221 Life Is On | Schneider Electric www.se.com Chapter 2 – Sustainable development Strategic Report 2. Recommended Disclosure CDP Climate Change & URD 2021 references Brief description (please refer to CDP Climate Change response and other sections of this Universal Registration Document for further details) 2. a) and 2. b) (continued) Schneider Electric has identified the following main climate-related risks: • Failure to meet 1.5°-aligned GHG reduction emissions targets: missing its decarbonization commitments could trigger greater financial costs than anticipated for Schneider due for instance to locked-in emissions of assets with long operating lifetime or long-term leases, or reputational impacts and loss of trust from customers investors and employees. • Inadequate evolution of the supply chain footprint: volatility of energy and commodity prices as well as regulation strengthening will generate increasing and volatile operating and investment costs along Schneider’s value chain, impacting both Schneider’s expenditures and those of its suppliers. This can translate into an increase of the cost of goods sold and reduced margins. • Transition risks: given the relatively low level of the Group’s Scope 1 and 2 carbon emissions, future carbon pricing regulations would have rather indirect impacts, resulting in increased supply chain costs, especially regarding the purchase of raw materials and manufactured components containing metals and plastics. • Workplace disruptions: extreme weather events, floods, droughts, and other climate impacts will increasingly put pressure onto supply chains. Shortages of all kinds can translate directly into revenue loss (missed orders), increased costs (urgent shipping), and increased working capital requirements (stock management). Extreme events can also cause damage to property and assets. To further tie climate-related issues to financial planning, Schneider Electric successfully launched the first-ever sustainability-linked convertible bonds, linked to 3 SSI targets including the objective to save and avoid 800 million tons CO 2 on customers’ end by 2025, since 2018. Read more in section 2.3.1 “Climate governance” page 128 and 2.3.2 “Roadmap towards a 1.5°C climate trajectory” page 130.. 2. c) Describe the resilience of the organization’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario. CDP – C3.2, C3.2a URD – chapter 2 (2.3) Schneider Electric has a dedicated Strategy Prospective & External Affairs SVP attached to the Chief Strategy & Sustainability Officer, in charge of climate and environment scenario analysis. Several scenarios to 2050 were developed in 2019, which included critical reviews of the geopolitical landscape, commodity and resources availability, economic and financial evolutions, climate sensitivity and evolving policies, energy transition pathways and technology developments, among others, with consequences quantified, looking at ten regions and a number of sectors individually, framing the business landscape in which Schneider operates. In 2021, Schneider Electric published a set of scenarios exploring the feasibility of a 1.5°C trajectory in a report called “Back to 2050”, demonstrating that a net-zero carbon future, aligned with IPCC’s 1.5°C scenarios, is still possible, and the Group is uniquely positioned to embark its ecosystem onto an inclusive, zero-carbon transition. Key findings are regularly cross-checked with new publications, particularly the ones from the International Energy Agency, BNEF, the IRENA, among others. Governance is well in place, under the leadership of the Chief Strategy & Sustainability Officer, and both short- and long-term analysis are shared internally and used to inform strategic priorities across business and operations. As part of the analysis, the Group identified that a growing demand for greener, low- carbon products and services creates a strong business opportunity for Schneider Electric. Key takeaways from the analysis is the dominant role of: • Electrification: the world is becoming more electric, with demand growing potentially up to 3x by 2050; • Digitization: with the increase in connectivity, complemented by real-time information and competitive computing capabilities, digital technologies play a major role in reaching decarbonization targets while augmenting economic productivity, notably around efficiency in energy and resource use and circularity, as well as increased resiliency and security. All these findings, and their potential financial impact on its business have helped the Group to fine-tune key development areas that will allow its active contribution to the low-carbon transition, enabling notably the development of its sustainability portfolio of offers.