SUSTAINABLE 4 DEVELOPMENT 4.1 VALEO AND SUSTAINABLE 4.5 VALEOʼS SOCIAL FOOTPRINT 236 DEVELOPMENT: STRATEGY, 4.5.1 The Groupʼs social policy 236 POLICY AND ORGANIZATION 180 4.5.2 Non-financial social risks 240 4.1.1 From sustainable development 4.5.3 Valeoʼs social commitments 245 challenges to non-financial risks 180 4.6 METHODOLOGY AND 4.1.2 Sustainable development governance and structure 182 INTERNATIONAL GUIDELINES 250 4.6.1 Sustainable development 4.1.3 Sustainable development objectives reporting methodology 250 in the Groupʼs business 183 4.6.2 Cross-reference with national 4.1.4 A commitment to sustainable and international guidelines 252 development based on strong relationships with stakeholders 188 4.7 SUMMARY OF VALEOʼS 4.2 RESEARCH AND DEVELOPMENT RESEARCH AND DEVELOPMENT AT VALEO: FROM MEGATRENDS AND CSR PERFORMANCE AFR 258 TO INNOVATION 192 4.7.1 Research and Development at Valeo 258 4.2.1 Group Research and Development policy 192 4.7.2 Environmental management and performance of Valeoʼs sites 258 4.2.2 Non-financial technological risks 196 4.7.3 Valeo and its employees 260 4.2.3 Valeoʼs technological commitments 201 4.3 ENVIRONMENTAL MANAGEMENT 4.8 SUSTAINABLE DEVELOPMENT AND PERFORMANCE GLOSSARY 262 OF VALEOʼS SITES 202 4.9 INDEPENDENT VERIFIERʼS 4.3.1 Valeoʼs environmental policy 202 REPORT ON THE NONDFINANCIAL 4.3.2 Non-financial environmental risks 206 INFORMATION STATEMENT 4.3.3 Valeoʼs environmental commitments 209 PRESENTED IN THE 4.4 VALEO AND ITS EMPLOYEES 219 MANAGEMENT REPORT 263 4.4.1 The Groupʼs employee policy 219 4.4.2 Non-financial employee-related risks 221 4.4.3 Valeoʼs employee-related commitments 230 AFR Information from the Annual Financial Report is clearly identified in the table of contents by the AFR symbol Valeo Registration Document — 2018 177 4 SUSTAINABLE DEVELOPMENT Interview with Jacques Aschenbroich Interview with Jacques Aschenbroich “VALEO IS CAPTURING ITS SHARE OF SUSTAINABLE VALUE CREATION IN TODAYʼS PARADIGM SHIFT IN MOBILITY.” JACQUES ASCHENBROICH JACQUES ASCHENBROICH Other than this goal of contributing to the fight against climate CHAIRMAN AND CHIEF EXECUTIVE OFFICER change through our products and solutions, Valeo bases its commitment to sustainable development and corporate social responsibility on the ten principles of the United Nations Global Compact, which we signed in 2015. Our support for this initiative remains whole, and we have now also formalized our contribution to the United Nations Sustainable Development Goals. What makes sustainable development Our permanent commitment to results and transparency, a driving central to Valeo? force of our sustainable development approach, has made Valeo one of the best automotive suppliers in terms of non-financial J.A. A commitment to sustainable development is embedded performance. The Group continues to rank among the leading in Valeoʼs DNA. players, according to the assessment developed by RobecoSAM, and As a technology company, Valeo offers innovative products is listed in the DJSI Europe and World indices. In the management of low-carbon transition risks, Valeo also featured in CDPʼs 2018 and systems that help reduce CO 2 emissions and promote the development of an intuitive, connected and more autonomous A List of best performers. Of the 6,937 companies assessed this driving experience. year, only 127 made it to that level. On-road mobility is in the midst of a threefold revolution spanning Valeo also emerged as the leading member of the automotive electrification, autonomous and connected vehicles and the industry in the 2019 edition of the Corporate Knights annual emergence of digital mobility solutions. Providing a range of global ranking of the 100 most sustainable corporations, which sustainable mobility solutions that keep up with the quickening is published every January at the Davos Forum in Switzerland. pace of the three aspects of this revolution is Valeoʼs way of In 2018, Valeo was also awarded the top prize covering all capturing its share of sustainable value creation in todayʼs paradigm categories at the Grand Prix for Transparency for its financial shift in mobility. and non-financial information by the major Paris-based financial Valeoʼs strategic decision to contribute to the transition toward market associations, thereby ranking first among the 120 largest sustainable mobility has been validated by our customers. In listed companies on the Paris stock market (SBF 120). The prize 2018, innovative products accounted for 53% of order intake (60% recognizes the importance placed by Valeo on the rigor, relevance, including Valeo Siemens eAutomotive). And products that directly transparency and ease of access to regulatory financial and non-financial information aimed at investors, shareholders and or indirectly contribute to reducing CO 2 emissions accounted for more than 50% of Valeoʼs original equipment sales in 2018. analysts. 178 Valeo Registration Document — 2018 SUSTAINABLE DEVELOPMENT 4 Interview with Jacques Aschenbroich How is the Groupʼs sustainable Valeo. Our recruitment of new skills matches the focuses of our development policy structured? research on autonomous vehicles, powertrain electrification and digital mobility. J.A. At Valeo, sustainable development is built on four key To make social dialog an integral part of the Groupʼs sustainable axes: innovation, environmental eco-efficiency, employees and development policy, Valeo has pressed ahead with an extensive commitment to corporate citizenship. It pervades all the areas dedicated training program for all sites. Following an extensive where the Group interacts with stakeholders, both internally training program in 2016 and 2017, 2018 was a year of and outside the Group. encouragement and support for the sites in the establishment Since 2010, at my request, Valeo has had a function and department of a sustainable development action plan at their level. It was dedicated to sustainable development. Its role within the Group developed in a concerted approach combining site management is to define the sustainable development policy and coordinate its teams and the aspirations of employees. implementation. Outside the Group, it is tasked with ensuring the As regards the Groupʼs commitment to corporate citizenship, the consistency of the messages shared with external stakeholders, Plantsʼ Initiatives program, which has been in place in each of our be they our customers or analysts that monitor our performance sites since 2008, covers a wide range of social initiatives targeting in this area, all of which are becoming increasingly discerning. both our employees and the neighboring local communities. Other Group departments, including Research and Development, In 2018, each site organized at least one such initiative, with Risk Insurance, Health, Safety and Environment, Ethics and priority going to activities for schools, technology institutes and Compliance, Human Resources and Purchasing, also contribute universities. Initiatives in this area are monitored closely by the directly to sustainable development in their respective fields, and Group, and are improving and flourishing. have developed their own tools for taking action and assessing performance. In 2018, Valeo continued its in-depth assessment of its suppliersʼ work in the field of sustainable development, extending the Our sustainable development policy also reflects our desire to scope of its specific audits to its main suppliers of electronic assess and satisfy the demands of our employees, customers, components around the world. These suppliers are set to take suppliers and shareholders, as well as national and international on greater importance in the Groupʼs purchasing value chain regulators and supervisory bodies. as a result of the increasing proportion of electronics in Valeoʼs products. What were the highlights of 2018? Lastly, as a result of nearly two years of work by all contributors to 4 sustainable development at Valeo, the non-financial risk approach J. A. In line with our achievements in previous years, we intensified is now an integral part of the Groupʼs sustainable development our efforts and investments in Research and Development to strategy. Our approach increases transparency in terms of risk, develop new products and new solutions. In 2018, investments which guides our vision of sustainable development. of this nature accounted for 13% of our original equipment sales. Today, in vehicle electrification, Valeo has a comprehensive offer of low-, medium- and high-voltage solutions, backed by the joint What are the challenges venture with Siemens at the high-voltage end. A strategic choice for the coming years? informed by the gradual diversification of the types of mobility J.A. Valeoʼs commitment to sustainable development is enduring, emerging in the automotive sector, this offering will enable us to and will be strengthened going forward. deliver solutions for all types of electric mobility going forward. We continue to contribute to the future of mobility and to remain at In terms of our environmental commitment, Valeo pursued its the forefront of solutions facilitating the large-scale electrification strategy and objectives in terms of reducing natural resource of vehicles at affordable prices. Likewise, in keeping with the consumption and restricting CO emissions. Since 2008, Valeo 2 Groupʼs continuous improvement approach, our sites around the has significantly reduced consumption (as a proportion of sales) world will continue their efforts on environmental