Duty of vigilance

The Air France-KLM Group is subject to the obligations introduced by the Act of March 27, 2017 relating to the duty of vigilance for parent companies and ordering companies. The Group has launched a number of initiatives aimed at consolidating a vigilance plan in compliance with the legal provisions. These initiatives complement the processes the Group already has in place, enabling it to comply directly or indirectly with the requirements of the new Act. In particular, having established verification processes in the areas required to be covered by the vigilance plan, the Group has ensured that it is in a position to benefit, as effectively as possible, from the contributions of its various entities. In 2018, Air France-KLM pursued its actions and focused on measuring their effectiveness within the Group and its subsidiaries.

IDENTIFICATION AND REGULAR RISK EVALUATION PROCEDURES

The identification and evaluation of the various risks relating to the duty of vigilance are part of the overall risk management process established within the Air France-KLM Group. As a facilitator of risk management, Internal Group Audit regularly evaluates the risk management process and its conclusions are the subject of presentations to the Group Executive Committee and the Audit Committee.

The Air France-KLM Group’s overall sub-contracting management system applies to all risk areas. It is based on contract reviews, compliance monitoring and supervision acts such as audits, inspections and controls carried out, where appropriate, by the subcontractors themselves.

In 2018, the Group conducted a review of the non-financial risks generated by its activities. This analysis validated the relevance and the comprehensiveness of the measures and action plans aimed at effective prevention, control and mitigation of the non-financial risks deemed to be the most material.

See Air France-KLM Registration Document 2018, section 3 Risk and risk management.


MEASURES DEPLOYED TO PREVENT AND MITIGATE THE RISKS AND MONITORING MECHANISM

Air France-KLM’s policy conforms to the respect of fundamental rights as established in the leading international principles: Universal Declaration of Human Rights, International Labor Organization’s (ILO) Declaration on Fundamental Principles and Rights at Work, and the Organization for Economic Cooperation and Development’s (OECD) guiding principles.

Air France-KLM has been a signatory of the United Nations Global Compact since 2003 and is committed to respecting and promoting its ten principles in the areas of Human Rights, labor, environment and anti-corruption. This undertaking is reaffirmed each year by the CEO.

The duty of vigilance is a multi-risk approach. Risk control is at the core of the Air France-KLM Group’s business activities, with a view toward prevention and homogeneous management via common methods and tools.

Human rights and fundamental liberties

In its Corporate Social Responsibility Statement, the Group undertakes to scrupulously respect Human Rights, to oppose child labor and all forms of forced labor, to apply laws and to demand from its service providers and suppliers to uphold these principles.

The Social Rights and Ethics Charter affirms the Group’s commitment to fostering a climate of mutual trust and respect among staff, and ensuring a safe working environment. The Group undertakes to apply the labor legislation of the European Union and its Member States and all national collective agreements, and to respect the trade union rights in all the relevant countries.

In view of its organization, the Group delegates to its subsidiaries the responsibility of respecting and promoting the content of these commitments locally, with respect to the national provisions and legislation specific to each country.

See Air France-KLM Registration Document 2018, section 4.2 Human resources.

Health and safety

For Air France-KLM, the health and safety of both customers and staff is an absolute priority.

Flight safety is paramount for the Group. It is key to retaining the trust of customers and imperative for the long-term viability of its operations. All the Group’s activities are subject to multiple controls and certifications, and need to comply with extremely strict norms and achieve the highest standards in the industry.

Both companies deploy Safety Management Systems, which are integral to their business organizations, processes and corporate cultures.

See Air France-KLM Registration Document 2018, section 3 Risk and risk management and section 4.4 Customer trust.

Safeguarding Health and Safety in the work place is a human issue to which the Group responds by preventing vocational risks and improving the quality of life in the workplace

See Air France-KLM Registration Document 2018, section 4.2 Human resources.

The Group must guarantee its customers and flight crew safe catering services and, to this end, has put in place a Food Hygiene and Safety process to respond to the regulatory requirements linked to the preparation and supply of meals.

See Air France-KLM Registration Document 2018, section 4.4 Customer trust.

Environment

Air France-KLM’s Climate Action Plan embodies the Group’s strategy and main priorities for reducing its impact on climate change.

The Air France and KLM Environmental Management Systems (EMS) aim to prevent and mitigate the environmental impacts of their operations. They have ISO 14001 certification and internal and external audits enable their effective deployment.

See Air France-KLM Registration Document 2018, section 4.3 Environment.


SUPPLY CHAIN

In its relations with sub-contractors and suppliers, Air France-KLM ensures that the fundamental social rights and principles, and environmental protection provisions, are properly respected everywhere in the world. A supplier selection process has been implemented to respond to the duty of vigilance requirements. To this end, Air France-KLM’s Procurement function provides awareness training on these risks for its buyers.

A risk-mapping process is in place with, for each segment and procurement domain, an evaluation of the environmental, social and ethical risks. Risk is also evaluated by country.

Signing of the Sustainable Development Charter is mandatory and is included in the appendix to all the new or renewed contracts. In the absence of this, the signed Air France-KLM questionnaire is acceptable, as it solicits equivalent commitment covering four areas: environment, social, ethical and supply chain.

In the segments most exposed to risks, suppliers are asked to submit an evaluation of their CSR performance, carried out by a specialized organization or the equivalent. The CSR performance analysis must necessarily address the four domains: environment, social, ethics, supply chain. The “supplier supply chain” criteria provides visibility for tier 2 suppliers.

Suppliers failing to reach an acceptable level are required to put in place a remedial action plan. Independent in-situ audits may also be triggered.

Irrespective of the level of risk, all suppliers are encouraged to carry out evaluations of their CSR performance.

In 2018, 355 suppliers were assessed.

See Air France-KLM Registration Document 2018, section 4.5 Ethics.


LISTENING TO STAKEHOLDERS AND WHISTLE BLOWER MECHANISM

In 2017, Air France-KLM performed a materiality analysis of its main issues by questioning a representative panel of internal and external stakeholders. This analysis enabled the identification of issues that hold priority to be both in terms of strategy and in terms of stakeholder expectations.

Several processes enable the Group to regularly evaluate the perception of stakeholders and to understand the related risks. The Group also has a number of feedback channels in place enabling stakeholders (particularly employees, customers and local residents around airports) to communicate any complaints.

See Air France-KLM Registration Document 2018, section 4.1.2.

The Air France-KLM Group has updated the scope of its internal whistleblowing procedures to enable employees to report any situations arising within the scope of the Act of March 27, 2017 relating to the duty of vigilance of parent companies and ordering companies. For reports under the Whistleblowing procedure please refer to Air France-KLM Registration Document 2018, section 4.5.3 “Business ethics”.


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