Plastic Omnium - 2018 Registration Document

3 STATEMENT OF NON-FINANCIAL PERFORMANCE CSR at the heart of our strategy www.plasticomnium.com PLASTIC OMNIUM 2018 REGISTRATION DOCUMENT 84 This governance and organization enables Plastic Omnium’s values to be disseminated across all business lines and entities and is the cornerstone of our success. The "PO Way", a culture, state of mind and way of life for all of the Group’s managers and employees, rests on five pillars, the “5I”, symbols of Plastic Omnium’s entrepreneurial spirit, boldness and level of excellence: independence: the cornerstone of the strategy, independence is ● guaranteed by the majority control exercised by the family holding company, Burelle SA, which ensures freedom of action; investment: robust investment programs allow new products to be ● defined and market growth to be captured by developing a presence in high potential countries and through the development of new technologies; innovation: part of the Group’s DNA, continuous innovation ensures the ● Group’s leadership position in its markets; iInternationalization: being flexible and capable of expanding in growth ● regions ensures the Group’s future; integration: the "PO Way" is a medium for integration shared by all ● employees on all continents. CHANGES IN THE AUTOMOTIVE SECTOR 3.1.1.3 The automotive market is affected by major environmental, corporate, technological and societal trends that are transforming it in a profound way. Energy transition and air quality In 2016, passenger road transport represented 45% of global CO 2 transport-related emissions, i.e. 11% of total emissions from energy combustion. The sector is considered to be a priority in combating climate change, as indicated by the International Energy Agency (IEA) in its Sustainable Development Scenario, a scenario enabling the Sustainable Development Goals (3 – Good Health and Well-Being, 7 – Affordable and Clean Energy and 13 – Climate Action) to be achieved. The two priority areas for achieving these goals are an increase in the share of electric vehicles (which should reach 50% of the fleet in 2040) and improving the energy efficiency of internal combustion vehicles (an efficiency of more than 40% in 2040 for gasoline and diesel-powered vehicles). Regulations to reduce emissions from new vehicles are ever more restrictive and widespread in the areas where Plastic Omnium has a strong presence: Europe, North America and Asia. Accordingly, in Europe, the regulations provide for emission thresholds for new private and public vehicles to reduce to 95 g CO 2 /km from 2021 (compared with 130 g CO 2 /km in 2015) while tightening approval tests, leading to an increase in measured emissions. The size of additional reductions expected between 2025 and 2030 is in the process of being negotiated. In the United States, current regulatory standards stipulate an improvement in vehicle range with a consumption target of 4.3 liters/100 km in 2025 compared with 8.1 in 2014, which will lead to reductions in CO 2 emissions. As for China, it is planning to achieve 117 g CO 2 /km in 2020. impact on air quality. Emissions of particulates and nitrogen oxides (NOx) lead to public health problems, particularly in cities. As increasing urbanization is causing an increase in road traffic and, consequently, air pollution, an increasing number of cities are making commitments to improve their air quality by regulating vehicle flows. The majority of European countries or their large cities are committed to a complete ban on diesel vehicles: the United Kingdom, the Netherlands and Norway have set a national target for banning diesel vehicles, whereas in France, Germany, Denmark, Italy and Greece, major cities have implemented local bans or restrictions on traffic. The another major challenge that carmakers and equipment manufacturers are taking into account in their product development is the At a global level, the 96 major cities in the C40 network which bring together one twelfth of the world’s population are committed to combating climate change by complying with the Paris Agreement and promoting intelligent and sustainable cities. One of the their initiatives has been to gradually ban vehicles with high levels of emissions. China is planning quotas for the market introduction of vehicles according to their level of pollution. In parallel, China’s ambition is to become the leader in the electric automotive industry by developing technologies within its own territory. Currently, half of the existing electric vehicles worldwide travel in China. Antipollution standards on NOx and particulates emissions regulate the market introduction of new diesel and gasoline-powered vehicles: for example, the new Euro 6 standard in Europe and the Tier 2 standard currently in force in the United States. In response to these regulations and to demonstrate their willingness to combat climate change, manufacturers are developing a range of short, medium and long-term solutions. Some are planning to offer hybrid engine or plug-in hybrid alternatives for all of their models, while others are planning the electrification of vehicles using rechargeable batteries or hydrogen propulsion. End dates for entirely internal combustion propulsion have been announced by Volkswagen, Toyota, Volvo and Mitsubishi, evidencing the change in the automotive market. Current forecasts accordingly predict that in 2020, the market will be driven by hybrid vehicles (43% of sales) and electric vehicles (23% of sales) in a total estimated market of 121 million units, with wholly 100% internal combustion vehicles decreasing to 29% of sales from 86% in 2018. Connectivity and digitization Digitization is becoming a major issue in industry in general and in the automotive sector in particular, whether for manufacturing or logistics chains or in vehicle technologies. Plastic Omnium is planning to integrate these opportunities into its production technologies and tools. The development of autonomous vehicles requires the development of data exchanges between vehicles and with infrastructure and its4surroundings. Tools for capturing information, connecting to infrastructures and managing data are becoming essential vehicle components, requiring all automotive parts to be adapted. As a result, external body parts are becoming active tools and represent an important source of growth for Intelligent Exterior Systems. Connectivity is already integrated with driving aid equipment (cameras, radar, lidar, sensors, etc) leading in the future to total vehicle autonomy. New disciplines are being developed to meet these needs: plastronics (a mix of plasturgy and electronics) and mechatronics (a combination of mechanics and connected systems).