APC 2015 Annual Report Download - page 42

2015 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC40
OVERVIEW OF THE GROUP’S STRATEGY, MARKETS AND BUSINESSES
1RISK FACTORS
The Group’s plants and products are subject to
environmental laws and regulations
Our plants and products are subject to extensive and increasingly
stringent environmental laws and regulations in all countries in
which we operate.
To limit risks related to the environment, the Group is involved in a
process to continuously improve the environmental performance of
its plants and industrial activities, as well as in a review and follow up
of possible environmental risks. In 1992, Schneider Electric issued
a formal environmental policy. This policy is designed to improve
production processes, promote eco-design, and integrate customer
expectations into our environmental protection approach. 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 as quite stringent
(e.g. those applicable to our Products, such as WEEE, RoHS and
REACh Regulations). Regarding industrial activities , the Group has
been deploying ISO 9001 , ISO14001, OHSAS18001 management
systems, globally. An Integrated Management System (IMS) is being
deployed, bringing together these three management systems and
this helping to drive effi ciency and effectiveness. Moreover, already
more than 90 sites have implemented an ISO 50001 Energy
Management System. The Group records environmental provisions
when the risks can be reliably measured, or it is likely that clean-up
work will have to be performed and related costs can be reasonably
estimated. Provisions for environmental risks related to the the
Group’s sites, totaled EUR348 million as of December 31, 2015.
If no risk has been identifi ed in a given location, Schneider Electric
will not estimate the fi nancial cost of environmental risks. We expect
our spend 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 Schneider Electric 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.
Schneider Electric may also be exposed to the risk of claims for
breaches of environmental laws and regulations. Such claims
could adversely affect Schneider Electric’s fi nancial position and
reputation, despite the efforts and investments made to comply at
all times with all applicable environmental laws and regulations as
they change.
If Schneider Electric fails to conduct its operations in compliance
with the applicable environmental laws and regulations, the judicial
or regulatory authorities could require the Group to conduct
investigations and/or implement costly clean-up measures to
deal with the current or past contamination of current or former
production facilities or off-site waste disposal facilities, and to scale
back or temporarily or permanently close facilities in accordance
with the applicable environmental laws and regulations.
Finally, the Group may be exposed to new risks related to recent
acquisitions. In application of IFRS rules, these risks are assessed
in the framework of the allocation of the purchase price, as specifi ed
in note 2 to the consolidated fi nancial statements.
7.3 Information systems risks
The Group operates, either directly or through service providers,
a wide range of highly complex information systems, including
servers, networks, applications and databases, that are essential to
the effi ciency of our sales and manufacturing processes. Failure of
any of these hardware or software systems, a fulfi llment failure by a
service provider, human error or computer viruses could adversely
affect the quality of service offered by the Group.
The Group regularly examines alternative solutions to protect
against this type of risk and has developed contingency plans to
mitigate the effects of any information system failure. Dedicated
governance structures have been set up to manage relations with
service providers responsible for outsourced IT systems operations.
Problems may also be encountered during the deployment of new
applications or software. In particular, in the last few years, the
Group has developed ERPs systems under SAP, which it started
to roll out in2008. This roll-out process has been carried out fully
or partially in a number ofcountries since 2008, and is continuing in
France, Brazil, the United States and other countries.
In addition to the deployment of ERP systems, the Group is
deploying various applications aimed at enhancing commercial and
supply chain effi ciency.
In view of these projects’ complexity, extensive functionalities and
their worldwide deployment, the Group has set up dedicated
governance and cost control structures to manage these issues
and limit the related risks.
However, despite the Group’s policy of establishing governance
structures and contingency plans, there can be no assurance
that information systems projects will not be subject to technical
problems and/or execution delays. While it is diffi cult to accurately
quantify the impact of any such problems or delays, they could
have an adverse effect on inventory levels, service quality and,
consequently, on our fi nancial results.