95 Life Is On | Schneider Electric www.se.com Chapter 2 – Sustainable development Strategic Report 2. 2.2.2 Ethics & Compliance program Each year, Schneider Electric’s Enterprise Risk Management team draws up a risks matrix at Group level which is presented to the Executive Committee and used to identify all risks faced by the Company; as part of this wider exercise the Company conducts a risk assessment on ethics and compliance matters. The exposure of the Group to risks of non-compliance and unethical practices has been increasing for several years, due to broader externalities for the Group through its geographic expansion, participation in complex projects, and a large range of acquisitions, all leading to the need to strengthen the effectiveness of its risk-based Ethics & Compliance program. Over the past years, the increase of law enforcement by public authorities, new regulations, and higher reputational risk with media exposure have led to the design of a preventive approach of several risks including corruption, fraud, violation of fundamental human rights (health and safety, discrimination, harassment, and sexual harassment), anti-competitive practices, sanctions, and export control. Adopting a full compliance approach on these topics brings trust to employees, customers, partners, suppliers, and local communities. 2.2.2.1 Governance of the Ethics & Compliance program Schneider Electric has built a strong governance to lead the Ethics & Compliance program to the best standards, with responsibilities at Board, executive, corporate, and zone levels. 2.2.2.1.1 Executive level Board Audit & Risk Committee Schneider Electric’s Board of Directors oversees the Ethics & Compliance program through a dedicated annual session of the Audit & Risks Committee during which the program, risks and improvements, and action plans, are reviewed by the Directors. Once a year, the Directors also review the Ethics & Compliance program’s effectiveness and the allocation of resources to the program (human and financial). In addition, the Directors agree on the audit plan which covers several audits related to the Ethics & Compliance program, and the program’s members are notified of their findings and related recommendations once finalized. Group Ethics & Compliance Committee Schneider Electric has also put in place a dedicated governance to lead the Ethics & Compliance program to the best standards. The program is overseen by the Group Executive Committee, through the Group Ethics & Compliance Committee. This Committee is composed of nine permanent members in charge of defining the program’s strategy and priorities: Chairman & CEO; Chief Governance Officer (Committee Chairperson); Chief Human Resources Officer; Chief Strategy & Sustainability Officer; Chief Compliance Officer; Chief Legal Officer; Chief Corporate Citizenship Officer; Group Internal Audit & Control Officer; and Senior Vice-President, Sustainability Development. They ensure that the program is consistent with the Group’s strategic goals. This Committee meets twice a year. Executive Committee Board – Audit & Risk Committee Group Ethics & Compliance Committee Regional Compliance Officers Ethics Delegates Group Operational Compliance Committee (GOCC) Regional, Zone, Cluster and Country Ethics & Compliance Committees Disciplinary Committee Detect and manage non-compliance Define, explain and disseminate priorities Support employees in navigating with our Trust Charter and prevent, detect and manage non-compliance Disciplinary review of non-compliances and levy sanctions Ensure implementation of Compliance program according to risks Executive level Corporate level Zone level Continuous improvement Continuous improvement