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2 Sustainable development

Green and responsible growth driving economic performance

now part of the standard purchaser curriculum; and more advanced training allows employees to learn how to question strategic suppliers during the business reviews (whether assessed by a third party or not). For off-limit situations, Schneider Electric favors a practical training approach, based on case studies, to ensure that purchasers have a clear understanding of situations that are unacceptable per the Group’s standards. This also includes how to react if such a situation is encountered. In addition, in 2017 Schneider Electric has committed to implementing a comprehensive vigilance plan within its supply chain. See p. 84. Conflict Minerals rule In August 2012, the SEC (US Security and Exchange Commission) adopted the so called Conflict Minerals rule as part of the Wall Street Reform and Consumer Protection Act. This rule requires companies to conduct a “reasonable country of minerals’ origin inquiry” and due diligence to determine whether “conflict minerals”, as defined in the rule, are used in their supply chain. Although this rule does not apply directly to Schneider Electric – since we are not registered with the US SEC, we are deeply concerned about social and environmental conditions in some mines that could supply metals for our products. As part of our ongoing sustainable business practices, we are committed to increasing our responsible metal sourcing efforts. In working towards these commitments, we have taken a number of steps including: E updating our Procurement terms and conditions to reflect our expectations from our suppliers; E establishing a “Conflict Minerals Compliance Program” supported and sponsored by our top leadership. This program was developed based on the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas and other appropriate international standards; E identifying the use of conflict minerals in our products; E engaging with our suppliers so that they respond in a timely manner to our requests for evidence of compliance.

We also shared with all the suppliers concerned a letter from our Chief Procurement Director requesting as much cooperation as possible on this subject to establish our potential exposure. We are working with an expert third party, collecting information from our suppliers to identify the source of the minerals in question and ensure they are recognized as “Conflict-Free” within established International standards such as CFSI (Conflict-Free Smelter Initiative), London Bullion Market Association (LBMA) or others. We are aware of the complexity of this task, and we know it will take time to collect the needed information, but we are committed to contributing to this responsible sourcing initiative as well as responding to our customers’ potential concerns. At the end of 2017, we confirmed that more than 70% of the relevant purchases are “conflict-free”. The remainder are still under analysis, mainly due to the number of lower ranking suppliers who are themselves in the process of developing this initiative. Rollout of eco-responsible initiatives Schneider Electric is rolling out several eco-responsible initiatives with its suppliers. For example, Schneider Electric has chosen to go further than the European REACH and RoHS regulations. The approach is therefore rolled out in the Group over the whole product portfolio and all suppliers, regardless of their geographic origin. To support the REACH and RoHS projects, Schneider Electric has implemented a data collection process supported by a dedicated team to gather required information from its suppliers. This has allowed it to significantly reduce its response time to collect such information and therefore be quicker to respond to its customers’ inquiries. In addition to data collection, Schneider Electric put in place a review process for this data to guarantee the quality. Thanks to this process, the level of verification required for a given supplier can be adjusted, particularly in order to make the controls more stringent in cases where deviations have been detected. Another example is Schneider Electric’s commitment to support the small and medium enterprises network. This support is given through an approach to work in a adapted manner with certain suppliers. In France, Schneider Electric is a major player in the International SME Pact. Finally, by the very nature of its activity, the Group continually encourages its ecosystem (including customers and suppliers) to implement energy efficient solutions.

2.5 Ethics and Responsibility Description of risks and opportunities As a global company, Schneider Electric is convinced that its responsibility goes beyond compliance with local and international regulations and is committed to conducting its business ethically, sustainably and responsibly. The Company is constantly interacting with all the stakeholders throughout the world: its borders are expanding, its environment is

changing ever faster, its activities are becoming globalized and its social responsibilities are growing. The challenge is to gain and maintain the highest confidence of its stakeholders. To support each employee in this approach, the Group emphasizes the importance of placing responsibility at the heart of its corporate governance.

2017 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

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