Plastic Omnium - 2020 Universal Registration Document

STATEMENT OF NON-FINANCIAL PERFORMANCE The business model www.plasticomnium.com PLASTIC OMNIUM UNIVERSAL REGISTRATION DOCUMENT 2020 136 integration: the ‘PO Way’ is a medium for integration shared by all ● employees on all continents. THE CASE MODEL TO ADDRESS 4.2.3 CURRENT MAJOR TRENDS The automotive sector is particularly impacted by current global trends, the issues of energy transition, air quality, circular economy and biodiversity, as well as by increasingly strict regulations and initiatives. To continue its trajectory and ensure its long-term sustainability, the Plastic Omnium Group has incorporated these major trends into its corporate strategy. The analysis of a vehicle according to the CASE model (Connected, Autonomous, Shared, Electrified) and the contribution of each of the business lines to these four components guide the Group’s strategy, whose ambition is to make sustainable mobility possible. CLIMATE CHANGE AND AIR QUALITY Climate change is due to the massive increase in emissions of greenhouse gases into the atmosphere, mainly as a result of human activities. The transport sector is a major contributor. Indeed, it is estimated that 18% of the emissions generated by energy consumption are due to road passenger transport and freight. The challenge to mitigate climate change is a reality and is identified by the World Economic Forum as one of the most important global risks along with the risk of biodiversity loss. Civil society’s expectations of companies and investors’ demands for emission reductions are becoming paramount. Various local and national regulations and investors’ expectations require companies to publish the impacts of different climate scenarios on their business models. OEMs are increasingly investing to develop and produce hybrid and electric vehicles, as well as announcing a reduction in internal combustion engine vehicles. In fact, the markets for electric and plug-in hybrid vehicles began to represent significant sales volumes in 2020, following exponential growth: 15% in the Netherlands, more than 5% in China and Portugal, and more than 3% in France, Germany, Belgium and the United Kingdom. Air quality problems, mainly in urban areas, are largely attributed to combustion engine vehicles, and in particular to diesel, and have led to numerous initiatives and regulations. Low-emission zones (with traffic restrictions) have grown 40% between 2011 and 2020. There are currently nearly 250 such zones in Europe, concentrated in the major cities. Many countries have also announced the end of diesel and gasoline vehicle sales: 2020 in the Netherlands and 2040 in France and 2030 in the United Kingdom. European and Chinese regulations are tightening CO 2 emission standard targets for passenger vehicles: 95 g CO 2 e/km in 2021, 81 g in 2025 and 59 g in 2030 for Europe; in China, 117 g CO 2 e/km as from 2020. At the same time, drivers’ preferences have rapidly changed in 2020. Thus, the global market for vehicles with a fuel tank is expected to decline sharply with market share projections dropping from a 96.7% in 2020 to 68.1% in 2030. Within the same timeframe, hybrid and electric vehicles (electric batteries or hybrid electric) should reach a market share of 65.8% compared with 13.3% in 2020. Plastic Omnium’s vessel developments for hybrid vehicles and hydrogen propulsion systems enable the Group to make proposals to its customers for the development of their new vehicles. Emissions control and emission reduction systems (SCR) enable it to support its customers in their required transition. SHARED AND CONNECTED MOBILITY The prevailing trend of shared mobility has been strongly slowed down by the Covid-19 crisis leading to a return to individual vehicles because of the health risk when using shared vehicles. This trend reversal could be long-lasting. The total automotive fleet is expected to decline in Europe (0.5% per year) while increasing in the United States (+1.1% per year) and China (+3.9% per year) by 2035. In 2025, all new vehicles should be connected, thus reaching 93% of the fleet in Europe, 97% in the United States and 72% in China. Vehicle automation will grow over the same period, reaching 15% of new sales in Europe, 2% in the United States and 16% in China, compared with less than 1% in 2020. Vehicle automation and connectivity will require increasing skills in plastronics (combining plastics and electronics) and mechatronics (at the crossroads of mechanics, electronics and connected systems). Information capture, connection with infrastructures and data processing are some of the functionalities that vehicles will need to have, especially in the parts produced by Plastic Omnium. The industry is also transforming to incorporate increasingly automated and connected chains, and will require new professions, whether for products or production equipment: data scientists, artificial intelligence engineers or cyber security specialists. CIRCULAR ECONOMY Another leading trend important for the automotive sector is the circular economy. Waste management is becoming a globalized issue with an increase in border closures and the relocation of waste treatment. Since 2015, European regulations relating to vehicles at their end-of-life have required the reuse and recovery of these vehicles to be 95% by average weight per vehicle and per year, with a reuse and recycling rate of at least 85%. This Directive no. 2000/53/EC of September 18, 2000 is currently being revised for publication in 2021, and in particular, manufacturers are expecting a requirement to include far more recycled materials in new vehicles than is currently the case. Automotive suppliers, in particular plastic parts suppliers such as Plastic Omnium, are therefore particularly sought after to work on incorporating recycled material. Life cycle analyses are becoming key tools for understanding the impact of products on the environment, from their design (extraction of raw materials) to their end-of-life (management of used vehicles and parts). Conducting these analyses provides an understanding of how to optimize the use of resources and participate in a circular economy.