AFD - 2018 Registration document

STATEMENT OF NON-FINANCIAL PERFORMANCE Identification of the main non-financial challenges and risks

2.2 Identification of the main non-financial challenges and risks

Pursuant to the transposition into the French law-books of Directive 2014/95/EU pertaining to non-financial reporting by companies (see above), the non-financial performance statement is based on the main non-financial risks and challenges facing the AFD Group. i. The priority risks were identified through an operational risk mapping exercise. A real risk management tool, this exercise consists in (i) listing and assessing operational risks (1) and (ii) for each of them, identifying the means of control, checks in place, and any action plans that will help improve risk management. Each structure identifies and lists three types of risk in its mapping: P risks with a significant and specific impact on its activity; P risks it helps to manage (to detect, prevent, monitor and/or manage when it occurs). The operational risk mapping is updated each year, based on a bottom-up approach (the risks being identified and rated by the businesses at the finest level of the organisational chart). The risk guideline is shared by all the Group’s structures. It included 80 risks in 2018, classified into 7 categories (2) . The last update enabled a specific focus to be made on corruption risks (in accordance with the requirements of the “Sapin II” law). ii. The non-financial challenges deemed most relevant for AFD Group were identified and ranked based on a materiality analysis. This analysis aims to offer a consensual view of the priority challenges for the organisation, in order to select the most relevant information for its corporate and social responsibility report based on its activities, its own objectives, and the expectations of its external and internal stakeholders. AFD Group conducted an initial materiality analysis in 2015. Based on challenges pre-defined by GRI (3) , the analysis had made it possible to identify, initially, the 58 CSR challenges relevant to the Group’s scope of activity; following that, to pre-select those considered most significant for AFD P risks generated by its activity;

Group, based on a documentary analysis, a benchmarking study conducted on comparable institutions, and qualitative interviews with senior management. This resulted in a list of 16 material challenges that were approved by Senior Management. This materiality analysis was updated in 2017. To take account of changes in the global economy and the French entity, and to reflect the strategic development of the Group, some of the 2015 challenges have been adjusted and four new challenges have been added, namely: P impact of activities on local communities and indigenous populations; P employee support as part of the Group’s transformation (agility, stress, well-being); P synergies with the private economic sector to benefit the SDG. These challenges were then prioritised thanks to ratings by internal and external stakeholders (4) in order to obtain the updated materiality matrix presented in Appendix 10. For the purposes of the non-financial performance statement (DPEF), AFD Group reviewed priority challenges and risks at the end of 2018. This exercise was carried out by the Strategy Department (responsible in particular for the corporate social responsibility process) and the Finance Department, in collaboration with the Risk Department. The review was underpinned by a review of AFD Group’s main strategic documents and by interviews conducted internally; in particular, it consisted in examining the mapping of the Group’s operational risks and in comparing it with its materiality matrix of non-financial challenges. It was performed in three stages: P review of the presentation of risks and the coverage of main risks; P review of the information on the risk identification, ranking and approval process; P review of the link between non-financial risks and the overall risk mapping and of consistency with the material challenges presented. P promoting diversity within teams;

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(1) Based on banking regulations, the operational risk for financial institutions is “the risk of losses resulting from inadequate or failed processes, employee and internal systems or external events”. (2) The seven categories of potentially risk-generating events defined by the Basel Committee on Banking Supervision (Basel II) are as follows: internal fraud; external fraud; employment and job security practices; clients, products and commercial practices; damage caused to physical assets; interruption of business and malfunctioning systems; execution, delivery and management of processes. (3) Global reporting initiative, NGO. (4) To help rate the challenges, a questionnaire was sent to 106 people (of whom 41 outside the Group); 45 people (of whom 17 external) responded.

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REGISTRATION DOCUMENT 2018