11 Life Is On | Schneider Electric 2021 Trust Report 3 Zero tolerance for corruption The exposure of the Group to corruption risk has been increasing for several years, due to the expansion of the Group’s activities in new economies, especially in Asia and Africa, through organic growth, a nd mer gers a nd ac quisitions. The business model of the Group relies on a large ecosyst em of partners. This ecosystem may represent a risk for the Group, being accountable for ac tivities p erformed o n its b ehalf, a nd i n regards to potential conflicts of interest or unethical solicitations. In addition, the Group is participating in complex projects involving a large range of partners in sectors at risk, such as oil and gas, and with end-users from the public sector in countries at risk. Over the past years, the increase of law enforcement by public authorities, higher press coverage of fines imposed on companies, and new regulations requiring a strong compliance program have significantly changed the potential impact of corruption risks. Schneider E lectric ha s a z ero t olerance p oli cy w ith regard t o corruption. This commitment materialized through a strong and continuously de veloping A nti-Corruption C ompliance pr ogram, which is part of the Ethics & Compliance program. 3. 1 Risk assessment To meet the legal obligations specified by the December 9, 2016 French law known as the Sapin II law, the Company launched a risk mapping exercise focusing on corruption risks, which was conducted in 2018 at global level and in 2019 at regional levels. In 2020, ac tion pl ans w ere i mplemented i n ac cordance w ith risks iden tified. In 2021, this risk assessment was updat ed as part of the new Ethics & Compliance risk mapping, which focuses in particular on Corruption and Conflicts of Interest. 3.2 Risk management 3.2.1 Anti-Corruption framework As stat ed in our Trust Charter and Anti-Corruption Policy, Schneider Electric is committed to comply with all appl icable laws and regulations, such as the OECD’s Convention on Com ba ting B ribery of Foreign Public Offici als in International Bus iness Transactions, the US Foreign Corrupt Practices Act (FCPA), the UK Bribery Act, and the French Sapin II law. Schneider E lectric a p plies a z ero-tolerance p olicy t owards corruption a nd o ther u nethical b usiness pr actices a nd c onsiders that “doing things right” is a key value-creation driver for all its stakeholders. We count on our employees and third parties to promote business integrity. For doing so, we must provide them with the tools to encourage them to act right. In order to meet the requirements of the French Sapin II law, the Group released an Anti-Corruption Policy. The Policy was reviewed in November 2019 to take into account results of the corruption r isk map ping a nd t o pr ovide em ployees w ith e xamples illustrating situations they may face. The Anti-Corruption Policy shall serve as a handbook that anyone may consult when having doubts about appropriate business practices. It is not int ended to address eve ry i ssue o ne m ay en co unter, b ut it pr ovides approp riate examples of corruption risks and offers guidance to resolve many e thical d ilemmas. www.se.com The Gifts & Hospitality Policy p rovides guidance to employees on the ethical handling of gifts and hospitality received and given b y S c hneider E l ectric em ployees. A new version of the Business Agent Policy was released in August 2019 to meet legal requirements and public authorities’ g uidance, especially regarding risk-based approach of the due d iligence, a s w el l a s internal r ecommendations f ollowing se veral audits p erformed o n applicability o f t he p olicy i n 2018. The risks associated with onboarding new acquisition targets a re n umerous a nd c onsequently, M erger a n d A cquisition ( M &A) guidelines ha ve b e en p ublished t o iden tify, m anage, a n d m itigate those risks at the earliest stage possible. These guidelines aim to cover the very first steps of identifying potential targets (M&A strategy), what to look out for in data-rooms, and finally how w e plan to integrate the acquired entity into our compliance o rganization. T hese s ame r u les a lso a pply w hen S c hneider E l ectric decides to make a divestiture with a step-by-step approach to m anaging t he t r ansition. In 2021, a Conflict of Interest Policy was published, in particular c reating a procedure to disclose and manage any identified c onflict of interest. A Donations Policy has also been published a nd i mplemented, w hich a ims, a mong o t her t hings, t o manage r isks of unlawful use of money and then corruption. 3 .2.2 Empowering e m ployees a gainst c orruption I n 2020 and 2021, a set of anti-corruption e-learnings was built, p roviding guidance on real life risk scenarios; it was designed t aking into account the trainees’ needs and expectations, and i s mandatory for targeted employees exposed to corruption risks through their job codes, i.e. those identified as such by t he corruption risk mapping. This led to a curriculum of modules o f e-learnings, deployed in 2020: a general module on the “zero t olerance” message against corruption and an explanation of the l egal framework and risks, and two specific modules about third parties and gifts and invitations. In 2021, four additional modules w ere created about facilitation payments, conflict of interest, c onditions that make people commit the wrongdoing, and how to r aise c oncerns i n S c hneider E lectric. T he m odules w ere s upported by top leaders’ videos demonstrating the “tone at the top” on this c rucial matter and are available in 14 languages. In 2021, the set o f anti-corruption e-learnings has been assigned to more than 40,000 employees and 97% completed it. 3 .3 Focus o n re sponsible lob bying, political a ctivity, a nd d onations I n its Trust Charter, Schneider Electric takes a clear stance with r egards t o r e sponsible lobbying, p olitical ac tivity, a nd d onations. As a Company, Schneider has a role to play in the public debate a ddressing leading issues with the global community. It is n ecessary that the Group states its positions clearly, participates in technical discussions, and supports responsible public policy de velopment.