SCH2017_DRF_EN_Livre.indb

2 Sustainable development

Sustainable development at the heart of our strategy

Process to select and prioritize commitments

E the progress plans are removed from the barometer; this is also the case with indicators that have reached a threshold; they continue to be monitored internally if necessary; E progress plans that respond to new issues are implemented. Operation and monitoring of the Planet & Society Barometer The Planet & Society Barometer 2015-2017 is part of the 2015-2020 company program. It comprises 16 key performance indicators scored out of 10. The average of the scores, with each indicator weighted equally, provides the overall performance of the barometer. Departments directly affected by the progress plans (Human Resources, Environment, Access to Energy, etc.), each represented by a project leader, implement measures to achieve the objectives of the plans. This project leader works directly with local managers in their respective areas. The quarterly results of the barometer are supervised by the Sustainability Executive Committee, which makes decisions on any corrective actions that may be necessary to achieve the objectives. This committee meets twice a year. The HR and CSR committee within the board of directors conducts an annual review of the Group’s sustainability policy, analyzing in particular the performance of the barometer. The barometer score is included in the variable compensation of Global Functions and company leaders (7,000 people), in the profit- sharing incentive of the two largest French entities of the Group (10,000 people), and in the long-term incentive plans (2,000 people). The barometer’s indicators are generally part of the variable compensation of the teams in charge of them. The table above shows Schneider Electric’s sustainable development performance in 2017. When the barometer was launched on January 1, 2015 the overall score was 3.00/10. At the end of 2017, the Company exceeded its target of 9/10 and attained 9.58/10. As of January 1, 2018, a new barometer has been launched, comprising 21 key indicators for a new 3-year period (2018-2020). Communicating the results of the Planet & Society Barometer The Planet & Society Barometer is published through the following main channels: E the quarterly conference calls on the Group’s financial and non-financial results to investors and the business press; E the Group’s website (quarterly press releases, presentation of integrated quarterly results); E the Intranet (including a quarterly internal video featuring the CEO and the CFO on the quarter’s results – these videos have strong internal visibility); E the “Webradios”, which inform the Sustainability Fellows (see page 74) about performance and achievements for the quarter and provide an update on key sustainability topics; E the communications with the board of directors via its HR and CSR committee and the Executive Committee; E the Group’s annual reports (registration document including the statutory auditors’ report, strategy and sustainability report, integrated report); E the quarterly internal rating for managers on monitoring the level of achievement of objectives related to variable compensation;

Schneider Electric has used the Planet & Society Barometer as its sustainable development dashboard since 2005. To have a significant impact and initiate lasting change, a performance measure is required. That is why Schneider Electric defines specific objectives and measures its results each quarter. The action plans of the barometer are carried out at the Group level. There are no recognized standards that define an organization’s sustainable development performance. The Planet & Society Barometer is Schneider Electric’s response to this matter. It allows the Group to meet its sustainability challenges and advance on the 3 pillars (Planet, Profit and People). The barometer uses a scoring scale of 10 and provides an overall measure of Group improvement in sustainable development. The aim of the Planet & Society Barometer is to: E mobilize the whole company around sustainability objectives; E share the Group’s progress plans with stakeholders. On a daily basis, Schneider Electric seeks to prove that economic, environmental and social interests are convergent. Every 3 years and as part of the company programs, the Group defines a new Planet & Society Barometer. The barometer is thus one of the indicators of Schneider Electric’s company program, which sets the Group’s strategic priorities every 3 to 5 years. The progress plans are drawn up following an exercise to identify sustainability issues based on external and internal inputs. We hear the voices of our stakeholders when we design a new barometer, via the materiality matrix that we carry out, our meetings with SRI investors, the questionnaires that we receive from rating agencies or from our customers, which all shed light on our strategic points of differentiation and on the salient societal concerns. For each target and indicator, and this is a critical point for the operational implementation of the barometer, the ambition is defined in consultation with the departments concerned. For the Group, it is the guarantee of a strong mobilization in the field and in consistency with the actual priorities; for the teams, integrating a program into the barometer is the assurance of having the necessary means and visibility to progress. At each new period, the update of the barometer takes into account the results obtained, the progress still expected, the emergence of new topics and new priorities, and the experience gained. Thus, our barometer is a powerful tool to move the Group forward on its major challenges. The Sustainable Development Department presents the draft version of the Planet & Society Barometer to the HR and CSR committee of the board of directors, to the European Works Council, and to the Sustainability Executive Committee for validation. This latter committee includes 4 members of the Executive Committee: Strategy, Human Resources, Global Supply Chain and Marketing. The barometer is then approved by the CEO. Four cases may be included from one barometer to the next: E the progress plans are maintained in the barometer and their targets are renewed or increased; E the progress plans change, new and more innovative or better adapted indicators that cover the same subject are implemented; the old indicators continue to be monitored internally if necessary;

2017 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

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