Message from our CEO 69 Report Highlights 2°C Scenario: Outcomes for Our Operating Partners 2°C Scenario: Outcomes for Franco-Nevada About Franco-Nevada Risk Outcomes for Operating Partners Outcomes Outcomes for Franco-Nevada Responsible Acute and • Extreme and intermittent weather events persist and increase over time. As climate General • Extreme weather events causing production delays and intermittent cessations of production Capital Allocation Chronic change is limited to 2°C, such events are manageable. at mining and energy operations in which we hold royalty and stream interests, will have Physical Risks • Certain events and weather patterns cause production delays and cessations for the effect of a deferral of our revenue over short or medium-term horizons, realizable Community certain operations. Such risks are unlikely to materially impact or impair broader upon recommencement of operations. Contributions gold and energy markets. • More persistent weather events, when combined with other pre-existing factors such as water scarce conditions, will result in the inability to expand operations or extend the mine Socio-Political, • Stringent climate-related policy and regulatory changes are enacted by governments, life of operations, which will have the effect of reducing our royalty and stream revenue. Good Governance and Regulatory and particularly from those countries and regions pledging alignment with “net-zero” • Inevitable increased capital and operating costs (including carbon pricing costs) due to Shareholder Alignment Legal Risks emissions. Increased capital expenditures are required by some operators to mandatory changes and transitions resulting from policy and regulatory reform will be accommodate and conform to mandatory changes and transitions. borne by our operating partners. Subject to instances where higher cost projects are • Carbon pricing policies are implemented globally with certain governments imposing rendered uneconomic and are temporarily or permanently abandoned, we will continue Diversity, Inclusion caps on carbon. Low-carbon energy producers are rewarded and given a competitive to have no exposure to costs of operations in which we hold royalty and stream interests. and Well-Being advantage. Carbon pricing increases the costs of many mining operations impacting the viability of some operations with higher cost structures and/or large carbon Energy • Lower demand for oil and less capital available to oil operations will reduce the level of Climate Action footprints. drilling activity on a number of our energy portfolio assets, reducing the rate of production • Greater climate impacts will increase sensitivity to the environmental impacts from those assets. Oil prices may increase as a result of supply shortfalls, which would of mining operations, making the permitting of new mines increasingly difficult. mitigate the impact of such reduced production levels. While the production from these Transparency and assets will be lower, subject to certain assets being permanently abandoned due to decreased demand, much of the resource will still be exploited over time due to the Guiding Principles Market Risks • A reduction in overall demand for oil occurs due to gradual behavioural transition demand for fossil fuels in the continuing transition to low-carbon energy sources. to low-carbon goods and services and access to more sustainable, lower-cost and • Our current capital allocation strategy for energy opportunities will remain the same. About this ESG Report decentralized energy sources. Decreased prices adversely impact revenues of We will not look to grow the energy mix in our portfolio above 20% of our overall revenue energy producers, although most operations continue to be profitable, with lower to manage our exposure to fossil fuel related climate risk. cost producers remaining resilient to fulfil reduced demand, including in sectors Appendices such as petrochemicals. • Prices and demand for natural gas remains consistent, given perception as a Gold • Greater climate impacts will increase sensitivity to the environmental impacts of mining A: ESG Performance Table sustainable alternative or “bridge fuel”. operations, making the permitting of new mines increasingly dif昀椀cult. This may result in • Gold has a continued role as a “safe haven” in a financial landscape that can at development of brown昀椀elds assets over which we have existing royalty interests. B: Operators’ Emissions times be increasingly volatile. • Carbon pricing increases the costs of many mining operations impacting the viability of C: TCFD Disclosure some operations with higher cost structures and/or large carbon footprints. Most of the projects over which we have royalty and stream interests have strong economics and D: SASB Disclosure Reputational • Broader reputational implications for energy industry in low-carbon transition such projects are not expected to be stranded due to rising costs. Risks is mitigated for those pledging “net-zero” and executing low-carbon transitions, • The gold industry is energy intensive and there will be reputational risks for operators E: GRI Index including reliance on renewable energy sources. that do not decarbonize their operations. Many of our gold operators are best-in-class and F: Sustainable • There are impacts on the ability of energy producers to access equity capital or raise have taken steps towards making low-carbon transitions. To the extent that our gold Development Goals debt, but this does not extend to sustainable, low-carbon producers. operators make strides towards decarbonization through increased access to low-cost • Gold operators committing to and achieving staged decarbonization retain access large-scale renewable energy that will reduce their carbon footprint heavily weighted to G: KPMG: Independent to equity capital and debt. electricity, this will mitigate climate-related reputational risk for such operators, and Limited Assurance Report indirectly for our company, due to decreased reliance on fossil fuels. • The effort to tackle climate change and to cover losses created by climate change will H: Carbon Neutral Initiative require substantial government capital. This will increase government de昀椀cits and debt. Gold’s appeal will be preserved due to its “safe haven” role.