2020 - Saint-gobain

SAINT-GOBAIN - 2020 INTEGRATED REPORTGROUP OVERVIEW2020HIGHLIGHTSSaint-Gobain is onceagain awarded theTop Employer Globalcertification and is oneof the 13 companiesworldwide to havereceived this label.JANUARYFEBRUARYIn the context of theCovid-19 pandemic,the Group furtherstrengthened itsfinancing resourcesthrough a 1.5 billionbond issue andsyndicated line of creditadjustment to 2 billion.MARCHCompletion ofthe acquisition ofContinental BuildingProducts after receivingthe approval of theGroup’s shareholdersand the US anti-trustauthorities.12Saint-Gobain completesthe sale of its entirestake in Sika for anamount of CHF 2.56billion, or 2.41 billion.APRILUpon publication ofits first-quarter sales,the Group announcesits decision not topay dividends toshareholders for fiscalyear 2019.MAYJUNEPublication of first-halfresults.Inauguration of a newmortar plant in Tulefa(Ethiopia). The Groupnow has an industrialpresence in 70 countries.Launch of a new jumbocoater at the Saint-GobainGlass plant in Poland aftertwo years of construction.Launch of the secondglobal survey to measureSaint-Gobain employees'engagement.JULYThe Group launchesits first apprenticeshiptraining center in France.In the manufacturingand processing of glassfiber, Saint-Gobainacquires the US plantof the Valmiera GlassGroup.AUGUSTSEPTEMBERFollowing the explosionsthat destroyed part ofBeirut (Lebanon) onAugust 4, 2020, the Groupprovides immediatesupport to help withthe reconstruction inthe form of several typesof materials.OCTOBERThe Group enters intoexclusive negotiationswith Mutares for thedisposal of Lapeyre.Saint-Gobain unveilsits roadmap towardscarbon neutrality by2050.NOVEMBERThe Group formulatesits purpose, “Making theworld a better home”.Publication of SaintGobain sales for the firstnine months of the year:strong recovery in the thirdquarter and objectivesrevised upwards.DECEMBERSaint-Gobainreports betterthan-expectedfourth quartersales and a recordoperating marginin the second halfof 2020.JANUARYThe Group cancelsthree million shares.Strengthening of thepartnership betweenSaint-Gobain and ElVolcan in Latin America.

SAINT-GOBAIN - 2020 INTEGRATED REPORTGROUP OVERVIEWRESPONDING TOTHE COVID-19 CRISIS:A STEADFAST COMMITMENTIn addition of being a humantragedy, the Covid-19 pandemicbrought an abrupt halt to alleconomies. This unprecedentedcrisis has profound implicationsfor Saint-Gobain, not only on itsday-to-day operations but alsoon its business model and futuredevelopment strategy. It has beena test of the Group’s abilityto react to adversity.THE PRIORITY: TAKINGCARE OF THE GROUP’SSTAKEHOLDERS—From the first weeks of the crisis,Saint-Gobain demonstratedunprecedented agility in adaptingits operating methods. Theoverriding priority has been toprotect the health of the Group’semployees, customers, suppliersand their families. Beyondnecessary sanitary measures,the emphasis has been puton maintaining contact, socialdialogue, and employees’work-life balance.STRATEGIC ORIENTATIONSVALIDATED BY THE CRISIS—The new link between global andlocal, resulting from the Transform& Grow strategic plan, hasproven its strength and relevanceduring the pandemic and hasallowed for crisis managementthat is both highly coordinatedand decentralized. Beyond themanagement of the crisis, thisdynamic unique to the Groupis clearly relevant in the contextof a trend toward regionalizationof the global economy andaspirations to relocate value chains.University of California San Francisco emergencyteam members wearing visors manufacturedby SolarGard13

SAINT-GOBAIN - 2020 INTEGRATED REPORTGROUP OVERVIEWA COMMITMENT TO SERVINGSOCIETY AS A WHOLE—RESPONDING TOTHE COVID-19 CRISIS:A STEADFAST COMMITMENTThe Saint-Gobain Life SciencesBusiness Unit has made anexceptional effort to produceand supply the components(tubes, connectors, filters,membranes) necessary for theequipment used to diagnose,treat and care for Covid-19patients. More specifically, ithas increased by 15 times theproduction of parts essential tothe manufacturing of ventilators.BOUNCE BACK AND PREPAREFOR THE FUTURE—For a group such as Saint-Gobain,the ability to face a crisis ofexceptional magnitude in the shortterm necessarily goes hand in handwith preparing for the future: comingout of the crisis and the more or lessrapid recovery of markets and theirtransformation. It is also a matter ofunderstanding the long term impactsof the crisis on the world in whichSaint-Gobain operates, first byanticipating the future needs ofits customers and their logistical,technical and financial challenges,then the solutions that will be apriority for them, and finally theemerging markets.Employee at the Life Sciences plant in Charny, France,which manufactures components for respirators14Saint-Gobain’s teams inSpain have converted plasticpackaging from gypsumpallets into protective apronsfor caregivers at hospitals.Saint-Gobain Ecophon Francehas delivered acoustic solutionsas part of a sponsorshipagreement with the hospitalgroup AP-HP SorbonneUniversité.

SAINT-GOBAIN - 2020 INTEGRATED REPORTSAINT-GOBAININ A FASTCHANGINGWORLDThe trends that shape our environmentSaint-Gobain Weber solutions were used in theconstruction of the world’s longest cross-sea bridge,spanning 55 km between Hong Kong, Zhuhai and Macao.15

SAINT-GOBAIN - 2020 INTEGRATED REPORTCONTEXT AND MEGATRENDSA WORLD UNDERGOINGACCELERATED CHANGETRENDS SHAPING A VOLATILE,UNCERTAIN AND UNSTABLE ENVIRONMENT—Saint-Gobain operates in a constantlychanging world. However, three majortrends have been emerging for severalyears now, and they are beingaccelerated by the health crisis:the world demands more sustainabledevelopment, and it is more local andmore digital.16The combination of the challenges(climate and the environment,demography and urbanization,digitization) and crises of variouskinds (health, economic, migration,political) that we are witnessingcreates a picture of a world that isvolatile, uncertain and complex allat once. Saint-Gobain’s positioningis based on taking into accountin the short and long term theseunderlying trends, which representboth opportunities and challengesfor the construction of the worldof tomorrow, and on an in-depthunderstanding of the ecosystemcomprised by all its stakeholders.The Group must fully integrateclimate and the environment intoits strategic vision, thanks toits commitments and its activeinvolvement in exerting a virtuousinfluence over its entire value chain.In 2020, Saint-Gobain unveiled itsroadmap toward carbon neutralityby 2050, with new objectives forreducing its greenhouse gasemissions by 2030 (cf. page 42).

SAINT-GOBAIN - 2020 INTEGRATED REPORTCONTEXT AND MEGATRENDSA WORLD UNDERGOINGACCELERATED CHANGEIn addition to the Group’sresponsibility as a leading economicplayer, the requirements ofsustainable development and thetransition to a low-carbon economyare accelerating the transformationof business models and offeringmany opportunities for Saint-Gobain,some of which have alreadymaterialized in terms of newproducts, new services and new waysof working with customers andpartners.17The Group faces a challenge:profoundly transforming itself sothat it is able to constantly adaptto an environment that has becomestructurally unstable, by buildingand implementing strategies thattake into account an uncertain world.The model that Saint-Gobain has builtcombines the strength of a globalgroup and a structure that gives thelocal level the autonomy necessaryto adapt to a changing environment;this model is a performance levernecessary to achieve profitableand sustainable growth.deadline for carbon neutralitythat Saint-Gobain set itself

SAINT-GOBAIN - 2020 INTEGRATED REPORTCONTEXT AND MEGATRENDSDEMOGRAPHICSAND URBANIZATIONIn developed countries, the ageing populationcreates a need for adapting housing unitsand renovating older buildings.A CONTINUOUS GROWTH TREND—The world population in 2020was estimated at 7.8 billion. In total,the total human population hasgrown by an average of 1.1% peryear over the last five years. Thevarious factors influencing globaldemographic trends resulted in aprojection of 9.7 billion inhabitantsin 2050 and 11 billion inhabitantsin 2100.18A POPULATION THAT IS MOREAND MORE URBAN—In 2007, the urban populationhas exceeded the rural populationfor the first time in human history;today, more than 80% of global GNPis generated in cities, which absorbmore than 60% of the natural resourcesused worldwide.At the local level, urban areas alreadydirectly or indirectly consume between60% and 80% of the energy consumedby a country. According to projections,the percentage of the urban populationwill continue to grow rapidly. In 2015,nearly 55% of the world’s populationlived in cities, whereas this proportionwill reach 68% by 2050, representingan additional 2.7 billion urban dwellers.

SAINT-GOBAIN - 2020 INTEGRATED REPORTCONTEXT AND MEGATRENDSDEMOGRAPHICSAND URBANIZATIONVULNERABLE AREAS,HIGH ENVIRONMENTAL IMPACTS—Urban areas, which are dense andlargely devoid of vegetation and havewaterproofed soil, are particularlyvulnerable to the increasein average temperatures and thehigher frequency of heat peaks.The rapid expansion of cities in turnincreases waste production, whichalready represents an annual volumeof 720 billion tons worldwide.19CONSEQUENCES OVERNEW CONSTRUCTIONAND RENOVATION MARKETS—Urbanization leads to an increasein the need for housing, transport,energy, water and waste treatment.As to construction and renovation,issues are many: in low-incomecountries, access to decent housingand affordable energy costs aremajor socio-economic topics;in middle-income countries, a largemiddle class with high purchasingpower is developing, with everincreasing demands for comfort,requiring adapted solutions.In developed countries, the ageingpopulation means a need for adaptinghousing units and renovating olderbuildings.97billion inhabitantson Earth by 2050,according to UnitedNations projections

SAINT-GOBAIN - 2020 INTEGRATED REPORTCONTEXT AND MEGATRENDSCLIMATECHANGE1990-2020: A 30-YEARJOURNEY IN DIAGNOSIS—THE WORLD IS NOTON THE RIGHT TRACK—The year 2020 is symbolic as itmarks the thirtieth anniversary ofthe first report published by theIntergovernmental Panel on ClimateChange (IPCC), which served asthe basis for the United NationsFramework Convention on ClimateChange (UNFCC). Since then, yearafter year, the scientific consensushas continued to confirm and clarifythe reality of multiple, mutuallyreinforcing phenomena.In 2015, via the Paris Agreement,states agreed upon the bindingambition to keep the rise intemperatures below 2 C comparedto the pre-industrial era, which meansreducing GHG emissions by 2.7% peryear from 2020 to 2030. However,data shows that the current trajectoryis not in line with this objective: in2019, greenhouse gas emissionsreached a record high of 59 billiontons of CO2 equivalent, signaling acontinued rapid increase in emissions.The first of these is direct impactson the environment, ranging fromecosystem integrity to biodiversity.20

SAINT-GOBAIN - 2020 INTEGRATED REPORTCONTEXT AND MEGATRENDSCLIMATECHANGEAFTER THE PANDEMIC,A WINDOW OF OPPORTUNITY—The stimulus plans announced bythe major powers and by regionalorganizations, which are measuredin the trillions of euros, are potentiallypart of the solution. Their unprecedentedscale ( 750 billion for the EuropeanUnion only) may make it possibleto achieve the temperature increasetargets. Almost half of the 100 billionFrench stimulus program is earmarkedfor investments supporting the ecologicaltransition, including 5.8 billion forenergy renovation and 6.5 billionfor transport infrastructure and greenmobility.59billion tons of CO2equivalent emitted** Human emissions, 2019 data21

SAINT-GOBAIN - 2020 INTEGRATED REPORTCONTEXT AND MEGATRENDSDEPLETION OFNATURAL RESOURCESAN EVER-INCREASING PRESSUREON RESOURCES—On a global scale, the consumptionof natural resources is accelerating, with92 billion tons extracted in 2017 comparedto 27 in 1970, a threefold increase, whilethe population has only doubled in thesame period of time. The constructionsector, which uses materials such as steelor concrete, plays a decisive role in this area.22THE URGENT NEED FOR SOLUTIONS—To limit the consumption of rawmaterials, solutions exist for optimizingthe quantity of materials used for a givenworksite, as well as through the adoptionof a circular economy approach. In fact,public policies increasingly adopt a “lifecycle” approach that takes into accountthe environmental impact of a buildingas a whole, from the extraction of rawmaterials to its dismantling and to therecycling of its materials.

SAINT-GOBAIN - 2020 INTEGRATED REPORTCONTEXT AND MEGATRENDSDEPLETION OFNATURAL RESOURCESA MAJOR IMPACT ON THE VALUECHAIN OF THE CONSTRUCTIONSECTOR—The recovery of materials makesit possible to limit the use of resourcesand emissions while generatingadditional economic growth, especiallybecause it stimulates the searchfor technological innovation. In theconstruction sector in particular, whichis responsible for 40% of global wasteproduction and 50% of resourceconsumption, the transition to thecircular economy is the source ofprofound renewal at different levels ofthe value chain: production processes,product formulation, product end-oflife management, recycling, reuse,development of the economy offunctionality, etc. The rise ofprefabrication and the developmentof lightweight construction solutionsare some of the responses to thesemajor challenges.2392billion tons extractedin 2017 comparedto 27 in 1970

SAINT-GOBAIN - 2020 INTEGRATED REPORTCONTEXT AND MEGATRENDSDIGITALTRANSFORMATIONA MEGATREND THAT CHANGESBUSINESS ECOSYSTEMS—Digital technology is opening newtrade opportunities, with a very highannual growth rate for e-commercethroughout the world since theearly 2000s. Businesses must nowbe closer to their end customersto avoid new intermediations. Inaddition, to differentiate themselves,services play an essential role. Thismeans that digital technology isglobally reshaping the competitivebalance and the way that businessesinteract with their stakeholders(customers, employees andsuppliers).24INDUSTRY 4.0: AN ARRAYOF INNOVATIONS FOR A NEWINDUSTRIAL REVOLUTION—Digital technology is alsorevolutionizing the way thatfactories are organized. It isproducing a major, gradual changein production methods, by providingreal-time access to a wealth ofinformation on industrial facilitiesthat are now interconnected, andenabling extensive data analysisand correlation of these data.The concept of “Industry 4.0”is an integral part of the realityof companies today, thanks to thecombination of intelligent dataanalysis, automation and augmentedoperators. This breakthroughprogress enables an increase inproductivity and flexibility, masscustomization, and optimizationof industrial sites' environmentalfootprint.

SAINT-GOBAIN - 2020 INTEGRATED REPORTCONTEXT AND MEGATRENDSDIGITALTRANSFORMATION25CONSTRUCTION:AN INDUSTRY RESHAPEDBY DIGITAL INNOVATION—THE DATA REVOLUTIONAND ITS IMPACT ON CLIENTRELATIONSHIPS—Digital integration of buildingsis leading to technical changes inconstruction, particularly the increasinguse of Building Information Modeling(BIM), which provides an integratedview of a building throughout allthe stages of its life cycle thanksto a “digital twin”. Prefab or off-siteconstruction are also rising thanksto new technologies allowing fordata collection and analysis.Domotics, which helps reducingenergy consumption in buildings andimproving security, allows for anincreasingly comprehensive integrationof smart equipment into daily life.Continuous growth of e-commerce,diversification of digital channels,data collection and analysis thanksto artificial intelligence solutions areall factors that have a deep impacton client relationship management.Businesses can tap into thisopportunity so as to optimize theirsales, develop cross-selling and getto know better the variousparticipants in their value chain.3billion users shouldhave internet accessby 2022 in fast-growingcountries

SAINT-GOBAIN - 2020 INTEGRATED REPORTSTRATEGYHow Saint-Gobain organizes itselfto create value with its stakeholders.Saint-Gobain provides solutions that makebuildings more efficient in terms of their energyconsumption, and which help contribute to the enduser’s well-being as well as to saving the planet.26

SAINT-GOBAIN - 2020 INTEGRATED REPORTSTRATEGYRISKS &OPPORTUNITIESIn an ever-changing world, Saint-Gobainintegrates environmental, social and societalchallenges in its strategy and operationsthanks to its unique value creation model,working as close as possible with marketsand customers.In addition to these opportunitiesand risks, sorted out by megatrends,Saint-Gobain analyzed CSR-relatedopportunities and risks, taking intoaccount its contribution to the UnitedNations’ Sustainable Development Goals.27The methodology used, the risksidentified and the strategies implementedto mitigate the latter are described inthe Group’s 2020 Universal RegistrationDocument (pp. 391 to 393).Management of risks that involvesignificant financial impact is describedin the Chapter 6 of the 2020 UniversalRegistration Document.Optimera’s LeanWorks servicein Norway allows for optimizedon-site delivery, positioningmaterials at the right placeand waste collection.

SAINT-GOBAIN - 2020 INTEGRATED REPORTSTRATEGYOPPORTUNITIESRISKS &OPPORTUNITIES New housing needs L ightweight constructionsolutions, prefabrication,performance of Saint-Gobain'ssolutions Solutions for sustainable mobility W aste collection and recyclingprocessesDEMOGRAPHICS & URBANIZATIONRISKS C ircular economy: waste collectionand recycling Optimization of industrialprocesses and supply chains Solutions for sustainable mobility S olutions taking into accountthe whole products’ life cycle,including deconstruction Client experience and newservices Innovation relating to low carbonindustrial processes and products Citizen mobilization on climatechange in many countries:positive effect on brandreputation and talent attractionfor companies involvedCLIMATE CHANGE I nnovation for new productformulation and the adaptationof industrial processesDEPLETION OF NATURAL RESOURCES E-commerce and distributionDIGITIZATION Cybersecurity and data protection I ncreasing pollution and wastegeneration Rise in the number of extremeclimate events C ost and availability

Saint-Gobain employees' engagement. The Group enters into exclusive negotiations with Mutares for the disposal of Lapeyre. Saint-Gobain unveils its roadmap towards carbon neutrality by 2050. Saint-Gobain reports better-than-expected fourth quarter sales and a record operating margin . In the , Saint-Gobain Group. August 4, 2020, the Group . 2020