LEGRAND_REGISTRATION_DOCUMENT_2017

INTERNAL CONTROL AND RISK MANAGEMENT Risk factors and control mechanisms in place

focused on the exposure of the Group’s sites to the increased risk of extreme weather events and natural disasters. (For more details about this analysis, please refer to chapter 4 of this Registration Document.); W on the profitability of its offerings, if a carbon emissions tax is introduced. Legrand has anticipated this risk by increasingly including the carbon dioxide price per ton into its operational considerations, notably investment decision processes since early 2016; W bylossoftrustamongststakeholders,andinparticularinvestors and customers, when there is no commitment to reduce our energy footprint or by not fulfilling our commitments. Legrand has joined two international initiatives against global warming: the Science Based Targets initiative, which calls on companies to commit to CO 2 emission reduction targets; and the Global Alliance for Energy Productivity, an international alliance that seeks to improve energy efficiency. For more details concerning the impact of Group activity on greenhouse gas emissions, the reader is also invited to refer to section 4.5.1. of this Registration Document.

Group for more than five years were ISO 14001 certified, while 25 were ISO 50001 certified. With regard to ISO 14001 and ISO 50001 certification, internal or external environmental audits were conducted in 2017: about 180 audits for ISO 14001 and eight for ISO 50001. Warning systems are in place to quickly inform the Group about actual or suspected pollution. Provisions for environmental risks are recognized when environmental assessments are available or remedial works are probable and their cost can reasonably be estimated. These provisions amounted to €8.6 million at December 31, 2017, none of which were individually significant. Concerning the environmental risks related to products, the Group, over and above the regulatory requirements of the RoHS Directive and the REACH regulation in Europe, has committed to complying with the restrictions on the substances identified in the RoHS Directive for all of its products sold worldwide. With regard to the challenges of climate change, the Group could be impacted at several levels: W faced with this new risk, Legrand has conducted a preliminary study into the vulnerability of its sites. So far, this analysis has Counterparty, liquidity, currency and interest rate risk and the corresponding financial instruments are also described in Note 5.1.2 on the management of financial risk, found in chapter 8. R 3.6.4.1 INTERNAL CONTROLWEAKNESSES Legrand’s international presence, its ongoing expansion and the diversity of its businesses result in many complex administrative, financial and operational processes. Its entities have varying levels of maturity in terms of internal control, operate in a variety of legal environments, and use different information systems. In this context, a flaw in the internal control system could make an internal or external fraud (theft, embezzlement, etc.) possible and/or result in the recording of inaccurate and/or inappropriate transactions or operations. Weakness in internal controls could also mean that corruption is not detected or prevented. More generally, the Group’s performance may be limited by inefficient processes. 3.6.4 – Financial risks

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In a bid to prevent a major failure in internal control, Legrand has defined a corpus of mandatory charters, rules, procedures and key controls that apply to all its subsidiaries. These rules and procedures are regularly updated to keep pace with changes in Legrand’s business, organization, processes and tools. The Company’s fundamental principles also include an ethics component, the requirements of which are impressed on all members of staff. The correct operation of the internal control system is assessed each year to ensure using a self-assessment process (see section 3.2.1 of this Registration Document), as well as through regular reviews and audits. Legrand makes every effort to include automated controls and audit tools in IT systems to optimize internal control within processes. The correct use of these tools is checked regularly by general or specialist internal auditors.

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REGISTRATION DOCUMENT 2017 - LEGRAND