A clear vision for the future
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Schneider Sustainability Report 2017 – 2018 A clear vision for the future sdreport.se.com sdreport.se.com ssdr sd dr drepo ep e po p orrt. rttt..sse se. e..ccom e co om o m • 1
CONTENTS 3 • INTRODUCTION: OUR MISSION The digital transformation of energy management and automation is our mission. As our CEO, Jean-Pascal Tricoire says, “When it comes to climate change, I’m neither an optimist nor a pessimist. I’m an activist.” 9 • SUSTAINABLE SOLUTIONS We believe meaningful action is the only path to a sustainable world. Discover how we use EcoStruxure™ innovation and open collaboration to create efficient, effective, green solutions for our customers. 17 • OUR CUSTOMERS Across buildings, data centers, industry, and infrastructure, we’re equipping the world with connected solutions that increase operational and energy efficiency — and make sustainability a reality. See the results. 22 • OUR PEOPLE It takes great people to power our sustainability efforts and our company. We offer a learning-focused, inclusive workplace that fosters innovation and fuels professional development. Learn more about our shared, meaningful purpose. 28 • OUTREACH AND INITIATIVES Today, 1.1 billion people lack access to electricity. As we work to reduce the energy gap and address fuel poverty, we must do so responsibly. Learn how we’re innovating to solve this energy paradox. 36 • COMPANY PERFORMANCE We launched more than 100 new products, continued to optimize our portfolio, and delivered growth for shareholders. See how Schneider Electric performed in 2017. 44 • LOOKING AHEAD We’re taking proactive steps toward co-creating a sustainable future with immediate and short- and long-term sustainability targets. See what’s next. ON THE COVER: Sustainability is driving growth in Shenzhen, China's greenest city. 2 • sdreport.se.com
CHAPTER 1 INTRODUCTION: OUR MISSION Welcome from the CEO At Schneider Electric, sustainability is part of everything we do — every decision, every innovation, and every initiative. For us, sustainability extends far beyond a vague hope for a cleaner planet. We believe that access to energy is a fundamental right, and therefore a truly relevant vision for sustainability must take into account human rights, ethics, and health and equity concerns. The challenge of our time As we once again provide this report on our sustainability efforts, we’re reminded of the urgency of the climate crisis and inspired by those who, together, are rising to meet the challenge head on. Two years ago, the Paris Climate Agreement gave us all a clearer understanding of what’s at stake. Limiting global temperature rise this century to less than 2 °C above pre-industrial levels is essential if we are to avoid widespread, disastrous ecological problems. The path to a healthier planet We believe that concrete, meaningful action is the only successful path to address climate change and create a heathier world. That is what this report is about. Each year, our Schneider Sustainability Report shows how we’re taking steps to ensure our own sustainability; how we’re empowering our people; how we’re delivering sustainable innovations to the world; and how we’re supporting the sustainable development of others through We believe climate change can outreach and initiatives. be overcome through innovation and collaboration. But the world Co-creating a sustainable future must be proactive. We must We also believe that sustainability is business — a core pillar for any successful company. This is because, act now. We must co-create a in working for a more sustainable world, we not only ensure a healthier planet for future generations, we also promote innovation and prosperity here and now. Because Life Is On™ when life is powered and digital, we are sustainable future. empowering our partners and customers to accelerate the transition to a sustainable future in buildings, industry, data centers, and the grid. As I have said before, when it comes to the climate, I’m neither an optimist nor a pessimist. I’m an activist. At Schneider, we’ll continue to actively participate in all useful initiatives to increase the JEAN-PASCAL TRICOIRE, low-carbon approach to the world’s economy. CHAIRMAN & CEO, Follow us on: SCHNEIDER ELECTRIC @schneiderelec sdreport.se.com • 3
INTRODUCTION: OUR MISSION The energy paradox The energy equation exists alongside a surprising reality, what we call “the energy paradox:” Two global megatrends We believe access to energy is a basic human right, yet we all must be mindful of the effects Electrification and digitization are presenting the world with of energy consumption on the the opportunity to make energy more decarbonized and more environment. decentralized. The question is if we all will harness these opportunities to create a healthier, sustainable world. The world must find a way to bring energy-poor populations ELECTRIFICATION DIGITIZATION access to energy while simultaneously fighting climate By 2040, consumption By 2050, energy consumption will increase by 50%.3 of electricity will increase 30 billion change. Here, again, initiative and proactive innovation are But 1.1 billion people currently lack access to electricity.4 by 1 devices will be 60% . connected by 20202. the answer. The energy equation Energy consumption and CO2 emissions will continue to increase over the coming decades. The 1.5x ÷2 3x 1 IEA, World Energy Outlook 2016 solution is efficiency. We must energy consumption CO2 emissions worldwide the world must become 2 IHS, March 2016 leverage technological innovation will grow by 50 percent. must be cut in half. 3 times more efficient. 3 Increase of global energy consumption 2014 – 2040 in New Policy Scenario extrapolated to 2050. to use less energy, and to use the IEA, World Energy Outlook 2016 4 energy that we do consume more International Energy Agency, Energy Access Outlook 2017 https://www.iea.org/publications/ intelligently. freepublications/publication/weo-2017-special-re- port-energy-access-outlook.html Note: Forecast for 2050 compared to 2009 levels Source: Intergovernmental Panel on Climate Change (IPCC); IEA 2014 – 2015, Schneider Internal Analysis 4 • sdreport.se.com
INTRODUCTION: OUR MISSION Sustainability at Schneider Electric With the challenges of climate change and the global megatrends made clear, the next steps also become apparent: we must act; we must take responsibility; and we must begin with ourselves. We are committed to providing innovative solutions that empower our own sustainability journey and help the world to overcome the energy paradox. Together, we can balance our planet’s carbon footprint with the irrefutable human right to quality energy. In 2017, Schneider Electric was one of 120 companies placed on the Climate A List of CDP (formerly Climate Disclosure Project) and is the only company in its industry to achieve an A rating for the seventh year in a row. Looking forward, our climate-related goals include: Reach the 21 new commitments of the 2018 – 2020 Schneider Sustainability Impact statement; define a precise trajectory respecting the 2 °C scenarios up to 2050; validate it via the 100% 2x Science Based Targets initiative to which the company has We will shift to 100% We will double our been a signatory since 2016; and increase the impact of the renewable electricity. energy productivity. Schneider Electric internal carbon price. Achieve carbon neutrality by reducing the carbon emissions of our sites and those of our industrial ecosystem, including suppliers and customers; quantify the CO2 emissions avoided by our customers 2015 – 2017 Planet & Society thanks to our offers; aim for 100% renewable electricity, 100% barometer achievements recycled or certified packaging, and 100% recycled waste; and double our energy productivity compared to 2005. CLIMATE & DEVELOPMENT CLIMATE (SUSTAINABILITY OFFERS) On Scopes 1 and 2, reduce by more than 50% our CO2 emissions in absolute value compared to 2015, in line with the guidelines of the Science Based Targets1. 10.3% 168,400 tons CO2 savings from transportation of CO2 avoided through maintenance, 1 Scope 1 are also referred to as Direct Green House Gases (GHG) and are defined as emissions from sources that retrofit, and end-of-life services are owned or controlled by the organization. Scope 2 are also referred to as Energy Indirect GHG and are defined as emissions from consumption of purchased sources of energy generated upstream from the organization. sdreport.se.com • 5
INTRODUCTION: OUR MISSION 10 commitments for a sustainable future At COP21 in 2015 we unveiled our 10 sustainability commitments. The goal of these pledges UN Sustainable Development Goals is to ensure that Schneider Electric’s entire ecosystem — from our own operations to those of our suppliers, customers, and partners — becomes carbon neutral by 2030. With this in mind, Schneider Electric aligns with the United Nation’s Sustainable we have now renewed and strengthened our 10 sustainability commitments. Development Goals (SDGs), a universal call to action to end poverty, protect the planet, and ensure that all people enjoy peace and prosperity by 2030. Avoid the emission of 100 Reach 200 sites labeled 01 06 million metric tons of CO2 Toward Zero Waste to Landfill We’re committed to accomplish the 17 SDGs through our core on our customers’ end, thanks by 2020 (2015 – 2020) and business and five sustainability megatrends: Climate, Circular to our offers (2018 – 2020). recover 100% of Economy, Ethics, Health & Equity, and Development. our industrial waste by Use 80% renewable 2030 (2015 – 2030). 02 electricity by 2020 and 100% by 2030; and continue Reduce CO2 emissions from 07 to drive energy efficiency the transport of our goods toward doubling our energy by 3.5% per year (annually productivity in our sites over since 2012). 2005 – 2030 period. 08 Facilitate access to lighting Achieve 75% of our and communication with 03 turnover under the new low-carbon solutions for Green Premium™ program 50 million underprivileged (2018 – 2020). people by 2025 (2009 – 2025). Avoid 100,000 metric Propose alternatives to the 04 09 tons of primary resource use of SF6 gas by 2020 consumption through (2015 – 2020) and eliminate ECOFIT,™ product recycling, SF6 from our products by 2025 and take-back programs (2015 – 2025). (2018 – 2020). Invest €10 billion in 10 Use 100% cardboard and innovation and R&D for 05 pallets for transport packing sustainability in 10 years from recycled or certified (2015 – 2025). sources by 2020 (Q4). 6 • sdreport.se.com
INTRODUCTION: OUR MISSION The Schneider Sustainability Impact guides our sustainability efforts by making our goals clear. Formerly known as the Planet & Society barometer, it reflects our holistic view of sustainability Environmental strategy and how our efforts affect the planet, its people, our profit, and Decades ago, sustainability and environmental concerns emerged as that of our customers. The Schneider Sustainability Impact is scientific studies began to uncover the harm being done to the planet audited by a third party and our progress is published quarterly by development and industry. Some corporations reacted to this trend at: schneider-electric.com by trying to demonstrate how they were working to use fewer resources or to offset their carbon footprint. Some organizations still operate in this manner, with sustainability and environmental responsibility viewed as CLIMATE CIRCULAR ECONOMY HEALTH & EQUITY ETHICS DEVELOPMENT “nice to haves” instead of the what they truly are: an engine for innovation. medical incident per 200 sites labeled toward zero waste 1 million hours worked 300 suppliers under Human Rights & The reality is, good environmental strategy is good business strategy. to landfill 95% of employees Environment vigilance received specfic 100,000 covered in the gender pay equity commitment on-site assessment metric tons of avoided primary 100% of sales, procurement, and finance We value collaboration and partnership resource consumption employees trained every because we believe that, together, we can year on anti-corruption transform the world’s buildings, industries, 350,000 infrastructure, and data centers. underprivileged people 100 million 100% of countries trained in energy management metric tons have fully deployed our XAVIER HOUOT, avoided CO2 on our Family Leave policy SENIOR VICE PRESIDENT, customers’ end through our offers x4 turnover of out Access to Energy program GLOBAL SAFETY, ENVIRONMENT, REAL ESTATE, SCHNEIDER ELECTRIC 90% of white-collar 80% 100% workers have an individual development plan 12K volunteering recycled packaging renewable electricity days thanks to our 90% 5 pts / 100 VolunteerIn global platform 2015 – 2017 25% increase in 75% of employees have access to a increase in average score CLIMATE & DEVELOPMENT turnover for our Energy & of sales under our comprehensive well-being of ISO 26000 assessment Planet & (SUSTAINABILITY OFFERS) CIRCULAR ECONOMY new Green Premium at work program for our strategic suppliers Sustainability Services program Society 10% CO2 effciency 70% scored in our barometer 80.1% 130 in transportation Employee Engagement Index achievements of product revenue with industrial sites labeled 100% of workers received 12 hours of Green Premium ecoLabel™ Towards Zero Waste to Landfill learning in the year sdreport.se.com • 7
INTRODUCTION: OUR MISSION Sustainability: the new pillar Our six pillars of environmental strategy of business growth At Schneider Electric, our environmental strategy extends our vision for sustainability into six principles that guide our operations and transform Business growth and sustainability are not at odds. Quite the our entire supply chain. opposite — sustainability drives business growth. Leading companies have recognized that environmental responsibility is a 02 boon to the bottom line. Renewable energy is now cheaper in many areas than traditional brown power. The economy of the future is low carbon, and companies that prepare for that future gain a competitive advantage. 01 Deploying low-CO2, Building an 03 Considering Becoming more sustainable makes good business sense, helping to efficient strategies increasingly green waste as worth ensure long-term market viability, competitiveness, and resiliency. for a planet-compatible supply chain growth path 04 05 06 Promoting green Implementing a Strengthening attributes and circular economy our environmental value-adds governance Schneider Electric is among the more than 400 companies #MoveTheDate working with the Science Based Targets initiative. We’re When it comes to environmental responsibility, incremental gains are no longer enough. We already consume currently at the second step of their four-step process — 1.7 planets’ worth of resources per year1. And if we do nothing, we are bound to a 4 °C increase in global Commit, Develop, Submit, Announce — and look forward to temperature by 2100. sharing our targets publicly and doing our part to achieve the goals of the Paris Climate Agreement. In 2017, August 2 was Earth Overshoot Day. This means that in 2017, all of us who call Earth home used more from nature than our planet can renew in the whole year — and we did so in less than eight months. Overshoot happens through overfishing, overharvesting forests, and emitting more carbon dioxide into the atmosphere than forests can recycle into oxygen. We must #MoveTheDate. 1 According to the Global Footprint Network 8 • sdreport.se.com
CHAPTER 2 SUSTAINABLE Data is the new oil. It’s a new currency. SOLUTIONS It’s a new way to monetize and create value in our businesses. EMMANUEL LAGARRIGUE, EXECUTIVE VICE PRESIDENT, STRATEGY, SCHNEIDER ELECTRIC Data-driven sustainability T U R N DATA I N TO AC T I O N If the world is going to become more sustainable, we all need to know Connect how much energy we’re using and how to use energy more intelligently. Connect everything The convergence of the “internet of things” (IoT) and energy gives us a from the shop floor to the top floor. tremendous opportunity to tap the value of data to advance sustainability across buildings, data centers, industry, and infrastructure. Collect Capture critical data Just as oil has delivered the economy of today, data is driving the at every level, from sustainable, low-carbon economy of tomorrow. sensor to cloud. 90% Schneider Electric brings together energy management, automation, and software in one interoperable IoT architecture: EcoStruxure. We also partner with clients to help them buy energy more strategically, reduce Analyze Convert data into meaningful analytics. energy use, and operate more sustainably through our EcoStruxure Energy & Sustainability Services Take action Drive action through of the data in the world With these innovations, we empower our customers’ bold ideas — to both real-time information today was created over achieve their sustainability goals and compete in today’s digital economy. and business logic. the past two years.1 1 IEA, Digitization & Energy 2017 http://www.iea.org/publications/freepublications/publication/DigitalizationandEnergy3.pdf sdreport.se.com • 9
SUSTAINABLE SOLUTIONS EcoStruxure Innovations Digitization is at the core of Schneider’s DNA. We connect people and assets to drive efficiency, safety, and reliability. The EcoStruxure platform and architecture is our IoT-enabled solution that increases operational and energy efficiency. EcoStruxure solutions have been deployed in 480,000+ sites, with the support of 20,000+ system integrators and developers, connecting over 1.6 million assets under HERVÉ COUREIL, management through 40+ digital services. EXECUTIVE VICE PRESIDENT, INFORMATION SYSTEMS, SCHNEIDER ELECTRIC EcoStruxure provides Innovation At Every Level: Level 3: Apps, Analytics & Services EcoStruxure leverages the cloud for computing power, aggregation of data and one data pool, machine learning models / new functionalities, and digital services. Thanks to analytics and artificial intelligence, data can take on meaning across a business (from shop floor to top floor), and/or on premise allowing a company to scrutinize energy use, for example, and to make more targeted decisions about how to prioritize energy projects. Level 2: Edge Control Mission-critical environments need local control of devices at the edge and reliable access to data from operational technology (OT) devices. Advancements such as artificial intelligence enable analytics close to the source of data, reducing latency while protecting safety, productivity, and uptime. IT Level 1: Connected Products The “internet of things” starts with the best things. EcoStruxure is based on smart, connected products with open integration to third-party products. Embedding sensors in devices opens a vast window to what’s happening both inside that product — from its energy efficiency to its performance and within its environment, too. Through internet connectivity, IoT enables all these connected “things” to talk to each other. 10 • sdreport.se.com
SUSTAINABLE SOLUTIONS Through six domains of expertise: The benefits of EcoStruxure solutions: EcoStruxure Power Safe, highly available, and energy-efficient electrical distribution systems • Maximize energy efficiency and sustainability through for low- and medium-voltage architectures to enhance connectivity, smarter systems and real-time, data-driven decisions real-time operational reliability, and smart analytics. • Optimize asset availability and performance through predictive analytics and proactive maintenance EcoStruxure Building From design, through integration, to commissioning, EcoStruxure Building • Enable smart, productive, and profitable operations brings best-in-class engineering efficiency to buildings, combined with through the reduction of waste and downtime asset and energy performance services. • Leverage mobile insights and proactive risk-mitigation through simulation, situational awareness, and digitization EcoStruxure Grid Seamless local production of distributed energy resources and integration • Lower CapEx and OpEx across the digital life cycle by at the grid edge, bridging demand and supply via energy flexibility based using “digital twin” capabilities to design, build, operate, on analytics and increasing grid efficiency for sustainable networks. and maintain systems and infrastructure EcoStruxure IT Connected products and remote, digital services to ensure that data center Discover how EcoStruxure delivers efficiency and sustainability for our customers physical infrastructure can adapt quickly to support both future demand (See Page 17.). driven by IoT and growth — in the cloud and at the edge — without ever compromising availability or operational efficiency. EcoStruxure Machine Innovative machine solutions and smart automation technologies for safer, A transformative platform that changes the core way connected, flexible, and more efficient machines. that data centers are monitored and managed. —INTERNATIONAL DATA CORPORATION, 2017 EcoStruxure Plant IoT-enabled, future-proof solutions for improved operational profitability in a measurable, safe, and sustainable way. sdreport.se.com • 11
SUSTAINABLE SOLUTIONS ES S AT A G L A N C E • Strategic sourcing $30 billion EcoStruxure Energy & BUY ENERGY SMARTER • Risk-management • Rate analysis managed energy spend Sustainability Services • Market intelligence • Energy budgets 650,000 Through EcoStruxure Energy & Sustainability Services (ESS), utility invoices collected • Energy efficiency consulting and reviewed monthly Schneider Electric helps clients design a strategy, deliver efficiency REDUCE • Remote energy monitoring in their facilities, and sustain results over time through long-term ENERGY USE • Data collection 40 million partnerships. and management metric tons of CO2 managed As an unbiased, independent consultant, we work with clients in more than 100 countries — from regional companies to the world’s largest • Sustainability strategy 2,000+ corporations. OPERATE • Climate change compliance • Sustainability reporting megawatts SUSTAINABLY • Sustainable operations in renewable energy • Water and waste optimization transactions (power purchase agreements) in 2017 • Renewables and cleantech ESS’s impact for our customers AEG Whirlpool The right tools and data make AEG® Data and expert support are 55% a more profitable and sustainable company. helping Whirlpool® achieve its sustainability strategy. Results: Results: • Visibility to 53 different types of • Three plants achieved of companies rank “lack of data streams across 59 facilities in zero-waste-to-landfill organizational alignment” as one central platform • Projected to save more than the top factor preventing them • $3 million+ savings since $1 million over the next three from reaching their energy and sustainability goals.1 implementation years through corrugated • 53% of worldwide waste cardboard recycling 1 diverted from landfill Based on a recent internal survey of clients at the Energy & Sustainability Perspectives Summit. • 14% reduction in GHG emissions from 2010 baseline 12 • sdreport.se.com
SUSTAINABLE SOLUTIONS H I G H LI G H T S: S C H N EI D ER EL EC T R I C Research & Development R& D I N 2017 16,250 patents Digital innovation is really about solving real or patent applications customer problems. To do so, you need to have an open ecosystem of technology partners, system integrators, customers, 670 new patent assets in 2017 startups, and universities to accelerate and scale innovation. 20+ digital services in development for 2018 CYRIL PERDUCAT, EXECUTIVE VICE PRESIDENT, IoT & DIGITAL TRANSFORMATION, SCHNEIDER ELECTRIC 5% of sales devoted to R&D Empowered by more than 8,000 research and development engineers worldwide, we bring bold ideas to life by developing connected, efficient, Six digital foundations are driving and sustainable products and solutions. our success in the digital space: Working together is the only way to fuel and advance digital innovation, so 1. One IoT-ready architecture and platform, EcoStruxure we’ve built an ecosystem that comprises customers, system integrators, 2015 – 2017 2. Historical leadership at the edge, where operational technology startups, and technology partners. and IT can converge securely to deliver fast, accurate intelligence Planet & Society at the edge barometer achievements 3. Digital life-cycle management, meaning that we apply IoT CIRCULAR ECONOMY The Aster Capital Fund advancements to drive down cost and complexity across both of products in CapEx and OpEx stages R&D designed We invest in innovative startups through the Aster Capital Fund, a leading 4. Deep domain and segment expertise, which enables us to venture capital firm that specializes in the energy, mobility, and industry fields. This venture capital activity has supported over 55 early-stage advance technology that solves specific customer problems 5. A robust, active digital services portfolio, which amplifies the value 100% with Schneider ecoDesign Way™ companies since its inception. we offer customers through services such as Resource Advisor and Asset Advisor In 2017, Aster supported the design and activation of a business incubation 6. An open partner ecosystem, which allows us to scale and model to bring additional innovation and growth to Schneider Electric. This accelerate each customer’s digital journey quickly allows employees to propose new ideas, setting the foundation for growth in new and critical areas. sdreport.se.com • 13
SUSTAINABLE SOLUTIONS H I G H LI G H T: ST R AT EG I C It’s amazing to see the solution [WaterForce D I G I TA L A L LI A N C ES SCADAfarm] that Schneider has built and what it can do for us as a society. Microsoft ® and Schneider create commercial IoT solutions in the SATYA NADELLA, areas of energy management CEO, MICROSOFT, and automation, marrying AT THE 2017 MICROSOFT INSPIRE CONFERENCE Microsoft’s secure, trusted cloud capabilities and Schneider’s OT domain expertise. Schneider and Cisco® develop advanced automation architectures across end-markets, merging Digital Services Factory: Schneider’s operational technology leadership and Cisco’s world-class speeding up innovation knowledge of networking and An accelerated development life cycle is essential for helping customers communication solutions. become more sustainable in today’s digital economy. That’s the goal of our Digital Services Factory. The DSF is organized to accelerate the creation of new digital services and connected products within Schneider Electric™ businesses. Co-innovating with digital alliance partners With funding from the U.S. Department of Energy, Schneider DSF capitalizes on the following expertise of our IoT & Digital Offers and Intel™ research, develop, organization: With our network of digital technology leaders, we co-innovate and commercialize silicon-based solutions that: cyber security solutions for the • Pervasive sensing electrical grid. • Cyber security • Respond effectively and quickly to market trends and customer • Device intelligence needs • Analytics • Innovate in a way that benefits the bottom line for business • Digital services • Leverage technology advancements such as sensing, mobility, We’re working with Accenture to cut development time to market by • Mission-critical control at the edge cloud, analytics, and cyber security 80%, so customers gain improved efficiency, sustainability, and productivity. 14 • sdreport.se.com
SUSTAINABLE SOLUTIONS Energy University Supply Chain Energy University™ is an online training program that offers more Schneider Electric works with • 5 pts / 100 increase in average than 200 free, vendor-neutral e-learning courses in 13 languages. sectors that account for the majority score of ISO 26000 assessments S U PP LY C H A I N Its purpose is to improve careers and help companies improve of global energy consumption and for our strategic suppliers AT A G L A N C E efficiency and sustainability. CO2. Therefore, we are especially • 300 suppliers under Human committed to making sure our own Rights & Environment vigilance solutions help reduce energy use and CO2 emissions — from design received specific on-site assessment 207 factories in to manufacturing to shipping and • 100% of sales, procurement, and 44 countries deployment to products’ end-of-life. finance employees trained every year on anti-corruption distribution Our new Schneider Sustainability 98 centers Impact for 2018 – 2020 includes the following goals: 86,000 employees We hold really high standards … not 24,000 suppliers only for ourselves, but also our suppliers. Professional We think of our suppliers as an €11 B in purchases 73,077 115,242 28 Energy Manager extension of our supply chain. total registrations courses taken certifications awarded in 2017 ANNETTE CLAYTON, 150,000 EXECUTIVE VICE PRESIDENT, SUPPLY CHAIN order lines per day Top countries for Top countries for Top countries for AND NORTH AMERICA OPERATIONS, registrations: completions: Professional Energy SCHNEIDER ELECTRIC 1. United States 1. United States Manager certifications: of the Gartner ® 2. Brazil 2. Egypt 1. United States #7 Top 10 Supply Chain 3. Egypt 3. India 2. Saudi Arabia Organizations for 2017 4. Mexico 4. Mexico 3. United Kingdom 2015 – 2017 CLIMATE ETHICS 5. India 5. Brazil 4. Australia Planet & Society ® of the Gartner 5. Lebanon barometer 10.3% 87.9% #17 Supply Chain achievements Top 25 of 2017 675,000 1 million CO2 savings from transportation of our strategic suppliers embrace registered users courses completed ISO 26000 guidelines since inception since inception sdreport.se.com • 15
SUSTAINABLE SOLUTIONS 2 017 S U P P LY C H A I N Social, environmental, and ethical responsibility H I G H LI G H T S for our upstream supply has been one of our key initiatives. Over the last several years, we 358 on-site audits that have led efforts such as ISO 26000 and conflict minerals tracking and contributed to Green included sustainability criteria Premium and hazardous material compliance. 2,400 kilotons of DK SINGH, goods shipped CHIEF PROCUREMENT OFFICER, SCHNEIDER ELECTRIC 88% of the strategic suppliers passed the third-party evaluation for sustainable development, 2015 – 2017 10% reduction Tailored Supply Chain 4.0 of CO2 emissions from transportation over In this digital economy, Schneider Electric’s global supply chain 2015-2017 period is evolving to become even more tailored, sustainable, and connected with our Tailored Supply Chain 4.0 strategy, powered by EcoStruxure solutions. Congratulations to Le Vaudreuil plant for its new prize: “Showcase for Industry of the Future” 74% goods shipped Tailored: We are passionate about our customers’ success, by road (23% by ocean, 3% by air) always seeking to provide what they value while leveraging scale Industry of the future and efficiency. In February 2018, our Le Vaudreuil plant received the “Showcase for Sustainable: Sustainability is a priority across our supply chain, Industry of the Future” award from the Alliance pour l’Industrie du Futur. 70% of relevant exemplifying our concern for people and the planet. We optimize purchases confirmed as Le Vaudreuil has developed and implemented many changes in several resources by developing a circular supply chain with clean and conflict-free under the Conflict areas leveraging our own EcoStruxure solutions such as: safe facilities powered by renewable energy. Minerals rule of 2012 • Cybers ecurity and the integration of a data bunker Connected: Our supply chain is digital and smart, powered by • Energy management with the use of our building management system EcoStruxure products and solutions. We provide visibility to • Addition of sensors to allow predictive maintenance customers, optimizing end-to-end efficiency and asset reliability. • Combination of EcoStruxure with startup solutions so employees benefit from continuous training 16 • sdreport.se.com
CHAPTER 3 OUR 2017 Highlights CUSTOMERS Our deep domain expertise fuels our customers’ sustainable results. We partner with customers across segments and around the world to innovate, improve performance, and bring their bold ideas to life. The four key markets that we serve are: Building Data Center Industry Infrastructure 2015 – 2017 Planet & Society barometer achievements We redefine value for our customers through unprecedented connectivity, sustainability, efficiency, reliability, and safety, and help companies CLIMATE & DEVELOPMENT become more efficient in how they buy and consume energy. We are (SUSTAINABILITY OFFERS) leading the digital transformation of energy management and automation of new large with EcoStruxure — our IoT-enabled architecture with connected customer projects 70% products; edge control; and apps, analytics, and services. 100% have a CO2 impact quantification of the world’s energy 2 017 – 2 018 R EC O G N I T I O N S consumption comes from the building, data center, Leader in Green Quadrant ® European regional finalist, Most “Integrated Thinking” award industry, and infrastructure Facility Optimization Admired Knowledge Enterprises By the Institut du Capitalisme Software report (MAKE) research program Responsable [Responsible Capitalism end markets.1 Comparing 14 facility optimization Selected from a list of 48 nominated Institute] in the “large companies” software applications by independent companies in various sectors category analyst Verdantix Engineers’ Choice for best Leader in Gartner ®’s Magic Ranked in Gartner ® 2017 Supply Motion Control Quadrant for Advanced Chain Top 15 for Europe Altivar Process 900 honored by Control Distribution Management Number 7 supply chain, ranking among Engineering for optimizing performance Systems the top 10 for third consecutive year across sectors Highest scores in all three use cases in the Critical Capabilities for fifth Ranked in Gartner ®’s Supply “Customer Innovation of the Year” consecutive year Chain Top 25 for 2017 Supply Chain Breakthrough award Number 17 supply chain, advancing in SCM World’s 2018 Power of the one place from 2016 rankings Profession Awards 1 World Energy Outlook 2012, OECD/IEA, Internal analysis sdreport.se.com • 17
OUR CUSTOMERS Building HIGHLIGHTS: EcoStruxure for Building Marriott’s sustainability journey Delivering the buildings of tomorrow, today Marriott® had a bold vision to reduce energy consumption while Marriott hotels, China meeting the rising demand for hotels in China. So, they turned to EcoStruxure Building to create 10% to 15% a sustainable, comfortable environment for their guests to energy savings offer a world-class experience Pharmacia Corporation, USA while achieving 10 to 15 percent $2M energy savings. avoided University of Mississippi, USA in new 25 to 30% Marriott and Schneider share equipment reduction in the same vision and … that's costs energy costs why it becomes much easier for us to reach the same goal, and partner toward that SUSTAINABLE RECORDED BENEFITS sustainability and energy SOLUTIONS: TO DATE INCLUDE: efficiency for all of our hotels. • EcoStruxure Resource Advisor • 10 – 15% energy savings Cinnamon Grand Hotel, Sri Lanka • EcoStruxure Building Operation, • Close collaboration ensuring EcoStruxure Lighting Expert, scalable, repeatable hotel $1M guaranteed savings MICHAEL WANG, CONTINENT HEAD, EcoStruxure Power Monitoring Expert technology solutions that meet Marriott brand standards over 3.7 years GLOBAL DESIGN ASIA PACIFIC, MARRIOTT HOTEL & RESORTS • Automation servers, network • Sustainability reporting that will AND THE RITZ-CARLTON HOTELS controllers, room controllers, further drive energy and carbon LV / MV switchgear, savings across Marriott’s global transformers, power meters, portfolio of hotels circuit breakers, variable speed drives, UPS, and wiring devices 18 • sdreport.se.com
OUR CUSTOMERS Data Center Telefónica’s sustainability journey HIGHLIGHTS: EcoStruxure IT Simplifying the data center in the cloud and at the edge Telefónica had a bold vision to become a digital telecommunications company, creating a data center to meet ITS Telecommunications Systems, USA customer demand while reducing energy costs. EcoStruxure for Data Telefónica, Spain 3-year Center allows Telefónica’s Alcalá data center to process 14 kW per 60% reduction projected ROI on $1.5M rack — reducing energy costs by in energy costs 60 percent. We created a project I'm very proud of, and specifically, we reduced energy costs by 60 percent compared to a traditional data center. SUSTAINABLE RECORDED BENEFITS SOLUTIONS: TO DATE INCLUDE: IronGate Data Centers, USA FRAN MUÑA, • Remote Monitoring Services • LV Electric Box, Building • A 60% reduction in energy costs compared to both 15 – 20 kW DIRECTOR OF CRITICAL INFRASTRUCTURE, Lighting, UPS traditional DCIM and the Gold per rack with TELEFÓNICA Tier IV® certification hot aisle containment • Ability to connect new servers and InRow™ cooling in running mode, with no Zhiguli Valley Technopark, Russia need to stop to reconfigure or redesign systems • A BMS that collects data from ~$54K some 45,000 elements per year estimated energy savings sdreport.se.com • 19
OUR CUSTOMERS Industry HIGHLIGHTS: EcoStruxure for Industry WaterForce’s sustainability journey Pioneering IIoT — from shop floor to top floor WaterForce had a bold vision Dow Corning, USA for efficient agricultural irrigation WaterForce, New Zealand using IoT technology to change 50% reduction the farming paradigm. Powered by the Microsoft® Azure platform and Up to 50% energy in CapEx Schneider’s EcoStruxure Industry savings reported by farmers IoT architecture, SCADAfarm is an integrated automation and Fonterra, New Zealand information management solution 4.4 Up to developed for WaterForce. In the first season alone, farmers report more visibility into operations, million liters with up to 50 percent in energy savings. of milk per day By leveraging our relationship SUSTAINABLE RECORDED BENEFITS with Schneider Electric, we can SOLUTIONS: TO DATE INCLUDE: focus on our core business — effective water management, • SCADAfarm, an integrated • Improved operational knowing that the information automation and information performance and crop yields management, analytics, and management platform • Enhanced safety procedures ArcelorMittal, France • Scalability • Significant energy savings by automation side is covered. • Complete water management taking advantage of off-peak 24/7 nonstop RON MCFETRIDGE, portal • Business opportunities energy rates • Better management of water, steel production DIRECTOR OF WATERFORCE, and easier compliance with NEW ZEALAND regulatory requirements 20 • sdreport.se.com
OUR CUSTOMERS Infrastructure South Australia Power Networks’ sustainability journey HIGHLIGHTS: EcoStruxure Grid Enabling the new energy world South Australia Power Networks had a bold vision to keep South Australia Power Networks electricity flowing for 1.5 million households through the most extreme storms. They trust 1.5 million homes receiving reliable electricity Enel, Italy 144 GWh EcoStruxure Grid for reliable monitoring and management of energy savings per year their extensive network, helping keep the people of South Australia safe — and powered — through extreme environmental conditions. We have over 1.5 million customers. To be able to restore power to the majority of customers on a feeder in under SUSTAINABLE RECORDED BENEFITS a minute is something that has SOLUTIONS: TO DATE INCLUDE: Salt River Project, USA never been done in our history. Without Schneider Electric, we probably wouldn’t have been • Advanced distribution management system (ADMS) • Fault location, isolation, and service restoration 44% able to progress as fast as we have. • Decentralized feeder automation systems • Network monitoring • Load-flow analysis reduction Tata Power, India • RM6 medium-voltage • Real-time control and of configured TASNIM ABDEL-RAZAQ, switchgear optimization • Operational planning • Training and simulation alarms
CHAPTER 4 OUR Everything we do in this company is meant PEOPLE to create a better world. But beyond the business mission, we want to be extremely progressive, very inclusive, and want to create an environment where every single employee will have the same chance of success. OLIVIER BLUM, EXECUTIVE VICE PRESIDENT, GLOBAL HUMAN RESOURCES, SCHNEIDER ELECTRIC At Schneider Electric, we believe great people make us a great company. That’s why when we talk about sustainability and energy management, we aren’t just talking about preserving energy as a resource; we are equally focused on sustaining the energy of our workforce. We invest in the energy of our people in numerous ways, including a company-wide focus on Health & Equity. A key measurement for progress is the Schneider Sustainability Impact. In fact, one-third of our barometer concerns health-related topics. We also prioritize diversity and inclusion on a global scale, advancing initiatives including gender pay equity and a Global Family Leave Policy. Additionally, we keep our eye on the upcoming talent pool of tomorrow. 2015 – 2017 Great people make We fostered this talent in 2017 with opportunities including Schneider Go Planet & Society Green in the City — an international student competition to find innovative barometer achievements SCHNEIDER ELECTRIC energy solutions for smart cities, and showcasing the talent of the workforce of the future. Participants include teams of two, of which at least a great HEALTH & EQUITY one team member is female, confirming our commitment to diversity and company was our score inclusion. Our ambition is that our employees everywhere have equal opportunities, 65% in the Employee Engagement Index while feeling uniquely valued. 22 • sdreport.se.com
OUR PEOPLE Why working here matters Our voice is Our Employer Value Proposition is our way of telling the world OneVoice what it means to be part of this organization. We believe it is our We don’t assume we know what responsibility to set up each employee for success. This is outlined our employees are thinking, or in our cornerstone: “Great people make Schneider Electric a great what’s best for them — we ask company.” It includes four key attributes that evolve annually along them, twice a year, every year. with us. We can’t expect them to thrive without their honest input, and that is where the OneVoice satisfaction Great people make Schneider Electric a great company survey comes in. Our belief is that access to energy is a basic human right. We are committed to a sustainable future O N E VO I C E S U RV E Y Company Values by solving the energy paradox. I N N U M B ERS BY EN D O F 2017: Ensuring access to energy for everyone around the world motivates and energizes every single employee. As such, we share a set of values as We provide equal opportunities to everyone 100% of employees part of an ongoing effort to change the status quo. everywhere. surveyed twice a year • STRAIGHTFORWARD: We do what we say and we communicate in We ensure all employees feel uniquely simple ways. We behave with integrity. valued and safe to contribute their best. 179,000 emails sent • CHALLENGE: We challenge ourselves and others to rethink what is expected. We are agile and move at the speed of change. We lead the digital transformation. 78,000 people reached via “kiosks” on • OPEN: We value differences. We listen. We learn, connect, and We collaborate with the largest partner, 271 production sites collaborate with others. integrator, and developer ecosystem on our open platform. • PASSIONATE: We are passionate about our customers, our people, our business, and our technology. We are positive in our approach to 3,300 managers received a dedicated report finding solutions that improve lives. We are ambitious for customers, and our • EFFECTIVE: We deliver on promises. We are pragmatic and fast, and business growth. 80% participation rate we compete to win. in 2017, improved from 62% We like to win as a team, we empower in 2011 and trust our people to stay agile. sdreport.se.com • 23
OUR PEOPLE Company Programs Innovative strategy helps Schneider Electric sustain a workforce that is competitive and highly engaged. The past year was one of great progress in terms of company programs, which include the following Stepping up customer-centric initiatives: in 2017 Step Up is known as the people transformation Do more by creating more of the company. It’s about Do More opportunities for our customers, team-building, talent and for ourselves. management, and cultural transformation. It helps us sustain a world-class Digitize to support our growth workforce. Step Up will Digitize and make our customers’ lives continue to be a company-wide G LO B A L R EC O G N I T I O N simpler and better. priority in the year ahead. Forbes® Fortune® ’s World’s Best “World’s Most Innovate our people to grow talents and foster strong Employers Admired Companies” Innovate employee engagements. for 2018 Policies and LinkedIn 2018 “World’s Most progress Top Companies 2017, Ethical Companies®” The past year brought with it an second year in a row Step up our operations for by the Ethisphere® Institute Step Up increased efficiency. emphasis on well-being and our commitment toward Diversity and 2017 European 2018 Bloomberg SM Inclusion, including: Most Admired Gender-Equality • The global launch of our inclusive Knowledge Global Family Leave Policy Index Listing: Simplify for our customers, Simplify and simplicity. • Putting pay equity high on our Enterprises 104 companies with strong commitments to gender diversity agenda for the betterment of our (MAKE) Award employees 24 • sdreport.se.com
OUR PEOPLE Worldwide Learning Week L E A R N I N G W EE K AT A G L A N C E: Marking its fourth year, Learning Week is a major contributor to our learning culture strategy. It gives employees the chance to train, More than and share knowledge through educational events including: • Webinars and workshops on key subjects >50,000 employees participated • Collective e-learning • Roundtables with leaders 75% of respondents were satisfied with Global Learning Days Learning Week In addition to Worldwide Learning Week, we also introduced the first-ever global Learning Days in 2017, with learning offered on 78% are likely to recommend Learning Week specific business topics: to a colleague 1. Schneider Electric: Our products and services 2. Customer centricity 3. Digitization and IoT 95% believe Learning Week should continue to be organized in the future Learning initiatives will continue to be offered in 2018 to maintain the Our Investment focus on lifelong learning at Schneider Electric. for Growth The spirit of lifelong learning is powerful at Schneider Electric. 2015 – 2017 Employees are tasked with completing seven hours of logged training annually. Through academies, Leadership Development Centers, Planet & Society internal learning tools, and more, employees can sharpen their skills barometer achievements and broaden their horizons. We emphasize proactive thinking about career development, beyond entities and across geographies. HEALTH & EQUITY one-day training 92% for every employee, every year sdreport.se.com • 25
OUR PEOPLE Go Green in the City Diversity We foster tomorrow’s workforce through Go Green in the City — an means value annual international business case challenge for students around At Schneider, diversity means the world to find innovative solutions for energy management value. Through our Diversity and and automation. Participants include teams of two, of which at Inclusion Policy, we prioritize least one team member is female, confirming Schneider Electric’s tolerance, dignity, and respect, commitment to diversity and inclusion. as well as gender equality. We understand that it takes diverse teams to handle the diverse markets we serve. Diversity and Inclusion Advisory Board In its second year, the Diversity More than 19,772 We Live Our Lives Better and Inclusion Advisory Board came together to effect positive participants in 2017 change for the entire company. Well-being isn’t just something we The group continued to work strive for; it’s part of who we are. diligently to advance gender 60,000+ External pressures make it difficult diversity and foster a culture participants in total (2011 – 2017) to strike a balance between 1,000 Well-Being Labs of inclusion within Schneider personal and professional life. We across 50 countries in 2017, Electric. As thought leaders and aim to counteract that by creating compared to 500 labs in innovators in their respective 180 countries an environment to help employees better manage their energy by 43 countries per 2016 areas of expertise, they help in 2017, expanded from create a unified voice for a more 8 countries in 2011 2017 winners: Raja Jain and Nimisha Gupta from the Indian Institute of empowering our individual parts, and the company becomes a 75 well-being trainings and progressive Schneider. Technology Roorkee won Go Green in learnings available to employees stronger whole. 58% of 2017 the City 2017, for the idea of using the ancient Indian technology of earthen participants were female pots to develop a modern-day cooling system. 26 • sdreport.se.com
OUR PEOPLE It’s great to see Schneider show, in concrete Measuring What HeForShe means here ways, its commitment to Diversity and Inclusion, and anchor it in a very pragmatic pay equity As part of its public commitment and personal policy that impacts lives. to gender equality, Schneider As part of our Diversity and Electric participates in the U.N.’s Inclusion ambition, gender HeForShe solidarity movement pay equity was one of the top to promote gender equality. TINA MYLON, priorities for 2017. It touches Schneider recently became a SENIOR VICE PRESIDENT TALENT AND DIVERSITY, every single employee, every SCHNEIDER ELECTRIC HeForShe IMPACT 10x10x10 single day. We’re holding Champion, signifying that it is ourselves accountable to make one of 10 corporate champions sure we have equal pay for equal work. Beyond equal pay, for the HeForShe global solidarity 38,000+ movement. Schneider Electric we’re making sure we have the Global family leave right data and processes to employees have joined the HeForShe Movement Initiated by U.N. Women, the We understand that each of us avoid disparity in pay across campaign engages men and equal roles, throughout the boys — including Schneider has a unique situation. Regardless of the details, our policies help company. Chairman and CEO Jean- 23,000 women recruited over the past support employees to manage Pascal Tricoire — as advocates three years their situation. That’s why we took and agents of change for the an “all in” approach to our Global achievement of gender equality. Family Leave Policy that launched Racing toward in September 2017. gender equality Schneider Electric provides paid As the title sponsor of the parental, care, and bereavement Paris Marathon for the fifth leave in all countries. We define year, Schneider Electric was “leave” and “family” in an inclusive proud to make great strides way, recognizing that definition of toward a greener and more 2015 – 2017 gender-diverse event in 2017. HEALTH & EQUITY HEALTH & EQUITY family, life, and work are changing Planet & every day. The policy includes key an equal amount of parental leave The world’s second-largest Society life stages of welcoming a new baby, taking care of sick or elderly to a parent by natural birth or adoption. The policy demonstrates marathon, the Schneider Electric Paris Marathon barometer 85% 38% family members, and mourning a commitment to diversity and welcomed 57,000 runners achievements of employees work in reduction in the Medical countries with gender Incident Rate (MIR) the loss of a family member. inclusion to generate greater this year, 25% of whom were pay equity plans in It also assumes an inclusive engagement, performance, and women. place definition of family by extending innovation. sdreport.se.com • 27
CHAPTER 5 OUTREACH AND We want everyone on our planet to have 2015 – 2017 INITIATIVES access to safe, reliable, efficient, and sustainable energy, and we are committed to developing the innovations that will make Planet & Society barometer achievements this happen. CLIMATE & DEVELOPMENT (SUSTAINABILITY OFFERS) GILLES VERMOT DESROCHES, increase in turnover CHIEF SUSTAINABILITY OFFICER, SCHNEIDER ELECTRIC x2.21 of Access to Energy program Innovation and engagement We believe that access to energy is a fundamental right. Today, approximately 1.1 billion people lack access to electricity1. But, as we expand access to energy, we all must be mindful of the effects of its consumption on the environment. 1.1 At Schneider Electric, our solution BILLION to this energy paradox is twofold: innovation and engagement. PEOPLE Through our outreach and initiatives, we further support the U.N.’s Sustainable Development Goals by deploying innovative LACK ACCESS business models and energy TO ELECTRICITY solutions to the world’s energy-poor communities. 1 International Energy Agency, Energy Access Outlook 2017 https://www.iea.org/publications/freepublications/publication/weo-2017-special-report-energy-access-outlook.html 28 • sdreport.se.com
O U T R E A C H A N D I N I T I AT I V E S T H E B E N E FI T S O F E L EC T R I C I T Y By joining the Sustainable Energy for All partnership network, Schneider Electric is • Improved health, most significantly for women and children bringing their leadership to a movement that • Reduced poverty and raised living standards is focused on going farther, faster — together • Enhanced educational opportunities — in closing the energy access gap. • Strengthened environmental sustainability • Improved security and feeling of safety RACHEL KYTE, CEO, • Increased productivity SUSTAINABLE ENERGY FOR ALL Worldwide electricity deficit: 2016 (in millions of people) 0 CHINA NORTH AFRICA
O U T R E A C H A N D I N I T I AT I V E S 2017 Access to Energy highlights: OFFERS AND BUSINESS MODELS Congo Nepal Bangladesh Proton and Schneider Electric Saral Urja partnered We brought solar-powered provided solar solutions with us to provide portable lamps to a remote to remote villages in the electricity to a remote, island village, where 100 Democratic Republic of the off-grid village using households now have electricity Congo. a solar-powered for basic needs. microgrid. Access to Energy In 2017, we expanded our range of products, solutions, and services for communities that lack access to energy — from individual lighting to community services and collective electrification. India Schneider Electric and the Cambodia The Access to Energy program actively involves local stakeholders, Schneider Electric India Installed in Bavet city of including residents and customers, to bring safe, clean, sustainable the Svay Rieng province, Foundation led two rural electricity to communities all over the world. The Access to Energy a 10 kW solar power plant electrification projects in program operates in three ways: from Schneider Electric Arunachal Pradesh, providing energy access to 375 now provides safe, reliable, • OFFERS AND BUSINESS MODELS, to address local electricity modern energy for the households with our Mobiya access shortages, we design electrical distribution offers via solar lanterns. surrounding villages. renewable off-grid products and solutions. Cameroon • IMPACT INVESTING, to address local funding shortages, we invest in The microfinancing group Myanmar innovative, local access to energy ventures and subject matter experts Pamiga partnered with us Kenya We worked with our local through impact investing funds. to bring more than 3,200 Our new Villaya Microgrid solution partners, Mandalay Yoma, • TRAINING AND ENTREPRENEURSHIP, to address local skill households access to is designed, manufactured, and Talent and Technology, and shortages, we support the creation of training courses in electricity energy with our Mobiya and tested in Nairobi. It provides access Techno Hill Engineering, to Homaya solar solutions. trades. to energy and socio-economic build microgrids that bring development to homes, health energy to more than 1,000 With the support of the Schneider Electric Foundation, we partner with clinics, schools, and businesses. households across five local and global not-for-profit education organizations. villages. 30 • sdreport.se.com
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