APC 2011 Annual Report Download - page 38

36 2011 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC
DESCRIPTION OFTHEGROUP, ANDITSSTRATEGY, MARKETS ANDBUSINESSES
1RISK FACTORS
Infrastructure, Industry, IT, Buildings and CST businesses. Details
on asset impairment are provided in note1.11 to the consolidated
fi nancial statements (Chapter5).
Where the recoverable amount of an asset or CGU is lower than
its book value, an impairment loss is recognised. Where the
tested CGU comprises goodwill, any impairment losses are fi rstly
deducted therefrom.
The Group is dependent upon hiring and
retaining highly qualified management and
technical personnel
Competition for highly qualifi ed management and technical
personnel is intense in the Group’s industry. Future success
depends in part on the Group’s ability to hire, assimilate and retain
engineers, salespeople and other qualifi ed personnel, especially in
the area of energy effi ciency solutions.
The Group put in place a “Workforce strategic planning” process
in 2011 in order to more effectively face this challenge. It allows
managers to anticipate their needs for certain key competences
and to implement HR solutions to recruit or improve these
competences. Group employees will also be able to benefi t from
this process by acquiring new knowledge, vital for the Company’s
success.
The Group’s success also rests on a policy of actively promoting
diversity, in terms of both gender and nationality.
The Group’s human resources strategy is designed to create
a motivating working environment. Specifi c policies have been
developed covering international mobility, career development,
training, compensation and managing talent. The Group’s
expatriates help prepare the future of its business, build local teams
and assemble the necessary skill sets in targeted regions. They are
tasked with identifying and preparing local successors. The Group
places considerable emphasis on training to expanding its skills
base and retaining employees, thanks to the Schneider Electric
University, its business academies and its leadership programs.
Industrial and environmental risks
The Group may be the subject of product
liability claims and other adverse effects due
to defective products, design faults or harm
caused to persons and property
Despite its testing and quality procedures, the Group’s products
might not operate properly or might contain design faults or defects,
which could give rise to disputes in respect of its liability as seller or
manufacturer, notably in Europe, where liability related to defective
products could lead to a loss of revenue, claims under warranty and
legal proceedings. Such disputes could result in a fall-off in demand
or harm Schneider Electric’s reputation for safety and quality.
Toprevent or limit these risks, the Group recalls products if there
are any doubts whatsoever that a product or one of its components
is not 100% safe in respect of people and/or equipment. At the end
of 2009, the Group launched a broad recall campaign concerning a
range of low voltage capacitors produced between 2004 and 2008.
This campaign continued in 2010 and 2011 and will be concluded
in this fi rst quarter of 2012. Another broad recall campaign concerns
a global campaign to recall Vigi Compact NS/NSX circuit breakers
produced from 2009 to 2011, which started in 2011 and must be
continued in 2012 and 2013. Other product recall operations have
been started in 2011 and are mentioned for the record because,
due to their local nature, the type of risks caused, or the number of
products involved, they have a lesser impact on the Group.
Some of the expenses incurred by Schneider Electric in the context
of its product recall are covered by the liability insurance program
described in the “Insurance” section below.
The Group recorded a provision for product risk in an amount
of EUR420 million in the fi nancial statements for the year
ended December 31, 2011 (see note 23 to the consolidated
fi nancialstatements).
The Group’s plants and products are subject to
environmental regulations
The Group’s plants and products are subject to extensive and
increasingly stringent environmental laws and regulations in all of
its host countries.
To limit risks related to the environment in general, the Group is
involved in a process to continuously improve the environmental
performance of its plants and products. In 1992, the Group published
a formal environmental policy designed to improve manufacturing
processes, promote eco-design and integrate customer concerns
in the area of environmental protection. This policy also aims
to identify, assess and prevent environmental risks, in order to
guarantee full compliance with all environmental laws and regulations
applicable to the Group’s businesses, particularly those in force in
the European Union and considered more rigorous (notably the
WEEE, RoHS directives and REACH programme). Environmental
provisions are booked when the risks can be reliably measured or
it is probable that clean-up work will be performed and the related
cost can be reasonably estimated. Provisions for environmental
risks totalled EUR57million for the year ended December31, 2011.
If no risk has been identifi ed, Schneider Electric will not estimate
the fi nancial cost of environmental risks. The Group expects its
spending on environmental compliance programs to increase as
a result of changes to existing environmental regulations and the
introduction of new regulations.
There can be no guarantee that the Group will not be required to
pay signifi cant fi nes or compensation as a result of past, current
or future breaches of environmental laws and regulations by
companies that are currently or were previously members of the
Group. This exposure exists even if the Group is not responsible
for the breaches, in cases where they were committed in the past
by companies or businesses that were not part of the Group at
thetime.