As a general introduction, we would like to remind you that since March 15th 2022, Michelin has suspended its industrial activities in Russia as well as its exportations to Russia.

We also would like to emphasize the fact that the Michelin Group has established a dedicated internal organization regarding Ethics & Compliance, including export control and international financial and economic sanctions. As part of this organization, Michelin has implemented and maintains compliance programs, which programs include policies, procedures and detection and prevention mechanisms.

As part of our internal processes and measures, we had taken appropriate measures to prevent re-exportation of our products to Russia that would be not compliant with international sanctions directed at the Russian Federation.

Please find below some complementary elements regarding such processes and measures.

As mentioned above, specific mechanisms and tools were already in place before the invasion of Ukraine and have been reinforced since the beginning of the conflict.

They consist notably of (i) a screening process to confirm that the Group’s business partners (actual and contemplated) are not sanctioned, either directly or because they are owned or controlled by a sanctioned party as well as (ii) by insertion of specific clauses in our contracts to ensure the respect of applicable international sanctions by our customers. This process allows us to cease any business relationship in case of a non-compliant flow.

In addition to these standard due diligences, for flows with a higher risk of parallel import, such as sales to customers in countries of the Eurasian Economic Union, we have strengthened our level of verification by (i) requiring a specific validation from Michelin Export Control team for all new customers after thorough checks, (ii) requiring additional undertakings to ensure our customers understand the impact of international sanctions against Russia regarding the use or resale of our products, (iii) prohibiting any transit through Russia, and/or (iv) providing dedicated training to our employees involved in these flows.

As part of our due diligence processes, we also ensure detection of red flags. These red flags can be:

• orders for unusually high volumes requested by our customers, especially those geographically close to Russia or owned by a Russian group of companies;
• orders for unusual products, which cannot be used in the territory of sale or were not part of the relevant customer’s historical/initial orders.
• reluctance to respond to questions about end-use and end-users.

Detection of red flags is also part of our prevention measures, and in case of any doubt, employees are aware that they can contact the Export Control Department or the Legal Department, in order to further explore the potential risks and to conduct additional due diligence before validation of the relevant business operation.

As part of our standard watch process, we also ensure a constant monitoring of the evolution of applicable laws and regulations, notably by following alerts and recommendations issued by the various sanctioning authorities.

In this extremely volatile environment, we are constantly adapting our trade compliance processes, in order to limit the risk of parallel import depending on the threats we identify.