259 Life Is On | Schneider Electric www.se.com Chapter 3 – How we manage risk at Schneider Electric Strategic Report 3. 1.7 Product quality Risk description Schneider Electric has more than 260,000 references produced in 191 factories, spread across 46 countries around the world. Operating in essential industries, product quality and safety is a critical topic for the Group as product malfunctions or failures could result in Schneider Electric incurring liabilities for tangible, intangible damages, or personal injuries. The failure of a product, system, or solution may involve costs related to the product recall, result in new development expenditure, and consume technical and economic resources. Schneider Electric’s products are also subject to multiple quality and safety controls and regulations and are governed by both national and supranational standards. New or more stringent standards or regulations could result in capital investment or costs of specific measures for compliance. The above-mentioned costs could have a significant impact on the profitability and cash equivalent of the Group. The business reputation of Schneider Electric could also be negatively impacted. Indeed, the Group has been impacted by several recalls recently, more or less ranging from EUR 10 million to EUR 40 million, depending on the case. Risk monitoring and management In 2019, the Group launched a specific program called Phoenix to continue to strengthen manufacturing tools and processes. This is extended to logistic processes and suppliers, and leverages processes digitization at suppliers’ sites and in our own entities. To ensure improvement in the area of design, the Group launched in mid-2020, a dedicated program, ReeD (Reliability End To End by Design), to secure fundamentals and ensure full integration of new customer expectations (from Quality to Reliability). To continue to protect our customers, the Group first defined five critical products ranges, and now 15 where some internal “Nets” are implemented. The objective is to identify internal weaknesses and ensure our customers avoid facing those. The Group grows its new design offer through constant learning, insights from the current offer, and leverage methodologies such as “Agile” to embed quality in each and every design step. Thanks to advanced analytics, the Group is starting to proactively listen for weak signals from internal captures or from customer experiences. 1.8 Competition laws Risk description Schneider Electric’s products are sold in markets worldwide and are subject to national and supranational competition laws and antitrust regulations. Some Group entities worldwide including, but not limited to, entities in Pakistan, Belgium, France, and Spain have been directly or indirectly cited in antitrust proceedings or investigated. In Pakistan and Belgium, the Group inherited, and subsequently discontinued, local operations from AREVA. These operations were investigated and sanctioned by the World Bank and the Belgium Competition Authority respectively. In France, investigations were performed in September 2018 by the French police and antitrust authorities at Schneider Electric’s head office and other premises concerning electrical distribution activities in France. Schneider Electric is co-operating with the French authorities in their investigations. As with any investigation, it is possible that these investigations could lead to formal proceedings against the Group in the future. While such proceedings and the possible outcomes cannot be determined at this time, it is possible it could be material in nature. In Spain, the local subsidiary was indicted for anti-competitive behavior related to a previously owned subsidiary. The investigation was concluded in February 2020 without any significant consequence for the Group. Risk monitoring and management The whistleblowing system of Trust Line for employees and external stakeholders such as suppliers is managed to identify any inappropriate practice or behavior with competitors or business partners that may be reported. Furthermore, internal controls and internal audit missions have been reinforced on compliance risks, including in respect of competition and antitrust risks. A revised compliance due diligence program for mergers and acquisitions was issued to strengthen upfront identification of compliance issues with potential acquisition targets. The Group deployed the Trust Charter in September 2021, with reinforced guidance regarding competition and antitrust rules, and issued various other policies and directives related to competition and anti-corruption.