Societe Generale : Oil and gas sector policy

January 2022

Public Document

Oil & Gas sector policy

TABLE OF CONTENTS
1.	INTRODUCTION ................................................................................................................................................	3
2.	SCOPE ..................................................................................................................................................................	3
	2.1. Geographical scope....................................................................................................................................................	3
	2.2. Scope of the Group's activities ..................................................................................................................................	3
	2.3. Scope of sector activities............................................................................................................................................	4
3.	OIL & GAS SECTOR ESG RISKS .....................................................................................................................	4
4.	SECTOR SPECIFIC E&S STANDARDS AND INITIATIVES.......................................................................	5
5.	IMPLEMENTATION PROCESS AND COMMITMENT ...............................................................................	6
	5.1. Implementation process............................................................................................................................................	6
	5.2. Commitment...............................................................................................................................................................	6
6.	APPLICATION CRITERIA.................................................................................................................................	7
	6.1. Clients criteria.............................................................................................................................................................	7
	6.2. Dedicated transactions, products and services criteria ..........................................................................................	9
	6.3. Investment criteria ...................................................................................................................................................	10
7.	DISCLOSURE AND UPDATES........................................................................................................................	11

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1. INTRODUCTION

In the frame of its Corporate Social Responsibility policy, and as a signatory of the Principles for Responsible Banking, Societe Generale and its subsidiaries (the Group) intends to take into account the environmental, social (E&S) and governance issues associated with all its activities, to better control their impact and promote good practices, with an objective of continuous improvement.

The Group published E&S general principles which define the overall framework of its E&S risk management system for the responsible conduct of its banking and financial activities. Within this framework, transversal statements addressing issues common to all sectors have been developed, as well as sector policies where the Group looks more specifically into certain sectors identified as sensitive from an E&S standpoint and in which it plays an active role.

The Oil & Gas sector has been identified as one such sector.

The Group provides a range of banking and financial products and services to the Oil & Gas sector, which is part of the Energy sector value chain. The Group's Energy sector policies seek to identify and manage E&S issues throughout the whole value chain in which the Group is active, from the extraction of energy resources, to transportation, distribution and storage, power and heat production, and end user energy consumption. If necessary, the Group will identify and develop additional sector policies in the future to better address E&S issues within this value chain.

Energy is at the core of the economy and a priority sector for the achievement of the Paris Agreement objectives. The Group recognizes it has a role to play in the transition to a low-carbon economy and supports governments and private sector efforts towards the diversification of energy sources and wider use of renewable energy in markets in which it operates. The Group has joined the Net Zero Banking Alliancewhich defines concrete and time-bound actions to align portfolios with an objective of net zero emissions by 2050.

Energy transition challenges are particularly acute for the actors of the Oil & Gas sector. The Group is willing to remain a value-adding partner to its clients and assist them in their transition, while ensuring that such support is provided in a responsible and considered manner. Societe Generale also recognizes that oil and gas activities may take place in complex operating environments, remote locations and countries with weak governance systems. They may also impact local communities and require heightened E&S risk management and due diligence.

This is why the Group aims for the highest E&S standards when considering the provision of banking and financial products and services to the Oil and Gas industry.

2. SCOPE

2.1. Geographical scope

The Oil & Gas sector policy is applicable worldwide. The application criteria may take into account the robustness of the countries' governance framework where the assets are located.

2.2. Scope of the Group's activities

This sector policy applies to all consolidated companies over which the Group exercises exclusive control.

It applies to the following products and services:

• Banking and financial products and services: credit, debt and equity markets, guarantees and advisory activities.

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• Investment activities of the Group's insurance entities.

2.3. Scope of sector activities

This sector policy covers the following activities and client companies owning, developing or operating assets related to:

• Oil and gas exploration & drilling or mining (including oil sands).
• Oil and gas field planning, development and operation.
• Oil and gas refining and processing, excluding petrochemical activities.
• Oil and gas transportation, storage and export infrastructures.
• Oil and gas trading activities.

Both conventional and unconventional oil and gas resources, as well as biofuels production, are covered by the sector policy. Financings involving Floating Production Storage and Offloading (FPSO) and Floating Storage Units (FSU) are within the scope of this sector policy. Where relevant, Societe Generale Shipping sector policy also applies.

3. OIL & GAS SECTOR ESG RISKS

A non-exhaustive list of potential E&S and governance risks considered by Societe Generale in its risk management framework is provided in the E&S general principles.

When evaluating corporates' activity in the Oil & Gas sector, particular attention will be paid to the following risks:

• Impacts on natural habitats, and areas protected for biodiversity or cultural considerations.
• Increased access to previously remote areas (which can result in impacts by third parties such as clearance of forest, or conflict with local communities).
• Air emissions and carbon intensity of the production.
• Reliance on gas flaring as a management strategy for associated gases.
• Methane leakages.
• Water consumption for processing and cooling operations, with potential negative impacts on water flow and/or quality.
• Potential for pollution of ground and surface water.
• Wastewater management.
• Waste management, including discharge of offshore drilling waste.
• Oil spill risks.
• Impact of toxic chemicals.
• Fire and explosion risks.
• Poor health and safety management for workers and/or high accident rates.
• Increased health and safety risks for local communities.
• Impacts on local communities, including resettlement or economic displacement caused by loss of land or assets.

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• Impacts on indigenous peoples or lands used by indigenous peoples.
• Operations in areas of social conflict and/or deployment of armed forces for security purposes.
• Operations in areas where there is a legacy of tension and in countries with a history of weak regulatory frameworks, lack of transparency or high corruption and/or human rights violations.
• Displacement of food crops and potential impact on the food and feed market prices (biofuels).

In addition, governance risks are managed as part of the Know Your Customer (KYC) and other Compliance processes to guarantee alignment of the Group with applicable laws and regulations, including exclusions based on international sanctions.

4. SECTOR SPECIFIC E&S STANDARDS AND INITIATIVES

The Group being active worldwide, the E&S laws and regulations its clients have to comply with vary from one country to another or one region to another. The Group requests its clients to comply with the laws and regulations of each relevant country or region while encouraging them to apply the following E&S standards and initiatives.

A number of institutions, business associations of the Oil & Gas industry, and other civil society organizations have developed standards and initiatives addressing the E&S impacts resulting from the sector activities. The standards and initiatives listed below provide guidance for Societe Generale E&S assessment framework in the Oil & Gas sector:

• E&S management

1. the IFC Performance Standardsand World Bank Group Environmental, Health and Safety Guidelines

applicable to the Oil & Gas sector.

1. the International Energy Agency Golden Rules for a Golden Age of Gas(2012).

• 1. the good practice guidance of the International Petroleum Industry Environmental Conservation Association(IPIECA) and of the International Association of Oil and Gas Producers(IOGP).
• Climate impact
• 1. the Oil and Gas Climate Initiative(OGCI).

• 1. the Climate and Clean Air Coalition (CCAC) Oil and Gas Methane Partnership. O the CDPClimate Change Program.
     O the European Union Fuel Quality Directive 2009/30/EC.
• Human Rights - the Voluntary Principles on Security and Human Rights(2000), the UN Declaration on the Rights of Indigenous People(2008)
• Transparency - the Extractive Industries Transparency Initiative(EITI).
• Gas Flaring - the Global Gas Flaring Reduction Partnership(GGFR) and the Zero Routine Flaring by 2030led by the World Bank.
• Emergency Response - For maritime operations, the IMO Convention on Oil Pollution Preparedness, Response and Co-operation(OPRC, 1990).
• Marine Pollution - the 2003 amendment to Annex 1 of the International Convention for the Prevention of Pollution from Ships(MARPOL) concerning the prevention of pollution by oil, and remaining criteria of the MARPOL Convention when applicable. The Convention for the Protection of the Marine Environment of the North- East Atlantic(OSPAR Convention).

New regulations and voluntary standards will be developed in the future. The Group will closely follow these developments, use them as references in implementing its Oil & Gas sector policy and update it if necessary.

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