www.se.com 12 2021 Trust Report However, Schneider believes that this representation of interests shall be conducted in a transparent and fair manner, allowing its third parties and stakeholders to understand its activities, positions, and statements. In particular, Schneider Electric does not engage in political activity or political representation and does not make any payment to political parties in relation to its public representation. In 2021, Schneider Electric has not been involved in sponsoring local, regional, or national political campaigning. In the US, political contributions can only be made by a corporation through a legally formed Political Action Committee (PAC) or Super Political Action Committee. Schneider Electric does not engage with Super PAC activity nor does it have a PAC in the US and therefore cannot make any political contributions in this country. Donations and lobbying activities are risks specifically addressed in the Anti-Corruption Policy. Schneider Electric presents information about its lobbying activities in the French High Authority for Transparency in Public Life, in the EU transparency register, and in the US Lobbying Disclosure Act Registration. For 2017 to 2020, the Group discloses membership fees towards trade associations, business coalitions, and think-tanks to a large extent in the sense that many organizations’ fees are not primarily focusing on political campaigns or legislative activities but rather on standardization activities and industry best practices. However, in an effort of transparency, those have been included as they could be referenced in policy development in the margin of their activities. The following geographies are covered: Europe, the US, China, and Russia, which are where the Group is mostly active when it comes to policy and legislation. Total contributions to such groups globally amounted €3.2 million in 2017, €2.6 million in 2018, €5.2 million in 2019, €5.9 million in 2020. 2021 data is not available at the time of writing as reporting on these matters typically ends mid-year or end of year. Largest contributions and expenditures concern two main engagement topics: • The first is “sustainable energy for all”: Schneider Electric believes that energy management and energy efficiency are critical to move towards a new energy landscape and therefore supports a policy framework that unleashes the business and climate opportunities related to the new energy landscape. Contributions and expenditures on this topic amounted €0.51 million in 2020 (€0.52 million in 2019) globally; • Th e second is “powering the digital economy”: The Group supports the emergence of digital economy to bring new opportunities for businesses and people and therefore supports a policy framework that facilitates the digital transformation globally. Contributions and expenditures on this topic amounted €0.47 million in 2020 (€0.27 million in 2019) globally. 4 Compliance with tax regulations Schneider E lectric G roup eng ages t o comply w ith t he international and local tax regulations applicable in each of the countries in which it operates, and to provide to the tax authorities with all the information necessary to enable them to carry out their mission. The tax policy of the Group can be consulted on our website at se.com Schneider E lectric 5 High standards for the quality an d safety of our products Quality is defined as “conformance to requirements or fitness for use”. Constant customer satisfaction and quality change would allow more proactive engagement to maximize our organization’s ability to successfully achieve our overall business strategy, purpose, and mission. Schneider Electric therefore understands that delivering superior quality is the foundation of an ultimate customer experience. 5.1 Risks and opportunities Schneider Electric has more than 260,000 references produced in 191 factories, spread across 46 countries around the world. Operating in essential industries, product quality and safety is a critical topic for the Group as product malfunctions or failures could result in Schneider incurring liabilities for tangible, intangible damages, or personal injuries. The failure of a product, system, or solution may involve costs related to the product recall, result in new development expenditure, and consume technical and economic resources. Schneider Electric’s products are also subject to multiple quality and safety controls and regulations and are governed by both national and supranational standards. New or more stringent standards or regulations could result in capital investment or costs of specific measures for compliance. The above-mentioned costs could have a significant impact on the profitability and cash equivalent of the Group. The business reputation of Schneider Electric could also be negatively impacted. Indeed, the Group has been impacted by several recalls recently, more or less ranging from EUR 10 million to EUR 40 million, depending on the case. Risks identified by Schneider Electric in regard to product, project, system quality, and offer reliability can be: • De sign quality concerns • Ma nufacturing and Logistic issues • De ficient product safety • Sof tware quality • Br and labelling, Supplier & Supply mismanagement The above risks have therefore convinced the Group to reinforce the focus on Quality, Reliability and Robustness of its offers and turn the above listed risks into opportunities for sustainability and efficiency such as: • Mo re reliability and agility in our designs for sustainable offers • Mo re robustness in our manufacturing and logistics processes • Mo re digital in our partnerships and more circularity in our supply chain to reduce our carbon footprint 5 . 2 Quality group policy S chn eider Electri c, tha nks t o it s “Issue to Pr evention” pr o cess, systematically analyses the root causes of any failures in a continuous i mprovement approach. This process is split up into three clear steps: 1 The r esol ution – to solve the issue fast and well 2 The a nalysis – to identify severe and recurrent issues 3 The p revention – to fix the systemic root causes for good F rom t hese a na lysis pha ses, S chneider E l ectric ac knowledges that half of the failures come from the design stage and the other half f rom t he manufacturing. S chneider ha s designed s pecific programs to address both ends of these failures.