UNPREDICTABILITY OF DURATION AND EFFECTS OF COVID-19 PANDEMIC
Risks associated with the uncertainty surrounding the global pandemic
- Risk Timeframe: Short/Medium Term
- Category: External Risk
Impact.
Covid-19 has already had a significant impact on Sodexo’s business in FY20 as national lockdowns led to partial or full closure of client premises, resulting in non-provision of services to the client and less or no revenue generation in those sites.
It has already been seen that the relaxation of government restrictions has also led to a renewed increase in country infection rates, resulting in countries being locked down again or in targeted local lockdowns of affected regions. Restrictions can
and do change daily with immediate effect. It is therefore very likely that targeted local lockdowns will continue in FY21.
In this uncertain environment, both clients and consumers remain cautious. Clients are re-opening sites on a staged basis, while consumers may be reluctant to return to work, if they have to travel on public transport, for example; or perceive the work
environment to be unsafe.
In addition, large gatherings or events are currently not allowed in many countries.
The continued spread of the virus and a significant rise in infection rates could mean:
- delay in further opening-up of client premises and a slower return to work of employees than anticipated or even client premises being forced to close again, both resulting in less revenue generation in those sites;
- continued inability to hold large scale events, leading to the further postponement of revenue and margin;
- reduced ability to re-deploy front-line employees who cannot work from home, leading to possible employee redundancies;
- reduced profitability.
Examples of Mitigating Activities
- Rise with Sodexo: a global multi-activity program for re-opening of client sites, that includes workspace optimization, safety guidance, disinfection cleaning and employee well-being services.
- Precise and pro-active management of our workforce to adapt to the rapidly changing environment.
- Global Response Team to coordinate Sodexo’s response to the pandemic, as well as local teams at regional and country level.
- Rigorous follow-up on the execution of our services with strong contract management including renegotiation of some terms and conditions.
- Strict management of cash, with a focus on client receivables.
- Strict control of SG&A.
COMPLIANCE WITH LAWS AND REGULATIONS
The nature of Sodexo’s business and its worldwide presence mean that it is subject to a wide variety of laws, including labor law, anti-trust law, anti-corruption law, data protection and privacy, and health, safety and environmental law.
- Risk Timeframe: Medium Term
- Category: External Risk
Impact
The wide range of services that Sodexo proposes means that it is subject to very specific laws and regulations for each activity at both the global and local level. As examples:
- as a food operator, Sodexo has a legal requirement to provide accurate allergen information about the food and drinks it serves;
- the emission of vouchers and cards in Benefits & Rewards Services requires compliance with anti-money-laundering laws in some countries;
- working with sensitive populations like children and seniors in Personal & Home Services requires back-ground checks of our employees.
Any non-compliance of Sodexo with laws and regulations or a lack of knowledge and awareness of laws and regulations either at a country level or a global level could mean:
- harm to employees, clients and consumers;
- damage to Sodexo’s reputation; potential financial penalties;
- criminal action being brought against the Company and its directors.
Examples of Mitigating Activities
- Legal teams deployed at the central and local levels, who provide advice to operational staff.
- Legal teams specialized by area of expertise, having recourse to external experts.
- Awareness training sessions for our employees.
- Global Ethics and Compliance Committee ensures coordination and coherence of deployment of compliance programs amongst countries.
- Sodexo Speak Up offers Sodexo employees and partners a confidential way to report activities or behaviors contrary to the Code of conduct or illegal.
