SCH2017_DRF_EN_Livre.indb

2

Sustainable development Schneider Electric’s commitment to environmental performance

3. Schneider Electric’s commitment to environmental performance

Overview

3.1

Introduction Our Environmental strategy is both a reflection and an enabler of our business and profitable growth strategy, our innovation strategy, and our sheer purpose. This chapter depicts how our Environmental strategy is core to whatever we do. With alarming scientific evidence available on climate change, resources depletion, biodiversity losses, as much as identified opportunities, we consider environmental performances and targets have to be rigorously quantified. Time has come to move away from vague “sustainability” goals, blending disconnected topics, as well from “incremental – i.e. year on year – resource efficiency gains ambitions”, and rather ensure are addressed the bolder issues of “affordability” and “compatibility”, namely: E Climate compatibility: are business model and supply chain “+2°C compatible”? E Planet compatibility: are resource consumption and recovery “One planet compatible”? E Life compatibility: are product design and industrial practices “Life preservation compatible”? Our compass to gauge our environmental performance is changing to reflect the above: we are now able to well understand all dimensions of our CO 2 footprint, including notably CO 2 saved on our customers’ end, and therefore how we help fight climate change through our offers. External disclosure is ready and starts in 2018 within our Planet & Society Barometer 2018-2020. On the resource footprint side, we have firmed-up a global partnership with Global Footprint Network, and are working towards assessing how our solutions help #Movethedate of Earth Overshoot Day later in the year. Description of risks and opportunities A sound environmental strategy aims at addressing risks and seizing opportunities, and some environmental transformations impact both concurrently. Risks and opportunities are addressed as follows by environmental transformations: E Environmental resource productivity ( e.g. reduced energy and materials consumption) helps both reduce operating costs -which is a significant business opportunity with positive impact on profit & loss- and reduce risks related to resource price volatility, and availability;

E Decarbonization of operations: with costs assigned today to CO 2 commodity in various parts of the globe and various application domains ( e.g. Electricity, Oil, Carbon markets and Carbon trading schemes, etc.), and considering that this trend is likely to expand going forward, it is critical for organizations to work towards -50% CO 2 emissions by 2050 as per Science-Based Targets. Organizations failing to demonstrate this may be considered as risky investments, and their value undermined. From another perspective, those companies agile in decarbonizing their supply chains, and even more their value propositions, will certainly position themselves favorably in the eyes of customers and investors alike (1) ; E Proactive chemical substances substitution is again both an opportunity, as an increasing share of customers, building standards and norms, expect less and less hazardous substances in products, and a risk avoidance mechanism as well, as it helps remain ahead of regulations, notably REACH, RoHS and California’s Proposition 65, as well as avoiding shortages, and preserving access to markets; E Circular economy innovations: an obsession to avoid wastage, reuse, repair, retrofit and recycle as much as possible, translates into cost savings which can be massive opportunities for companies. A circular mindset also triggers process transformations, and in some cases even opens door to innovative business models enhancing customer intimacy and thus loyalty; E Environmental information & footprint transparency, superior environmental compliance: more and more customers, green building standards, distributors and electricians, prefer buying or prescribing offers with strong green credentials. It is both a risk, if one is too indulgent in this domain, or an opportunity to harness if a proactive approach can be adopted: market demand can shrink or grow, products can be sold or sit idle. Such environmental intelligence is really critical; E Site and property environmental excellence: ill-managed industrial processes can trigger spills and contamination of water, soil and air, and this is clearly a risk for a company as much as for the environment. However , a proactive approach towards site & property environmental risks helps preserve continuity of operations, reduce risks of unexpected legal action and avoid environmental remediation costs. In addition, removal of hazardous and chemicals substances in workshops helps preserve workers’ health.

(1) See, for example, the letter from Larry Fink (Founder, President and CEO of BlackRock, Inc.) to CEOs at the end of 2017, “A sense of purpose”, and the final report of the High-Level Expert Group on Sustainable Finance to the European Commission at the end of January 2018.

2017 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

92