6 Risks and control Risk factors www.saint-gobain.com SAINT-GOBAIN UNIVERSAL REGISTRATION DOCUMENT 2021 236 There are a large number of issues and circumstances that need to be explored and the implications for Celotex are unlikely to be known for some time. Civil proceedings in connection with Grenfell Tower brought against Celotex Limited and/or Saint-Gobain Construction Products UK Limited (which respectively held the Celotex business until or after December 31, 2015) and a number of other defendants – who are also core participants in the Public Inquiry – have been issued and are stayed prior to the service of full pleadings. No figure has yet been put on the quantum claimed. The extent to which Celotex may incur civil or criminal liability in connection with the production, marketing, supply or use of its products is currently unclear and Celotex Limited and Saint-Gobain Construction Products UK are currently unable to make a reliable estimate of their potential liability in this respect. Other proceedings and disputes 1.4.1.5 Some of the Group’s companies may also be the subject of other claims made by their employees or by the tax authorities, or in the context of the enforcement of seller’s warranties granted by the Group to the buyers of divested businesses (see Chapter 8, Section 1, note 5.5.2 to the consolidated financial statements). Apart from the proceedings and litigation described above, to the best of the Company’s knowledge, no other government, court or arbitration proceedings exist (including pending proceedings or proceedings where the Company and/or the Group might be threatened) which could have or have had, in the last 12 months, a significant impact on the financial position or profitability of the Company and/or Group. Please refer to Note 9 to the consolidated financial statements relating to provisions for litigation, Chapter 8, Section 1. Risk of regulatory changes 1.4.2 The Group is not subject to any specific regulations that could have an impact on its financial position, although the Group companies that operate industrial sites are generally required to comply with the specific national laws and regulations of the country where such sites are located. It is therefore, for example, with regard to France, subject to regulations applicable to classified sites, and certain regulations relating to the environment, aimed at reducing carbon dioxide emissions, in particular with a view to meeting the targets for reducing greenhouse gas emissions under the Paris Agreement which came into force on November 4, 2016. A certain number of legislative measures are already in place in certain countries and regions in which the Group operates. As such, at European level, Directive 2003/87/EC of October 13, 2003, known as the “Quotas Directive”, has set a cap on carbon dioxide emissions and a quota trading system for certain large production sites. Notwithstanding the Group’s efforts to reduce CO2 emissions, and broadly, the use of best available techniques for its investments (see Chapter 3, Section 2), changes in regulations applicable to the Group’s activities could impact the operation of its production sites, which could have a material adverse effect on its operation, financial position or results. Laws and regulations applicable to the Group and to the materials and products it uses in its activities may change in a manner that may be unfavorable to the Group. The introduction of stricter regulations or more diligent enforcement of existing regulations may affect the conditions under which the Group operates its businesses, which could increase its operating expenses, limit the scope of its activities or act as a brake on business growth. More generally, the Group cannot guarantee that there will be no rapid and/or significant regulatory changes in the future with a material adverse effect on its business, financial position or results. Insurance 1.5 The Group transfers its risks to the insurance market when this is the most efficient solution. Default by one or more of the Group’s insurers could therefore lead to financial losses. The Group’s policy is to implement preventive programs and purchase insurance coverage to protect its assets and revenue. This policy is embedded within a Group doctrine, which takes into account current conditions in the insurance market. It is determined, coordinated and overseen by the Risk and Insurance Department. It defines insurance criteria for the most significant risks, such as property and business interruption, as well as general and product liability. With this in mind, a new insurance program to cover the Group’s cyber risks was implemented at the end of 2017. For other types of coverage, such as automobile fleet insurance, the Risk and Insurance Department advises the individual operating units on policy content broker selection and which market to consult. These are called “high-frequency” risks, for which claims are monitored internally and appropriate action taken. The policies in force in 2021 are the result of the renewal of the policies for 2020. The captive insurance company set up to cover property risks was highly successful and delivered real benefits for the Group. Companies acquired during the year have been integrated into existing insurance programs.
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