Universal Registration Document - Fiscal 2023

6. Risk management

COMPLIANCE WITH LAWS AND REGULATIONS
Risk of non-compliance with a wide variety of laws, including labor law, antitrust law, anti-corruption law, data protection and privacy, and health, safety and environmental law.
Category : External Environment
Impact Examples of Mitigating Activities
The wide range of services that Sodexo proposes and its worldwide presence means that it is subject to very specific laws and regulations for its operations at both the global and local level. For example, as a food operator, Sodexo has a legal requirement to provide accurate allergen information about the food and drinks it serves. The issue of cards by Pluxee require compliance with anti-money-laundering and terrorism financing laws in some countries. Changing regulatory scenarios that may also have an impact on its business include anti-corruption (Sapin II Act on transparency, fight against corruption and the modernization of economic life), and duty of care and human rights regulations (e.g. France’s Duty of Vigilance law and the UK Modern Slavery Act). 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.
  • 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.
  • Monitoring of the political, social and economic environments at global
    and country level to proactively identify proposed changes in laws that
    could impact Sodexo.
    Group-wide mandatory training sessions for Sodexo managers in
    regulatory areas like anti-corruption and data protection.
  • Global Ethics and Compliance Committee ensures coordination and
    coherence of deployment of ethics and compliance programs amongst
    countries. Details of these programs are provided in section 7.3.3
    “Ethics and Compliance” and 2.6 “Vigilance Plan”.
  • Sodexo Speak Up offers Sodexo employees and partners a confidential
    way to report activities or behaviors that are contrary to the Code of
    conduct or simply illegal.
CLIMATE DISRUPTION EXPOSURE
Risk of Sodexo's business being adversely affected by climate disruption
Category : External Environment
Impact Examples of Mitigating Activities

The risk assessment carried out in Fiscal 2022 using the Task Force on Climate-Related Financial Disclosures (TCFD) framework identified that of all Sodexo's activities, its Food business had the greatest exposure to climate disruption, driven by possible interruptions to its supply chain through physical risks. For example, the increased frequency and severity of drought could mean that the agricultural industry becomes less productive, reducing its ability to meet demand and increasing costs. This would mean that Sodexo might not be able to source the products needed for client and consumer offers, resulting in reputational damage, or the products can only be bought at a much higher price, leading to loss of profitability on contracts.

In relation to transition risks, the risk assessment highlighted a risk from a shift in consumer demand – such as a move away from traditional menus and recipes to more plant-based options. If Sodexo is not able to adapt to this change, then it will lose client and consumer business, resulting in a loss of revenues and profitability.
  • Broad range of suppliers identified and utilized.
  • Adaption of menus to take account of the availability of products and
    their impacts.
  • Cost and inflation management through use of indexation clauses in
    client contracts.
  • Launch of the Future Food Collective; a collaborative initiative bringing
    Sodexo chefs together with industry experts and key suppliers to look at
    consumer habits. By partnering with NGOs such as the Food for Climate
    League, the Future Food Collective is gathering insights to develop new
    plant-based innovative solutions for consumers.
  • Launch of Modern Recipes, an offer that focuses on the development of
    sustainable and healthy recipes.
  • Roll-out of low carbon recipes in units using ingredients selected for
    their lower environmental impact and higher nutritional value, including
    plant-based and plant-forward recipes.
  • Deployment of Energy solutions to clients to increase energy savings
    and reduce their carbon footprint.
Effect of Pluxee spin-off

Of the Group's principal risk factors, “Technology & Information Security” and “Compliance with Laws and Regulations” are the two that are impacted by Pluxee activity.

No specific risk to Sodexo itself has been identified with the spin-off of the Pluxee business.