SCH2017_DRF_EN_Livre.indb

2 Sustainable development

Green and responsible growth driving economic performance

RBA partnership. Most exposed countries include China and India, while most exposed commodities include sheet metal and connectors regarding production procurement, and construction and travel as regards indirect procurement. Now that the riskier suppliers are identified, a combination of both prevention and control initiatives can be launched. The supplier vigilance plan is made of several steps. First, a specific training campaign will be done for the Schneider Electric buyers and auditors involved as well as the suppliers targeted by the program. Online modules translated in multiple languages are already available through the RBA-online platform, on topics such as: child labor; forced labor; environmental pollution; health and safety working conditions. Then, the RBA self-assessment questionnaire will be send to the riskier suppliers and reviewed by the Schneider Electric procurement staff in charge of the business relationship. Last, depending on their level of exposure and their results to the self-assessment, some suppliers will be audited per the RBA’s auditing protocol in the following domains: labor practices; health & safety; environment; business ethics. A specific process has been validated for supplier disengagement if unresolved sustainability risks. In addition, existing processes towards supplier selection, contract management, audit, etc. have been reviewed in Q4 2017, to prepare for 2018 updates. Reflecting the importance of this program, a Global Procurement Project leader has been specifically appointed and the number of suppliers under vigilance having received an on-site audit is introduced as a new indicator in the 2018-2020 Planet & Society Barometer, which measures the Group’s sustainability performance. This new indicator comes with an objective of auditing 300 suppliers’ sites over 2018-2019-2020. Concerning the second pillar, the following risks have been identified and already managed for many years, more particularly: labor practices, health and safety conditions, environment protection, and Description of risks and opportunities As a Global Compact signatory, Schneider Electric has been involved in an ambitious approach to include sustainable development challenges in the supplier selection and working processes. This approach is all the more important as Schneider Electric’s Procurement volume represents more than EUR12.8 billion. Schneider Electric has a risk management system to identify and manage critical suppliers, and uses a tool, SRIM – Supplier RIsk Management –, to capture risks and ensure the follow up of identified cases with an extended source. The Group has also been performing sustainability risks assessments with its own purchasing specialists, supported by its Schneider Supplier Quality Management processes and the ISO 26000 assessments for strategic of suppliers (see below). 2.4

business integrity. In that regard, the existing environment, health & safety internal assessment has been fully revised upgraded and digitized, to be deployed in 2018. In addition, the other existing processes have been improved during an update carried out during the last quarter of 2017 ( e.g. Key Internal Controls revision, applicable to all entities and subsidiaries). Last, a specific program to prevent forced labor will be launched in 2018. To do so, Schneider Electric has decided to join the RBA’s Trafficked & Forced Labor taskforce launched in 2014 with a range of activities including training of key on-the-ground actors, review of labor agencies, and a range of other actions to be taken with a multi-industry approach for the most positive impact on workers. To strengthen its processes, the Company will also join the RBA’s Responsible Labor Initiative created in 2017, focused on labor agents in the supply chain and risks associated with the recruitment of foreign workers. On the third pillar, we plan to implement specific due diligences on the Company’s projects activity in 2018. The objective of these new measures would be to make sure that our business partners also commit to respect our standards in terms of labor practices, business ethics, environment, health and safety. In addition, a new professional alert system has been developed in 2017 and is available online since the beginning of 2018. This system, called GreenLine, allows all the Schneider Electric external stakeholders, including suppliers, subcontractors, customers and business agents, to raise a concern on the following items: corruption; conflict of interests; falsification of documents; accounting and auditing manipulation; theft; fraud; embezzlement; child labor; forced labor; human trafficking; health & safety; environmental pollution; harassment; discrimination. The GreenLine is managed similarly to the internal alert system R&ED Line; each case is dealt with internally with the highest level of gravity by the Fraud Committee. It is intended to be communicated to our stakeholders through our official website and our Supplier Code of Conduct. In addition, Schneider Electric is reinforcing its sustainability risk assessment by geography and type of activity as part of its duty of vigilance plan, based on the following categories of risks: human rights, environment, health & safety, and anti-corruption. In this context, Schneider Electric has performed a risk analysis in early 2018 among all its suppliers with the help of a recognized third-party expert mapping tool available through the RBA partnership. Top countries include China and India, top commodities include sheet metal and connectors regarding production procurement, and construction and travel as regards indirect procurement. Last, in the first quarter of 2018, Schneider Electric is opening its professional alert system to all stakeholders, including suppliers.

Relations with subcontractors and suppliers

2017 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

85