Message from our CEO 63 Report Highlights REPUTATIONAL RISKS About Franco-Nevada Potential Financial Impact for: Description of Reputational Risks Our Operating Partners Our Company Responsible SUMMARY Capital Allocation Changing public perceptions of an operator’s climate-related activities and May affect access to equity capital or the ability to raise new debt or • Potential delay (deferral) of Revenues if operator’s inability to raise capital or Community their contributions to or detractions from the transition to a low-carbon refinance existing debt, which may lead to projects changing hands or being finance debt results in operations changing hands Contributions economy. temporarily or permanently abandoned. • Potential impact to valuation of Assets on balance sheet (e.g. impairment or write-off of assets) Good Governance and BY COMMODITY Shareholder Alignment Stigmatization of sector: Commodities at highest risk: All commodities Diversity, Inclusion Growing scrutiny of the climate impacts of different sectors has created the Stigmatisation of sectors could lead to reduced demand and lower prices for • Potential reduction of Revenues if demand for carbon-intensive commodities and Well-Being perception that some industries are inherently ‘dirty’ and ‘polluting’, products and services. Of particular risk of stigmatization will be ‘heavy or assets are reduced due to stigmatization of sectors creating a stigma around certain activities. industry’ commodity producers, including energy producers. This risk can be • Potential impact to valuation of Assets on balance sheet (e.g. impairment or mitigated by operators and industries deploying energy efficient and write-off of assets) if decrease in demand and/or lower prices causes Climate Action low-carbon technologies in the production process and the lower carbon uneconomic assets to become stranded emitting producers, even within a stigmatised industry, will be rewarded while there is still demand for their products. Transparency and Guiding Principles Shifts in consumer preferences: Commodities at highest risk: Energy (oil, gas, NGLs) and gold Climate change could lead to a moral shift in customer preferences, with Energy operators are most vulnerable to this risk as customers are likely to • Potential reduction of Revenues if demand for carbon-intensive commodities About this ESG Report stakeholders becoming increasingly aware of their own carbon footprint and receive incentives to reduce use of these commodities due to their climate or assets are reduced due to shift in preferences new regulations and policies incentivising lower-carbon lifestyles. impacts. Gold and other commodities that are not considered to be essential • Potential impact to valuation of Assets on balance sheet (e.g. impairment or to industry or the energy transition may come under greater scrutiny, write-off of assets) if decrease in demand and/or lower prices causes Appendices potentially resulting in reduced demand. uneconomic assets to become stranded A: ESG Performance Table Increased stakeholder concern: Commodities at highest risk: Energy (oil, gas, NGLs) B: Operators’ Emissions With stakeholders having growing access to information about company Operators producing commodities that are not critical to the energy transition • Potential reduction of Revenues if demand for carbon-intensive commodities C: TCFD Disclosure performance, those companies perceived to be causing environmental and and/or typically have high-carbon intensity will be most vulnerable to this or assets are reduced due to negative feedback or concern social harms could encounter increased scrutiny over their impacts. This risk, with energy producers being particularly exposed. This may impact • Potential impact to valuation of Assets on balance sheet (e.g. impairment or D: SASB Disclosure could pose a significant threat to a company’s social license to operate and operator’s access to capital and asset valuations significantly impacted if write-off of assets) if erosion of social license causes uneconomic assets to require proactive mitigation. negative stakeholder concern erodes operators’ social license to operate. become stranded E: GRI Index F: Sustainable Development Goals G: KPMG: Independent Limited Assurance Report H: Carbon Neutral Initiative