Message from our CEO 61 Report Highlights SOCIO-POLITICAL, REGULATORY AND LEGAL RISKS About Franco-Nevada Potential Financial Impact for: Description of Socio-Political, Regulatory and Legal Risks Our Operating Partners Our Company Responsible SUMMARY Capital Allocation Policy, regulatory and legal changes in a jurisdiction that seek to promote These regulatory and legal changes may require extensive capital • Potential delay (deferral) of Revenues if mandatory adaptation results in Community adaptation to climate change and/or constrain the activities of operators and expenditures by operators to accommodate or conform to such changes, delays or cessation of operations Contributions operations that contribute to adverse effects of climate change. which may lead to projects being abandoned or placed on care and • Potential impact to valuation of Assets on balance sheet (e.g. impairment or maintenance if such mandatory expenditures erode anticipated profitability. write-off of assets) Good Governance and BY COMMODITY Shareholder Alignment Increased pricing of GHG emissions: Commodities at highest risk: All commodities Diversity, Inclusion Regulation of emissions, such as through carbon taxation or cap-and-trade These regulatory and legal changes may require extensive capital • Potential delay (deferral) of Revenues if mandatory adaptation results in and Well-Being schemes, can significantly increase costs for businesses. As more expenditures by operators to accommodate or conform to such changes, delays or cessation of operations countries set net-zero emissions goals and increasingly ambitious 2030 which may lead to projects being abandoned or placed on care and • Potential impact to valuation of Assets on balance sheet (e.g. impairment or targets, it is possible that carbon pricing regulations could become more maintenance if such mandatory expenditures erode anticipated profitability. write-off of assets) Climate Action widely implemented and/or made more stringent globally. The impact of these regulations will differ depending on the location of the assets and the carbon intensity of production, which varies significantly both within and Transparency and between commodities. Guiding Principles Mandates on and regulation of existing products and services: Commodities at highest risk: Energy (oil, gas, NGLs) About this ESG Report If carbon-intensive industries are stigmatised for their contributions to Given the contribution of fossil fuels to climate change, regulation and • Potential reduction of Revenues if demand for carbon-intensive commodities climate change, the use of products and services from these industries mandates on the use of these products, including derivatives such as is restricted due to widespread regulation of products could be curbed by new regulations. gasoline and plastics, may be subject to regulation from policy makers (e.g. Appendices ban on gas-powered cars in city centers, increased focus on reducing single-use plastics), which could impact demand for products. A: ESG Performance Table Commodities at highest risk: All commodities Enhanced emissions reporting obligations: B: Operators’ Emissions As governments seek to improve emissions data and meet their respective Companies may face growing pressure to report their emissions in • Potential increase to Operating Expenditures with growing demand to collect C: TCFD Disclosure long-term emissions goals, there may be increased obligations to report on compliance with mandatory disclosure regimes, which will increase costs. data, produce emissions reports, obtain external assurance, etc. energy usage and emissions and/or to obtain independent external Such companies could also encounter financial losses as a result of fines if D: SASB Disclosure assurance for such data. Companies may be required to comply with they are unwilling or unable to comply with new regulations. detailed mandatory TCFD or other reporting legislation as a result. E: GRI Index Exposure to litigation: Commodities at highest risk: Energy (oil, gas, NGLs) F: Sustainable Development Goals The expansion of climate-related legislation creates litigation risks for those Legal actions against Energy producers could increase operating costs (e.g. • Corresponding direct impact to Revenues upon reduction of demand for companies that are unable to keep up with the pace of developments. through payment of legal fees, fines, settlements, or insurance fees), reduce commodities due to reputational damage to entire sectors or industries G: KPMG: Independent Companies in heavy industries, such as mining and oil and gas, could also demand for products, and cause reputational damage. Energy producers in • Potential impact to valuation of Assets on balance sheet (e.g. impairment or Limited Assurance Report face legal action due to their relatively higher levels of emissions/ North America and Europe have already faced legal challenges on various write-off of assets) if increased operating costs cause uneconomic assets to emissions intensities, with some claimants also seeking to link climate grounds, with accusations ranging from misleading investors to infringing on become stranded H: Carbon Neutral Initiative change to other sustainability concerns, such as human rights. the rights of nature and the right of life of future generations.