Franco-Nevada Corporation 56 Market Risks Reputational Risks Potential Financial Impact for: Description Our Operating Partners Our Company SUMMARY Shifts in supply and demand for certain commodities based on their real or perceived impact on the climate. Reductions in commodity prices may impact the applicable operator’s bottom line and in serious cases may ultimately render a project uneconomic, which may lead to projects being abandoned or placed on care and maintenance until commodity prices recover. • Corresponding direct impact to Revenues (e.g. our sales) and potential long-term delay (deferral) of Revenues if project placed on care and maintenance BY COMMODITY Changing customer behaviour: Demand for certain commodities is expected to reduce as a result of the energy transition, which may impact prices. While this trend could be the same across a single commodity, in some cases the significance of this risk will vary depending on the carbon intensity of specific assets. In the latter case, it is possible that the market will start to fragment between low-carbon and high carbon products, with some customers willing to pay a premium for low-carbon products. Commodities at highest risk: Energy (oil, gas, NGLs) Energy producers may encounter reduced demand for their products due to changing customer behaviour in the energy transition. The level of risk and timeframe will vary depending on the carbon production intensity of assets – for instance, low-carbon gas is projected to be competitive in many jurisdictions for longer than high-carbon intensity oil. Other non-energy producers may be impacted but this shift is more likely to be specific to the carbon intensity of a given asset than a blanket trend witnessed across the commodity group. • Potential reduction of Revenues if demand for carbon-intensive commodities or assets are reduced due to changing customer behaviour • Potential impact to valuation of Assets on balance sheet (e.g. impairment or write-off of assets) if decrease in demand causes uneconomic assets to become stranded Potential Financial Impact for: Description Our Operating Partners Our Company SUMMARY Changing public perceptions of an operator’s climate-related activities and their contributions to or detractions from the transition to a low-carbon economy. May affect access to equity capital or the ability to raise new debt or refinance existing debt, which may lead to projects changing hands or being temporarily or permanently abandoned. • Potential delay (deferral) of Revenues if operator’s inability to raise capital or finance debt results in operations changing hands • Potential impact to valuation of Assets on balance sheet (e.g. impairment or write-off of assets) BY COMMODITY Stigmatization of sector: Growing scrutiny of the climate impacts of different sectors has created the perception that some industries are inherently ‘dirty’ and ‘polluting’, creating a stigma around certain activities. Commodities at highest risk: All commodities Stigmatisation of sectors could lead to reduced demand and lower prices for products and services. Of particular risk of stigmatization will be ‘heavy industry’ commodity producers, including energy producers. This risk can be mitigated by operators and industries deploying energy efficient and low-carbon technologies in the production process and the lower carbon emitting producers, even within a stigmatised industry, will be rewarded while there is still demand for their products. • Potential reduction of Revenues if demand for carbon-intensive commodities or assets are reduced due to stigmatization of sectors • Potential impact to valuation of Assets on balance sheet (e.g. impairment or write-off of assets) if decrease in demand and/or lower prices causes uneconomic assets to become stranded Shifts in consumer preferences: Climate change could lead to a moral shift in customer preferences, with stakeholders becoming increasingly aware of their own carbon footprint and new regulations and policies incentivising lower-carbon lifestyles. Commodities at highest risk: Energy (oil, gas, NGLs) and gold Energy operators are most vulnerable to this risk as customers are likely to receive incentives to reduce use of these commodities due to their climate impacts. Gold and other commodities that are not considered to be essential to industry or the energy transition may come under greater scrutiny, potentially resulting in reduced demand. • Potential reduction of Revenues if demand for carbon-intensive commodities or assets are reduced due to shift in preferences • Potential impact to valuation of Assets on balance sheet (e.g. impairment or write-off of assets) if decrease in demand and/or lower prices causes uneconomic assets to become stranded Increased stakeholder concern: With stakeholders having growing access to information about company performance, those companies perceived to be causing environmental and social harms could encounter increased scrutiny over their impacts. This could pose a significant threat to a company’s social license to operate and require proactive mitigation. Commodities at highest risk: Energy (oil, gas, NGLs) Operators producing commodities that are not critical to the energy transition and/or typically have high-carbon intensity will be most vulnerable to this risk, with energy producers being particularly exposed. This may impact operator’s access to capital and asset valuations significantly impacted if negative stakeholder concern erodes operators’ social license to operate. • Potential reduction of Revenues if demand for carbon-intensive commodities or assets are reduced due to negative feedback or concern • Potential impact to valuation of Assets on balance sheet (e.g. impairment or write-off of assets) if erosion of social license causes uneconomic assets to become stranded Message from our CEO Report Highlights About Franco-Nevada Responsible Capital Allocation Community Contributions Good Governance and Shareholder Alignment Diversity, Inclusion and Well-Being Climate Action Transparency and Guiding Principles About this Sustainability Report Appendices Appendices A: ESG Performance Table B: ISSB Sustainability Disclosure Standards C: SASB Disclosure D: GRI Index E: Sustainable Development Goals F: KPMG: Independent Limited Assurance Report G: Carbon Neutral Initiative