Eaton Corporation, plc Ordinary SharesETN

Natural and catastrophic events · Climate change and environmental impact

Weather disruptions and regulatory, market and social reactions to them create uncertainties that could negatively impact our business. Extreme weather events may create physical risks to our operating locations and supply chains, as well as to our suppliers' and customers' operations.

Economic and market conditions · Economic recession and downturns

We are exposed to geopolitical, economic and other risks that arise from uncertainty in worldwide and regional economic conditions. Our global business is sensitive to macroeconomic conditions. Macroeconomic downturns may have an adverse effect on our business, results of operations and financial condition.

Economic and market conditions · Inflation and deflation pressures

We have been affected by supply chain disruptions and related inflationary pressures. While we strive to recoup these increased costs through our pricing, product modifications or other mediating responses, if we are unable to do so without compromising the competitive position of our products and services, our results could continue to be impacted by this trend.

Natural and catastrophic events · Pandemic and public health crises

Our manufacturing facilities and operations could be disrupted by a natural disaster, labor strike, war, geopolitical instability and/or conflict, political unrest, terrorist activity, economic upheaval, or public health concerns.

Geopolitical and trade · International conflicts and tensions

Among the economic factors that may have such an effect are disruptions in financial markets; adverse changes in the availability and cost of capital; economic downturns; military conflicts; wars; terrorism; pandemics, epidemics and public health emergencies; political changes and trends.

Innovation and product development · Intellectual property protection and infringement

We may be unable to adequately protect our intellectual property rights, which could affect our ability to compete. We own a large number of patents and patent applications worldwide, as well as trademark and copyright registrations that are necessary, and contribute significantly, to the preservation of our competitive position.

Customer and revenue · Changing customer preferences and behavior

Eaton's success depends in part on our ability to anticipate and offer products and services that appeal to the changing needs and preferences of our customers in the various markets we serve. If we are not able to anticipate, identify, develop, and market products that respond to changes in customer preferences and emerging technological and broader industry trends, demand for our products could decline.

Strategic execution · Merger acquisition and divestiture risks

As part of our strategy, we pursue strategic transactions, including but not limited to acquisitions, joint ventures, and investments. Acquisitions and investments may involve significant cash expenditures, debt incurrences, equity issuances, operating losses and expenses, in addition to integration challenges whether foreseen or unforeseen, which may be dilutive to earnings and unfavorably impact cash flow.

Strategic execution · Strategic transformation and turnaround risks

We may not complete the anticipated spin-off or complete it within the time frame we anticipate or at all; the spin-off may present difficulties that could have an adverse effect on us. Spin-offs are complex in nature, and unanticipated developments or changes, including changes in law, the macroeconomic environment and market conditions or regulatory or political conditions may affect our ability to complete the anticipated spin-off as currently expected.

Supply chain and procurement · Geographic concentration of suppliers

Our reliance on suppliers involves certain risks, including: climate impacts, severe weather events, or natural and other disasters that impact our suppliers; sanctions, embargoes, and other trade restrictions that may affect our ability to purchase commodities, components, or other materials from various suppliers.

Human capital and workforce · Talent acquisition and retention

Our ability to identify, attract, develop, engage, and retain qualified employees could affect our ability to execute our strategy. The market for employees and leaders with certain skills and experiences is very competitive. Failure to attract, develop, engage, and retain qualified employees, difficulty in recruiting new employees, could impair our ability to execute our business strategy.

Supply chain and procurement · Supplier operation and dependance

Our business requires that we buy raw materials, components, and services from third parties. Supplier relationships have in the past been and could in the future be interrupted or terminated. Our reliance on suppliers involves certain risks, including: shortages of commodities, components, or other materials, which could adversely affect our manufacturing efficiencies and ability to make timely delivery of our products.

Supply chain and procurement · Raw material availability and cost volatility

Significant inflation or shortages of raw materials, energy, components, and/or labor, or similar challenges for our customers, could continue to adversely impact our results of operations. Labor shortages persist broadly in select markets, and shortages of certain raw materials have continued to affect the prices that our businesses are charged, particularly commodities.

Core operations · Operational disruption and business continuity

Our manufacturing facilities and operations could be disrupted by a natural disaster, labor strike, war, geopolitical instability and/or conflict, political unrest, terrorist activity, economic upheaval, or public health concerns. Any such disruption could cause delays in production and shipment of products and the loss of sales and customers.

Supply chain and procurement · Supplier financial distress and capability

We may rely on third-party suppliers for the components used in our products, and we may rely on third-party manufacturers to manufacture certain of our assemblies and finished products. Our results of operations, financial position, and cash flows could be adversely affected if such third parties lack sufficient quality control or if there are significant changes in their financial or business condition.

International and currency · Foreign exchange and currency exposure

Operating globally subjects Eaton to various risks, including currency fluctuations, which can affect the value of our foreign currency revenues, expenses, and cash flows.

International and currency · International operations and emerging markets

Operating globally subjects Eaton to various risks, including, but not limited to, economic and political instability, including war or armed conflict, changes in government policies, expropriation, nationalization, and other political, economic, or social developments; complex and continually changing government laws, regulations and policies.

Tax and financial reporting · Tax compliance and changes in tax law

We are subject to risks relating to changes in our tax rates, changes in global tax laws and regulations, or exposure to additional income tax liabilities. Eaton is subject to income taxes in many jurisdictions around the world. Our effective tax rate could be affected materially by changes in the mix among earnings in countries with differing statutory tax rates, changes in tax legislation, regulations, and policies.

Data and privacy · Data protection and privacy laws

As a result of our worldwide operations, we are subject to laws and regulations, including data protection/privacy and cybersecurity laws and regulations, in many jurisdictions. For example, the Global Data Protection Regulation (GDPR) prefers that we manage personal data in the E.U. and may impose fines of up to four percent of our global revenue in the event of certain violations.

Cybersecurity and data protection · Third party data security and vendors

Additionally, many of our products and services include, and we utilize and rely on, third-party service-providers, whose products include integrated software and information technology that collects data or connects to external and internal systems. These threats may be directed at Eaton, its products, software embedded in Eaton's products, or its third-party service providers.