Strategy and Sustainability Highlights - 2012-2013 - Schneider Electric

Table of ContentsCompany Overview01 Schneider Electric at a glance03 Words from the President04 Leadership Team05 Solutions overview07 Strategy overview09 Year in review10 Creating shared valueGovernance & Ethics11 Message from Henri Lachmann12 Aligning oversight and mission13 Putting principles into practiceEnergy Management Solutions15 Meeting the world’s energy challenge17 Solutions at work21 New economies23 Innovation and R&DAccess to Energy25 Combining social progress and business27 The BipBop ProgrammeEnvironment29 Environmental commitment31 Carbon footprint reduction32 Green solutions and sitesOur People33 Building sustainable careers35 Training and education36 Safety and diversitySocial Responsibility37 The Schneider Electric Foundation39 The Foundation at workFinancial & Extra-financialIndicators41 Interview with Emmanuel Babeau42 Shareholders’ Advisory Committee43 Stock performance44 Planet & Society Barometer

01 Company Overview / Schneider Electric at a glanceSchneider Electricat a glanceWorking each day for a moreefficient and sustainable worldWestern Europe30%RevenueAsia Pacific27%33% RevenuePeopleNorth America25%Revenue21%People31%PeopleRest of the world18%Revenue15%People

Company Overview / Schneider Electric at a glance 02s the global specialist in energy management,ASchneider Electric has a 177-year legacy of innovation,international scope, and corporate responsibility. Acrossthree centuries, we have contributed to the transformationof multiple industries, including iron, steel, shipbuilding, andelectricity. Today, our more than 140,000 employees in over100 countries bring a singular mission to their work eachday: to help people make the most of their energy.Revenue breakdownby Business37% 22% 19% 15% 7%PowerInfrastructureIndustryincluding CSTITBuildingsSchneider Electric by the numbers177yearsof history¤24billionin consolidatedrevenue140,000total workforcein 100+ countries¤1billiondevoted to R&Drepresenting almost4.4% of our sales41%salesin new economies¤2.02 110#1 or #2billion netincome 1+12% vs. 2011volunteersacting as delegates ofthe Schneider ElectricFoundation in 75 countriesplayerin 90% world group sales1. Adjusted from impairment of goodwillSDreport.schneider-electric.com

03 Company Overview / Words from the President'It is time foreveryone tobecome an activeplayer in energy'.Jean-Pascal TricoirePresident & CEOWords from the PresidentIn a complicated international environment, 2012 has been a year of consolidation for Schneider Electric.First of all, 2012 has been a record year of earnings and cashgeneration. It reflects the strength of our business model, the solidexecution of the Connect company programme, and the disciplinedintegration of our acquisitions.We have positioned Schneider Electric on a solid and growingbusiness: technologies that make industry, IT, energy, and citiesmore efficient. We have diversified and balanced our exposureto geographies and end markets, while remaining totally focusedon our mission of helping our customers to make the most oftheir energy.We continue to grow our business in new economies, whichnow make up 41 per cent of our sales, developing productsand solutions specifically adapted to those countries.Our business with partners has been strengthened by a growingrelationship with large end users. By growing our service businessand our software solutions, we improved considerably in 2012 indelivering those new added values to our customers whereverthey operate in the world.We have increased our investment in innovation with morethan €1 billion invested in R&D, to reinforce our leadership infunctionality, quality, connectivity, integration, and usability.We worked intensively to make sure our customers can benefit fromthe efficiency of One Schneider Electric. We continued streamliningour costs, and delivered significant cost productivity. We progressedtowards a more customer-centric and efficient supply chain. Weglobalized and simplified our organization: We created two businessgroups, Partner and End User, dedicated to support our businessmodels; we organized our geographical presence by establishingoperation divisions by main geographies; we also globalized oursupply chain in order to strengthen partnerships with our suppliers,and drive the efficiency on a whole different scale.We also welcomed the companies recently acquired, and madesure these new teams found their place within our company.We stepped up our engagement in social responsibility andsustainable development. We keep measuring our progress inour Planet & Society barometer, and integrate this indicator in theincentives of our leaders. Beyond our support of the UN GlobalCompact since 2003, our commitment has been recognized inratings of reference such as Dow Jones Sustainability Indexes,CDP Global 100, and Ethisphere. I am particularly proud of ourBipBop access to energy programme. In 2012, this initiativebrought electricity to 340,000 households, and enabled the trainingof 10,000 underprivileged youngsters in the field of electricity.As a specialist in efficiency technologies, Schneider Electric hasbeen an active contributor to the debates over the world energychallenge and climate change.The world of energy is under important pressure and undergoinglarge transitions. Energy prices, commercial unbalance due to'We have positioned Schneider Electricon a solid and growing business:technologies that make industry, IT,energy, and cities more efficient'.energy imports, energy availability, climate change, and pollutionin large cities are many challenges demanding a different energyparadigm. The convergence of IT and energy technologies, andthe new affordability of renewable energy open the door to a newworld, a world where energy is saved systematically, producedcloser to consumption, and where the environment is connectedand accessible. Users, managers, and utilities will work together tosave more and share better energy, and integrate a more intelligentenergy for more intelligent and efficient cities. It is time for everyoneto become an active player in energy, by saving, producing, andconsuming energy in the same place.Schneider Electric is helping people navigate the transition to a newenergy world. This is the mission, the aspiration, and the ambition ofour 140,000 employees, in the 100 countries where we operate. Wewill continue to serve our customers wherever they develop, meetchallenges, and innovate to build a more efficient world.Read the full interview from The Schneider Electric@ 2012 Annual Report online.

Company Overview / Leadership Team 04Emmanuel BabeauExecutive Vice President,Finance *ExecutiveCommitteeThe Schneider Electricmanagement team bringsvision, broad knowledge,and deep expertise to theleadership of our organization.Clemens BlumExecutive Vice President,Industry BusinessMichel CrochonExecutive Vice President,StrategyAnnette ClaytonExecutive Vice President,Global Supply ChainChris CurtisExecutive Vice President,North America OperationsHervé CoureilChief Information OfficerAaron DavisChief Marketing OfficerDivisions Executive Vice PresidentsFrédéric AbbalEnergyJeff DreesProfessionalServicesOlivier BlumRetailPhilippe DelormeExecutive Vice President,Partner BusinessDaniel DoimoExecutive Vice President,IT BusinessKaren FergusonExecutive Vice President,Global Human Resources53yearsis the average age of ourLeadership Team membersIgnacioGonzalezSmartInfrastructureJoseLorenzoEco BusinessZhu HaiExecutive Vice President,China OperationsEric PilaudExecutive Vice President,Custom Sensors andTechnologies **Julio RodriguezExecutive Vice President,Global OperationsLaurent VernereyExecutive Vice President,End User BusinessDean MeyerBuildings* Member of the Management Board ** President & CEO, Custom Sensors & Technologies Inc. (Executive Committee Team as of 1 March 2013) SDreport.schneider-electric.com

xx 05 Company Title / Section Overview / Solutions overviewWhat drives ourcompany's workDelivering solutions thatalign business performanceand sustainabilitySchneider Electric delivers efficient solutions across theenergy chain, enabling people to experience and transformefficiency together at home and work, across the grid, and intowns and cities.S> Efficiency: Implementing the right services, systems, andtechnology to reduce energy consumption, cost per kWh,and operating expenditure> Intelligence: Accessing smart, real-time data andinformation that can be shared, optimized, and deliveredacross integrated systems through connected and openplatforms, with the right level of information for each user> Sustainability: Coupling efficient solutions with actionabledata to provide the capability for any user to optimizeenergy usage, curb CO 2 emissions, and improve long-termROI on CapEx and OpExenergy efficiencyBuildings and industryrepresent more than60%of theworld'sfinalenergy consumptionand a significant shareof relatedCO 2emissions.Source: World Energy Outlook 2012, IEA, graph 12.1c

Company Overview / Solutions overview 06smart gridGrid infrastructures are ageing,overloaded, and in need of repair.They need to becomesmarterto adapt to a more complexenvironment.smart cities50%Cities today containof the world's populations,consume75% ofglobal energy,and give off 80%of greenhouse gas emissions.Source: UN State of the World Cities Report 2012Enhancing the smart gridrevolution ...By supporting renewable energy, flexible distribution,active energy efficiency and energy management,electric vehicles, and real-time grid managementSupporting urban efficiency ...By setting the vision, bringing in the technology,working on the integration, adding the innovation,and driving collaborationMaking infrastructure, industry, IT,buildings, and homes more efficient …At work, by enabling up to 30 per cent energysavings, improving productivity, reducing costs,enhancing comfort, and increasing securityAt home, by creating comfortable, safe, efficient,and automated living spaces39%revenuederived from solutionsLearn more about our solutionsin action through our customersuccess stories on pages 16 – 22.SDreport.schneider-electric.com

07 Company Overview / Strategy overview'The world's energychallenge requiresboth immediate andlong-term solutions'.— Michel CrochonMichel CrochonExecutive Vice President,Strategy, Schneider Electric'Immediately, we need to controlenergy costs and consumption, andreduce the harmful effects of CO 2 .Long-term, we must prepare for theenergy demand created when70 per cent of the world's populationlives in cities, which is projected tohappen by 2050. Schneider Electrichas developed its strategy inresponse to both of these challenges.Our innovative solutions deliver energyefficiency today, and our leadershipposition in energy management ishelping to pave the way to smartercities and upgraded infrastructuresthat will be needed in the urbanizedworld of the future’.Responding to today’senergy challengeEnergy needs are escalating worldwide as a result of unprecedented economic,demographic, industrial, and urban growth. But rising demand increases carbonemissions, which threaten the sustainability of our planet. How can we respond tosociety’s understandable thirst for the health, educational, and social benefits thatelectricity brings, while also being responsible stewards of the environment? Ourcollective response must work towards three goals: energy efficiency, a smarterelectricity grid, and more sustainable cities. To work towards achieving these goals,Schneider Electric has designed its strategy around four main actions:Leverage the world’s newenergy challengesWe have developed a wide range ofproducts and solutions that deliver significantlevels of energy efficiency and savings inindustrial plants, data centres, infrastructure,homes, and buildings; smart grid solutionsthat help utilities improve efficiency and offerbetter service to customers; and solutionsthat speed the development of smart cities.Build two complementary business models:products and solutionsProducts and solutions are different andcomplementary business models, andwe aim to deliver profitable growth inboth. Products allow us to achieve scaleand pricing power in our end-markets,while providing differentiation throughtechnologies that can be combined andintegrated. Solutions allow us to generateadditional growth and profits, lower capitalintensity, and help reduce cyclicality.Schneider Electric has a tradition of guiding strategic execution through company programmes.In January 2012, we unveiled our latest programme, ‘Connect’, the goals of which align with our keystrategic levers: to be a leader in products and solutions; to be a leader in mature and new economies;to create a culture for employee development and performance; and to drive efficiency, profitability, andgrowth. The three-year programme runs through 2014.ELeverage the opportunity arisingfrom the accelerated expansion ofcertain economiesCertain countries in Asia (excluding Japan),Latin America (including Mexico), the MiddleEast, Africa, and Eastern Europe (includingRussia), which we refer to collectively as'new economies', have entered a prolongedperiod of accelerated development. As aresult of the industrialization, urbanization,digitization, and development processes thatthese countries are experiencing, we expectthe markets of their economies to continueto have a pressing need for the products andsolutions that we provide.Invest in profitable and responsiblegrowth while driving efficiencyWe believe in the long-term growth potentialof our business, and we continuously investto drive that growth. This investment isfocused on sustained spending in researchand development, as well as on growingour commercial presence and skills,especially in the fields of high value-addedtechnologies and services. In addition,we will continuously look for and evaluatepossible opportunistic acquisitions.

Company Overview / Sustainable development overview 08Interweaving sustainabilityand successAs the global specialist in energy management,Schneider Electric tackles one of the majorsustainable development challenges each day:climate change. Our sustainability commitment isaligned with our mission. It is based on three pillars:A> Solving the energy dilemmaWe will help create a more sustainable worldthrough the development of solutions for energyefficiency, the smart grid, the integration ofrenewables, electric vehicles, and smart cities.> Being exemplary toward all stakeholdersWe will limit the impact of our activity on theenvironment, be a responsible employer,support the development of the communitieswhere we work and live, and practice ethicsand responsibility in all of our operations.> Providing access to energy to those who need it mostWe are committed to developing reliable, affordable,green, and sustainable access to energy to the1.3 billion people who are still energy deprived today.Measuring our sustainability performanceThe Planet & Society BarometerSince 2005, we have provided an ongoing measure and report on our sustainability effortsbased on the key performance indicators in our Planet & Society Barometer. Our aim is to:> Bring the corporate communitytogether around sustainabledevelopment objectives> Transparently communicate ourperformance against each objectiveevery quarter, with annual audits> Clearly share our improvement planswith stakeholdersAt the start of 2012 we introduced ablend of 14 new indicators that reflectour company’s key sustainability stakesfor the next three years. As with pastPlanet & Society Barometers, our goalwill be to meet the 8/10 target by theend of 2014.1086420Goal is to reach8 out of 10by the end of 20146.422012 201320148Look for this symbol to seehow we’re measuring up to our14 performance indicators.Performance'Over the last 10 years, we have strived to build a company that is both global and innovative, to face the sustainability and responsibilitystakes and commitments of each country. Our objective: help divide global CO 2 emissions by reducing the world's energy intensity while alsodeveloping energy access for all. Schneider Electric works on solutions that will help nations to shape the necessary commitmentfor the future of the planet. To get there, the Planet & Society Barometer pushes everyone in the company to turn their commitment intomeaningful action for the good of all our stakeholders'.Gilles Vermot DesrochesSenior Vice President, Sustainability, Schneider ElectricSDreport.schneider-electric.com

09 Company Overview / Year in reviewGlobal 100Most SustainableCorporationsRanked 13th on the Global 100Most Sustainable Corporations inthe World in 2013, up 13 placesfrom the previous yearWorld's MostAdmiredIts highest ranking ever, Schneider Electric wasnamed #5 in the Industry/Electronics categoryof Fortune Magazine's 'World's Most AdmiredCompanies' list for 2013Companies#5Top 100 EnergyEfficiency ServiceCompaniesSolarDecathlonIEA inHong KongSustainabilityIndexesWelcomed the InternationalEnergy Agency to a paneldiscussion in Hong Kongfocused on unlocking thepotential of energy efficiencyRanked 2nd in Top 100Energy Efficiency ServiceCompanies 2012 byChina Industrial EnergyConservation and CleanProduction AssociationTop 50EmployerNamed to the leading sustainabilityindexes (DJSI, CDP, etc.)Served as Sustaining Sponsorof Solar Decathlon Europe, heldin Madrid, the largest globaluniversity competition focused onenergy management in homesNOVEMBEROCTOBERDECEMBERSEPTEMBERNamed to the Top 50 World’sMost Attractive Employers2012 by UniversumCiscoHouseJANUARY 13Showcased energy managementsolutions at Cisco ® House duringthe London OlympicsJANUARY 12Highlights from2012 - 2013AUGUSTJULYFEBRUARYThe yearin reviewSkolkovoFoundationRio+20ConferenceJUNESigned agreementwith the SkolkovoFoundation to openan R&D centre inSkolkovo, RussiaMAYMARCHAPRILEBieAwardsParticipated in sustainabledevelopment discussions at theUN Conference on SustainableDevelopment in Rio de Janeiro, BrazilLaunch ofinternationalcompetitionGo Greenin the CityLaunched an international competitionattracting 270,000 students worldwideSchneider ElectricTeachersAcquisition ofM&CSchneider Electric retrofitof the Dallas Museum ofArt named a winner inthe ‘Reformed GasGuzzler’ category at theEBie awardsGrameenSchneider ElectricAcquisition of M&C EnergyGroup, strengthening ourcapability to respond tofast-growing demand forenergy managementservicesLaunch ofEnR-PoolCreation of Schneider Electric Teachers, anNGO to promote employee volunteering ineducational and professional trainingprogrammes in the energy sectorGolden PeacockAwardsRecipient of the GoldenPeacock Award for SocialResponsibility in the areasof village electrification,electrician trainings,employment, andentrepreneurshipLaunch of EnR-Pool to fosterthe development ofrenewables by modulatingelectricity capacity with largeindustrial customersCreation of Grameen Schneider Electric,a social business for energy servicesin Bangladesh

Company Overview / Creating shared value 10Creating shared value for all our stakeholdersThe financial performance of our company affects stakeholders all over the world —employees, suppliers, non-governmental organizations, and public authorities. It alsoThas an impact on the local communities where we work, live, and actively invest. Throughdistributions, we are pleased to share value with our stakeholders. Through investments,the company positions itself to create more value in the future.Purchases& Other¤14,177millionDividends¤991millionNet InterestExpenses to Bank¤349million2012Total Revenue¤23,946Customers millionInvestment CapabilitiesEmployees& Wages¤6,040millionIncomeTaxes¤568millionNon-governmentalOrganizations& Donations¤11 millionOperatingCash FlowAfter DividendPayment¤1,810millionNet ExternalFinancing*Including CapitalVariation¤237millionInvestments &Development¤719millionNet FinancialInvestments¤214**millionCash Variation¤1,114millionRevenue distribution to our stakeholdersCash flow after operating expenses and dividendsCash flow from external sources* Share issues, sale of treasury stock and loans ** Including 90% of acquisition and 10% placed for retirement pensionsSDreport.schneider-electric.com

11 Governance & Ethics / Interview with Henri Lachmann'Schneider Electric iswell positioned to seizeopportunities relatedto the energy transition'.— Henri LachmannHow does responsible governancefoster sustainable growth?'For several years, the Supervisory and theManagement Boards have given much thought tomy succession plan and the evolution of governanceat Schneider Electric. I took the initiative toput in place this succession plan at the nextAnnual Shareholder’s meeting, in order to be able toparticipate in this transition before the end of my term.Consequently, our Supervisory Board, in agreementwith the President of the Management Board,propose the adoption of a structure with a Board ofDirectors (Conseil d’Administration). The Board isattached to the continued success of the group andits good governance. It endeavours to respect twokey principles: to maintain a strong and stableleadership and to guarantee the independent controlin the management of the company. It intends toname Jean-Pascal Tricoire as Chairman and ChiefExecutive Officer (Président Directeur Général) inlight of his achievements and performance since hetook the lead of the Group in 2006'.Henri Lachmann6 5Chairman of the SupervisoryBoard, Schneider Electricmeetingsof the SupervisoryBoard in 2012hoursaverage durationof meetingsIn order to reinforce the Board’s role and involvement in theoversight of the Group, the Board of Directors will name a ViceChairman Lead Director, in application of the by-laws, and will publishthe internal regulation of the Board of Directors. Furthermore, fourcommittees will be established, chaired by independent directors.Executive sessions (without the presence of the Chairman & CEO)chaired by the Vice Chairman Lead Director will be included in eachBoard meeting agenda. The Board will remain flexible with respectto the combination of the Chairman & CEO roles and will reconsideron a yearly basis the combination of these roles.The existing members of the Supervisory Board (who will benominated as Directors of the Board for the remaining duration oftheir terms) have built a strong relationship with the managementof our company, based on transparency, dialogue, and even onconfronting their ideas and options. By unanimous agreement, theypropose this new governance structure and are very confident inits functioning, in the best interest of our shareholders and allSchneider Electric stakeholders.In additional comments, Henri Lachmann noted that the 2012performance of Schneider Electric 'reflects the strength of ourstrategy and the quality of the teams implementing this strategy.The Supervisory Board would like to congratulate and thankthem for their work and efficiency. We are highly confident inthe profitable development of our company and believe thatSchneider Electric is well positioned to seize opportunities relatedto the energy transition and energy efficiency in general'.Read the full interview from The Schneider Electric@ 2012 Annual Report online.

Governance & Ethics / Aligning oversight and mission 12Aligning our oversight with our missionEffective governance is good for business. That pointwas underscored at the COMMIT!Forum in New York inOctober 2012. ‘Sound governance is a key element ofsustainability’, said speaker Margie Flynn, principal ofBrownFlynn, a responsible business strategy consultancy.‘It correlates with stock value and contributes to acompany’s reputation, which comprises a large percentageof the intangible assets of business value today’.Read more about the@ COMMIT!Forum online.The Schneider Electric team with Muhammad Yunus, founder ofGrameen Bank, at the UN Conference on Sustainable Development (Rio+20).As a member of the UN Global Compact,Schneider Electric aligns its operations andstrategies with 10 universally acceptedprinciples in the areas of human rights,labour, environment, and anti-corruption.Evolving and extending our governanceUpholding our ethicsAt Schneider Electric, governance calls forvision, responsibility, and ongoing dialoguewith stakeholders. These actions not onlycharacterize a good corporate citizen,they also go hand-in-hand with effectivebusiness performance.Our governance principles reached deep intoour operations in 2012. We launched a newresponsibility programme for suppliers basedon ISO 26000 compliance. We also deployeda whistle-blowing system in all major countrieswhere we operate, within the framework of ourResponsibility & Ethical Dynamics programme.At the same time, we continued to fuel thedebate around energy, climate change, andcorporate social responsibility, taking a leadrole at events such as the Rio+20 Conference.One welcome outcome of our vigilantgovernance is our continued high ranking forethics and sustainability among best-in-classcompanies worldwide.See what Georg Kell, Executive Director of the UN Global Compact Office, has to say about the world’s largest@ corporate citizenship initiative, how it has evolved, and the role Schneider Electric plays as a member.31%of SupervisoryBoardmembers are women*4membersare from non-Frenchorigin or nationalities*The Planet&2012 results vs. 2014 targetThree major ethical stock indexesselect Schneider ElectricSociety Barometer3 3 3start results target> This Planet & Society Barometer indicator reflects the fact thatsustainability is an important factor for the worldwide investment community.View frominvestors ...166 Socially Responsible Investment (SRI) fundsselect Schneider Electric. That represents4.5% of the company’s market capitalization,and places us #5 among all companies in theworld and #1 in France.Source: Summer 2012 ‘SRI Lenders Report, Companies mostfavoured by Socially Responsible Investors’, by marketintelligence consultancy Ipreo93%attendanceby members at 2012Supervisory Boardmeetings*SDreport.schneider-electric.com*Source: The Schneider Electric2012 Annual Report

Governance & Ethics / Putting principles into practice 14Supplieraudit …Up to20%of variablecompensationfor the company's leaders based ona sustainability topic related to theirscope of work90% of recommendedsuppliers embraceISO 26000 guidelinesIn 2012, 150 suppliers representing7.8% of our total recommendedsuppliers were audited to assess theircompliance with the ISO 26000guidelines. All of them were judgedcompliant, based on a grade from1 to 10.Holding ourselves to the same measureOur expectations for suppliers apply to ourcompany, as well. So we conducted the ISO 26000audit on our company. Result: a grade of 7.The Planet&2012 results vs. 2014 targetSociety Barometer0 7.8 90start results target> With this Planet & Society Barometer indicator, we aremotivated to foster relationships with suppliers who share ourcommitment to operating in a socially responsible manner.Linking performance incentivesto company aspirationsA win-win approachAll members of the Executive Committee havesustainable development components built intotheir performance incentives. These measures aredirectly linked to our Planet & Society Barometertargets. In addition, the CO 2 reduction target andthe safety indicators, are taken into account for theperformance incentives of all Global Supply ChainManagement personnel who receive a bonus.Also, 20 per cent of the variable part of theperformance shares are calculated on thePlanet & Society Barometer results. By linkingthe remuneration of key players to well-definedDirect and ongoing dialogue with stakeholdersTransparency and dialogue are drivers ofinnovation and performance. That's why, as anintegral part of its sustainability commitment,Schneider Electric frequently surveys and meetswith various stakeholders. Their views arevalued and their voices are heard.View fromthe expert ...‘In 2013, we are launching astakeholders panel to channel ourdialogue with the intent of integratingtheir voice at the core of oursustainability strategy’.Emilienne LepoutreSustainability Performance Manager,Schneider ElectricPartnersKey managers gather at our annual leadership team networking eventto brainstorm and collaborate.sustainability performance objectives, we seek to makeour actions and our aspirations one and the same.Stakeholders dialogueFinancialcommunityCustomersProfessionaltrade unions,Consortiums,Joint venturesBuildings,Industry,Infrastructure,EnergySRI,Financial andextra-financialanalystsResearch andacademics,IndependentexpertsNGO's,MediaCivil societyUnions,sector union'UIMM'Law,EuropeanCommissionSocialInstitutionalbodiesChart on the right: Gimelec is a group of 230 France-basedcompanies, including Schneider Electric, working to establisha harmonized approach to stakeholder dialogue. Membercompanies supply electrical and automation solutions for theenergy, construction, industrial, and infrastructure markets.TechnicalcommunityChart source: Gimelec 2012SDreport.schneider-electric.com

15 Energy Management Solutions / Meeting the world’s energy challenge‘Millions of people aregoing to generate theirown green electricity’.— Jeremy RifkinHow do we meet the world’senergy challenge right now?Jeremy RifkinFounder and Presidentof the Foundation onEconomic Trends‘Great economic revolutions occur when twophenomena come together: a convergence ofcommunication and energy changes. In the19th century, print technology became verycheap when we introduced steam power toprinting: we created a print literate workforcewith the communications skills to organize aFirst Industrial Revolution driven by coal andsteam power. Then we did it again in the 20thcentury when centralized electricity becamethe communication vehicle to manage amore dispersed Second Industrial Revolution,organized around the oil-powered internalcombustion engine, suburban construction,and the creation of a mass consumer society …We are today on the verge of a Third IndustrialRevolution based on the convergence ofInternet communication with distributedrenewable energy sources’.Learn more about Jeremy Rifkin's theory on the Third@ Industrial Revolution and why he believes it is imminent.According to the International Energy Agency, if proper energyefficiency programmes are implemented between 2012 and2035, the need for 230 gigawatts of energy from coal-fired powerplants and another 120 gigawatts from gas-fired plants will beeliminated. Schneider Electric believes the time for change is now.Consume green and consume low carbon — the reasons havenever been more compelling:A> Because citizens cannot endure the consequences of energydeadlock caused by rising prices, climate disorders such asHurricane Sandy or the Tohoku earthquake and tsunami,increasing pollution in cities, etc.> Because technology, for the first time in history, is able to provideenergy efficiency solutions that are practical and cost-effective> Because the economics work: Energy efficiency and managementinvolving buildings, smart cities, and the smart grid have a fastpayback, improving energy security, and creating jobsEnergy efficiency: a huge opportunity going unrealized100%80%60%40%20%Unrealized energyefficiency potentialRealized energyefficiency potentialSource: IEA, WorldEnergy Outlook 2012Industry Transport PowerGenerationBuildings

Energy Management Solutions / Meeting the world’s energy challenge 16Efficiency is our most immediate and cost-effective responseFossil fuels remain the principal source of energyworldwide. While renewable energy sources aremandatory and promise a solution in the long-term,they are not enough to change the energy mix today.To address today’s energy challenge, efficiencyprovides our best solution right now.Learn more about our solutions@ for energy efficiency.Issy-les-Moulineaux is home to France's first district smart grid.View from the experts ...Responding to the smart grid challenge with urban efficiencyMaking the case for change with IssyGrid in FranceIn less than 40 years, 70 per cent of the world’spopulation will reside in our cities — a rapidmigration that will push urban centres to theirseams. Can cities evolve to become smarter:more efficient, liveable, and sustainable? Canthey meet the challenges that lie ahead? TheIssyGrid ® in France suggests that they can andgives us a promising glimpse of the future.In 2011, the City of Issy-les-Moulineaux andBouygues Immobilier brought together ateam of benchmark industry players includingSchneider Electric to build IssyGrid, France’s firstdistrict smart grid. In response to an increasinglytight and complex energy market, IssyGrid offers alocal response to global environmental challenges.The smart grid will gradually extend from its initialbase in the Seine Ouest district to the entire cityof Issy-les-Moulineaux. IssyGrid will cover theneeds of nearly 10,000 in a 160,000 squaremeterarea. Soon nearby residential buildingswill be included, as well. The smart grid will bedeveloped in an open-ended manner over afive-year period.the players behind IssyGridAlstom, Bouygues Energies & Services,Bouygues Immobilier, Bouygues Telecom, ERDF,EDF, Microsoft ® , Schneider Electric, Steria, andTotal collaborated to make IssyGrid possible.close to70%of the globalpopulationwill live in citiesby 2050*50%of CO 2reductionsare projected to comefrom energy efficiencyin the next 20 years**‘Moving forward, local communities, landlords, building managers, andrenters are looking for services that deliver energy efficiency and flexibilityof distributed energy resources under optimal environmental and costconditions. This raises a number of challenges, chief among them smartenergy management at the eco-neighbourhood level. Together, theIssyGrid partner companies provide the necessary expertise to coverall of the technical aspects of the project and achieve the end goal:supporting Issy-les-Moulineaux in achieving energy excellence’.Guillaume Parisot, Innovation leader, Bouygues Immobilier'Cities today are the real living lab of how we live andinteract together every day. With the increasing demandand need for urban efficiency, we have the opportunity totransform towards more efficient, liveable, and sustainablecommunities. Such progress in cities can be achieved withthe help and commitment of its leaders, citizens,and businesses'.Charbel Aoun, Senior Vice President, Smart Cities, Schneider ElectricRead our White Paper, ‘The Smart City Cornerstone:@ Urban Efficiency’.SDreport.schneider-electric.com50%of globalenergydemandwill come from Indiaand China by 2035*** Source: United Nations WorldUrbanization Prospects, 2011** Source: InternationalEnergy Agency 2012

Energy Management Solutions / Solutions at work 18View from the expert ...Michel OrlhacVice President, Global Marketing,Schneider Electric'The Solar Decathlon captures theenthusiasm of students as future engineers,architects, business specialists, andhomeowners. It not only gives us anopportunity to cooperate with businesspartners and promote our company, butalso helps us find talented new employees.As such, the Solar Decathlon is awellspring for business and recruitment'.Energy Leaders' Education is aninitiative leveraging a series of courses,competitions, and programmes focusedon the importance of energy issues. Itincludes Energy University , our freeonline educational resource.300+ courses, 165+ countries,12 languageson energy efficiency and data centre topicsoffered by Energy UniversityRaising awareness of keyenergy issuesSolar Decathlon Europe in MadridSchneider Electric is proud to be a sustaining partnerof the Solar Decathlon. The award-winning programmechallenges collegiate teams to design, build, andoperate solar-powered houses that are cost-effective,energy efficient, and attractive. The Solar Decathlongives us an opportunity to promote innovative andeffective solutions to reduce energy waste, promoteclean energy, and encourage environmentally friendlyconsumption habits. In September 2012, 19 teamsfrom 11 different countries presented their projectsat the competition in Madrid.See student entries from Solar DecathlonEurope 2012, including the winning project.Taking a lead role in support ofour missionSchneider Electric is first-ever titlesponsor of the Paris MarathonIn February 2013, Schneider Electric became the titlesponsor of the prestigious Paris Marathon, one of thepremier global marathon events. We were thrilled toagree to a four-year title sponsorship, especially asthe event truly underscores our company’s values andour commitment to what we do. Across the race routein April 2013, we demonstrated how energy can beefficiently tracked, saved, and transformed.The Planet&7 points growth revenuewith EcoXperts above totalgrowth revenueSociety Barometer0 OPEN 7.6 AREA?? 7start results targetThe Rhone Alps Team, a group of 10 universities sponsored bySchneider Electric, was declared winner at Solar Decathlon Europe 2012.Upcoming Solar Decathlon competitionsDatong, China — August 2013Los Angeles, CA, USA — October 2013Versailles / Paris, France — August 2014The Paris Marathon attracts more than 50,000 runners to one of theworld’s most beautiful cities.2012 results vs. 2014 target> This indicator motivates us to generate growththrough partners who have demonstrated expertisein energy-efficient products and solutions.SDreport.schneider-electric.com

Energy Management Solutions / Solutions at work 20View from the expert ...Alexis Grenon,Vice President, EcoStruxure Programme,Schneider Electric‘With StruxureWare software,Schneider Electric is deliveringmeaningful customer value.Segment solutions are specificallyfocused on the interoperability ofsoftware and hardware to create aunique competitive advantage.These solutions are part of anarchitecture that is tested, validated,and documented. They are drivinginnovation for our customers’.Verdantix recognizes Schneider Electric asa leader in energy management softwareThe independent analyst firm Verdantixnamed Schneider Electric a leader in its2013 Green Quadrant Energy ManagementSoftware (Global) report. Verdantixreferenced our energy management andsustainability software applications alongwith our strong leadership and vision.Schneider Electric was one of threecompanies cited as a market leader in thereport, along with CA Technologies ® and IBM ® .Driving business performance withinnovative technologyKeeping data centres cool in AustraliaAs data centre service providers such as NEXTDC inAustralia continue to grow, highly effective and efficientcooling solutions are critical to keep servers running. Flexiblecooling solutions enable data centres to accommodate theincrease in density that cloud computing demands. Theefficiencies delivered by Schneider Electric cooling solutionsat NEXTDC's Brisbane data centre offer clients some of themost competitive rates in the marketplace while maintainingavailability. Our solutions also provide the visibility NEXTDCneeds to make important decisions about energy usage atits Brisbane facility.Coming home to savings, security,and controlWiser solutions are user-friendlyEveryone wants a safe and comfortable home, but withenergy prices rising, people are keeping a close eye ontheir consumption as well. Our Wiser offer providessmart, cost-effective plug-and-play devices that connectthrough a dashboard to show homeowners how theyare consuming energy and enabling them to programthermostats and control lights and appliances from theirPC, smartphone, or tablet.AwardsBetter lighting by designSchneider Electric provides the flexible cooling solutions NEXTDCneeds to handle the increased densities created by cloud computing.Schneider Electric received the prestigious Janus de l’Industrie 2012 Award from the French Design Institute for itsinnovative and environmentally friendly Odace switchgear line.Recognition for innovative engineeringIn our video, see how NEXTDC is offering itsBrisbane data centre as a service to clients,with the help of Schneider Electric solutions.Wiser received the prestigious Design star from Observeur du Designin 2012.The U.S. Industry Business awarded Schneider Electric the 2011 Plant Engineering Product of the Year Gold Award in theautomation and control category for its Harmony XB5R wireless, battery-less push button. The annual Product of theYear recognition is the manufacturing and engineering industry standard for new and innovative product achievements.SDreport.schneider-electric.com

23 Energy Management Solutions / Innovation and R&DInnovating for the futureDriving efficiency breakthroughswith R&DResearch and development is a key driver of the growthstrategy of Schneider Electric and strongly contributes toits ambition to become the global provider of operationalefficiency solutions, with a specific focus on energy. Weinvest almost 5 per cent of our revenues in R&D annually,with hubs in China, India, America, and France. Theglobal hubs aim to:> Develop products and solutions for all of thecompany’s sectors> Collaborate with the organization in each country toidentify and develop specific offers> Develop strategic expertise and innovativetechnology for the entire company, both internallyand in partnershipSchneider Electric helps its 11,000+ R&D engineers expand theirknowledge through a skills network development programme.11,000R&D engineersin 26 countriesSchneider Electric R&D main sitesGrenoble,FranceShanghai,ChinaBangalore,India4.4%of revenuespent in R&D by Schneider Electric —more than ¤1 billion in 2012Monterrey,MexicoBoston,United StatesNurturing a collective think tankHelping engineers share skills and knowledgeAround 20 worldwide expertise networks are in place atSchneider Electric, the result of a long-term knowledgedevelopment programme. These networks bring together the11,000 Schneider Electric R&D engineers, located worldwideacross the 26 countries and 70 sites where we operate.The programme is part of a long-term vision to expand ourtechnological leadership, as we:> Offer men and women in R&D a motivating work environment> Help get our programmes deployed in the marketplace faster> Enhance our development with quick thinking and foresight> Participate in structured projects and research partnershipsCollaborating to augmentour brain trustSchneider Electric partners withuniversities and prestigious institutionsworldwide, including:China> Jiao Tong UniversityFrance> CEA> INRIA> Mines ParisTech> Grenoble Institute of Technology> Joseph Fourier UniversityMexico> Monterrey Institute of TechnologyHigher EducationUnited States> MIT Media Lab> Georgia TechGreen plastics for better healthFossil fuel-based plastics areeverywhere in our daily lives, as well asin most of Schneider Electric products.Life cycle assessments demonstratethat biosource plastics — recycled orvegetable-based — can now technicallyreplace existing solutions, improvinghealth and limiting resource depletion.Schneider Electric is conducting teststo transition to biosource plastics forits switches and other basic products.

Energy Management Solutions / Innovation and R&D 24View from the expert ...Pascal BrossetSenior Vice President, Innovation,Schneider Electric'Having reached a leadership position inenergy efficiency, Schneider Electric isbroadening the scope of its researchagenda on the optimization — beyond,but including energy — of the coreprocesses of its customers. Optimizinga mine 'from pit to port', a distributiongrid, or even an entire city will requirethe management, analysis, andultimately 'sense making' of vastamounts of data, beyond the reach oftraditional IT technologies. In-memorydatabases, 'big data', and machinelearning then become key topics in ourresearch agenda. Deeply integratedwith the broad Schneider Electricportfolio of operational control solutions,these techniques will allow companiesto mine the efficiency gap betweenenterprise-class systems (ERPs) andtraditional automation systems'.Partnering to optimize energyperformanceHOMES programme concludes fouryears of successful collaborationLed by Schneider Electric, the HOMES (Homes andbuildings for Optimized Management of Energy andServices) programme was the largest European projectfocused on active energy efficiency. Twenty partners atfive pilot sites collaborated to create solutions for achievingoptimal energy performance in all buildings. After four yearsof experiments, concluded in February 2013, the groupdetermined that buildings can save up to 60 per centon energy-related costs while realizing a fast payback —estimated at three to seven years in tertiary buildings andfive to fifteen years in residences.Solutions developed through the HOMES programmecould have a significant impact. If applied to the 230 millionbuildings in Europe, they can:> Reduce building energy consumption by 40 per cent,cutting the global energy bill by 16 per cent> Ease the integration of renewables into the grid, enhancingthe ability of smart grid-ready buildings to respond to peakshaving during high energy demand periodsPackaging our solutions for fast implementationLabThe HOMES programme brought together 20 partners to createsolutions for optimizing energy performance in buildings.> Improve Europe's energy security and independence> Create approximately 600,000 jobs in Europe inthe next 30 years> Not add to the debt burden of local municipalities,as the solutions are almost autonomous financiallyLearn more about the innovative solutions developed@ through the HOMES programme.40%potential savingsin energy consumption in a building withproper active energy efficiency measuresTo improve the efficiency of our solution development process,Schneider Electric created global StruxureLabs. Their purpose? Createpre-packed StruxureWare software solutions for market segmentstargeted by Schneider Electric. StruxureLabs enable us to respond to aclient's market-specific needs (for healthcare, mining, public companies,etc.) while making it easier for customers to adopt our technologyplatforms. In addition to improving efficiency, our platform strategyincreases the potential for innovation.SDreport.schneider-electric.com

25 Access to Energy / Combining social progress and business'Sustainable energy isthe golden thread thatconnects us all'.— UN Secretary-General Ban Ki-moonHow do we eradicate energypoverty while making a profit?Dr Kandeh YumkellaSpecial Representative ofthe UN Secretary-General forSustainable Energy for All‘I am honoured to serve the Secretary-General and ready to take this path-breakinginitiative to the next level. We will continue towork with all key stakeholders to achievesustainable energy for all and drive realaction on the ground — action thattransforms lives, communities, economies,and the environment. Since the initiative’slaunch last year, more than $50 billion hasbeen mobilized from the private sector andinvestors. Tens of billions of dollars havebeen committed by multi-lateraldevelopment banks in Asia, Europe, andLatin America. Commitments to supportenergy access will provide more than onebillion people with access to modern energyduring the lifespan of the initiative. And newpublic-private partnerships are forming ontransport, energy efficiency, solar cooking,finance, and energy access for the poor’.he BipBop Programme focuses our company’s ambition toTbring safe, clean electricity to the people who need it mostworldwide. BipBop is an acronym that stands for Business,Innovation, and People at the Base of the Pyramid. Theprogramme addresses three key issues in an effort to achievethe environmental, social, and business outcomes that areessential to any successful sustainability initiative:> the lack of appropriate equipment through thedevelopment of an adequate offer> the lack of financial resources available for innovativeenergy entrepreneurs through funding> the skills and expertise shortage through technicaland business trainingPowering water pumps with solar energySolar driveenclosurePump/MotorStorage tankIn remote areas, pumping water from awell can be a time-consuming andlaborious task. To address this challenge,Schneider Electric provides ruralcommunities with Water of the Sun, afully automatic solar-powered waterpumping system. With Water of the Sun,villages with no grid power or erraticpower can maximize use of solar energyto pump water for domestic use and/orirrigation purposes.

Access to Energy / Combining social progress and business 26Combining social progress and business performanceAs we address the challenges faced by peopleworldwide who have no access to energy, can we alsomake money? That may sound shocking to some, butit is an essential question for any sustainability project.Schneider Electric believes its energy access initiativesmust be looked at through a three-faceted prism,with consideration given to environmental, social, andbusiness outcomes.@Learn more about how our sustainability effortsare informed by our business practices.In isolated regions in Senegal, Villasol off-grid electrification systems coupledwith In-Diya lighting systems by Schneider Electric provide 24/7 electricity forcollective infrastructure and local micro-entrepreneurs, as well as light forindividual homes.In 2013, Schneider Electric is launching aportable lamp with modular-LED lighting,a USB port for mobile charging, and asolar or plug-in charging capability.Providing technology to improve everyday livingSolutions for three off-grid villages in SenegalSchneider Electric, in collaboration withthe Senegal authorities, provided threeoff-grid villages in Senegal with a microoff-grid solar-powered facility known asVillasol. The plant supplies electricityto the main communal buildings inDar Salam, Thiasky, and Kak: their schools,community centres, and health centres.It also provides a battery charging stationso village inhabitants can recharge theirSchneider Electric–provided In-Diya lamps.In Senegal, 67 per cent of the populationhas no access to electricity.For end users in remote villages, our Villasolsolution offers a significant improvementin healthcare, education, and lighting,all of which helps improve overall livingconditions. It also reduces migration andprovides more sustainable developmentfor local communities and businesses. ForSchneider Electric, the installation of Villasolsolutions fulfils our BipBop Programme’scall for providingthe rightequipmentto addressthe need forenergy access.13 villageshave gained access toelectricity thanks toVillasol and Villasmart ruralelectrification solutionsin Africa, Asia, and SouthAmerica, representing3,500 households*Source: The Schneider Electric2012 Annual Report2.5billionpeople worldwidedo not have cookingcapabilities(approximate combinedpopulations of the UnitedStates, Europe, and China)*1.3billionpeople worldwide donot have access toenergy(approximate combinedpopulations of the United Statesand Europe)*The Planet&2012 results vs. 2014 target1,000,000 households at the Base ofthe Pyramid have access to energy30,000 people at the Base of thePyramid trained in energy managementSociety Barometer0 344,441 1 millionstart results target0 10,517 30,000start results target> Two flagship indicators forour 2012 – 2014 Planet &Society Barometer focus oninitiatives from our BipBopProgramme: the number ofhouseholds benefiting fromaccess to energy solutions,and the number of BoPpeople trained in energymanagement.In similar news …Schneider Electric is helping peoplegain access to energy worldwide,including the Amazon communities ofTumbira and Santa Helena do Ingles.Watch our video and discover howelectrification and training are changinglives and delivering economicopportunity for these rural populations.Learn more about bringing clean energyto Amazon communities in our video.$1trillionmobilized to eliminateenergy poverty(approximate gross domesticproduct (GDP) of Mexico orSouth Korea)**World Energy Outlook 2012Fact Sheet, InternationalEnergy AgencySDreport.schneider-electric.com

27 Access to Energy / The BipBop ProgrammeThrough vocational training, Schneider Electric supports theCambodian government’s effort to bring electricity to 70 per centof its villages by the end of 2020.Progress update …Nurturing the skills that makesustainability possibleIntroducing trades in CambodiaVocational training is always the first step towardsaccess to energy. That’s why it is one of the pillars ofour BipBop Programme. Cultivating competence in atrade or the management of a system leads to autonomyand sustainability.Since 2009, Centre Kram Ngoy in Cambodia has beena partner in the Schneider Electric BipBop TrainingProgramme for energy access. Together, we areintroducing electrical and automation trades to peoplefrom the BoP to enable them to contribute to Cambodiandevelopment. Schneider Electric helps traininstructors and provideslaboratory equipment.With the help of our training programme, 120 people havesuccessfully set up their own business. Individual earningsaverage 3,000 Indian Rupee (INR) per month.It’s one of the20 trainingprojectsin 19 countries thathave been initiatedsince 2009.Less than$10daily earningsby individual consumers inmany emerging markets*$38billionspent annually by low-incomeconsumers worldwide onkerosene for light*Collaborating to succeedSchneider Electric is a member of Livelihoods, a carbonfund dedicated to supporting the efforts of agriculturaland rural communities to live in sustainable ecosystems.These ecosystems serve as the foundation of acommunity’s food security and provide the resourcesthat ensure sustainability. Livelihoods creates valuefor communities, which benefit from the restorationand preservation of ecosystems that are degradedor threatened. Investors, such as Schneider Electric,benefit from the carbon credits (VERs) they receivein return for their investment in the fund. JoiningSchneider Electric as partner investors in Livelihoodsare Danone, CDC Climat, La poste, Crédit Agricole,HERMÈS, and Voyageurs du monde.Schneider Electric supported theAfrica Express mission which touredaround the whole continent toassess energy best practices.$10billionspent annually by low-incomeconsumers worldwide on cellphone charging**Source: Simpa Networks,www.simpanetworks.com/energy-as-opportunity

Access to Energy / The BipBop Programme 28View from the expert ...‘The problem is essentially lopsideddevelopment. For instance, we haveseen unemployment in the villagesthat has led to an exodus of ruralpopulations to the cities. What isneeded is to create a situation thatreduces such migration. Theentrepreneurs programme createsopportunities for our trainedelectricians to start their ownbusinesses while staying in their ownvillage, not only giving them a sourceof livelihood, but also providing safe,reliable, efficient, and affordablelighting for people living in the village’.Ravi BushanIndia BipBop Training Programme Director,Schneider ElectricMaking modern energy simple,affordable, and accessibleSupporting Simpa NetworksSimpa Networks is a venture-backed technologycompany that provides distributed energy solutionson a ‘progressive purchase’ basis to underservedconsumers in emerging markets. Customers makea small initial down payment for a high-qualitysolar photovoltaics (PV) system and then pre-payfor the energy service, topping up their systemsin small, user-defined increments. Each paymentfor energy also applies to the final purchase priceof the PV system. Once fully paid, the systemunlocks permanently and produces energy, freeand clear. Simpa Networks is funded in part bythe Schneider Electric Energy Access (SEEA)Fund, which aims to support the development ofentrepreneurial initiatives around access to energyin communities at the Base of the Pyramid.¤¤¤With Simpa household energy systems, users pre-pay for electricitybased on actual usage, and each payment adds up towards the totalpurchase price of the solar home system.'So far Schneider Electric Energy Access hasinvested in six companies in France, Africa, andIndia. By investing in those companies, we fosteran ecosystem of innovative subject matter expertswho make sustainable development throughaccess to energy possible'.Christophe Poline, Sustainable Investment Director,Schneider ElectricProgressupdate …After acquiring skillsin the electricaltrade through theBipBop Programme,Sandeep KumarSahu set up asolar-powered battery charging stationin his village of Bairi Mangtaiya, India in2011. One year later, Sandeep's incomehad increased considerably. He wasalso instrumental in helping otherentrepreneurs install their batterycharging stations. Now Sandeep is readyto transform his LED lamp and batterybusiness from rentals to sales.@Learnmore about our commitment to sustainability at SDreport.schneider-electric.comAwardsPraise for our corporate social responsibilitySchneider Electric India was awarded the prestigiousGolden Peacock Award for Corporate Social Responsibilityfor the year 2012. The award recognized our corporatesocial responsibility initiatives in the areas of villageelectrification, electrician trainings, employment, andentrepreneurship.SDreport.schneider-electric.com

29 Environment / Environmental commitment'Many citizens overall arebecoming legitimately moreattentive to the carbonfootprint of companies'.— Alain DigeonHow do we link concern for the planetto productivity and customer service?Alain DigeonSenior Vice President,Environment, Schneider Electric'Each year, we see the expectations from all ourstakeholders rise when it comes to environmentalissues. More and more customers ask fortransparent environmental information.Regulations are more demanding. Resources aremore scarce and their price is more volatile. Endusers, financial institutions, and many citizensoverall are becoming legitimately more attentive tothe carbon footprint of companies. Over the lastthree years, we have built great momentum for ourenvironmental commitment. 2012 has been thebeginning of a new chapter for Schneider Electric.Based on a complete carbon assessment, weextended our CO 2 management into Scope 3 * ,pursued our journey towards reliable productenvironmental information with Green Premium,and initiated a new programme to master ourwater footprint. And there is more to come'.*Scope 3 emissions are all indirect emissions (not included in Scope 2)that occur in the value chain of the reporting company, including bothupstream and downstream emissions.In response to the company's significant growth in the lastdecade, Schneider Electric is reinventing its supply chain tobe more effective and green. In this transformation, our objectiveis to make our supply network a source of competitive advantage.The initiative is called the Tailored Supply Chain, and at its core isthe understanding that our customers are too diversified to betreated in a uniform way. Accordingly, we have segmented theirpurchasing behaviours into four models: basic products, facilities,systems, and spare parts. Mapping our supply chain to eachcustomer's needs will become part of the Schneider Electricprocess, updated every year to bring more added value.The Tailored Supply Chain has three major axes of transformation:> Segmentation to answer the specific needs of new and diversifiedcustomers and deliver added value> Coordination of the supply chain, marketing, and sales to speedresponse time and lower cost> Regionalization around three logistics hubs connected by physicaland computing highways to optimize our distribution networkSchneider Electric aims to incorporate environmental actions intoits supply chain transformation to boost customer satisfactionand productivity.

Environment / Environmental commitment 30Looking at everything through an environmental lensAt Schneider Electric, our environmental commitmentis all-encompassing. That means everything we do— from making and selling products to operatingsites and consuming energy — is considered withinan environmental context. Our recent focus includeswhat the International Energy Agency calls the ‘waterenergynexus’, as water resources worldwide becomeincreasingly stressed and access more contentious. ** Source: World Energy Outlook 2012 ExecutiveSummary, International Energy AgencyLearn more about our commitment to safeguarding@ the planet and read our Environmental Policy.Our headquarters in France was the first building in the world to earnISO 50001 certification, the new standard for energy management practices.202 sitesconnected to energy management unified dashboards throughthe Schneider Energy Action programme, representing 3/4 ofSchneider Electric total energy consumptionThe Planet&2012 results vs. 2014 target10% CO 2 savings ontransportation75% of our products revenueachieved with Green Premium10% energyconsumption savings>Society Barometer0 14.8 10start results target63 65.5 75start results target0 6.1 10start results targetThree indicators of our 2012 – 2014 Planet & Society Barometer focus onminimizing our environmental impact through reduced CO2 emissions,green products, and reduced energy consumption.Proper energy management starts at homeSaving with our own solutionsAcross 160 industrial sites, Schneider Electrichas achieved a 15 per cent reduction inenergy consumption since 2005 while alsoreducing CO 2 emissions. These resultswere delivered within the context of theSchneider Energy Action programme,whose main objectives are to:> Achieve continuous overall reductionof electricity, gas, and oil consumptionIn similarnews ...> Implement the company’s ownsolutions across all of its sites> Raise employees’ awareness of thenew energy efficiency offers andhelp them understand how they cancontribute to their developmentSchneider Electric has now set a newenergy consumption reduction goal: tosave an additional 10 per cent by 2014.See how we are reducing our energyconsumption globally.Implementing our own solutions,we have transformed our Pisekmanufacturing plant in the CzechRepublic into an energy efficiencyshowroom, demonstrating our corestrategy to customers and employees.> 24.5% reduction in energy consumption2012 vs. 2008> 390 tonne reduction of CO 2 emissions2012 vs. 2008SDreport.schneider-electric.com6.1%reductionin Schneider Electricenergy consumptionover 2012*36SchneiderElectricsites are ISO 50001certified*280SchneiderElectricsites are ISO 40001certified**Source: The Schneider Electric2012 Annual Report

31 Environment / Carbon footprint reductionDriving down carbon emissionsFocusing on transportationBetween 2009 and 2011, Schneider Electric focusedits carbon reduction efforts on energy consumption,the SF 6 gas that is present in some of its products, andlong-distance freight. We have now decided to maketransportation our target for reducing emissions, as itis the largest contributor of the three. Incorporating ourambition in our new Planet & Society Barometer, wenow have a goal of reducing by 10 per cent our CO 2emissions linked to transportation. We got off to a goodstart in 2012, achieving 14.8 per cent savings based onsea freight preferences, logistics flow rationalizations,and choosing cleaner carriers.15%9%Site energyconsumption(and SF 6)Logisticstransportation(from upstream tocustomer delivery)Optimizing our energy billsRecently acquired by Schneider Electric,Summit Energy Services specializes inenergy procurement and sustainabilityservices. Their know-how has optimizedour energy bills and enhanced our energyand carbon dashboards.Schneider Electric carbon emissions shareBased on 2011 carbon assessment1%Others(including waste)5%Employee travel(daily commute andbusiness trips)70%Purchases ofraw materialand equipmentTrack our emissions reduction progress with@ our online Planet & Society Barometer tool.Progressupdate …33companiesincluded in the CarbonPerformance LeadershipIndex of the CarbonDisclosure Project in 2012,including Schneider ElectricThrough a focused effort,Schneider Electric hasreduced leaks of SF 6 in itsmanufacturing processes to0.75%, minimizing relatedCO 2 emissions.99.25%of manufacturingprocesses at Schneider Electricare free of SF 6 leaks and relatedCO 2 emissionsCollaborating with Green Freight EuropeSchneider Electric has always thought thatstandardization is key at the industry level.That's why we became one of the foundingmembers of Green Freight Europe, theleading independent voluntary programmefor improving the environmental performanceof European road freight. Comprising morethan thirty multinational carriers, shippers,and logistics service providers, Green FreightEurope aims to have an industry-drivenapproach to establishing a standardpan-European system for collecting, analyzing,and monitoring CO 2 emissions for road freightoperations. Such an approach is mandatory tohave long-term improvements.4.1tonnes of CO 2emissionsper employee, equivalent tothe CO 2 per capita of MexicoSource: The Schneider Electric 2012Annual Report and World Bank DataLibrary 2012

Environment / Green solutions and sites 32Mastering our water footprintIn an effort to be more mindful in itsmanagement of water resources,Schneider Electric has launched atask force to establish three-yearwater reduction objectives andidentify the main water usage of thecompany. At the end of 2012, someof our facilities had already achievedtheir water reduction objective. Inthese cases, we have establishednew challenges for 2013.2.4%reductionin water consumptionper employee in 2012Source: The Schneider Electric 2012 Annual ReportSupporting our customers'environmental policiesGreen Premium productsWith its Green Premium products Schneider Electricprovides customers with the information they needto maintain their environmental policies. An onlineCheck-a-Product tool lets users access the followinginformation about each of our Green Premiumproducts, based on its date code:> Environmental Product Profile> End-of-life instruction manual> The list of substances of concern accordingto the European REACH regulation> Confirmation that the product does notcontain lead, hexavalent chromium, mercury,polybrominated biphenyls (PBB), andpolybrominated diphenyl ethers (PBDEs) abovethe threshold set by the European RoHS directive.Green Premium products help customers calculatetheir carbon footprint, anticipate and ensure fullregulation compliance, and reduce end-of-life costby optimizing recyclability.Learn more in our White Paper 'Green Premium eco-mark:@ In Sustainability, Information is Power'.Thanks to the Check-a-Product tool, our customerscan search on-line for the environmental informationthey need on our products.2/3of Schneider Electricproduct revenue is achievedwith Green Premium productsComplying with ISO 50001 at 15 UK sitesThe commitment of Schneider Electric to energy efficiencyhas been recognized with ISO 50001 accreditation across 15 ofits largest UK sites. The UK certification followed a global firstin June 2011, when the company's head office in France was thefirst building in the world to be certified as complying with thenew standard for energy management practices.SDreport.schneider-electric.com

33 Our People / Building sustainable careers‘We need to help ouremployees buildsustainable careers’.— Karen FergusonHow do we connect individualfulfilment with collective success?Karen FergusonExecutive Vice President,Global Human Resources, Schneider Electric‘I firmly believe that to build a trulysustainable business, we need to helpour employees build sustainable careers.If we give people access to learning,career development, and coaching, weempower them to take control of theircareers and to be agile enough to facethe future, whatever it may bring. This inturn creates an enterprise which is ableto constantly evolve and take advantageof opportunities for growth, which in turncreates even more growth opportunitiesfor our people — this is true sustainability’.Highly engaged people are a competitive advantage forSchneider Electric. So how can we foster employeeengagement to drive business results? The answer is theTotal Employee Experience, a collaborative approach thatempowers all Schneider Electric employees to take ownershipof their careers. The programme provides managers with thetools to guide highly motivated employees, while enablinghuman resources to play a strategic role in building a thrivingglobal organization.HSchneider Electric embraces digitization as a way to engageand empower employees, as well. Web tools, social networks,collaborative portals, and more are major efficiency enablers,allowing us to accelerate service to our customers. Trainingalso engages Schneider Electric employees as we give ourpeople the means to learn new skills and build their careers.The Planet2012 results vs. 2014 target1 day of training for eachemployee every year*&*This indicator will start to be reported in 2013>Society Barometer- - 1start results target30% women in the talent pool(~ 2,500 people) 23 27 30start results target30% reduction of theMedical Incident Rate (MIR) 0 23 30start results targetThese Planet & Society indicators promote skills development,gender balance, and employee safety.

Our People / Building sustainable careers 34Creating an environment for employee and corporate growthAt Schneider Electric, we are committed to giving ouremployees an engaging work environment — one thatinspires, supports, and rewards their efforts.We believe our company can perform better when ourpeople are empowered in a collaborative workplace.Hear what our employees have to say@ about working at Schneider Electric.Schneider Electric employees at our world headquarters inRueil-Malmaison, France.Ranking with top employers worldwideFostering employee engagementOur aspiration as an employer isunequivocal: we want to be the companyof choice for the people who work for usand for potential employees. Toward thatend, we set up the ONEVoice internalsatisfaction survey in 2009. Each quarter,we take the pulse of our organizationworldwide, using a methodology similar tothe one we use to measure our customers’satisfaction. Questions recently added to thesurvey enable us to quantify an EmployeeEngagement Index, which we use tocompare ourselves with the best employersin key regions of the world. In 2012, ourEmployee Engagement Index was 55 percent, two points above the average for theIndustry sector. An ambitious objective of70 per cent by the end of 2014 is now partof our Planet & Society Barometer.Discover what our people, including our President & CEO, have to say about workingat Schneider Electric when you watch our video.50best employersSchneider Electricis part of the Top 50best employers in theUniversum 2012 ranking*31%of workforceare women*Teaming up forsustainability ...Schneider Electric employees from aroundthe world participated in the AmazoneGreen Tree Raid, a challenging womenonlycompetition that celebratesempowerment, collaboration, theenvironment, and a more sustainableworld. Our four teams represented eachof our four company programme values:care, connect, challenge, and commit.Connecting the generations40 per cent of Schneider Electric employees arebetween 16 and 34 years of age. In 2012, a specifictraining was provided to 2,000 of our leaders inorder to help them bridge generational differencesand facilitate understanding and collaborationamong people of all ages.47%of workforceare blue collars**Source: The Schneider Electric2012 Annual ReportSDreport.schneider-electric.com

35 Our People / Training and educationEmployees earn Energy Management Expert certification atEnergy & Solutions University.Advancing our skills through trainingEnergy & Solutions UniversityThrough Energy & Solutions University, Schneider Electricoffers employees business-approved learning paths tohelp them become more solutions-oriented and developtheir consultative skills. The learning resource also givesour people the opportunity to achieve certification as anEnergy Management Expert. The designation is a valuableprofessional credential for employees and a source ofconfidence for customers. At the end of 2012, 3,501employees in 60 countries had received certification, andmore than 10,000 people — account managers, salesrepresentatives, solutions architects, service teams, andmore — were enrolled at Energy & Solutions University.35%of ouremployeesare Schneider Electricshareholders3,501employeescertified at Energy & Solutions Universitysince 2009The Connect OlympicsGo Green in the City challenges students from around theworld to develop innovative solutions for energy managementin urban areas.Engaging students at Go Green in the City 2012Go Green in the City is a competition created by Schneider Electricthat invites students working in teams of two to develop viablesolutions for energy management sectors critical to a city. The teams,which must include at least one woman, are rewarded for innovativeproposals reconciling energy demand, social progress, andenvironmental protection. The 2012 competition attractedapproximately 270,000 students, and the top 25 teams were flown toParis in June for a final presentation. The winners received attractiveSchneider Electric job offers and earned a trip around the world, whichstarted with a visit to our facilities in the United States and Russia.Meet the Go Green in the City 2012 winners and learn more@ about the challenge.In celebration of our new companyprogramme, our West Kingston facilityhosted the first-ever Connect Olympics.Athletes were divided into four teams,each representing one of the Connecttransformations: Connect to Customers,Connect Everywhere, Connect People, andConnect for Efficiency. The event broughttogether people from all levels of ourcompany, as executives and employeescompeted in a range of contests beforeenjoying an end-of-the-summer cookout.

Our People / Safety and diversity 36View from the field ...Rich WiddowsonVice President, Safety,Environment, Real Estate,North AmericaSchneider Electric'When it comes to safety, our challengewill be to build on the momentum wehave had on the frequency rate ofaccidents and the Medical IncidentRate and drive 10% more improvementin 2013. Our ultimate goal is zeroinjuries and we want all our employeessafe at work, at home, and at play'.Ensuring the highest levels of safetyCertification for manufacturing andlogistics sitesAll Schneider Electric employees and contractors mustbenefit from the highest possible standards for health andsafety. The company conducts frequent and ongoing safetyawareness and training campaigns. We include safetycriteria in the performance incentives of all plant andlogistics centre managers. And by the end of 2012, allSchneider Electric manufacturing and logistics sites hadimplemented a certified health and safety managementsystem (OHSAS 18001 or equivalent). We are alsocommitted to helping our people adopt well-being practicesaround health, stress management, nutrition, and more.1,172 calendar dayswithout a lost time accident at our Swindon, UK plant(as of 31 January 2013)In August 2012, our manufacturing facility in Swindon, UK achieved its1,000th calendar day without a lost time accident.Embracing diversity and gender balanceThe launch of the Women InitiativeEveline NoyaSenior Vice President,Talent Management,Schneider Electric'We promote diversity, inclusion, andgender balance in our talent pool andbeyond because we recognize they area source of strength and competitiveadvantage. Different viewpoints spurinnovation and creativity'.At Schneider Electric, our different nationalities, backgrounds,genders, and abilities are cause for celebration. They giveus competitive advantage and make our company unique.The diversity policy at Schneider Electric places particularemphasis on equal employment opportunities for men andwomen. Reflecting this emphasis, the company launched theWomen Initiative in 2012, with four main pillars:> Ensure that our human resources processes andKey Performance Indicators are aligned with ourgender balance policy> Develop the potential of our women throughthe ‘Women in Leadership’ programme and bysupporting employee participation in professionalwomen’s networks> Build gender balance awareness among managersthroughout the company via workshop training, andinvolve key potential women in mentoring programmesThe Schneider Electric Women Initiative was launched in 2012 tosupport women employees through career development andprofessional networking opportunities.> Attract female graduates for internships andrecruitment through our Go Green in the Cityinternational case challenge for students(see page 35)SDreport.schneider-electric.com

37 Social Responsibility / The Schneider Electric Foundation'2012 has been a defining yearfor the Schneider ElectricFoundation'.— Patricia BenchennaHow can our leadership andknowledge help build communities?Patricia BenchennaSchneider Electric FoundationPrograms Director'First, we fortunately had no emergencycampaigns to support as no major naturaldisasters required our help, enabling us tofocus on reconstruction in Haiti and Japan.Indeed, we have scaled up the number ofyoung people trained from 7,500 to 10,500,a 40 per cent increase from 2011. In addition,we have launched a new initiative,Schneider Electric Teachers, that opensthe way for our employees and retireesto contribute to the Foundation's mainmission: foster professional integrationof underprivileged people through trainingaround energy. The combination ofprofessional training, engaged employees,and long-term partnerships gives us reasonto be optimistic about our future work'.ccording to the UNESCO 2012 Education for All GlobalAMonitoring Report, one young person out of eight worldwideis unemployed, two to three times more than the percentage foradults. The development of skills and competencies is instrumentalto tackle unemployment and poverty, and to boost long-termgrowth. That is why, in the past five years, the Schneider ElectricFoundation has decided to focus its action towards the mostunderprivileged communities around professional training inenergy. Created in 1998, under the aegis of Fondation de France,the Schneider Electric Foundation articulates its actions aroundthree areas:> Support the professional integration of young underprivilegedpeople in energy management through training and reconstructionprogrammes after natural disasters> Support sustainability awareness via innovative projects> Foster employee and retiree volunteeringIn parallel, through our annual Luli week, we continue to supportlocal projects to ensure that we nurture our contributions to thecommunities around us all over the world.The Planet&2012 results vs. 2014 target300 missions by the ‘Schneider ElectricTeachers’ NGOSociety Barometer0 66 300start results target> With this objective, we concentrate on encouraging Schneider Electric employeesand retirees to volunteer in communities where energy training is required.

Social Responsibility / The Schneider Electric Foundation 38Sharing expertise, fostering skills, and lending a handSchneider Electric is in touch with the real-lifeconditions in its local markets. We make a proactiveand lasting commitment to the places where wework and live by rolling up our sleeves and standingshoulder-to-shoulder with our community partners.Discover how we are helping communities through@ training, volunteering, and sharing knowledge.The schools of the Iwate Prefecture in Japan were devastatedby the Tohoku tsunami.Aiding reconstruction with professional trainingRestarting after a natural disasterThe Schneider Electric Foundation strivesto integrate training into all of its relief supportefforts. So, after donating In-Diya solarlamps in emergency support of tsunamidevastatedTohoku, Japan in March 2011,we turned to education. With an eyetowards supporting recovery in the region,we partnered with the Iwate PrefectureBoard of Education to help 12 technicalschools recover from the significant damagethat they had suffered. We provided theschools with equipment and educationaltools involving solar generation. We alsodonated equipment for the development ofextracurricular activities.¤6.5millionin-kind and financialdonations fromSchneider Electricemployees, entities,and partners in 2012Source: The Schneider Electric2012 Annual ReportSchneider Electric Foundation Contributions in 2012Contribution by programmeEmergency Emergency20% 20%Awareness Awareness7% 7%Volunteering Volunteering10% 10%Luli7%Luli7%Others17%BipBop39%Others17%BipBop39%Contribution by subjectOthers17%Awareness Awareness7% 7%Volunteering Volunteering8% 8%Others17%View fromthe expert ...Training Training68% 68%'Many citizens werevictims of the 2011Tohoku earthquake,as were many of theregion's economicactivities. In ourefforts to help withthe recovery, we hope to advance ourstudents' knowledge in industrial engineeringand science so they can grow to becomeyoung professionals who can contribute tothe region's rebuilding'.Hiroshi Takahashi, Manager of Special MissionCouncil and High School Education Department IwatePrefecture Board of Education, Executive Office ofHigh School Education Chamber¤4millionFoundation budgetin 2012SDreport.schneider-electric.com

39 Social Responsibility / The Foundation at workTraining tomorrow's energy expertsBridging the technology gap in AfricaThe Schneider Electric Foundation is committed to projects thatemphasize sustainable and practical training in energy managementfor the Base of the Pyramid populations. Schneider ElectricTeachers, an NGO launched in February 2012, has become a keycomponent of the Foundation’s focus on training, harnessing theexpertise of current and retired Schneider Electric employees in aneducational and professional training capacity.Michel Ruiz works at Schneider Electric Automation in Carros, France.For three years, he has volunteered as a Schneider Electric Teacher inArusha, Tanzania, working as a human-machine interface trainer.‘I think it’s very important to bring this sort ofexpertise to the people of Tanzania and EastAfrica’, Michel says. He notes that training isessential not only to teach people how to usetechnology, but to also provide them with theskills to repair equipment if it breaks down.10,517In similarnews ...Hear Schneider Electric Teachers volunteerMichel Ruiz talk about his experiences at theKIITEC technical institute in Tanzania.young peopletrainedthrough Foundation effortsOver the last 20 years, the technology revolution has widened thegap between industrialized countries and the emerging nations ofAfrica, where new technologies can create unsolvable maintenanceproblems. Within its partnership with ADEI (Action – Development– Education – International) since 2009, the Schneider ElectricFoundation has supported the KIITEC technical institute in Arusha,Tanzania, by:> Contributing equipment and materials for the electricityand automation training courses> Allocating grants to open up training to the poorest> Facilitating and supporting the graduate students insetting up their own businesses> Encouraging employee volunteers throughSchneider Electric TeachersSchneider Electric Teachers around the worldIn November 2012, three Schneider Electric engineers travelled tonorthwestern China to make electricity available to villages in the Kashgar,Xinjiang province. In addition to being part of our BipBop Programme,the project incorporated the work of Schneider Electric Teachers, as theengineers directed the design and installation of a technical laboratory inthe Kashgar Technician Training School.Reaching new heights insustainable developmentPerched on a breathtaking 3,835 metres(12,582 feet) above sea level the Refuge duGoûter has long been an iconic destinationfor mountaineers, but one that desperatelyneeded renovation. Now a new shelter hasbeen constructed, with the support of theSchneider Electric Foundation, main patronof the Refuge. EcoStruxure architecture,the innovative energy management solutionby Schneider Electric, was donated anddeployed to monitor and control energyproduction and consumption. The energygenerationsystem comprises solar panels,a Schneider Electric Conext XW off-gridsystem, and a cogeneration group thatruns on petrol or vegetable oil. The systemhas been programmed to optimize theperformance of the energy sources.Volunteering mission in the Kashgar,Xinjiang province of China as part ofSchneider Electric Teachers.We also completed 31 missions in India in 2012.Watch our video to learn more.

Social Responsibility / The Foundation at work 40View from the expert ...Gabrielle LeroySolar Solution Specialist, Schneider Electric‘Thanks to existing strong relationshipswith the best electricians in the Alps, allspecializing in solar and micro-hydro, Ihad the chance to get some training withthem before being called to the Goûter inAugust 2012 … We had made an exactcopy of the Refuge’s electrical installationin a lab working closely with theEcoStruxure teams, to make sure wecould simulate faults, troubleshoot, anddevelop solutions in a less hostileenvironment. Up there, with the lack ofoxygen, even the simplest mentaladdition hurts your brain! To sum it up, itwas a beautiful human adventure and anunforgettable field experience'.Discover how Schneider Electric and its@ Foundation demonstrate it is possibleto do more with less through projectslike the Refuge du Goûter .Supporting entrepreneurs, helpingyoung job seekersRewarding ingenuity and ambitionSchneider Electric works to create opportunities forentrepreneurs within its own ranks and for young peoplefrom the community at large.> Created in 1994, Schneider Initiatives Entrepreneursholds an annual competition encouraging theentrepreneurial spirit of the company's employees andrewarding the six most promising proposals to comeforth. In 2012, the association welcomed its thousandthinitiative to the competition.> The '100 chances, 100 emplois' association gathersapproximately 600 companies in 15 different cities inFrance to help underprivileged young people enter thejob market. The network connects youths with thesecompanies to get them started on a career path.Learn more about the Schneider Electric Foundation's@ involvement with local communities.Progressupdate …As part of our Luli campaign and BipBopProgramme for 2012, Schneider ElectricSouth Africa sent a team to Mkhangisa, one ofthe most deserted villages in the Eastern CapeProvince. The team helped install our In-Diyalighting solution in homes and buildings.The Schneider Electric team with Slim Bensaoud, centre, winner of our2012 internal entrepreneurs contest, 'Vivez l'Aventure!'Helping through the Luli campaignLuli is an annual campaign to raise funds and competenciesamong Schneider Electric employees. Now in its twelfth year,Luli energizes support for long-term partnerships developed locallywith organizations involved in youth employment opportunities.The 2012 campaign was led by 110 Schneider Electric Foundationdelegates worldwide and delivered these results:> 155 initiatives undertaken, with 75 per cent of projectsrelated to our skills> More than 30,000 employees involved110Foundation delegates leadour community actions in75 countries**Source: Schneider Electric Foundationand The Schneider Electric 2012Annual ReportSDreport.schneider-electric.com

41 Financial & Extra-financial Indicators / Interview with Emmanuel Babeau'We have laid a solid basefor our long-term growthand profit'.— Emmanuel BabeauWhat drives our growth, even in achallenging economy?Emmanuel BabeauExecutive Vice President, FinanceMember of the Management Board, Schneider Electric'In 2012, we delivered 7 per centgrowth in sales, double-digitincrease in earnings per share,and record free cash flow in mixedmarkets. This illustrates once againthe strength of our business model,the solid execution of the Connectcompany program, and thedisciplined integration of ouracquisitions. This strong performanceallows us to propose a 10 per centincrease in dividend to €1.87 pershare this year. Our effort to improvethe solutions performance is payingoff and we continue to grow ourstrong new economies platform'.With what has been achieved in product and softwareinnovation, tailored supply chain, and organizationefficiency, Schneider Electric has laid a solid base forlong-term growth and profit. For 2013, in an economicenvironment that remains mixed, the company targets alow-single digit organic growth in sales and a stable toslightly up adjusted EBITA margin.Key Figures Full Year 2011 (2) Full Year 2012 % Change(in millions of euros)Sales 22,345 23,946 7%Organic growth -0.7%Adjusted EBITA 3,190 3,515 +10%(before acquisition and integration costs)% of sales 14.3% 14.7% 0.4 ptsAdjusted net income (1) 1,808 2,023 +12%Adjusted earnings 3.36 3.73per share in euros(1)Adjusted for the non-recurring goodwill impairment charges(2)The 2011 figures were restated for the item disclosed in note 1.2 of consolidated financial statement.

Financial & Extra-financial Indicators / Shareholders' Advisory Committee 42Executing consistently on a proven strategyIn contrast to a world economy and marketplacedistinguished by unpredictability, Schneider Electric hasachieved steady growth by adhering to a proven formula:stay focused on a clear strategy and insist on exceptionalperformance in all phases of execution. For 2013, we expectthe economic environment to remain mixed, with continuedchallenges in Western Europe, opportunities for accelerationin the new economies, and a slow recovery in North America.Learn more about our financial@ results, review key figures, and accessfinancial reports and presentations.Hearing the voice of our shareholdersThe Shareholders' Advisory CommitteeShareholders’ Advisory Committee members visiting Schneider Electricinternational headquarters in March 2012.When shareholders have a concernabout financial communications fromSchneider Electric, they also have avoice. The Shareholders’ AdvisoryCommittee is designed to provide acommunications channel between ourshareholders and the company. Thecommittee’s members align with thegeographic and professional diversityof our shareholder base. Up to eightindependent volunteers are appointed bySchneider Electric for a three-year term.In addition to meeting as a group severaltimes in 2012, members participatedin discussions with shareholdersthroughout the year.¤1.87 *dividendper share **2013 Financial and Extra-financialCalendarFinancial:21 February 2012 Annual results23 April Q1 2013 sales25 April Annual Shareholders’ Meeting31 July Half year results25 October Q3 2013 salesExtra-financial:2 May Q1 results31 July Half year results7 November Q3 resultsView fromthe expert ...‘As an individual shareholder of Schneider Electric, I appreciatethe company’s efforts in technological innovation as well as thedevelopment of solutions in the field of energy management.The geographic footprint of the company and its responsivenessdemonstrate long-lasting development opportunities. Also, preservingthe company's operations in France and focusing on employeetraining and social integration of young people are very important’.Henriette Dennequin,Shareholders’ Advisory Committee Member¤3.73adjustedearningsper share *** Subject to shareholders’ approvalon 25 April 2013** Source: The Schneider Electric2012 Annual ReportSDreport.schneider-electric.com

43 Financial & Extra-financial Indicators / Planet Stock performance& Society Barometer indicatorsDelivering value toall our shareholdersOwnership profile andstock performanceShareholder Ownership structure (as of December 2012)Evolution of dividend and share priceBy typeCapital Research and Management – 7.5%*CDC Group – 3.7%Employees – 4.4%Individual shareholders – 5.6%Treasury stock, own shares – 1.5%Other institutional – 77.3%*To the best knowledge of the company70.0060.0050.0040.0030.0020.0046.3426.5040.8956.0040.6854.5810.0031/12/07 31/6/08 31/12/08 31/6/09 31/12/09 31/6/10 31/12/10 31/6/11 31/12/11 31/6/12 31/12/12By regionSchneider Electric* Cotation Assistée en ContinuCAC 40* rebaséFrance – 31.6%North America – 29.6%UK & Ireland – 14.1%Rest of Europe – 14.5%Other – 10.2%Dividend per share1.7251.601.701.871.025¤30 billionSchneider Electric market capitalizationas of 31 December 20122008 2009 2010 20112012Schneider Electric policy is to pay out 50% of netincome in dividend.

Financial & Extra-financial Indicators / Planet & Society Barometer 44Planet & Society Barometer:Results for our 14 indicators in 2012Our Planet & Society Barometer kicked off a new three-year cycle in 2012, with a blend of indicatorsinformed by our company’s key sustainability stakes. The goal is to reach our target of 8/10 by 2014.With a score of 6.42 at the end of 2012, we are off to a good start.The Planet & Society Barometer indicatorsPlanetStart01/01/12Results31/12/12Target12/20146.42 / 10barometer scoreafter one yearCarbonProducts & SolutionsEnergy10% CO 2 savings on transportation75% of our products revenue achieved with Green Premium10% energy consumption savings-63%-14.80%65.5%6.1%10%75%10%AwardsProfitGreen GrowthAccess to energy7 points growth revenue with EcoXperts above total growth revenue1,000,000 households at the Base of the Pyramid have access to energy-07.6344,44171,000,000In October 2012, the Cercle Humaniaawarded Schneider Electric theSustainability Innovation Prize for itsPlanet & Society Barometer. TheSuppliers90% of preferred suppliers embraces ISO 26000 guidelinesGovernance 3 major ethical stock market indexes select Schneider ElectricBest Practices 300 sites recognized as ‘Great places to work — cool site '** This indicator will start to be reported in 2013People0307.8%3-90%3300Cercle Humania think tank rewardssustainability initiatives that haveproven their efficiency to thebenefit of companies, colleagues,customers, or the environment.Henri Lachmann, ChairmanSafety30% reduction of the Medical Incident Rate (MIR)-23%30%of the Supervisory Board ofEngagement70% score in the Employee Engagement Index-55%70%Schneider Electric, received theDiversity30% women in the talent pool (~ 2,500 people)23%27%30%award on behalf of the company.Training1 day of training for each employee every year*--100%Access to Energy30,000 people at the Base of the Pyramid trained in energy management010,51730,000Communities300 missions by the ‘Schneider Electric Teachers’ NGO066300SDreport.schneider-electric.com

Collaborating with our stakeholders to tell our storyThe making of this documentEngagementof 2011 - 2012edition readersJune 2012 to September 2012Online survey involving1,000 internal andexternal stakeholdersEditorialcommitteeOctober 2012IssueValidation of outline by internalstakeholders, includingsustainability, strategy,marketing, and HR teamsCover ContestCrowdsourcing of ideas forcover concepts, shortlisted bythe editorial committee andsubmitted to Schneider Electricemployees via the company'sinternal social networkApril 2013Release of the new 2012-2013edition and distribution atShareholders' MeetingPrintreportDigitalexecutionsIssuance of iPad andWeb versions, reflecting64% reader preferencefor digital deliveryversus 27% in 2011ExecutionJanuary 2013 to March 2013Collaboration with externaland internal stakeholderson content and designdevelopment, refinement,validation, and translationOutlinedevelopmentOctober 2012 to January 2013Determination of majorachievements, results, casestudies, and best practicesto be featured for eachoutline topicSustainable management of this documentBecause this document must reflect our commitment to sustainability, we have tried to keep its carbon footprint as low as possible> This document is printed with vegetable oil-based ink on100 per cent FSC ® -certified recycled paper, manufacturedin a chlorine-free process> The printer meets the standards in accordance with theImprim’Vert ® specification@Discover the carbon footprint of this document online at SDreport.schneider-electric.com> Printed on Arjowiggins Graphic Cocoon Offset paper: 140 g/m 2 textand 250 g/m 2 cover> The year over year printed quantities have been reduced by22 per cent for the English version and 12 per cent for the French version

AcknowledgementsOur dear customers and external stakeholders:Big C Superstores (Casino group), ConAGUA, City of Boulder, Colorado,Dallas Museum of Art, Green Freight Europe, International Energy Agency,IssyGrid and Bouygues Immobilier, Grameen Shakti, KDDI, M&C Energy Group,NEXTDC, Jeremy Rifkin, Regionservice, Vandantix, The Refuge du Goûter,Dr. Kandeh Yumkella, and Cathy Kopp.Agencies, partners, and alliances:Cisco, CKN Training Centre, Jean-Marc Chenevier / A la Verticale,Green Freight, GUIGNARD - Air images, Hadrien Meyer / Art Vision System,Happy Days Studio, Mário Miranda Filho / Prêmio Eco, Ethisphere, Foundationon Economic Trends, Global Compact, Iwate Prefecture Board of Education,Constantin Meyer, Sebastien Niess, Rio+20 Conference, Pascal Tournaire,United Nations Foundation, United Nations Industrial Development Organization,and United Nations.Schneider Electric Global Marketing Communications DevelopmentDepartment provided the design, writing, project management,and production for this document.All Schneider Electric teams who contributed to the report:Executive committee members, Patricia Benchenna, Philippe Bougon,Pascal Brosset, Ravi Bhushan, Jean-Yves Blanc, Dang Duyen Mai Bui,Graham Bull, Anthime Caprioli, Marie Castella, Alain Digeon, Sophie Donabedian,Paul-Henry Fallourd, My-Linh Franzi, Joris Gaudion, Martin Goby, Carolyn Harris,Jonathan Hart, Laura Johnson-Hill, Carina Ho, Mark Jones, Louis Klepal,Gabrielle Leroy, François Milioni, Denise Lana Molina, Solange Massimi,Emmanuelle Mercier, Eveline Noya, Michel Orlhac, Véronique Roquet Montegon,Brandy Moore, Jeremy Quillion, Sonali Satpathy, YanWen Shan, Danning Shi,Cécile Tuil, Gilles Vermot Desroches, Rich Widdowson, Selin Yilmaz,Sandrine Zapata, and more.The Registration Document filed with France’s Autorité des Marchés Financiers(AMF) is available by request on the Finance page of our corporate website:www.schneider-electric.com/company©2013 Schneider Electric. All Rights Reserved. Schneider Electric, The globalspecialist in energy management, Energy University, Wiser, StruxureWare,Odace, Harmony, Summit Energy, Green Premium, EcoStruxure, and Xantrexare trademarks owned by Schneider Electric Industries SAS or its affiliatedcompanies. All other trademarks are property of their respective owners. IBM andthe IBM logo are trademarks or registered trademarks of International BusinessMachines Corporations in the United States, other countries, or both.

Find out more online at:SDreport.schneider-electric.comTo enjoy more content, including videos, interviews, and furtherdiscussion of the topics within, download the Schneider ElectricStrategy & Sustainability Highlights app today!Also available:The Schneider Electric 2012 Annual Reportwww.schneider-electric.com/annualreportSchneider Electric 2012 - 2013 Strategy and Sustainability Highlights: Creating Shared ValueSchneider Electric SA35, rue Joseph MonierCS 30323 F-92506 Rueil-Malmaison Cedex (France)Phone: + 33 (0) 1 41 29 70 00Fax: + 33 (0) 1 41 29 71 00www.schneider-electric.comIncorporated in Francewith issued capital of 2,221,668,056 eurosListed on the Euronext Paris MarketRegistered in Nanterre, RCS 542 048 574Siret no.542 048 574 01791998-1191537_GMA-GB