www.se.com Schneider Electric 94 2021 Sustainable Development Report 4 Being efficient with Resources 4.2 Eco-efficient manufacturing 4.2.1 Risks and opportunities Environmental risks related to manufacturing include soil, water, and air contamination. For instance, the release of hazardous substances can be harmful for fauna, flora, and human health. It can also disrupt continuity of operations and tarnish reputation. In addition, with 183 factories and 94 distribution centers in our Global Supply Chain organization, spread across dozens of countries and different national environmental regulatory frameworks, risks of non-compliance exist. These risks include for instance effluent management, handling of waste, or greenhouse gases related expectations. A proactive approach towards site and property environmental risks and environmental compliance helps preserve the continuity of operations, reduce reputational and legal risks, and avoid expensive remediation steps. When Schneider runs projects for customers, its superior execution ability on environmental matters may trigger preference from its customers and give the Group an edge over the competition. Resource and energy efficiency delivers not only financial savings, but also limits the Group’s exposure to commodity-price volatility and shortage risks. The risk extends to the reliability of the energy on which a facility relies to maintain production. The Group’s CO 2 emissions contribute to climate change and may also incur additional costs as carbon taxes become implemented worldwide. Facilities and industrial assets themselves are also at risk of acute and chronic climate events which can disrupt the supply chain and endanger lives. By using lean and clean eco-efficient operations, Schneider can outperform competitors and mitigate risks. The Group believes environmental performance is a powerful tool to innovate towards a more efficient and resilient supply chain and generate bottom-line savings. By using its own EcoStruxure ™ architecture to achieve this ambition, the Group also showcases carbon efficient architectures to its customers. 4.2.2 Group policy Schneider Electric continuously works towards a greener supply chain to protect the environment, decouple its activity from the consumption of natural resources, and innovate to build a more circular supply chain. These ambitions are included in the Group’s supply chain strategy, and referred to as Schneider Sustainability Essentials (SSE), starting 2021. The Group’s eco-efficient manufacturing goals: • Protect the environment, prevent pollution, and limit emissions; • Continuously improve the environmental management system and meet compliance obligations; • Decouple the supply chain from natural resource consumption; • Invent circular business models and supply chain loops; • Include the environment in its strategy and governance; • Extend environmental ambitions to suppliers and partners; • Spread a culture of environmental excellence in the company. The Group’s energy management goals: • Reduce the energy intensity of its operations, sustainably decoupling energy consumption from activity growth; • Reduce the CO 2 intensity of energy consumption, and absolute CO 2 footprint, in line with the Group’s commitments to achieve a 1.5°C climate change trajectory; • Adopt Schneider’s own Energy Management and Automation EcoStruxure ™ solutions wherever possible, to showcase the Group’s solutions for customers and business partners, and help embark them onto an energy excellence journey. Schneider Electric 2025 sustainable supply chain ambitions 0 fatal and serious accident 100% of applicable sites certified with ISO 14001, ISO 50001 and ISO 45001 150 Zero-CO 2 sites 90% of electricity comes from renewable sources 100% of sites deliver energy savings, with EcoStruxure ™ Power and EcoStruxure ™ Resource Advisor Top 1,000 suppliers reduce operational CO 2 emissions by 50% 15% CO 2 efficiency in transportation 200 ‘Waste-to-Resource’ sites 100% of packaging is free from single-use plastic and uses recycled cardboard 100% sites with Circular supply chain innovations 100% sites with local biodiversity preservation programs & water efficiency Preserve life and act responsibly Act for a climate positive world Be efficient with resources