101 Life Is On | Schneider Electric www.se.com Chapter 2 – Sustainable development Strategic Report 2. 2.2.3 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, and mergers and acquisitions. The business model of the Group relies on a large ecosystem of partners. This ecosystem may represent a risk for the Group, being accountable for activities performed on its behalf, and in 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 Electric has a zero tolerance policy with regard to corruption. This commitment materialized through a strong and continuously developing Anti-Corruption Compliance program, which is part of the Ethics & Compliance program. 2.2.3.1 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, action plans were implemented in accordance with risks identified. In 2021, this risk assessment was updated as part of the new Ethics & Compliance risk mapping, which focuses in particular on Corruption and Conflicts of Interest. Please refer to section 2.2.2 “Ethics & Compliance program”, page 95. 2.2.3.2 Risk management 2.2.3.2.1 Anti-Corruption framework As stated in our Trust Charter and Anti-Corruption Policy, Schneider Electric is committed to comply with all applicable laws and regulations, such as the OECD’s Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, the US Foreign Corrupt Practices Act (FCPA), the UK Bribery Act, and the French Sapin II law. Schneider Electric applies a zero-tolerance policy towards corruption and other unethical business practices and considers 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 risk mapping and to provide employees with examples 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 intended to address every issue one may encounter, but it provides appropriate examples of corruption risks and offers guidance to resolve many ethical dilemmas. The Gifts & Hospitality Policy provides guidance to employees on the ethical handling of gifts and hospitality received and given by Schneider Electric employees. A new version of the Business Agent Policy was released in August 2019 to meet legal requirements and public authorities’ guidance, especially regarding risk-based approach of the due diligence, as well as internal recommendations following several audits performed on applicability of the policy in 2018. The risks associated with onboarding new acquisition targets are numerous and consequently, Merger and Acquisition (M&A) guidelines have been published to identify, manage, and mitigate 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 we plan to integrate the acquired entity into our compliance organization. These same rules also apply when Schneider Electric decides to make a divestiture with a step-by-step approach to managing the transition. In 2021, a Conflict of Interest Policy was published, in particular creating a procedure to disclose and manage any identified conflict of interest. A Donations Policy has also been published and implemented, which aims, among other things, to manage risks of unlawful use of money and then corruption. 2.2.3.2.2 Empowering employees against corruption In 2020 and 2021, a set of anti-corruption e-learnings was built, providing guidance on real life risk scenarios; it was designed taking into account the trainees’ needs and expectations, and is mandatory for targeted employees exposed to corruption risks through their job codes, i.e. those identified as such by the corruption risk mapping. This led to a curriculum of modules of e-learnings, deployed in 2020: a general module on the “zero tolerance” message against corruption and an explanation of the legal framework and risks, and two specific modules about third parties and gifts and invitations. In 2021, four additional modules were created about facilitation payments, conflict of interest, conditions that make people commit the wrongdoing, and how to raise concerns in Schneider Electric. The modules were supported by top leaders’ videos demonstrating the “tone at the top” on this crucial matter and are available in 14 languages. In 2021, the set of anti-corruption e-learnings has been assigned to more than 40,000 employees and 97% completed it. 2.2.3.3 Focus on responsible lobbying, political activity, and donations In its Trust Charter, Schneider Electric takes a clear stance with regards to responsible lobbying, political activity, and donations. As a Company, Schneider has a role to play in the public debate addressing leading issues with the global community. It is necessary that the Group states its positions clearly, participates in technical discussions, and supports responsible public policy development.