day-to-day operations, the Group has invested in its real estate assets in and outside France to improve their energy performances. The Real Estate Division has set up an energy pilot programme for buildings with surface areas greater than 1,000 m2 to achieve the target of reducing building energy consumption by 40% by 2030, compared with 2019, as required by French regulations (French Decree on reducing energy consumption in service-sector buildings). Since 2018, all SG France network branches have used software that produces a monthly breakdown of water, electricity and gas consumption data, thereby promoting the application of corrective measures, as required.
The Group's Real Estate Division conducted a programme over 2021-2025 to address the performance criteria of businesses, digital experience and the transformation of employees' working methods. Societe Generale's Corporate Centre buildings in the Greater Paris (Ile-de-France) region have obtained the following environmental and energy management certification, the La Défense building has ISO 50001 certification, in Val de Fontenay the Sakura building has BREAAM NC 2016 Excellent, HQE Bâtiment Durable High Energy Performance certification and WELL building standard Core & Shell Gold level, and the Dunes building has HQE Excellent and LEED GOLD certification. The Societe Generale building in London is certified "BREAAM Outstanding". Societe Generale's new Arsenal headquarters in Luxembourg inaugurated in 2023 has dual BREEAM Very Good and HQE Excellent certifications.
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In 2019, the Group was also one of the first companies to sign the Sustainable IT Charter to help limit the environmental impact of technology and promote digital inclusion. The Group has implemented several actions that are monitored and measured: the transformation of its data centres, the- recycling and reuse of IT hardware, improved data and system management, training for IT experts in eco design and e-accessibility, and awareness training for future generations in these practices.
The Group also invests in professional mobility levers, above and beyond its policy on air travel. Accordingly, the French Retail Banking activity continued to grow its share of electric cars, and now registers more than 280 electric service vehicles in the regions. Electric vehicles will gradually replace the corporate fleet of Komerční banka (KB) in the Czech Republic (at the end of 2023, 131 electric vehicles were in service). Actions to optimise the total fleet of service vehicles include the rollout of a car-sharing offer by Ayvens. The Group also continued to increase the number of electric charging points at its premises: 200 were installed in 2023 at the Corporate Centre buildings in the Greater Paris (Ile-de-France) region. To encourage alternative forms of mobility, SG Network France launched a pilot programme by installing a shared electric bike station (at the Marseilles premises) using a solution designed by Ayvens and its partner GREEN ON.
The Group is investing in energy transition start-ups such as Qarnot in France, enabling it to reduce its energy consumption by reusing IT waste heat from data centres to produce hot water for social housing, and in Enviros in the Czech Republic, an energy transition advisory firm that enables the KB subsidiary to build solid technical skills and ramp up its commercial decarbonisation offering.
- On which baseline scenario(s) is your decarbonisation strategy based (for the three scopes)? Is it aligned with the 1.5°C scenario? Has it been validated by an independent third party (SBTi, ACT- ADEME, etc.)?
Please state the name of the baseline scenario(s) and the organisation(s); for example, AIE, GIEC, etc.
The full set of targets and baseline scenarios on which they are based are listed in the table opposite, which is presented on page 340 of our Universal Registration Document. These communications are reviewed by an independentthird-partybody as part of the verification of the Group's Declaration ofExtra-FinancialPerformance (DEFP), which is included in the Universal Registration Document.
- In its Net-Zero-by-2050 scenario to which you refer in your climate policy, the International Energy Agency (IEA) forecasts that to limit global warming to 1.5°C, 6 dollars must be allocated annually to the supply of "clean" energy (including production, network and energy storage), mainly electricity, for each dollar allocated annually to fossil fuels (including the entire value chain, from production to distribution), by 2030.
Could you provide us with your target for financing (companies and projects) fossil fuels across the entire value chain and for the supply of "clean" energies (specifying the detailed scope of the sources and technologies included in these clean energies) by 2030? If you have not reached the 6:1 ratio, can you explain why?
The calculation made by the IEA in its latest Net Zero 2050 scenario is genuinely inspiring for the energy sector and our CSR teams are analysing its possible interpretation as a management indicator for financial activities. Several challenges still need to be addressed: the ratio is focused on investment flows in the energy sector, but these investments may be self-financed, financed by bond issues or bank debt, and by share issues. Accordingly, it is not directly transposable; establishing a ratio of investment flows from "clean" energies and fossil fuels also raises the question of allocating the percentages of these energies through financing flows, a significant proportion of which is unallocated (general financing of clients' needs, etc.). It is worth noting that the 6:1 ratio is phased in the IEA's scenario with an intermediate stage in 2025. This phasing-in process takes into consideration the operational restrictions associated with the energy transition.
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The Group has already committed to reduce its exposure to fossil energies with a target to completely phase- out from thermal coal in 2030 in EU and OECD countries and by 2040 in the rest of the world, and a target for a 50% reduction of exposure to upstream oil and gas by 2025 and an 80% reduction by 2030, with a certain number of measures exposed to Response No.1.
For the past several years, the Group has imposed a standard enabling it to measure the distribution of its Sustainable Finance and Positive Impact (SPIF) financing offering dedicated to financing the economy and companies. Renewable energy infrastructure loan production totalled EUR 6.2 billion in 2023.
In addition, considering that some emerging technologies require equity investments before debt can be raised, Societe Generale Group announced the launch of a new EUR 1 billion investment fund focusing on transition that includes a EUR 0.7 billion equity investment component. The fund's objective is to support clients on energy transition, nature-based solutions and impact-driven opportunities which support the UN's Sustainable Development Goals.
2. Risks, impacts, dependencies and opportunities related to biodiversity are still insufficiently taken into account in business activities (in-house, supply chain, products, customer services, etc.). However, progress is being made regarding the context and the tools (TNFD, SBTN, GRI, etc.), as well as with practices.
Although the topic would appear to be fairly immaterial for a number of sectors, we nonetheless believe it is worth being analysed by everyone.
a) Have you assessed, monitored and reduced your dependencies and risks, and your footprint, as well as your opportunities (investment in projects with a positive net impact on nature, biodiversity services, etc.) In relation to biodiversity and nature?
Is this assessment up to date and does it cover your entire value chain (direct operations, upstream and downstream)? If it only covers part of your value chain, do you plan to extend the scope of the assessment? If not, why?
In the run-up to the application of the CSRD and in light of the recommendations of the TNFD, the Group is working on an assessment of its credit portfolio. Accordingly, the Group carried out an initial mapping of the sectors financed according to the severity of their nature-related impacts and dependencies in relation to the Group's exposure in each of these sectors.
The work was based on the ENCORE (Exploring Natural Capital Opportunities Risks and Exposure) methodology, which provides an analytical framework for the physical impacts and potential dependencies of economic activities on natural capital. These preliminary components were presented to the Responsible Commitments Committee, chaired by General Management. The mapping provides a preliminary analysis of Societe Generale's portfolio in respect of the nature-related imperatives and also sets out the methodological limits (notably, the geographical angle and the value chain are not taken into consideration) which necessitates a more in-depth approach by sector and assessment work that is ongoing.
With regard to financial risks, Societe Generale carried out a complementary analysis aimed at identifying the nature-related risk factors for each risk category, and performed analysis aimed at identifying these risks and opportunities by Business Unit. These analyses focused on identifying the channels through which financial risks are transmitted to highlight the most significant risks so that they can be taken into account in risk management processes on a more systematic basis.
These analyses were based, among other things, on the Industry Nature Vulnerability Indicator (INVI) set up by the Group, which provides- an initial assessment of financial materiality, in other words what impact physical and transition nature related risks might have on revenues, costs and the value of assets of non-financial sectors.
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Natural risks are grouped under four headings in line with the objectives of the European taxonomy: pollution, water and marine resources, biodiversity and ecosystems, resource use and the circular economy. The indicator does not include climate aspects to avoid duplication with the ICVI.
INVI scores are forward-looking and provide an assessment of the current vulnerability of sectors and the capacity to adapt to transitional and physical risks, with a focus on the way forward to 2030 and the capacity to continue out to 2050. For physical risks, this means the ability to switch to inputs or production processes that are less dependent on ecosystem services, or to protect assets from the impacts of a decline in the availability of ecosystem services. For transition risks, it means the ability to move away from inputs or activities that have a high impact on nature, or to reduce the impacts of existing activities on nature.
This work focuses on the downstream chain (i.e., our clients) where the most significant impacts, dependencies, risks and opportunities for the Group are concentrated.
In terms of opportunities, Societe Generale announced the launch of a new EUR 1 billion investment fund focusing on transition, including a EUR 700 million equity investment component. The fund notably focuses on supporting nature-based solutions.
Societe Generale joined SBTN's Corporate Program to be in a better position to accompany its corporate clients when taking into account nature-related issues. A team in Corporate and Investment Banking is dedicated to advising our clients on nature-based solutions.
Regarding the real estate development activities, SOGEPROM has structured its CSR approach around three pillars, which include preservation of biodiversity. These pillars focus on promoting green areas, training and a partnership with CDC Biodiversity. They are available by clicking on the following link (in French only): https://groupe-sogeprom.fr/nos-engagements-rse/.
- Have you published the results of this work? If not, do you intend to? Please provide reasons for your answer.
Do you plan to use voluntary frameworks such as the TNFD, SBTN, GRI101, etc. to report on nature- related risks and opportunities?
The Group already relies on this work to identify impacts and dependencies while highlighting their methodological limitations and publishes the results of these analyses in the Group's Universal Registration Document, notably in Chapter 4 on Risks, and in the Group's Duty of Care Plan, presented in Chapter 5.
Societe Generale is also a member of the TNFD Forum and contributed to successive consultations proposed by the initiative prior to the publication of its recommendations in September 2023. The rollout of the recommendations throughout the Group is currently under review.
- Have you published or plan to publish quantitative indicators to report on the biodiversity-related risks and opportunities posed or offered to your company (asset values, liabilities, income and expenditure deemed vulnerable to nature-related risks, CAPEX, financing or investment allocated to nature-related opportunities, etc.)? If so, what are they and have you set yourself any targets? Give reasons for the choice of these indicators. If not, why?
The Group is continuing its work on assessing nature-related risks and does not plan to issue a publication in the near future.
For the past several years, the Group has imposed a standard enabling it to measure the distribution of its Sustainable Finance and Positive Impact Financing (SPIF) offering dedicated to financing the economy and
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Société Générale SA published this content on 24 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 May 2024 14:53:20 UTC.
