45 Life Is On | Schneider Electric www.se.com Chapter 1 – Group strategy and sustainability Strategic Report 1. 1. All electric Electrification will intensify in line with the energy transition, due to several factors: • More electric loads , namely: − The electrification of road mobility as the yearly electricity consumption from electric vehicles is anticipated to grow by 21% p.a. from 2018 to 2050 (1) . − Decoupling of industrial production versus access to goods, driving a new energy system: further electrification of industrial processes currently powered by coal or gas. − Electricity in the industry energy mix is expected to reach ~80% in 2050 versus 25% in 2018 (1) . − Increased electrification in homes and buildings, driven by the electrification of heating, cooking, and cooling, and new regulations to accelerate decarbonization. Electrification rate in buildings is anticipated to reach 81% in 2050 versus 33% in 2018 (1) . • Innovation that promotes more cost-effective electrification and power decentralization : − Energy batteries are expected to provide up to five times more energy density by 2030 (2) . − More renewables, with a variable capacity mix anticipated to reach up to 50% by 2040 (3) . − More energy efficiency: the best energy is the one we do not consume. 2. All digital Today’s digital economy is driving disruption across every sector. Digital remote interactions have become more prevalent, further revolutionizing how we work and live together. • Growing need to aggregate exponential amounts of data : 11 billion smart appliances in one billion homes are expected to participate in interconnected electricity systems by 2040 (4) . • Large data volumes generated by IoT in industrial applications : an offshore oil rig is expected to produce 1 – 2 terabytes of data daily and a smart factory 5 petabytes per week (5) . • New business models with artificial intelligence, algorithms, and platforms that turn vast amounts of data into insights and value. It is estimated that 70% of new value created in the economy over the next decade will be based on digitally- enabled platform business models (6) . Why these trends matter for Schneider Electric? Sustainability is not just a part of Schneider Electric’s business, sustainability is the core of our strategy. We integrate sustainability everywhere, in our model and culture to have a strong impact at both a global and local level. We see many of our customers stepping up their efforts and investments in sustainability. We have both the technologies and the expertise to support our customers on their sustainability journeys. Our solutions, from connected devices to software, digital services, and sustainability consulting, help our customers, whatever their maturity and scope. Electrification and digitization are key drivers in all our end-markets bringing sustainability and efficiency. They fuel both of Schneider Electric’s businesses: Energy Management for energy transition and Industrial Automation for Industry 4.0. Schneider Electric’s mission is to be your digital partner for Sustainability and Efficiency. We provide energy and automation digital solutions for sustainability and efficiency for your business. We combine world-leading process and energy technologies, real- time automation, software, and services, enabling remote everywhere integrated solutions that are built with safety, reliability, and cybersecurity for your homes, buildings, data centers, infrastructure, and industries. (1) Back to 2050 scenario figures from Back to 2050 report – Schneider Electric Sustainability Research Institute. (2) Rocky Mountain Institute. (3) Includes Onshore Wind, Offshore Wind, Utility-scale PV, Small-scale PV, Solar thermal, Source: Bloomberg New Energy Finance. (4) International Energy Agency. (5) Quicksilver Capital, industrial digital transformation, Spring 2020. (6) World Economic Forum: Shaping the Future of Digital Economy and New Value Creation, 2019.