Fiscal 2022 Universal Registration Document

6.4 Risk management

6 CORPORATE GOVERNANCE

6.4 Risk management

6.4.1 Definition and objectives of risk management and internal control

The purpose of Sodexo’s risk management and internal control systems are to:

  • protect the Group’s value, assets and reputation;
  • identify and evaluate the risks that could prevent the Group from achieving its business objectives;
  • anticipate changes in these risks;
  • put in place mitigating actions and risk transfer measures.

Sodexo’s risk management systems are designed to ensure that risks are:

  • properly identified, evaluated and prioritized;
  • efficiently mitigated;
  • regularly reported and monitored.

Sodexo’s internal control procedures are designed to give reasonable assurance that:

  • laws and regulations are complied with;
  • Group policies and guidelines are properly applied;
  • internal processes are functioning correctly;
  • financial reporting is reliable.

Internal control procedures also underpin the good and efficient management of Sodexo’s operations.

6.4.1.1 Group Policies

As part of its risk governance and management, Sodexo has established a number of Group policies. These policies cover such subjects as human resources development, finance, procurement, responsible business conduct, corporate responsibility, fundamental human rights at work, health safety and environment, information security, data protection and internal audit. Policies are regularly updated and approved by the Board of Directors.

Human resources development policy

The Group’s human resources priorities are:

  • anticipate and adapt the staffing requirements of operations in terms of numbers, skills and competencies to enhance operational efficiency;
  • continue to develop a performance-based culture based on shared priorities and indicators, by offering training and learning for individual development;
  • promote an inclusive work environment and embrace diversity in all its dimensions.

The main human resources policies are focused on: the profile of a Sodexo leader and senior manager, succession planning for senior managers, senior managers’ training and skills enhancement, employee engagement, and compensation.

Annual tracking of improvement metrics by the Executive Committee and Board of Directors serves to validate action plans aimed at advancing these policies. These metrics include employee net promoter score, employee engagement rate, employee retention, employee absenteeism, internal promotion, and the representation of women in senior management.

Sodexo continually strives to go further in the area of diversity, equity and inclusion. The Group focuses on promoting gender equality throughout the business, and providing job opportunities for people with disabilities. It seeks to foster an inclusive culture for employees irrespective of ethnicity and race, and create a welcoming environment for people of all sexual orientations and identifications. It is mindful of the generation gaps that may arise when employees of multiple generations work together, and has created generational networks to support better understanding.

Financial policies

Sodexo’s financial objectives are twofold, namely:

TO PRESERVE ITS FINANCIAL INDEPENDENCE

Financial independence is a fundamental principle, because it enables the Group to hold firm to its values, pursue a long-term strategic vision, ensure management continuity and guarantee the business’s lasting success.

Sodexo’s financial independence is guaranteed by the family shareholding. As of August 31, 2022, Sodexo’s family holding company, Bellon SA, held 42.8% of the shares and 57.5% of the exercisable voting rights. This financial independence is based on three simple principles:

  • choosing low capital-intensive activities;
  • continuously maintaining sufficient liquidity to fund growth, reimburse medium-term debt, and pay dividends to shareholders;
  • preserving a strong balance sheet and sound financial ratios.
TO ENHANCE THE ATTRACTIVENESS OF ITS SHARES TO LOYAL, LONG-TERM SHAREHOLDERS

Financial policies establish rules applicable to areas such as investment approvals, and the management of working capital, cash and debt.

Sodexo's financial policies require all decisions involving external financing to be made by the Group Chief Financial Officer, the Chairwoman of the Board of Directors and Chief Executive Officer or the Board of Directors, depending on the amount and type of the transaction.

The Group Finance Department prepares a ten-year financing plan for the Group each year.

Financial policies are designed to prevent any speculative positions being taken and to avoid risk in connection with financing and cash management activities.