GREEN BONDS REPORTING 2017 CONTENTS 01/ PRESENTATION 02/ ECOLOGICAL 04/ ALLOCATION 05/ REPORTING OF SNCF RÉSEAU TRANSITION AND RAILWAY OF BORROWED FUNDS AND METHODOLOGY INFRASTRUCTURE OF THE GREEN BONDS P. 04_SNCF RÉSEAU P. 18_STRUCTURE PROGRAMME INDICATORS AND THE FRENCH RAILWAY P. 08_THE “CLIMATE” OF THE SNCF RÉSEAU NETWORK BENEFITS OF RAIL IN THE FIGHT GREEN BONDS PROGRAMME P. 28_MAP OF THE GREEN BOND AGAINST CLIMATE CHANGE 2017 SITES P. 05_A CREDIT RISK _PREPARATION EQUIVALENT TO THAT P. 10_THE SNCF RÉSEAU OF THE SNCF RÉSEAU P. 29_GENERAL INDICATORS OF THE FRENCH STATE CARBON APPROACH GREEN BONDS PROGRAMME TABLE P. 11_SNCF RÉSEAU P. 19_ELIGIBLE PROJECT P. 30_DETAILED REPORT EXTRA-FINANCIAL RATINGS CATEGORIES PER CATEGORY P. 20_TABLE P. 32_CATEGORY 1. INVESTMENTS OF ALLOCATIONS IN MAINTENANCE, MODERNISATION 03/ SNCF RÉSEAU’S AND ENERGY EFFICIENCY PROJECTS “GREEN BONDS FUNDING” P. 22__DESCRIPTION CONCERNING THE RAIL SYSTEM OF THE FUND P. 14_A “CLIMATE MANAGEMENT POLICY P. 33_CATEGORY 2. INVESTMENTS BONDS INITIATIVE” RELATED TO NEW RAIL LINES CERTIFIED ISSUE P. 24_AUDITORS ASSURANCE AND RAIL LINE EXTENSIONS REPORT P. 15_CHARACTERISTICS OF THE 2017 OPERATION 06/ ONE STEP FURTHER _TYPOLOGY AND GEOGRAPHICAL DISTRIBUTION OF INVESTORS Photo: © SNCF Réseau /CAPA Pictures/Jean-Christophe Verhaegen. Design and execution: 04 SNCF RÉSEAU GREEN BONDS REPORT 2017 05 TURNOVER PER BUSINESS A CREDIT RISK LINE IN 2017 EQUIVALENT TO THAT OF THE FRENCH STATE Freight Intercity 2% trains 11% TER 01 38% As of 31 december 2017, as a 100% State-owned public entity, SNCF Réseau benefits from the strong support of the French 6.5 State based on its legal status (EPIC). BILLION EUROS As an EPIC, SNCF Réseau: INTRODUCTION Transilien 13% – is not subject to private-sector bankruptcy law; – may only be dissolved by an amending law transferring TO SNCF RÉSEAU its rights and obligations High-speed trains to another public entity. 35% SNCF Réseau: – performs a public sector mission and enjoys a natural monopoly position with no risk of deregulation; TRAFFIC IN 2017 – was included in the “Government Regional Related Entity” list by the European SNCF Réseau is one of the leading commission in 2002 and is eligible SNCF RÉSEAU Intercity trains AND THE FRENCH investors in France with 3.2 billion euros trains (TER and to the ECB Public Sector Purchasing RAILWAY NETWORK invested in 2017; 7% Transilien) Programme. – ensuring the development 51% SNCF Réseau debt is seen by credit of the network. Freight rating agencies as implicitly 14% guaranteed by the French State. SNCF Réseau owns and manages With its 54,000 employees, SNCF Réseau the French national rail network. has generated a turnover of 6.5 billion euros 480 RATING LONG SHORT with an operating margin (EBITDA - MILLION AGENCIES TERM TERM SNCF Réseau’s main responsibilities: earnings before interest, tax, OF TRAINS- KILOMETER – ensuring fair access to the rail depreciation and amortisation) Fitch AA F1+ network for 26 rail transport companies of 1.9 billion euros and a net result and 11 regional transport authorities; of -0.2 billion euros in 2017. – organising and developing rail traffic: Moody’s Aa2 P-1 15,000 trains circulate daily, transporting more than 5 million passengers per day; High-speed Standard & AA A-1+ – ensuring the maintenance and trains Poor’s enhancement of the network, 27% 04 SNCF RÉSEAU GREEN BONDS REPORT 2017 05 02 As the most ECOLOGICAL eco-friendly mode of transport, railway TRANSITION transport has AND RAIL a critical role to play in the transition INFRASTRUCTURE to a low carbon economy. 06 SNCF RÉSEAU GREEN BONDS REPORT 2017 07 THE “CLIMATE” BENEFITS OF RAIL GHG EMISSIONS PER MODE OF TRANSPORT IN THE FIGHT AGAINST CLIMATE CHANGE TGV, LYRIA, IDTGV, OUIGO 3 TRANSILIEN 6 INTERCITIES 11 EUROSTAR, THALYS, ALLEO, ELIPSOS, GALA 8 to 27 30 TER Passengers In France, rail transport, which accounts for 10% of traffic (freight and LONG DISTANCE BUS (OUIBUS) 44 passengers), emits less than 1% of all GHG emissions from transport. CARPOOLING 74 CARS, LONG DISTANCE TRAVEL 90 CARS, LONG DISTANCE/SUBURBAN TRAVEL 148 PLANE (DOMESTIC FLIGHTS) 168 REGIONAL OR DEPARTMENTAL BUS 171 SINGLE PASSENGER VEHICLE 207 BREAKDOWN PER SOURCE OF GHG EMISSIONS (EXCLUDING LULUCF1) IN FRANCE IN 2014 0 20 40 60 80 100 120 140 160 180 200 220 Grams equivalent CO2 per passenger-km ENERGY INDUSTRY: 8.6% Agriculture: 7 TRANSPORT: 28.5% RAIL 17.25% MARITIME 17 Energy COMBINED 21 consumption: Freight MANUFACTURING AND RIVER 34 69.7% 77 Industrial CONSTRUCTION INDUSTRY: 13.1% Sources: TRUCK procedures and AIR 552 TERTIARY/RESIDENTIAL: 15.8% - Passengers: methodology solvents: 8.75% note on CO2 information OTHERS: 3.8% for transport services 0 20 40 60 80 100 120 140 160 180 200 220 Waste material: (2016, statistics obtained from SNCF, MEDDE, ADEME). Grams equivalent CO2 per tonne-km 4.3% - Freight: SNCF Cargo (2014), SNCF Logistics (2011), ADEME. GHG EMISSIONS PER MODES OF TRANSPORT IN FRANCE AS A % (INCLUDING FOD) Heavy Two wheelers: 1.2% This can be explained by: sheet, given that transport goods Utility – the low amount of energy needed in France accounts for close vehicles: vehicles: for rail traction (wheel-rail contact to 30% of total GHG emissions 21.3% 19.1% vs tyre-road); of France (i.e. 133 MtCO eq). Off-road AIR: 3.5% 2 vehicles: – mass-transport; 5.3% – the high use of electricity Moreover, the advantages of rail Private vehicles: (78% of trains use electric traction), transport are not limited to low levels RIVER AND MARITIME: 1% 53.2% only 7% of which is generated of CO2 emissions. There are other RAIL: 0.4% by fossil fuels in France. benefits such as lower air pollution, OTHERS: 0.4% fewer accidents, optimised use Thus, any modal shift from air of space, less noise and a lower Source: Citepa, June 2016 and road to rail is greatly beneficial negative biodiversity impact. 1. LULUCF: Land use, Land Use Change and Forestry. to the GHG emissions balance 08 SNCF RÉSEAU GREEN BONDS REPORT 2017 09 THE SNCF RÉSEAU SNCF RÉSEAU CARBON APPROACH EXTRA-FINANCIAL RATINGS Although rail transport is a key Several extrapolation ratios (per million Reflecting this policy and CSR strategy, contributor to France’s low carbon euros invested) are therefore established SNCF Réseau is monitored by two extra- transition, SNCF Réseau nonetheless to calculate both the carbon footprint financial rating agencies, Vigeo and strike for greater energy efficiency and avoided carbon emissions for renewal Oekom Research, which have awarded and reducing it’s own GHG emissions. projects, as well as for new line it the ratings given in the table below. and extension projects. SNCF Réseau has thus made a commitment to reduce its energy These ratios are subject to revision consumption and its GHG emissions each year based on studies conducted RATING AGENCIES RATING POSITION OF SNCF RÉSEAU by 25% between 2015 and 2025. by SNCF Réseau. Vigeo 66/100 2nd from a panel of 38 European companies To achieve this, actions have been Since 2015, SNCF Réseau has produced in the logistics/transport sector. identified and initiated. a first Bilan Carbone® (Carbon Balance – For all our activities: sheet) for track renewal projects using Oekom B- 1st ex-aequo from a panel of 45 Global companies tertiary, operational activities, projects a mobile workshop known as a “Suite Research in the transport infrastructure management (related to the Green Bonds programme); Rapide” (90 km between Narbonne and sector. – For the primary sources of Montpellier), identified actions to reduce GHG emissions: energy required GHG emissions and created a tool for construction, service vehicles, to assess the emissions of similar projects. train engines, materials used, etc. In 2017, a second carbon audit of track The rating obtained from Vigeo for comprehensive measures to preventing Knowing the carbon weight renewal projects using a high intensity the environmental aspect (73/100) is local pollution such as low nuisance of SNCF Réseau activities is the starting track renewal unit was conducted between accompanied by the following comment: equipment and programs to reduce point for actions for improvement Gevrey and Sennecey. This resulted local pollution, and to cooperate and commitment as part of a sustainable in updating of the footprint ratios used ”The main elements accounting for the with stakeholders involved through development approach. It helps identify for track renewal projects and for EFTI score increase remain the more exhaustive regular dialogue processes.” priorities for optimisation and improves renewal projects. approach to management of climate our operational methods. change issues through more reliance The latest ratings reports from In order to industrialise the approach, In 2018, SNCF Réseau will introduce a new on renewable energy and facilities and these two agencies are available SNCF Réseau is currently preparing carbon accounting procedure specifically fleet optimization programs throughout on the SNCF Réseau website. an operational tool to calculate for switch renewal projects. This procedure the Company’s operations. In addition, and report the GHG emissions will refine the carbon impact methodology SNCF Réseau appears to have developed of the company’s main activity, in order to improve the accuracy of i.e. maintenance and modernisation the carbon footprint calculation, as it will of the national rail network. distinguish between a switch renewal operation and a track renewal operation In order to calculate the carbon impact by applying a ratio of tCO2/million euros of all projects financed using Green specific to switch renewal projects. Bonds, SNCF Réseau extrapolates values per million euros invested rather than Other Bilans Carbone® (Carbon Balance calculating the impact of each individual sheets) will be produced for other types project. of projects to consolidate our knowledge as part of a continuous improvement approach. 10 SNCF RÉSEAU GREEN BONDS REPORT 2017 11 03 In July 2017, SNCF RÉSEAU’S SNCF Réseau launched “GREEN the longest Green Bond BONDS ever issued FUNDING” in euros.