www.se.com Schneider Electric Universal Registration Document 2021 208 Chapter 2 – Sustainable development 2.7 Methodology and audit of indicators To ensure suppliers get adequate handholding during the implementation, several capacity building and engagement modules have been deployed. These initiatives sensitize the suppliers on various approaches and technical levers for decarbonization, including training on basic requirements and calculations. Moreover, Schneider attempts to support and drive collaborations with suppliers through services and EcoStruxure ™ solutions. As a first step in the long-term journey to decarbonize, top 1,000 suppliers are required to quantify their carbon emissions and take ambitious reduction targets and deploy roadmap to achieve them. Suppliers are required to share the carbon emission performance via the dedicated Schneider Supplier Portal-Supplier Relationship Management (SSPSRM). To measure the carbon emission reduction achieved, we calculate the average carbon intensity reduction achieved by responding suppliers, multiplied by the percentage of suppliers reporting carbon emission data. Carbon intensity is calculated as Scope 1 & 2 CO 2 emission divided by financial turnover. This indicator was audited by Ernst & Young. SSI #4: Increase green material content in our products to 50% A Green Material is defined as either of the following: • a material with a lower environment footprint; • a material that is the output of an industrial technology which is a key enabler for a 1.5°C climate scenario and/or a more circular economy. For 2021, the scope of this KPI covers commodities identified as relevant in terms of volume (circa 29% of total products volume in 2019), environmental impact (carbon footprint and biodiversity assessment) and industry readiness, meaning: • Steel and aluminum direct purchases; • Thermoplastic direct and indirect purchases. Overall, the materials in scope represent approximatively 400,000 metric tons. Cross-functional experts at Schneider Electric (Procurement, R&D, Environment) have worked in close relationship with suppliers to define the Green attributes for each commodity in scope, based on existing international schemes and standards. Thermoplastics are qualified as “Green” when the supplier is bringing evidence of a minimum recycled content, biobased content (minimum threshold depends on whether the compound is halogenated or not) or is using a green flame retardant. Steel is qualified as “Green” when the supplier is bringing evidence that the mill of origin is an Electric Arc Furnace (EAF) or has a Green certificate such as the ones delivered by Responsible Steel. Aluminum is qualified as “Green” when the supplier is bringing evidence that the product carbon footprint is below 8 tons of CO 2 per ton of Aluminum, is using a minimum of 90% of recycled content in its product or that the mill of origin has a Green certificate such as the ones delivered by the Aluminium Stewardship Initiative. The scope will be yearly reassessed as the program maturity and the transparency of supply chains improve. To consolidate the KPI, several sources of data are used. The volumes of green materials are identified using Prism extract for metals and Puma extract for thermoplastic, both tools are providing budgeted volumes. The total volume in scope (the denominator of the KPI) is determined using RMI extracts for thermoplastic, steel and aluminum providing purchased volumes in metric tons. For silicon steel there is no consolidation in RMI since silicon steel is not a market index, thus the volume is estimated based on a negotiation file RCM. Schneider Electric decided to identify reported and tracked Green Materials using ‘budgeted’ volume since the precision of the reporting tool is better compared to RMI extract. Actually, Prism and Puma allowed to track suppliers and material grade that make the two levers mentioned above possible to activate. This indicator was audited by Ernst & Young. SSI #5: 100% of our primary and secondary packaging is free from single-use plastic and uses recycled cardboard This program has been designed to: • Ensure legal compliance through the selection of our packaging materials and the availability of adequate take-back, collection and sustainable options for our customers. • Support the achievement of our 2025 Green packaging commitment: − 100% of our primary and secondary packaging uses recycled cardboard. − 100% of our primary and secondary packaging is free from single-use plastic. − Define the best practices to offer differentiating green packaging solutions to our customers. The scope includes tier-one strategic suppliers with a direct purchase of cardboard and plastics in the Schneider Electric procurement system. Geographically, all regions under the global supply chain will be covered, as well as Equipment & Transformers. Cardboard is considered as recycled when it includes at least 70% of recycled fiber by weight. Temporary exemption is made for NAM, where an average of 50% of recycled fiber by weight is required to be considered recycled. Every reporting period, the spend on cardboard and plastics is extracted from the system and each element is classified as sustainable or none based on criteria mentioned above. Verification is done for sustainable declarations on the definitions already provided as well as certificates and other documentary evidence from suppliers. The list of eligible certificates/documents is continually updated to make it exhaustive and to cover countries specificities. A global campaign is being run in all global supply chain regions to progressively move the spend to sustainable sources and remove single use plastic usage with sponsorship from top management. This indicator was audited by Ernst & Young. SSI #6: 100% of our strategic suppliers provide decent work to their employees Schneider Electric has deployed a series of engagement on the topic of working conditions to correct mal practices, but also proactively work to implement measures which will prevent such violations in future. This philosophy is the foundation of the Decent Work program.