Welcome to the Alimentation

Revolution INTEGRATED REPORT For any specification on our indicators definitions, scope, coverage and collection procedures, please refer to our INTRODUCTION methodology note online.

This summary version of our integrated report interests in our daily activities in line with our provides insights on our strategic focus. It dual commitment to business success and social discusses our ability to achieve our objectives and progress. to create value, in the near and distant future, as disclaimer We have identified our material aspects to drive part of our dual economic and social project. our sustainability performance taking these into This document is a shortened and summarized In the first part of this document, we account. Most of our key performance indicators version of Danone’s Integrated Report. demonstrate how our history has defined our are available in this document, with the intention For a complete and detailed version of Danone’s mission “to bring health through food to as many of ensuring consistency and comparability with Environmental, Social and Governance (ESG) people as possible” and how it has influenced our previous years. Our methodology note is available commitments, projects and results, please refer business activities and markets’ evolution. online for more information on our calculation to the full version of Danone’s Integrated Report methods and our data reliability. The second part of this document introduces available online: Danone’s governance structure and how it allows We hope this document will help you understand http://www.danone.com/en/for-all/ for delivering results and creating value on a how Danone has created value in 2016 and we integrated-report/ daily basis with a unique business approach. It invite you to read the full version online. also provides a concise overview of our strategies All results and projects presented in this and commitments on Environmental, Social document, as well as on the online version and Nutritional topics. Some projects chosen of Danone’s Integrated Report, are based for each of these topics will illustrate how at on 2016 reporting scope, excluding any element Danone we incorporate stakeholders’ needs and related to the WhiteWave acquisition. This document, as well as the online version of Danone’s Integrated Report, only covers the year 2016. Projects presented were therefore launched in 2016 or earlier. Projects started in the current year are not included in this document.

2016 INTEGRATED REPORT SUMMARY 2 DANONE SUMMARY

Danone Company Integrated Report

social innovationS p.39

2016 INTEGRATED REPORT SUMMARY 3 DANONE Danone Company

2016 INTEGRATED REPORT SUMMARY 4 DANONE OUR HERITAGE From 1919 to 1972 ENTREPRENEURIAL spirit 1929

ENTREPRENEURIAL spirit Daniel Carasso ENTREPRENEURIAL spirit founds Danone in France. 1942 Daniel Carasso founds Dannon in the US. DANONE ARRIVEs IN fRANCE

Daniel Carasso founds the Société Parisienne du Yoghourt Danone and opens the first retail outlet on rue André Messager in Paris. He also creates the brand’s first advertising slogan: “Delicious and healthy, Danone yogurt is the right dessert 1929 for happy, healthy digestion.” Danone pioneers ENTREPRENEURIALits message of bringing together enjoyment and health. The French flock to try Danone’s small ceramic jars of yogurt, which are first sold in spirit pharmacies before becoming available for purchase at cheese stalls. SOCIAL THE START OF THE Isaac Carasso innovationAMERICAN DREAM BIRTH OF DANONE In 1941, Daniel Carasso and his wife leave France for NYC. Shortly after arriving, Daniel Carasso IN BARCELONA, SPAIN sees a classifi ed ad: Yoghurt business for sale. He decides to investigate. “It was a shop in the founds saacDanone arass les arcela the s. Bronx run by an old Greek couple, who made e seres that a pash chlre suer 1941 between 100 and 200 pots of yogurt a day for Expo Groupe_CT_170915.indd 2 21/09/2015 16:10 r testal ect. are research t the cafeterias in the area.” By purchasing this lactc erets el laureate a asteur 1966 goodwill, he founds Dannon Milk Products Inc. in Barcelona.sttute rectr la ech saac eces in 1942. 1919 t truce a pruct the alas r 1919 its health benefi ts: yogurt. He launches the Danone brand in 1919 named after his son Daniel, whose nickname was “Danon”. Danone is committed to healthy eating from the very start! BSN is created.

Expo Groupe_CT_250915.indd 3 25/09/2015 10:50

Expo Groupe_CT_250915.indd 1 25/09/2015 10:50

Antoine Riboud redefines the 1968 traditional role unsuccessful of the business takeover leader during bid for his speech Saint-Gobain. HEALTH BY alimentation in Marseille. GROUNDBREAKING SPEECH IN MARSEILLE

In a speech to 2,000 executives at the Assises du Patronat, held in Marseille, Antoine Riboud redefines the traditional role of the business 1972 leader. Motivated by the ideals of May 1968, he calls for a different approach to management and outlines a new vision of corporate social STRONGER TOGETHER responsibility. This is the birth of Danone’s dual commitment to business success and social In 1966, Antoine Riboud forms the French progress. His speech marks the first time an 1970 employer in France stresses the need to consider company BSN by merging Verreries Souchon- the human side of business. Neuvesel, France’s top producer of bottles and jars, with Boussois, France’s second-largest Daniel Carasso and producer of flat glass. With 8,815 employees, BSN becomes France’s BSN becomes a glassmaker capable of competing Antoine Riboud meet. 1966 on a European scale. largest producer Merger between BSN Expo Groupe_CT_250915.indd 6 of beverages and Gervais25/09/2015 10:50 Danone and infant food. is announced 1972 in December 1972.

GROUP’S ROOTS: FROMExpo GLASS Groupe_CT_250915.indd 4 TO FOOD 25/09/2015 10:50

INVESTING IN THE FOOD INDUSTRY

2016 INTEGRATED REPORT SUMMARY BSN becomes France’s largest producer of beverages and baby food by acquiring Evian, Kronenbourg, Société5 Européenne de Brasseries DANONE 1970 and Blédina (originally Evian Solide).

Expo Groupe_CT_250915.indd 5 25/09/2015 10:50 OUR HERITAGE From 1972 to 2015 1994 1996 hEALTh by alimentation

BSN-Gervais Danone is Franck Riboud renamed succeeds his father Danone Group. Antoine as CEO. A new logo is created. 90’s 2006 1989 SOCIALsince innovation 2007 Formalization - of the mission The BSN group becomes the and acquisition third-largest food and beverage 2007 of Numico. company in Europe, and the

leader in France, Italy and Spain. A pORTfOLIO fOCus ON HEALTH

Danone sells its Biscuits business to Kraft in 2007 and buys Royal Numico, a global leader in Baby and Medical Nutrition. With this acquisition Danone focuses on 4 divisions including health. Royal Numico has a portfolio of strong brands, Groundwork is laid for its 2007 among them Nutricia, Milupa, and Cow & Gate. Numico’s international presence in the Medical and Baby Nutrition markets provided new international development avenues of growth and profitability and helps fulfill Danone’s mission. International development COMMITTED TO THE ENVIRONMENT: THE strategy and implementationGENEsIs Of LIVELIHOODs In 1998, Danone signs the Ramsar International Convention on protecting wetlands. Ten years later we set up the Danone Fund for Nature of2008 social innovationto develop platforms. and provide funding for innovative carbon offset programs, and we have broadened the scope of these efforts by inviting other businesses to join us through the Livelihoods Fund, launched in 2011. ETEEEAL iit Expo Groupe_CT_170915.indd 22 21/09/2015 16:13

Expo Groupe_CT_170915.indd 23 WE 21/09/2015CAN 16:13 MAKE a change... 2014 manifestovoice.com 2015 Franck Riboud Chairman of the Board Emmanuel Faber Chief Executive Officer Danone unveils its “Manifesto”. The company’s 100,000 employees bring it to life. Design: Burson-Marsteller i&e Design: Burson-Marsteller

EUROPEAN EXPANSION

tartin in BNervais anone acuires several companies includin mora Maille andamme a ie ui hante iebi albani and olvic n less than years it becomes urope’s third larest ood company leadin the market in rance ermany Belium pain 1980s taly uembour and ortual SINCE 2007 ACCELERATION 1973-1990 EUROPEAN EXPANSION 1990-1996 GLOBAL AMBITIONS 1996-2007 REFOCUS ON HEALTHY FOOD OF INTERNATIONAL DEVELOPMENT

Expo Groupe_CT_250915_bat2.indd2016 8 INTEGRATED REPORT SUMMARY28/09/2015 11:19 6 DANONE OUR vision 3 CEOs since the BSN and Gervais Danone merger

Manifesto A UNIQUE MISSION AND A DUAL ECONOMIC AND SOCIAL PROJECT AT THE HEART OF THE COMPANY & Danone 2020 “As CEO, I pledge to pursue As early as 1972, Antoine Riboud was drawing attention Danone’s dual commitment

2014 to the environmental and social impact of businesses to business success and social on the planet. For over 40 years the pioneering speech Emmanuel Faber progress” 2014- … by Antoine Riboud which established our ‘dual project’ has been felt in our company. That dual project was enhanced in 2006 by Frank Riboud who launched our lasting mission to bring health through food Health to as many people as possible. In 2015 we published a new Manifesto, which will

2006 mission be a guiding star to build a healthier future and “How can a company to enshrine the principles of co-creation, local Franck Riboud expect to thrive in an 1996-2014 economic and social desert?” adaptation and continuous improvement. Our recent partnership with B Corp is a modern illustration of our ambition to pioneer a new business approach. Foundation of the Dual OUR mission 1972 Project “The frontiers of the Bring health through food company do not stop Antoine Riboud to as many people as possible. 1973-1996 at the factory gates…”

2016 INTEGRATED REPORT SUMMARY 7 DANONE OUR vision The manifesto: mobilizing employees to support Danone’s ambitions This Manifesto belongs to every Danoner. By living our Manifesto, we carry forward our mission to “bring health through food to as OUR COMMITMENTS many people as possible” and our dual project for business success and social progress, while reflecting our values of Humanism, Openness, Proximity and Enthusiasm. This Manifesto embodies our commitment to lead an Alimentation Revolution by supporting people to adopt healthier choices and lifestyles, and by caring about the As Danoners, we commit health and wellness of Danone and Danoners, of our communities and our planet, of current and future generations. FOR HEALTH AND WELL-BEING We will stand next to everyone’s quest for good health, by encouraging diets and lifestyles that bring the most benefit in people’s lives.

WITH THE BEST WE CAN DO, ALWAYS OUR BELIEFS We will stand by all our products and services, with pride and openness, as a guarantee of quality and integrity – whatever a consumer may choose, and wherever they may choose it.

As Danoners, we believe that FOR EVERY PERSON, AT EVERY AGE, WITH PLEASURE We will stand for the widest range of products and services to feed the needs and GOOD HEALTH IS EVERYTHING TO ALL OF US wishes of every person at every key stage of life, encouraging balanced nutritional Good health is a state of general well-being. It involves the mind as well as the body, habits or delivering specific health benefits. and emotion as well as sensation.

FOOD IS HEALTH’S MOST SIGNIFICANT PARTNER FOR OUR OWN HOMES Healthy eating and drinking is an essential part of life, to build and to maintain our We celebrate our own diversity, and stand up for the principle that every culture has well-being. From the earliest times, all over the world, people have always understood the right to enjoy its own way of eating and living well, by offering products inspired this and it is still true. by and relevant for local needs and ideas.

HEALTH CANNOT LIVE LONG WITHOUT PLEASURE FOR OUR PLANET AND ITS LIVING HERITAGE Without appetite and delight, no-one would eat or keep eating well. Pleasure in We will stand together for a healthy planet and devote all our energies to protect food and beverage is a precondition of every healthy lifestyle. and preserve the abundance of life and the variety of nature, in all its forms and ecosystems. FOOD IS THE WARMTH BEHIND EVERY CULTURE Healthy eating is an idea that goes beyond nutritional needs and appetites. Its FOR WHAT IS INVENTED AND WHAT STILL NEEDS TO BE INVENTED richness is a part of every culture – always different and always special – and worth We will always respect our obligation to prepare the future through new, sustainable taking the time to understand. ways to provide healthy food and access to safe water for all, by bonding with communities and stakeholders. We will keep our place at the forefront of these THE WEALTH OF NATIONS GROWS FROM A HEALTHY PLANET efforts. Emmanuel Faber Everything we eat depends on the earth that it grows in or feeds on. Chief Executive Officer, Danone As gardeners of this planet, we have a duty of care and a business necessity to NOT ALONE, BUT WITH PARTNERS AND FRIENDS manage its resources responsibly and sustainably. We are a collaborative Danone team. We will stand firmly by our belief that it is RESEARCH IS OUR BEST ALLY better to walk together and share benefits, by engaging with more consumers and more communities, in our common quest to find better health through better food “The Manifesto is an invitation Food is more than nature. It is the outcome of human endeavour, combining and beverage, for the greatest number. to share ideas and feelings. technological progress with deeper understanding of its value and its potential. It invites for the 1st time PREPARING FOR TOMORROW IS THE BUSINESS OF TODAY New ways can and will be found, to better serve this generation and the next, and 100,000 collaborators to bring healthy, affordable food and safe water to the greatest number, across the to a discussion and a collaborative world. Each of us has the power to make this happen. experience.”

2016 INTEGRATED REPORT SUMMARY 8 DANONE OUR mission Translating our vision of alimentation with our Alimentation Tree

Now more than ever, consumers are concerned with food. The revolution now underway is shaping how products are made and consumed, as well as our approach to preserving resources and protecting the environment. Every day we embrace our commitment to favoring healthier eating and drinking habits through a portfolio of products that are enjoyed on a daily basis, and a broad variety of activities. To explain our vision of alimentation we use the symbol of a tree. The leaves represent nine health priorities to which Danone contributes through its food categories and brands acting for healthier diets and lifestyles. They are clustered in three main areas of action: building health capital starting in the earliest days of life, maintaining it throughout life, and protecting it when most vulnerable. The trunk illustrates the key role of our brands. By delivering a superior experience and offering healthier choices and solutions tailored to local needs, we can impact on a greater number of people. Lastly, the roots show our actions aimed at addressing environmental challenges, such as fighting climate change, preserving the water cycle, fostering sustainable agriculture, and developing responsible packaging.

2016 INTEGRATED REPORT SUMMARY 9 DANONE OUR mission Evolution of products portfolio and markets in line with our mission

1996 2016

Baby Food Fresh Dairy 3% Products 26% Glass Packaging Pasta 7% Advanced Fresh Dairy FOCUSING 3% Medical Products THE healthy Sauces Nutrition healthy 49% Waters 5% 7% PRODUCT 10% food Italian food PORTFOLIO % Cheeses % Beers 9% ON HEALTHY 8% 39 100 FOOD Prepared Waters Early Life Biscuits and frozen food 21% Nutrition 20% 9% CATEGORIES 23%

6% 20% North America CIS & Noram* (excl. Mexico) Growth Growth 17% 41% Emerging ALMA* markets markets 77% markets REACHING % Western 39% % A NEW 23 Europe Europe 61 GLOBAL EQUILIBIRUM *NORAM – North America: USA+ Canada / ALMA: Asia Pacific + Latin America + Middle East + Africa

2016 INTEGRATED REPORT SUMMARY 10 DANONE Integrated

Report social innovations p.39

2016 INTEGRATED REPORT SUMMARY 11 DANONE MATERIAL ASPECTs

BUSINESS 1 Production and IMPACT commercialization of safe and healthy products Danone reports on its impacts and 1 2 An open and performance based on internationally constructive social recognized standards. dialogue with employees Danone structures its Integrated Report so as to 3 Assessment of suppliers’ 2 CSR performance comply with the guidelines of the Global Reporting Initiative 4. The GRI affirms the importance of 4 Guarantee of communication on the relevant challenges of the employees’ health business, reflecting the economic, environmental, and well-being at work 10 social and societal impacts of the organization 5 Management and and influencing the assessments and positions of protection of water stakeholders towards the company. 3 resources 9 6 IMPORTANCE 6 Sustainable raw In order to refine its understanding of the key FOR STAKEHOLDERS materials supply challenges and confront them strategically, Danone has conducted a materiality assessment using the 7 Guarantee of access to water for everyone following contributions: 12 13 4 8 Fight against fraud • analyzing the available documentation about Danone and corruption and its environment in order to identify relevant 14 8 5 9 Individual employee challenges; development • sharing these challenges with a representative sample 15 7 10 Consideration of stakeholders (nine internal and 13 external); of CSR challenges 11 in Danone’s strategy • ranking them according to their potential impact on the activity and their importance for the stakeholders 11 Reduction in the quantity of waste and questioned. recycling This impact is assessed according to several criteria: 12 Sustainable regulatory impact; financial impact; and impact on relationships reputation, on the confidence of investors, customer with suppliers loyalty and employee satisfaction. NUTRITION & HEALTH COMMUNITIES STRATEGY 13 Reduction of the environmental footprint The fight against forced labor, child labor, all types of discrimination, the limiting of the number and SOCIAL RESPONSIBLE FIGHT AGAINST FRAUD of products and activities PROCUREMENT AND CORRUPTION severity of workplace accidents and the promotion Supporting the local 14 of human rights within the company have not economy and local supply ENVIRONMENT been included in these priorities since these are 15 Promotion of a healthy considered to be fundamental challenges. lifestyle and nutritional education

2016 INTEGRATED REPORT SUMMARY 12 DANONE unique business approach better health Danone’s ambition is to generate strong, profitable Danone wants to influence healthier eating and drinking and sustainable growth by 2020. practices, to encourage healthier lives.

better world better lives Danone believes that healthy food starts with In line with our dual commitment to social progress healthy nature. and business success, Danone creates social value.

2016 INTEGRATED REPORT SUMMARY 13 DANONE unique business approach

We have reaffirmed our mission—bringing health through food to as many people as possible Unique brands — and translated it into a Manifesto, which forms the core of Danone 2020, our transformational five-year plan. Firmly rooted in our four health-oriented product categories and our new vision of food and categories and beverages, we’re changing the way we look at our business, finding new ways to grow, and putting the power of our unique brands behind our strategy of strong, profitable and sustainable growth. As a result, in 2016, consolidated sales stood at €21,945 million, up +2.9% like-for-like. The company’s margin rose by a very strong +70 bps like-for-like, well above the initial guidance, with a positive contribution from all divisions.

FRESH DAIRY EARLY LIFE ADVANCED MEDICAL WATERS At Danone, we aim to generate PRODUCTS NUTRITION NUTRITION strong, sustainable, profitable growth by 2020. WHY IT MATTERS WHY IT MATTERS WHY IT MATTERS WHY IT MATTERS We want our fresh dairy products As one of the world’s leading The first 1,000 days of an infant’s Nutricia believes that nutrition More specifically, we’re targeting to be the consumer’s first bottled water companies, we want life are a period of incredible can make a positive, proven overall growth of at least 5%, choice—for their convenience, to be part of the solution for the growth and development, difference to patient health. with our four divisions for their nutritional value and world’s main water challenges. forming a blueprint for lifelong Which is why we focus our for their great taste. Innovation That’s an ambitious goal, and health and well-being. time and energy on developing contributing as follows: is critical in reaching that goal, co-creation will be essential and delivering new nutritional At Danone, we believe that from the quality of the milk and to meeting it. In this respect, we solutions that meet today’s health helping mothers and babies other raw ingredients, to the have an outstanding track record needs—and tomorrow’s. around the world get the right FRESH DAIRY PRODUCTS search for sustainable production of working with partners to build nutrition during this critical HOW IT WORKS techniques and the aesthetics innovative, sustainable business period—from conception to age Our strategy consists of expanding + 3-5% of the product itself. For decades solutions. In fact, that’s one of two—is a crucial step towards our global coverage by launching now, we’ve been convinced of the things that make Danone improving global health. operations in new countries and the health benefits of fresh dairy unique—and why we’re confident developing a range of distribution products in general and yogurt we can make a real difference. HOW IT WORKS WATERS channels. We see significant in particular, and we’ve continued Our strategy focuses on one HOW IT WORKS scope for growth in the medical + 7-10% to innovate so that everyone key area: developing the right Our Waters strategy is geared nutrition market, mainly as can continue to enjoy the healthy products for a child’s earliest around increasing consumption a result of the aging population, pleasures they offer. years. Within that area, of bottled water and aquadrinks, increased awareness of the role we have three priorities: EARLY LIFE NUTRITION and we’re doing that by: of nutrition in health, the HOW IT WORKS show that Danone’s early-life Our strategy calls for expanding emergence of new illnesses + 7-10% promoting hydration-related nutrition brands meet the consumption of fresh dairy •  and allergies, and the growing health benefits, special needs of pregnant women, products all around the world. Key number of screening procedures nursing mothers, babies and features include strengthening that enable early management ADVANCED MEDICAL • taking a long-term approach young children; make health markets with major growth of afflicted patients. NUTRITION to water resource management and flavor two indivisible potential—the United States, and environmental protection, features of baby food; and Russia, Brazil, Mexico, Morocco and + 6-8% identify local nutritional needs. South Africa; maintaining business • developing a line of light, volumes in mature European natural beverages as healthy countries; and expanding our alternatives to sodas and other operations in new regions, sweetened beverages, particularly Africa and Asia. • creating innovative packaging.

2016 INTEGRATED REPORT SUMMARY 14 DANONE unique business approach Key performance indicators 2016

€21,945 breakdown million +2.9% like-for-like growth +70 BPS like-for-like sales of sales growth recurring operating by geographic area margin growth*

*(vs. +17 bps in 2015)

FRESH DAIRY PRODUCTS WATERS ALMA* 40,5%

49% - €10,736 Million (vs 11,057 in 2015) 21% - €4,574 Million (vs 4,768 in 2015) +2.0% sales up on a like-for-like basis +2.9% sales up on a like-for-like basis +38 BPS margin up at constant exchange rates (vs. +49 bps in 2015) +15 BPS margin up at constant exchange rates (vs. -192 bps in 2015) EUROPE 39,1%

EARLY LIFE NUTRITION ADVANCED MEDICAL NUTRITION CIS & NORAM* 20,4% 23% - €5,017 Million (vs 4,994 in 2015) 7% - €1,618 Million (vs 1,593 in 2015) sales up on a like-for-like basis sales up on a like-for-like basis +3.5% +7.4% *NORAM – North America: USA+ Canada / ALMA: Asia Pacific + Latin America +167 BPS margin up at constant exchange rates (+142 bps in 2015) +93 BPS margin up at constant exchange rates (+1 bp in 2015) + Middle East + Africa

2016 INTEGRATED REPORT SUMMARY 15 DANONE unique business approach Compliance in Danone As part of the General Secretary, the Compliance Danone’s Compliance Program, which is an integral Department reports directly via the Chief Compliance part of Danone’s control environment. Officer to the General Secretary and the Audit Committee. The overall supervisory responsibility for the Compliance is a precondition to fair and open It is supported by compliance teams as well as the establishment, implementation, application and markets, to strong, sustainable and profitable organization local Compliance Committees, with each Compliance improvement of the Compliance Program is allocated growth and, thus, to both business success Officer reporting to the Chief Compliance Officer. to the Corporate Compliance & Ethics Board, chaired and healthy societies. Danone’s commitment The Compliance department developed and oversees by the Chief Compliance Officer. to compliance is a natural consequence of our historical dual commitment to business success The Corporate Compliance Department developed encourage customers to adopt such principles. Business and social progress. a number of Corporate Compliance policies, including partners are expected to adhere to our Code of Conduct Danone’s Compliance Program safeguards a new edition of the Code of Business Conduct, setting for Business Partners. our commitment to our stakeholders and the standards Employees are informed about the Code of Business our growth and supports the company by of behavior to which all of us must adhere. All employees Conduct upon joining and are periodically reminded minimizing compliance risks in critical areas, of Danone, as well as its subsidiaries and controlled of its principles. providing expertise, leveraging existing know- Policies companies, are expected to follow the Code of Business how and improving the company compliance Conduct. We expect companies of which Danone has In addition to the Code of Business conduct a number culture, ensuring that all Danoners and relevant a joint or minority ownership to adhere to principles of policies in the core areas of integrity, competition, business partners are aware of their compliance equivalent to the Code of Business Conduct and we also personal data privacy, international trade sanctions responsibilities. More specifically, the program and related subjects have been developed. is designed to establish and promote a global Allowing employees to report potential infringements The Danone Ethics Line went live on July 2016 as an set of policies and procedures, and encourage of the Compliance Program and ask questions on its enhancement of our previous whistleblowing system. self-discipline to help protect our business from implementation is part of an effective Compliance process. This secure web platform allows Danoners to approach, corrupt practices and other risks. from everywhere, at any time, even anonymously if Having such a system allows for the minimizing of needed, and according to local laws, the Danone Ethics Our Compliance Program focuses not only on Danone accidental detection of non-compliance and facilitates Line Committee, made of corporate Compliance, HR, and the sharing of the information in the organization. fighting corruption in all its forms (covering topics Internal Audit representatives. such as bribery, gifts and hospitality, sponsorship Ethics Line In addition, such a process offers a way to guarantee and donations, money laundering, conflicts of adequate response to and remediation of cases of This tool represents best-in-class in terms of security and non-compliance. privacy, having received the European Privacy Seal and interest), but also in assuring diligent behaviors in having gone through certified regular penetration tests. the scopes of competition, personal data privacy and international trade. Over the past few years, perceived international tax As a global corporation, Danone recognizes the avoidance by large multinational corporations has importance of taxation for the budgets and development come under increasing scrutiny from the media, the of the countries where we do business. We thus support public and non-governmental organizations. the BEPS initiative and have contributed to it actively by providing input for business consultations. TAX POLICY The Organization for Economic Cooperation and Development (OECD) has responded We have also published our tax policy, reflecting with an intensive effort to develop 15 Action Plans under our commitment to explaining our guiding principles the Base Erosion and Profit Shifting (BEPS) initiative. in relation to taxes.

2016 INTEGRATED REPORT SUMMARY 16 DANONE unique business approach Responsible procurement

PROCESS AND TOOLS “NON-COMPLIANT OF THE RESPECT PROGRAM ACTION PLAN SUPPLIERS” Launched in 2005, our RESPECT program is expanding The RESPECT program’s fundamentals include: Danone’s dual commitment to business success and evaluation of suppliers’ CSR risk through information- “AT RISK social progress throughout our entire supply chain— • sharing based on self-disclosures by suppliers regarding EXTERNAL AUDIT SUPPLIERS” except for milk producers covered by the sustainable their CSR performance. The RESPECT program integrates agriculture program FaRMS. sector and region-specific social and environmental RISK MAPPING via SEDEX All the direct suppliers of certain categories, such as raw risk intelligence through Sedex (Supplier Ethical Data shared with other SEDEX members ingredients, and bigger suppliers in other categories, Exchange), a dedicated online information-sharing and such as Services & Goods, undergo a rigorous process of pooling platform used by many companies in the food assessment of their social, environmental and ethical and beverage sector, which allows their suppliers to performance that increases reliability of the supply (i) enter information regarding their production sites’ REGISTRATION ON SEDEX chain, conserves our planet’s natural resources, and ethical management practices, sustainable development protects the people who work for and with us. and societal responsibility policies, and (ii) share this RESPECT CONTROL PROCEDURE CONTROL RESPECT At Danone, we believe that what we do and how we do it information with several customers at once ; CONTRACTUAL CLAUSE are equally important—which is why we’ve put responsible, (Sustainable Development Principles) • external verification of suppliers identified as “at risk”, sustainable sourcing practices into place throughout by a certified third party organization, throughSMETA our supply chain and made them an integral part of audits (Sedex Members Ethical Trade Audit) ; 0% 100% our strategy. We’re also a member of the AIM-Progress SUPPLIERS IN THE RESPECT SCOPE COVERED forum, which contributes to continuous improvement in • corrective action plans in case of non-compliance sustainable purchasing across our industry, and are an identified during the audit, and monitoring by Danone’s active member of the Consumer Goods Forum. purchasing teams. Danone also has access to over 2,000 supplier audits on the Sedex platform and over 15,000 Danone also has access to over Under Danone’s Sustainability Principles, we’ve audits thanks to the principles of mutual recognition 15,000 audits thanks structured the RESPECT program around social, through the AIM Progress consortium for responsible to the principles of mutual environmental and ethical fundamentals that are built sourcing. 2,000supplier audits into our General Terms of Procurement and thus are recognition through the on the SEDEX included in all contracts. platform and over AIM Progress consortium for responsible sourcing.

SEDEX: Supplier Ethical Data Exchange SMETA: SEDEX Members Ethical Trade Audit

2016 INTEGRATED REPORT SUMMARY 17 DANONE unique business approach Respect of human rights

RESPECT OF HUMAN RIGHTS WITHIN DANONE’S SUPPLY CHAIN

Danone has included in its Fundamental Social Principles, • WORKPLACE HEALTH AND SAFETY: The company ensures that the seven salient Human Rights risks, based on the International the workplace and its environment do not endanger the physical DANONE ECOSYSTEM FUND Labor Organization conventions. integrity or health of employees. Action to reduce the causes of WOMEN’S EMPOWERMENT: The sustainability clause, containing Fundamental Social accidents and improve working conditions is the object of ongoing Principles, inserted in the suppliers contracts requires suppliers programs. As a minimum, appropriate sanitary and medical to uphold workers’ fundamental rights and freedom: facilities and drinking water are made available. In addition to the 7 salient human rights areas addressed by Danone Fundamental Principles, • CHILD LABOR: No children below the age 15 are employed by the • WORKING HOURS: The company ensures that national applicable company or if the local law is set higher, that limit would apply. legal restrictions on working hours, including overtime are Danone Ecosystem Fund works to promote complied with. • FORCED LABOR: the company does not use forced or compulsory Women’s Empowerment, thereby tackling labour, i.e. any work or service performed under threat or that is not • COMPENSATION the issue of development in its entirety and consented to by the person concerned. The company ensures that no wages paid are lower than the promoting a more inclusive type of economy. applicable legal minimum, all employees receive a payslip, • NON-DISCRIMINATION: the company refuses to engage in any Over the last 7 years, around 30 out of a total discriminatory practices. employees receive a decent wage, as compared to standard pay of 65 Ecosystem projects have tackled Women’s practices in the country, wage rates for overtime are in all cases FREEDOM OF ASSOCIATION AND THE RIGHT • higher than for normal hours. Empowerment issues. The projects’ outreach TO COLLECTIVE BARGAINING: the company recognizes and respects counts 20,200 women with 1,200 jobs created employees’ freedom of association and their right to freely choose for women. their representatives; employees’ right to collective bargaining; and ensures that employee representatives do not suffer any discrimination.

By complying with the above principles, Danone’s suppliers ensure In 2016, Danone launched a global audit program for the top that the above principles are already in place in their own organization 7 fruit categories covering 75% of Danone’s volumes of fruits and undertake to ensure that their employees, agents, suppliers and purchased, mapping the fruit supply chain to the farm across 8 sub-contractors respect the said principles. Suppliers are in addition geographical areas. The assessment is based on Farm Sustainability requested to strive to continuously work on the implementation Assessment questionnaire by SAI platform. The program’s focus is of the Fundamental Environmental Principles. to identify sustainability “hot spots”, including labour and human Danone is deeply aware of the fact that notwithstanding its rights topics, such as health and safety and temporary worker willingness to conduct business in an ethical way, human rights conditions, and develop a baseline, a gap analysis and a subsequent infringements are common in long supply chains. The company improvement plan to be implemented in 2017 onwards. is determined to identify its areas of progress and committed to addressing them.

2016 INTEGRATED REPORT SUMMARY 18 DANONE unique business approach Responsible Procurement: Key performance indicators 2016

100 108 AUDITS Number of sites from watch list which have been If we identify a potential case of high risk in our supplier base, we investigate 75 audited and the causes and validity of the assessment further by auditing our suppliers which have either via a third party using the SMETA 4-Pillars program. SMETA is an resolved all non- internationally accepted and widely recognized audit protocol developed compliance issues, 72 or been terminated by Sedex. Suppliers can upload their audit results to the platform and share as suppliers. them with all of their customers, thus reducing the burden of multiple 50 60 57 audits. We also recognize audit results from other protocols through the Number of sites 52 AIM-PROGRESS Mutual Recognition mechanism. from watch list 49 which have been These audits help to identify possible points of improvement for sustainable audited business operations. Our buyers are working closely with suppliers to build and implement action plans to remediate all cases of non-compliance. 25 Following this process, in 2016 we were able to remediate risks at 38 sites, either by resolving issues immediately or by implementing mutually accepted corrective action plans. For 56 supplier sites where non-conformities were detected on site, our procurement teams continue to follow up 0 on progress toward remediation, which includes resolving non-compliance within an agreed time frame (up to 6 months). 2014 2015 2016 Our aim is to terminate all non-compliance situations and improve suppliers’ sustainability and ethical performance. Nevertheless, in some cases we see no alternative but to terminate relationships with suppliers that refuse to collaborate.

2016 INTEGRATED REPORT SUMMARY 19 DANONE unique business approach Responsible Procurement: Key performance indicators 2016

4,586 COMPLIANCE 4,523 4,000 4,241 4,183 Number of sites 4,062 in RESPECT scope With the help of the Sedex tool, we are able to monitor and assess our 3,705 suppliers’ sustainability performance and associated social, environmental Number of or business ethics risks. To do so most effectively, our 89 program compliant sites ambassadors—the RESPECT Champions, located all over the world—are 3,000 continuously driving the culture and training buyers to ensure this topic is embedded as one of the fundamentals of business. Year on year, we are improving the RESPECT Program by adapting its scope as well as reviewing our criteria to provide the most accurate picture of our supply 2 ,000 chain sustainability risks and performance. Overall compliance has been improving at company level, with more suppliers now registered on the Sedex platform, assessed and audited, while taking into account consolidation of suppliers through our new global sourcing structure: 1,000 the Strategic Resource Cycles (SRC). SRC is a new cross-division organization which consists of the sourcing capabilities and dedicated transversal teams that will deliver our ambitions to protect and optimize our strategic resources (water, milk and plastic), to strengthen our competitiveness and secure our license to operate 0 in a cycle-oriented way. 2014 2015 2016

2016 INTEGRATED REPORT SUMMARY 20 DANONE better health Strategy and commitments

At Danone we believe that help people adopt eating ALIMENTATION providing health through and drinking habits that are food is not only a necessity both healthy and relevant Alimentation goes beyond nutrition, and takes into consideration taste, social and cultural dimensions that are but also our responsibility. for them, whatever their relevant to healthier dietary habits. More sedentary lifestyles and age, culture or personal Through alimentation, we can play an important role: we less healthy eating habits preferences. encourage the adoption of dietary habits that help preserving health. But Danone has decided to take its nutritional charter mean modern societies face one step further and implement Nutrition Commitments major public health issues. containing stronger, more measurable and time-bound In this context, we aim to commitments to evaluate its performance.

HEALTHIER HEALTHIER COMMUNITY RESPONSIBLE PRODUCTS LIFESTYLES RELEVANT COMPANY PRACTICES

2016 INTEGRATED REPORT SUMMARY 21 DANONE better health Strategy and commitments

HEALTHIER HEALTHIER COMMUNITY RESPONSIBLE PRODUCTS LIFESTYLES RELEVANT COMPANY PRACTICES

WHY IT MATTERS WHY IT MATTERS WHY IT MATTERS WHY IT MATTERS At Danone, we’ve made a strategic decision Nutrition can only make a real difference Because eating habits are rooted in Our mission to bring health through food to build our product portfolio on health. when it is part of a healthy overall cultural, social beliefs and behaviors, our to as many people as possible calls on us We focus primarily on products that are lifestyle—which is why we devote nutrition model takes into consideration to adopt responsible business practices. recommended as part of a balanced diet significant resources to education local eating and drinking patterns and Safe products and responsible advertising or are specifically designed to meet the programs and events that promote healthy relies also on the understanding of local are essential in creating and strengthening nutritional needs of sensitive groups. diets, healthy hydration and exercise. health and nutrition challenges. This is trust-based relationships with our We aim to continuously improve the The challenge ahead is to measure their the reason why we have a country- and consumers and stakeholders. The adoption nutritional quality of our products impact on communities in terms of community-based approach. Thanks to this of even more responsible marketing particularly with our new targets and the greater awareness, changing consumption approach, we can offer healthier options practices is key for encouraging healthier objective to meet them by 2020 for all habits, better diet, and healthier food and that are relevant to the local diets and behaviors. product categories. beverage choices. preferences and better impact eating and At Danone, food safety is paramount— drinking practices. Finally, we plan to design products which HOW IT WORKS no compromises. We are committed to offer healthier choices by combining two At Danone, we encourage healthier diets HOW IT WORKS developing, making and delivering products criteria: superior product experience and and lifestyles by working with local For Danone, to have a good understanding that adhere strictly to the demanding superior nutritional quality. stakeholders to create education programs of the local nutritional context, public standards set by our Food Safety policy. for consumers—both children and adults— health concerns and eating practices HOW IT WORKS HOW IT WORKS as well as parents, patients and caregivers. from a socio-cultural perspective is key We’ve established our own nutrition We promote better health for everyone In addition, we create targeted programs to defining appropriate strategies that through: standards and commitments for our Fresh for our employees and for healthcare promote healthier diets. Dairy Products, our Early Life Nutrition professionals. • Food safety: We proudly stand by all of our products and our Aquadrinks*, and we apply Danone’s comprehensive Nutriplanet products and services, them to all innovations, all new products, We’re also working to understand the diet- program provides scientific facts on health connection through our Nutrimpact nutritional deficiencies and local public • Product nutrition labelling: to guide and reformulations of existing products. Our healthier dietary choices and habits, approach aims to enhance the nutritional research program, which studies the health challenges, as well as useful insights quality of our products and categories, by impact of alimentation on health. Danone into local traditions, preferences, values • Even more responsible marketing monitoring and improving the nutritional researchers begin by studying the impact and beliefs relative to food and beverages. practices, especially to children, of food choices and lifestyle on diet and profile of our products vs. other available • Responsible marketing of breast milk nutritional status, and then assess the choices and analyzing substitution. substitutes, role of diet and its contribution to overall health. • Change of business practices through * Danone nutritional standards do not apply to Danone Waters or Advanced Medical Nutrition products. The composition of our waters cannot be modified cross-sector voluntary commitments. and our Medical Nutrition products comply with strict regulations, requirements, and scientific recommendations.

2016 INTEGRATED REPORT SUMMARY 22 DANONE BETTER HEALTH Key performance indicators 2016

healthier product healthier lifestyles community relevant responsible company practices

HEALTHY PRODUCTS “HEALTH @ WORK” NUTRIPLANET CLAIMS AND ADVERTISING • 88% of volume of “healthy • 51,349 (vs 50,412 in 2015) employees • 54 countries are covered by • 61% of volume of product have products” * (same as in 2015). have access to the “Health @ Work” Nutriplanet studies (the Nutriplanet nutritional claims (vs 59% in 2015). Program, it represents 69% of the Program was designed to provide 97% Compliance with the NUTRITIONAL QUALITY employees covered by the scope in-depth knowledge of every • of the Health & Nutrition Scorecard food-related aspect of our local International Chamber of • 67% of volume of products (vs 73% in 2015). contexts) (vs 53 in 2015). Commerce Framework for compliant with Danone’s 2020 Responsible Food and Beverage nutritional targets. MATERNITY LEAVE FLUID INTAKE Marketing Communications 26% of volume of 2016 products (vs 100% in 2015). • 1 0 0 % of the Health & Nutrition 15 countries are covered by specific have been nutritionally improved • • Scorecard subsidiaries have fluid intake studies (with data on 118 Education, information over the past three years (vs 29% • a maternity policy that allows 16,300 adults and 12,000 kids and programs and activities were in 2015). employees to take paid teens) (same as in 2015). active this year (vs 148 in 2015). maternity leave. NUTRITIONAL INFORMATION It potentially affected more than 481 million people (vs 579 million • 99% of volume of products with SUPPORT FOR NURSING MOTHERS people in 2015). on-pack nutritional information of Health & Nutrition (same as in 2015). • 8 5 % Scorecard subsidiaries have made SKILLS, RESPONSIBILITY AND OUTSIDE OPINIONS • 99% of volume of products with arrangements to help employees off-pack nutritional information continue to breast-feed after going • More than 31,000 employees (available online or via the call center, back to work (vs 70% in 2015). training on nutrition and/or for example) (same as in 2015). hydration in the last two years (vs 21 000 in 2015). • 74% of volume of products indicate the portion size (products • Health & Nutrition Scorecard packaged in individual portions subsidiaries have created 138 and/or with a clear indication expert committees (vs 165 in 2015). of portion size on the packaging) (vs 69% in 2015). • Health & Nutrition Scorecard subsidiaries are in regular contact * “In operational terms “Healthy product categories” for with 2,115 experts around the world Danone include: Dairy with more than 50% milk (Codex (vs 1,743 in 2015). definition of dairy), Waters and calorie-free beverages, Early Life Nutrition (except teas, juices, biscuits, rusks), and all Medical Nutrition.

2016 INTEGRATED REPORT SUMMARY 23 DANONE better health Project

In Bangladesh, over 54% of preschool-age children—some 9.5 million youngsters—are malnourished, and 56% of these are underweight. Bangladeshi children also suffer from high rates GRAMEEN DANONE of micronutrient deficiencies, particularly vitamin FIGHTS POVERTY WHY IT MATTERS A, iron, iodine and zinc. And all of these deficiencies have an immediate impact on physical and AND MALNUTRITION cognitive development. IN BANGLADESH Malnutrition is nearly as prevalent in towns and cities as in rural areas, affecting 38% of children, In October 2005, Danone Chairman and while stunting affects 42% of urban youngsters. CEO Franck Riboud met Muhammad Yunus, who had founded Grameen “We need a new type of business that pursues microcredit bank and would soon win goals other than making personal profit the 2006 Nobel Peace Prize. —a business that is totally dedicated to solving Together, the two men decided to explore social and environmental problems,” wrote the possibility of a Danone-Grameen Muhammad Yunus. partnership in Bangladesh, and in March GDFL aims to overcome poverty in Bangladesh while 2006 announced the creation of Grameen being financially and economically sustainable and Danone Foods, Ltd (GDFL) in Dhaka. HOW IT WORKS as community-relevant as possible. The company GDFL aims to fight poverty and sells Shokti+ yogurt—designed to deliver 30% of malnutrition in Bangladesh and to create the daily requirement for iron, zinc, vitamin A and positive social impact throughout its iodine—at an affordable price through a dense value cycle. distribution system serving both urban and rural populations.

GDFL produces Shokti +, but the company generates CHILDREN FARMERS HOW DOES THIS broader social benefits as well. On the supply side, IMPACTED INVOLVED it supports small local farmers by buying their milk, 300,000 400 PROJECT CREATE and on the distribution side it provides work and empowerment for the “Grameen Ladies” who sell GRAMEEN DIRECT JOBS VALUE? GDFL products in rural areas. 260 LADIES 300 CREATED

2016 INTEGRATED REPORT SUMMARY 24 DANONE better lives Strategy and commitments

As part of our dual commitment to business success and social progress, we create PEOPLE & ORGANIZATION social value by promoting constructive To achieve this goal and prosper in a more volatile and complex dialogue to ensure the health and safety world, we need to strengthen our organization. And we’re doing just that: today Danone is transforming its structures through of our employees—over 100,000 talented programs like One Danone—a shared service organization that Danoners around the globe—our partners focuses on sharpening our expertise, strengthening compliance and all of our stakeholders. and developing synergies between our different divisions.

SOCIAL SOCIAL DIALOGUE HEALTH AND SAFETY TALENT INCLUSIVENESS

2016 INTEGRATED REPORT SUMMARY 25 DANONE better lives Strategy and commitments

SOCIAL SOCIAL DIALOGUE HEALTH AND SAFETY TALENT INCLUSIVENESS

WHY IT MATTERS WHY IT MATTERS WHY IT MATTERS WHY IT MATTERS Caring for our employees and working Keeping our employees safe and healthy is At Danone, we fuel growth by attracting As a global food company, Danone is towards optimum growth in a fast- one of the pillars of our dual commitment. outside talent—and with it, new passion, committed to fighting malnutrition, changing economy are at the heart of It’s also in line with our mission to bring leadership and related skills. We also guaranteeing access to water for all, and our culture and our dual commitment health through food to as many people want to nurture the unique, exceptional supporting local economies and supply to business success and social progress. as possible. And workplace health and potential of our 100,000 Danoners, sources while respecting and promoting In this, dialogue with our employees is safety play an increasingly powerful role inspiring the engagement they need to human rights. And we firmly believe that essential—a key driver for economic and in sustaining employee engagement in serve our clients and our communities. We we will address these fundamental issues social growth, the foundation for sweeping today’s world—a volatile economic, political believe that a truly inclusive culture makes more effectively with friends and partners transformation and an essential part of and social environment that is in constant us more innovative and versatile. than on our own. sustainable performance for Danone as a flux. An environment of aging populations HOW IT WORKS HOW IT WORKS whole. and young people with changing career Our Talents 2020 program is built on five We’re committed to creating better lives aspirations. An environment where the HOW IT WORKS pillars: for everyone who is involved in any way Dialogue with our employees has boundary between health and safety is in our business. Which means we develop 1 talent relationships, been deeply rooted in Danone’s dual increasingly blurred, as exemplified by meaningful brands that connect with our musculoskeletal disorders, stress-related 2 a diverse, inclusive culture that allows commitment since 1972, when then- everyone to express their uniqueness, consumers, and take an inclusive approach Chairman Antoine Riboud made his absenteeism and more. to small or vulnerable stakeholders in our 3 a long-term focus on building the HOW IT WORKS historic speech to the French employers’ capabilities we need to answer our value cycle. In 2014, we made health and well-being association in Marseille. Over 45 years Manifesto’s call for community engagement an integral part of Danone’s successful later, dialogue is still a fundamental part and other aims, WISE safety program. WISE takes a of Danone—but now we practice it on a a new talent model that redefines our comprehensive approach to all types of 4 global scale. One important example is our methods of assessing performance and risk, focusing on day-to-day operations, worldwide dialogue with the International potential, to promote the physical, mental and Union of Food Workers (IUF) through its the shared conviction that “We all social well-being of Danoners all around 5 Committee for Information & Consultation have talents and we all are talents.” We the world, and to get all of our employees (CIC). plan to identify and harness all skills, by involved, regardless of their specific job. conducting talent reviews and offering training for everyone.

2016 INTEGRATED REPORT SUMMARY 26 DANONE BETTER LIVES Key performance indicators 2016

BREAKDOWN By Geographic area & gender HIRES OF HEADCOUNT & DISMISSALS 20 000 20,216 20,649 20,671 There were 13,016 new 15,631 hires in 2016. 40% 39% 39% 10 000 38% There were 6,203 dismissals in 2016. Alternative 30 8,234 solutions to layoffs are 5,221 routinely sought, such 1,097 7,372 0 as changing the organizations and related Africa & Asia-Pacific Europe Americas activities, discontinuing Middle East the use of temporary workers, re-insourcing 20 MEN WOMEN activities and providing training or leave periods. When layoffs become 14% inevitable, a significant 13% By Geographic area & employment type employee support system 10 is set up to minimize 33,232 6% 6% 30 000 the consequences for individuals. The continued 3% 2% 27,075 employment of workers 25,107 following the sale of 20 000 0 several sites has therefore 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 been made possible by the guarantees implemented. By division 10 000 8,255 EARLY LIFE 3,048 FRESH DAIRY PRODUCTS WATERS 2,419 NUTRITION 1,076 1,571 1,650 0 513 167 785

ADVANCED MEDICAL CORPORATE Africa & Asia-Pacific Europe Americas NUTRITION FUNCTIONS Middle East

PERMANENT TEMPORARY INTERIMS

2016 INTEGRATED REPORT SUMMARY 27 DANONE BETTER LIVES Key performance indicators 2016

SOCIAL SOCIAL DIALOGUE HEALTH AND SAFETY TALENT INCLUSIVENESS

10 Worldwide agreements have been SAFETY TRAINING Key Performance Indicators related to the • thematic “Social Inclusiveness” concern signed between Danone and the IUF and • Danone’s 2016 frequency rate for • Training was provided to 91% joined visits are organized to monitor workplace accidents with medical of employees in 2016 (86% in 2015, Danone 4 funds and are detailed on the their implementation in more than 55 absence (FR1) was 2.0 for the Safety Social Indicators Scope). following page “Social Innovations”. entities between 2009 and 2016: Scope (same as in 2015). At constant training hours per person trained scope, the FR1 rate was 1.8, which • 25 • 1985 Start of the relationship with IUF. represents a decrease of -10% in 2016 (25 hours in 2015, Social Indicators Scope). • 1988 Convention #1 on the common compared to 2015. vision between Danone & the IUF. • Danone’s 2016 frequency rate for GENDER EQUALITY workplace accidents without medical • 1989 Convention #2 on economic • The proportion of Danone female and social data in Danone companies. absence (FR2) was 3.0 for the Safety managers, directors and executives Scope (vs 3.5 in 2015). continued to grow in 2016. It went Convention #3 for the promotion from 48% in 2015 to 49% in 2016. of gender equality in the workplace. • Danone’s 2016 severity rate (SR) for workplace accidents with medical DISABILITIES on skills training. • 1993 Convention #4 absence was 0.1 for the Safety Scope In France, the percentage of persons (same as in 2015). •  • 1994 Convention #5 on trade union with disabilities employed by Danone rights. was 3.8% in 2016 (same as in 2015). ABSENTEEISM • 1997 Convention #6 in the event of changes in business activities affecting • The absenteeism rate was estimated employment or working conditions. at 2.4% in 2016. In 2015, it was estimated at 2.3%. • 2005 Convention #7 on the setting up of social indicators at group level. HEALTH • 2007 Convention #8 on diversity. • 70,000 employees in 25 countries • 2011 Convention #9 on health, safety, had healthcare coverage in line with working conditions and stress. the standards defined by Dan’Cares. • 2016 Convention #10 on sustainable employment and access to rights.

2016 INTEGRATED REPORT SUMMARY 28 DANONE better lives Project

In Mexico, 1.5 million blind or visually impaired people are the main breadwinners for their families, working a variety of jobs and earning less than 70 Mexican pesos (USD 4.50) a day. Around 300 EYES WIDE OPEN are members of a Mexican non-profit association WHY IT MATTERS called ASOCIVE. Meanwhile, Bonafont Mexico—aware that five The “Eyes Wide Open” project has set up million people use the Mexico City subway every a micro-distribution network for bottled water in the Mexico City subway. The day—was looking for new distribution channels for aim is to promote social inclusion for its water products. Mexico’s visually impaired and improve Inside the Mexico City metro, Bonafont Mexico their working conditions by giving them the opportunity to become vendors. has opened a new sales channel that promotes Bonafont co-created the project in inclusive business to Mexican citizens and partnership with Ojos Que Sienten A.C., companies through a sales team made up of an NGO that specializes in training and HOW IT WORKS visually impaired ASOCIVE members. The project empowering the blind, with backing from offers entrepreneurial training to give members the Danone Ecosystem Fund. personal and career help and to keep them motivated. From a business perspective, this sales vector is both profitable and sustainable.

Since 2013, Bonafont has worked with over 200 VISUALLY IMPAIRED INDIVIDUALS PEOPLE HAVE ACCESS visually impaired people to build a new micro- HAVE STABILIZED OR EVEN TO MEDICAL CARE UNDER HOW DOES THIS distribution channel for bottled water in the 244 INCREASED THEIR INCOME 120 THE PROJECT subway. Participants can boost their income by up PROJECT CREATE to 28% while selling a profitable, healthy product, and they have access to training and better tools— INDIRECT pallets, security vests and more. Eyes Wide Open has BENEFICIARIES VALUE? 853 also built a training center that provides medical assistance.

2016 INTEGRATED REPORT SUMMARY 29 DANONE better world Strategy and commitments

At Danone, we believe that healthy Which is why our Nature strategy food starts with a healthy planet. is built around four priorities: climate, PROTECTING OUR STRATEGIC The initial raw materials used in water, packaging and sustainable RESOURCE CYCLES our ingredients are rain, soil and agriculture. We’re working hard We’re committed to strengthening our strategic sunlight—natural resources that to promote sustainable farming, resources—milk, water and plastic—and managing them as cycles rather than taking combine to grow the food, feed the make water cycles healthier, achieve a conventional linear approach. The only way cows and provide the water we need zero net carbon emissions in the long to achieve these goals is to rely on our unique organization and work with our partners along to make healthy foods and beverages term, and give all of our packaging our value chain. for our consumers around the world. a second life.

SUSTAINABLE CLIMATE WATERS PACKAGING AGRICULTURE

2016 INTEGRATED REPORT SUMMARY 30 DANONE better world Strategy and commitments

SUSTAINABLE CLIMATE WATERS PACKAGING AGRICULTURE

WHY IT MATTERS WHY IT MATTERS WHY IT MATTERS WHY IT MATTERS Climate change affects the natural cycles Water is a precious, sometimes scarce Packaging has an important role to play Danone’s operations are linked directly to of water, soil and biodiversity as well as resource that must be used in cooperation by protecting the nutritional benefits nature and to farming, which now presents the ecosystem of services that play a vital with local ecosystems and communities. and quality of our products and allowing major challenges, including food safety, role in the food system, such as forests. The United Nations Sustainable them to be stored, transported and used competitiveness, price volatility and access Overcoming this challenge is essential to Development Goal for Water establishes safely. However, packaging also presents to raw materials. This means that the making our global food cycle more resilient clear linkages with other goals related to challenges. It uses valuable resources in sustainability of our business hinges on our and growing our business sustainably health, food security, climate change and its design and generates waste when not ability to strengthen and protect our global in the future. Bottom line: we need to ecosystems’ resilience to disasters. recycled. Which is why we’re committed to food cycle in terms of both quality and fight climate change by reducing our turning packaging waste into a resource quantity. HOW IT WORKS environmental footprint and helping nature Helping to protect water cycles at local HOW IT WORKS HOW IT WORKS sequester more carbon. level is critical to our ability to strengthen Danone’s Packaging Policy was published In agriculture, we’re looking for ways to HOW IT WORKS the resilience of Danone’s supply chain, in November 2016, with the ambition source sustainably, promoting farming We have committed to a climate policy paving the way for sustainable business to “Co-build the circular economy of models that are competitive but respectful with a long-term goal of zero net carbon growth in the future. packaging: sourcing sustainable materials of natural cycles and ecosystems. We will emissions—and not just direct emissions, We are therefore committed to preserving and creating a second-life for all plastics”. also continue to work with farmers to but indirect emissions as well, what we this vital resource and to respecting its Breakthrough innovation, whether develop new tools and solutions to support call our extended scope of responsibility, natural cycles by adopting responsible technical, social or environmental, as well climate smart farming. including agriculture. To reach this target, practices at every stage of the value chain. as collaboration all along the supply chain, we will rely on co-creation, working with will play key roles in this transformation. the farmers, suppliers, customers and local communities within our ecosystem to find solutions.

2016 INTEGRATED REPORT SUMMARY 31 DANONE better world Nature dashboard

2016 PERFORMANCE TARGETS WE WILL FIGHT CLIMATE CHANGE BY REDUCING OUR FOOTPRINT AND HELPING NATURE SEQUESTER MORE CARBON

50,1% Intensity reduction Danone Direct 50% intensity reduction DDR 2007-2020 Reduction in CO2 footprint Responsibility (DDR) scope vs 2007 50% intensity reduction Full scope 2015-2030 Intensity (g CO equivalent/Kg product) 2 5,6% Intensity reduction Danone Full scope VS 2015 Zero Net Carbon by 2050

Reduce energy consumption of factories 51% energy reduction 60% energy reduction by 2020 Intensity (kWh/T product) Baseline 2000

Use climate-friendly refrigerants in our new cooling 75% compliant in point of sales fridges & coolers 100% compliant in all new installations within installation within our operations (100% Compliance in point of sales for regions where our operations (plants, warehouses, sales points etc. ) Number of new coolers & fridges compliant it is legally allowed and available) by 2025 and immediately in regions where it is legally allowed and available

Paper & Board Policy: 86% compliance (97% compliance in top risky countries) Eliminate deforestation by 2020 for commodities Eliminate deforestation from our supply chain Palm oil policy: 100% RSPO fully segregated at risk: Paper & Board; Palm oil; Soy for animal feed; Relevant standards specific to each commodity Soy policy: joined RTRS (RoundTable on Responsible Soy) Sugar; Timber Sugar and timber: In progress Evian zero net carbon WIP Reduction and offset trajectories in line with target Zero net carbon by 2020 WE WILL PROTECT WATER RESOURCES, PARTICULARLY WHEN SCARCE, AND USE THEM IN HARMONY WITH LOCAL ECOSYSTEMS AND COMMUNITIES

Protect natural mineral water resources 100% of sites have run SPRING audits in all Waters division 87% of sites have run SPRING audits * in Waters Division in our watersheds sites (including new ones) by 2020

Return clean water to nature compliant with Danone 63% of sites compliant with CWS discharging 56% 100% of sites compliant with the standards “Clean Water Standards” for waste water of clean water to nature discharging 100% clean water to nature by 2020

Reduce water consumption in factories 47% water reduction 60% water reduction by 2020 Process water intensity (m3/T product) Baseline 2000

* These audits define management standards for each source of spring water bottled by the Company. 2016 INTEGRATED REPORT SUMMARY 32 DANONE better world Nature dashboard

2016 PERFORMANCE TARGETS WE WILL CO-BUILD THE CIRCULAR ECONOMY OF PACKAGING BY SOURCING SUSTAINABLE MATERIALS AND CREATING A SECOND LIFE FOR ALL PLASTICS

25% rPET in Waters division where it is allowed by 2020 Develop the use of sustainable resources 11% rPET in Waters division excluding Turkey & China and 33% by 2025

Zero plastic landfill for post-industrial 90% of post-industrial packaging waste are diverted from Zero plastics landfill by 2020 in countries with developed packaging waste landfill collection systems and by 2025 in all our factories

Co-create a second life for all plastics 2nd life roadmap under development 2nd life roadmap for 10 priority countries by end 2017

WE SUPPORT AGRICULTURE THAT IS COMPETITIVE, RESPECTS NATURAL ECOSYSTEMS AND GENERATES BOTH ECONOMIC AND SOCIAL VALUE 100% animal welfare compliance for meat; egg and fish by ELN animal welfare program: 100% lamb; Beef have 2020. access to pasture and 100% of eggs are free-cage. Dannon US Pledge: Promote sustainable agriculture Dannon US Pledge: 100% animal welfare compliance US direct milk sourcing 90% direct Milk sourcing is animal welfare compliant by 2017 (Validus certified) (Validus certified) 50% Oikos, Dannon, Danimals; non GMO Project Certified by 2018.

Palm oil policy: 100% RSPO fully segregated Source raw materials sustainably Soy policy: joined RTRS Sugar: In progress WE WILL PREVENT FOOD-WASTE AND MAXIMIZE ITS RECOVERY WITHIN OUR OWN OPERATIONS Reduce by 50% non-recovered food waste Food waste baseline defined according 2016 Baseline: 12 kg / tons product sold 50% reduction by 2025 to Food Loss & Waste Protocol

2016 INTEGRATED REPORT SUMMARY 33 DANONE better world Key performance indicators 2016

SUSTAINABLE CLIMATE WATERS PACKAGING AGRICULTURE

REDUCE GREENHOUSE GAS EMISSIONS TOTAL WATER DISCHARGE BY QUALITY AND CO-CREATE A SECOND LIFE FOR ALL PROMOTE SUSTAINABLE AGRICULTURE • Danone’s total emissions in 2016 (including DESTINATION PLASTICS • ELN animal welfare program: 100% lamb; upstream agriculture) are estimated at • Danone’s net Chemical Oxygen Demand • Percentage of packaging coming from beef have access to pasture and 100% (COD) (i.e after treatment) per ton of product recycled materials went from 27% in 2015 of eggs are cage-free. approximately 23 million tons of CO2 eq. increased by 18.3% from 2015 to 2016. This to 30% in 2016. It corresponds to 655.8 grams of CO 90% of Dannon US direct milk sourcing is • 2 increase was mainly linked to two industrial Percentage of recycled paper-based was • equivalent per kilogram of product • validus certified sites in Africa region which had exceptional 77% in 2015 and 67% in 2016. In 2016 (Greenhouse Gas Emissions Scope, see operational problems in 2016. we included for the first time all tertiary SOURCE RAW MATERIALS SUSTAINABLY Metholodogy Note). packaging to assess the total packaging in Palm oil policy: 100% RSPO fully segregated The ratio of total emissions in kg of CO REDUCE WATER CONSUMPTION our products and not only what is visible • • 2 Soy policy: joined RTRS equivalent per ton of production (market IN FACTORIES by consumers. These added volumes are • based ratio) fell by 9% between 2015 and • Water used in the production process mainly paper-based which explains the 2016. On a like for like basis, this ratio fell decreased by 5.0 % in 2016 related to 2015. slight decrease in recycled content. by 4.8% which is mainly due to the impact On a like-for-like basis and using the same ACHIEVE ZERO LANDFILL FOR PLASTIC of purchasing renewable sources with • method, the water consumption intensity INDUSTRIAL WASTE guarantee of origin certificates. ratio changed from 1.21 to 1.20, between 2015 • In 2016, 90% of total packaging waste REDUCE ENERGY CONSUMPTION and 2016, for a 1.3% improvement mainly due is recycled or incinerated with energy OF FACTORIES to productivity efforts by the Waters Division. recovery. • Danone’s energy consumption intensity fell REDUCE TOTAL WEIGHT OF WASTE BY TYPE by 4.9% in 2016 related to 2015. On a like & DISPOSAL METHOD for like basis, Danone’s energy consumption • Based on the same methodology, the ratio intensity increased slightly by 0.5% of waste generated per ton of product was between 2015 and 2016. down by 2.3% between 2015 and 2016. USE ONLY NATURAL REFRIGERANTS • The recovery rate rose from 82.1% to 86.7%, between 2015 and 2016, due mainly • The quantities of HCFC leakage decreased to recovery efforts at all Centrale Danone by 23% between 2015 and 2016. plants (Fresh Dairy Products, Morocco). PREVENT FOOD WASTE • Ratio of total quantity of food waste generated per metric ton of sales: 51.8 kg of waste per ton of products sold. • Ratio of non recovered food waste per metric ton of sales: 11.8 kg of waste per ton of products sold.

2016 INTEGRATED REPORT SUMMARY 34 DANONE better world Project

Protecting its infiltration area is essential for Aqua to secure high-quality water for years to come, and demonstrate its commitment WHY IT MATTERS to preserving water sources. The farming ORISA ORGANIC community is a key partner in this initiative, and Aqua has invited members to implement RICE HELPS PROTECT healthy agricultural practices. WATER QUALITY Aqua worked closely with over 700 farmers working 89 hectares of land to encourage Water is at the heart of Aqua’s a switch from chemical to organic production. business, which makes stewardship Since organic farming is still a niche market, for the entire water cycle vital for the company created a new brand of organic this Indonesian subsidiary of the HOW IT WORKS rice, Orisa, and then supported market access Waters Division. In the infiltration through its more than 350 AHS (Aqua Home area collecting water used at Service) outlets. Today there is an efficient path the company’s Cianjur plant in to market: Aqua distributors pick up farmers’ Indonesia, Aqua mitigates risk rice when they stop in to drop off Aqua water jugs. through a collaborative approach based on educating smallholders and encouraging them to switch This project delivered a quadruple win: to organic farming. Aqua gets reliable water quality while strengthening HOW DOES THIS its community, as farmers make a good income from organic rice production. And Aqualady (AHS) outlets PROJECT CREATE get additional revenue by selling organic rice at their stalls. Last but not least Aqua successfully promotes VALUE? a healthy lifestyle through affordable organic rice, HECTARES OF establishing credibility with stakeholders. OF RICE ORGANIC 700 FARMERS 89 PADDIES 1100 OUTLETS 55,000 kg RICE

INCREASE OF IN COMPARISON SELLING ORISA WILL COMPARED INCOME FOR WITH PRODUCING MAKE AQUALADIES’ TO SELLING FARMERS BY 20% NORMAL RICE INCOMES INCREASE BY 30% NORMAL RICE

2016 INTEGRATED REPORT SUMMARY 35 DANONE THE DANONE WAY PROGRAM DANONE WAY IS AN INITIATIVE THAT PROMOTES DEPLOYMENT OF BEST

PRACTICES IN SUSTAINABLE DEVELOPMENT DANONE WAY RESULTS IMPROVE STEADILY, YEAR BY YEAR Through the Danone Way “Better Health”, “Better Lives” for central teams, letting Over the past decade, the program’s Guidelines, central teams and “Better World”. Danone Way them monitor the level of best coverage has expanded regularly, and by implement sustainable includes a host of spin-offs and practices achieved by subsidiary, 2016 stood at 94.1% of sales (vs 95% in development recommendations webinars that enable subsidiaries by geographical region and by 2015). at Danone subsidiaries. These to take the program fully on division, and provide support as Subsidiaries have continued to progress, cover 258 practices organized board and make it their own. needed. applying more and more of the best into four main groups based on practices proposed—even as the bar has The vast majority of subsidiaries level of maturity (fundamentals, been raised from one year to the next. conduct an annual self- progression, maturity, and assessment based on the Since 2002, the Danone Way guide exemplarity) and 20 themes, program’s core concepts. This and participants’ results have been also divided into four categories: in turn is a rich source of data subject to regular audits carried out by “Unique Business Approach”, an independent third party. Between October and December 2016, a sample of subsidiaries representing 21.4% of the consolidated sales of Danone Way DANONE WAY OFFERS SUBSIDIARIES A participants was audited. PROCESS BUILT ON CONTINUOUS PROGRESS After having reviewed the audits’ results and the consolidation methodology, the independent third party certified Danone Each year, subsidiaries receive an A coordinator brings together After a review by the central Way results “with a moderate level of updated program guide to the experts from each theme to teams, subsidiaries receive assurance”. key practices that will help them conduct the subsidiary’s global a scorecard setting out their The assurance report is available online. achieve Danone’s sustainable self-assessment. This lets results—global maturity (rated (web-link above) development targets for each subsidiaries review how their by number of stars), detailed strategic theme. practices fit into the maturity performance by theme, and key and performance grid. practices needed to move ahead.

2016 INTEGRATED REPORT SUMMARY 36 DANONE the danone way program Key performance indicators 2016 unique business approach better health

of subsidiaries have communicated to all of subsidiaries systematically consider three required employees the latest version of the points in recommendations for new product Compliance Policies and Code of Business launches: appropriate nutritional composition 95% Conduct (vs 94% in 2015). vs needs of target consumers; comparison of nutritional composition to alternatives available 73% on the market; consistency of advertising/ of subsidiaries have set up a cross- communications and nutritional quality functional working group or committee (no possible comparison as it is a new practice). on sustainability, including a Danone Way 71% coordinator and the head of Public Affairs (vs 65% in 2015) . of subsidiaries have teamed up with local stakeholders to address a relevant public health of subsidiaries have consulted a selection 65% issue (no possible comparison as it is a new practice). of stakeholders (internal and external) to prioritize sustainable development issues 60% at local level (same as in 2015).

of subsidiaries have trained all of their buyers to RESPECT, Danone’s responsible procurement program, using the internal training 84% documentation (vs 83% in 2015).

2016 INTEGRATED REPORT SUMMARY 37 DANONE the danone way program Key performance indicators 2016 better better lives better world world

of subsidiaries formalized in minutes the of subsidiaries have adopted a one or two year information/discussion meetings between roadmap to reduce their carbon footprint on management and employee representatives their Direct Responsibility Scope (production, 80% bodies. (vs 86% in 2015) packaging, logistics, product end of life, etc.) 67% in keeping with Danone’s targets. (vs. 69% in of subsidiaries have done a survey analysis for 2015) all Danoners in the last two years to identify working organization challenges. (vs 99% in 2015) For example, Danone People Survey, Great Place to of subsidiaries have drawn up a roadmap with 98% Work survey or any other study based on employees their R&D/packaging referent to accelerate feedback concerning working time, working the transition from from fossil to bio-based organization, work-life balance, workload and stress. feedstocks in keeping with Danone’s Packaging 38% Policy. (no possible comparison as it is a new of subsidiaries have set up a “learning plan” practice). and budget allocation target for collective & individual needs for all populations (workers, of subsidiaries have a concrete action plan 98% staff and supervisors, managers, sales with local or centralized procurement representatives if applicable). (vs 95% in 2015) teams that shows progression to eliminate deforestation from/due to soy by 2020 in line of subsidiaries prepare a Talent Review of 63% with Danone’s commitments described in the managers’ skills (promoting their development), soy Policy. (no possible comparison as results and include this in HR management tools were not published in 2015) 99% to allow regional consolidation. (no possible comparison as the practice was reformulated)

of subsidiaries allow each Danoner to have access to the vacant positions by Human Resources IT tools or any other way (website), with 97% clear information on how to apply. (no possible comparison as the practice was reformulated)

2016 INTEGRATED REPORT SUMMARY 38 DANONE SOCIAL INNOVATIONS DANONE SUPPORTS FOUR FINANCIAL FUNDS: DANONE COMMUNITIES,

THE DANONE ECOSYSTEM The Danone Communities Fund is the incubator The aim of the Fund is to generate social and economic of Danone’s social business and brings finance value for the small players in the local economy and FUND, THE LIVELIHOODS and skills to local companies aiming to address Danone. The Fund strengthens or sustainably creates CARBON FUND AND THE social problems: malnutrition and access to clean employment for small players in the local economy drinking water. Today, companies supported by (small producers and farmers, waste pickers, caregivers, LIVELIHOODS FUND FOR Danone Communities change the daily life of one etc.), which constitute its ecosystem, by contributing million people in eight countries (Bangladesh, through its projects to the development of skills and FAMILY FARMING. Cambodia, China, France, India, Mexico, Senegal autonomy – with a particular focus on women, and and Haiti). contributes to the creation of long-lasting independent economic structures, which ensure sustainable action These funds anchor the inclusion (institutes, schools, cooperatives). of sustainable development challenges in Danone’s strategy, thereby giving even more meaning to the company mission: to bring health through food to as many people as possible. LIVELIHOODS CARBON FUND LIVELIHOODS FUND FOR FAMILY Danone has joined forces with nine other large FARMING companies in support of the Livelihoods Fund whose mission is to invest in projects with a great In February 2015, Danone and Mars, Incorporated environmental and social impact, particularly the announced the creation of an innovative investment restoration of natural ecosystems. These projects fund, Livelihoods Fund for Family Farming (Livelihoods contribute to the fight against climate change by 3F), aiming at helping companies learn how sustainably capturing large volumes of carbon. The Fund also aims source the materials they need from smallholder to have a significant impact on local communities (food farmers while at the same time delivering large-scale safety, development of new revenue streams, etc.) and social and economic impact to those famers and their on the environment. communities.

2016 INTEGRATED REPORT SUMMARY 39 DANONE SOCIAL INNOVATIONs DANONE COMMUNITIES

DANONE COMMUNITIES’ MISSION To bring funds & expertise to social businesses adressing issues around malnutrition and access to water.

To advocate Social Business, by raising awareness and inspiration.

2016 INTEGRATED REPORT SUMMARY 40 DANONE SOCIAL INNOVATIONs DANONE COMMUNITIES Key performance indicators

SICAV SOCIAL

OF THE TOTAL PERFORMANCE OF THE BENEFICIARIES IN TOTAL. SICAV (MUTUAL FUND). The indicator refers The indicator refers to the total to the total number of beneficiaries performance net of fees over 5 years. of the social businesses supported 10.29% (it was 8.55% in 2015) 1 Million by Danone Communities, in regards to the 8 countries in the Fund.

MEASURING THE COMMITMENT BENEFICIARIES IN THE FIGHT AGAINST OF DANONE’S EMPLOYEES MALNUTRITION AND POVERTY. The indicator refers to the total number of beneficiaries of the nutrition 300,000 social businesses supported by Danone DANONE’S EMPLOYEES REPRESENT 23% Communities. OF THE DANONE COMMUNITIES FUND. 23% (vs 20% in 2015) BENEFICIARIES WITH ACCESS TO DRINKING WATER. OF DANONE EMPLOYEES IN FRANCE The indicator refers to the total SUBSCRIBED AT LEAST ONCE TO THE number of beneficiaries of the water DANONE COMMUNITIES FUND IN 2016. 700,000 access social businesses supported 43% (vs 34% in 2015) by Danone Communities.

2016 INTEGRATED REPORT SUMMARY 41 DANONE SOCIAL INNOVATIONs DANONE ECOSYSTEM FUND

Committed within Danone to build a more inclusive society, the Danone Ecosystem Fund aims to develop and strengthen the activity of the partners that make up Danone’s ecosystem.

67 PROJECTS 29 COUNTRIES

PEOPLE JOBS PROFESSIONALLY 4,650 CREATED 40,912 EMPOWERED

INDIRECT 2,9m BENEFICIARIES

WOMEN PROFESSIONALLY 22,500 EMPOWERED

FUNDING 139m€ OF WHICH: FROM DANONE 62m€ ECOSYSTEM FUND FROM 77m€ CO-FUNDING

- Sourcing Territory Micro distribution Caring services Recycling DANONE NON GOVERNMENTAL 46 SUBSIDIARIES 56 ORGANIZATION

2016 INTEGRATED REPORT SUMMARY 42 DANONE SOCIAL INNOVATIONs DANONE ECOSYSTEM FUND Key performance indicators 2016

ECONOMIC IMPACT ENVIRONMENTAL IMPACT

80 000 7,5 Percentage of 75,578 k€ milk from Danone 60 000 Ecosystem Fund 62,871 k€ projects vs total 5 6% sourcing of Danone concerned subsidiaries 40 000 Sales generated by Danone Ecosystem Fund 4% This indicator refers capabilities to the volume of milk 2,5 20 000 This indicator refers sourced from projects to sales generated as a percentage of total by business under milk sourced by Danone all projects (not concerned subsidiaries 0 exclusively Danone). 0 over the same period. 2015 2016 2015 2016

600 000 3,000 537,448 Number of potential consumers made 2,412 aware of Danone 2,250 2,400 300 000 product categories PET sourced from 294,019 This indicator refers Danone Ecosystem to the number of 1,500 Fund projects (tons) potential consumers This indicator refers 150 000 who heard of / or to tons of recycled PET became familiar with 750 from projects supplied Danone product to Danone concerned categories (direct subsidiaries over the beneficiaries of projects period. 0 and their families). 0 2015 2016 2015 2016

2016 INTEGRATED REPORT SUMMARY 43 DANONE SOCIAL INNOVATIONs LIVELIHOODS CARBON FUND

The Livelihoods Funds support the efforts of disadvantaged rural communities in SOCIAL IMPACT developing countries to restore their natural ecosystems so as to improve OBJECTIVES their livelihoods by increasing their food 1.2 million of people positively impacted. security and their economic revenues. 120,000 households equipped with efficient cookstoves. Livelihoods Carbon Fund is an investment In addition to mitigating deforestation, efficient fund created in 2011, which relies on the cookstoves have direct impacts on women’s lives: carbon market to generate maximum social, less exposure to toxic smoke and burn and less time economic and environmental value for local needed for wood collecting and cooking. communities in Africa, Asia, Indonesia & Latin America, while contributing to make ACHIEVEMENTS SINCE 2011 businesses more virtuous. 107,000 households equipped with efficient cookstoves It invests in three types of projects: mangrove in 2016 (vs 56,000 in 2015). restoration, agroforestry and rural energy. 1,068,000 people positively impacted in 2016 (vs 614,000 in Projects are implemented on the field by local 2015). NGOs and monitored over 10 to 20 years. Livelihoods Carbon Fund is financed by 10 ENVIRONMENTAL IMPACT companies: Groupe Caisse des Dépôts, Crédit Agricole SA, Danone, Firmenich, Hermès, OBJECTIVES Groupe La Poste, Michelin, Schneider Electric, 130 million trees planted. SAP and Voyageurs du Monde. 10 million tons of Carbon emissions avoided over 20 years (trees sequester CO2, thus helping mitigate climate change). 47,000 hectares restored. ACHIEVEMENTS SINCE 2011 ECOSYSTEM RURAL 122 million trees planted in 2016 (vs 120 million in 2015). ACTIVE AGROFORESTRY RESTORATION ENERGY PROJECTS: PROJECTS 700,000 tons of carbon emissions avoided since 2014 (vs 9 3 PROJECTS 3 3 PROJECTS 440,000 in 2015). TOTAL Agroforestry, for example, regenerates lands by improving INVESTMENT soil fertility—allowing small farmers to produce enough 40M€ VOLUME food and cash crops to improve their livelihoods: 33,000 hectares restored in 2016 (vs 24,800 in 2015).

2016 INTEGRATED REPORT SUMMARY 44 DANONE SOCIAL INNOVATIONs LIVELIHOODS FUND FOR FAMILY FARMING

The Livelihoods Fund for Family Farming (L3F) is the second fund created by Livelihoods. Like the Livelihoods Carbon Fund (LCF), it believes that environmental degradation, climate change and rural poverty are interlinked. Its model provides a solution to address all three challenges at once, linking them to sustainable sourcing. L3F’s mission is to offer companies innovative solutions to build a win-win relationship with small producers. L3F projects allow farmers to adopt more efficient and more eco-friendly agricultural practices. Farmers are also more efficiently connected to the value chain of companies, improving the incomes of farmers and their living conditions, while securing the supply of businesses. L3F projects generate direct benefits for water and biodiversity preservation but also for the fight against climate change through the sequestration of carbon in the soil. L3F is supported by Danone, Mars, Incorporated, Firmenich and Veolia. L3F will invest in key raw materials of its investors: milk, vanilla, water conservation (watersheds), cocoa, etc. 3 projects will be launched in 2017.

OBJECTIVE OF 2 000 000 people OBJECTIVE OF

120 m€ 200 000 farms TOTAL INVESTMENT CONVERTED TO SUSTAINABLE VOLUME OBJECTIVE AGRICULTURE

2016 INTEGRATED REPORT SUMMARY 45 DANONE external evaluations

Score B for palm On January, 2016, the second edition of the global In 2016, Danone was recognized by the DJSI (Dow Danone has been included in the ESI Excellence oil and B- for soy Access to Nutrition Index (ATNI) was released Jones Sustainability Index), which each year Europe, ESI Excellence Global, NYSE Euronext Vigeo and paper paste by the Access to Nutrition Foundation (ATNF). selects the best performing companies based on Europe 120, NYSE Euronext Vigeo Eurozone 120, NYSE This new edition ranks Danone among the top 3 criteria such as social responsibility, innovation Euronext Vigeo France 20 and NYSE Euronext Vigeo Danone participated performing food companies, along with Unilever and economic performance, as a benchmark World 120 indices. With a CSR (Corporate Social in the Forest Footprint and Nestlé. company in the food and beverage sector, Responsibility) score of 65/100, Danone is considered Disclosure (FFD), particularly in terms of packaging, water-related as an “advanced performer” and remains the leader in which primarily risk management and health and nutrition. the food and beverage sector in terms of environmental aims to mitigate the performance (Vigeo’s Global Food Universe). growing effects of deforestation. This global rating, created by the CDP, assesses the impact that very large companies have on forests, based on their use of five raw materials: soy, palm oil, wood and paper pulp, animal feed and biofuels. Danone was In 2015, Danone received a B rating for Danone has participated in the CDP Water Disclosure since it was created able to report the data Danone has been environmental performance and a transparency in 2010. This program seeks to gather critical data from the world’s largest necessary for this reconfirmed as a score of 98 from the Carbon Disclosure Project. companies on water shortages and related issues. This global database evaluation based on its constituent of the facilitates access to vital information on the sustainable use of water. Forest Policy published Ethibel Sustainability in 2012, illustrating the In 2016, Danone improved its score from B to A-entering Leadership level. Index (ESI) Excellence company’s concern Europe and the Ethibel for its impact on the Sustainability Index upstream part of the (ESI) Excellence Global value chain. since March 2017.

2016 INTEGRATED REPORT SUMMARY 46 DANONE external evaluations

In June 2016, Danone entered the FTSE4Good In 2016, Danone was rated AAA by the MSCI ESG In March 2017, Danone was awarded “Prime” status In 2016, Danone Index, a global responsible investment index Research according to its outstanding performance on by the OEKOM Corporate Rating, which evaluates received for the designed to measure the performance of Environmental, Social and Governance (ESG) issues. companies’ Corporate Responsibility performance third year in a companies demonstrating strong Environmental, using a comprehensive and mainly industry row the maximum The MSCI ESG Research is designed to identify Social and Governance (ESG) practices. FTSE4Good specific approach. score of 5/5 in the sustainability’s stakes to be integrated into investment Index is based upon independently reviewed Forest500 ranking decision-making. Danone obtained a C+ rating and was particularly standards of environmental commitments, social of the Global Canopy well-rated in terms of equal opportunities and practices and governance. Danone’s entrance Danone has been upgraded from AA in 2015 to AAA Program. It remains non-discrimination, climate change strategy shows the recognition of the company’s focus on in 2016, owing to very good scores in the following ranked among the and strategy to minimize food waste. Danone doing business in a sustainable way. This means areas: toxic emissions & waste, carbon emissions, raw 6 best companies positioned itself among the industry leaders. delivering economic, social and environmental materials sourcing, health & safety, nutrition & health worldwide. value to all the communities with whom it and corporate governance. operates around the world.

2016 INTEGRATED REPORT SUMMARY 47 DANONE • Cover photo credit: Ivan • Intermediate summaries photo credit: Mint Images - Tim Robbins • Grameen Danone project photo credit: Sandro Di Carlo • Design: Pixelis