ANNUAL REPORT Activity and Sustainable Development FOREWORD
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ANNUAL REPORT Activity and Sustainable development FOREWORD With this 2018 activity and It also presents our new sustainable development strategic road map, Avril 2023 report, Avril is for the first and its associated CSR time publishing an framework, “Spring”, which “integrated” report inspired will help the Group to achieve by the framework of the its goals regarding International Integrated performance and sustainable Reporting Council (IIRC). development. This report offers a synthetic presentation of the Avril Group As part of deliberate efforts and its identity: our model, our to ensure dialogue and governance and our strategy to long-term progress, this create value. Its preparation document is intended for was the result of collaborative all our stakeholders, efforts that involved numerous and particularly our Group entities and support shareholders in the farming functions in a global approach world, our customers and to performance – financial, our consumers, our economic, social and employees and our partners environmental. (notably suppliers and NGOs). CONTENTS 2 3 AVRIL — ANNUAL REPORT 2018 AVRIL TODAY OUR STRATEGY P. 16-29 P. 36-57 P. 16 Avril, cultivate tomorrow P. 36 Avril 2023, responding to the demands P. 17 A model that is... of our customers and consumers P. 18 A group structured around P. 37 4 strategic areas to serve a sustainable agricultural and industrial sectors and competitive model P. 20 35 years of sustainable growth at P. 38 Strategy and CSR an integrated vision the service of a virtuous farming model P. 39 The Spring approach: P. 22 Two complementary activities sustainability progress index to serve Avril’s mission P. 40 Sustainable development P. 24 Tailor-made governance P. 42 Area 1 Preparing the future with strong roots in agriculture P. 46 Area 2 Developing specialties P. 28 Avril, a group committed to the sustainable valorization of all P. 50 Area 3 Reducing exposure to risk its resources P. 54 Area 4 Pursuing our transformation OUR ECOSYSTEM HOW WE SHARE VALUE P. 30-35 P. 58-71 P. 30 Five major trends P. 58 Deciphering the financial P. 31 New consumer demands and extra-financial year P. 32 The demographic challenge P. 62 Sharing value with partners P. 33 Agriculture as a regional bond in our sectors P. 34 The climate challenge P. 64 Sharing value with customers and consumers P. 35 Uncertainty and volatility P. 66 Sharing value to benefit the planet P. 68 Sharing value with our employees P. 70 Sharing value with our stakeholders and society 4 5 AVRIL — ANNUAL REPORT 2018 FROM GRAIN TO OLEO100 Oleo100 is the first energy generated by French agriculture that is 100% plant-based, 100% rapeseed and 100% renewable and traceable. Intended for use by road haulage contractors and local authorities, this new energy can simply replace fossil diesel, achieving equivalent performance and cost. It reduces the emissions of greenhouse gases by at least 60%¹ and those of fine and ultrafine particles by up to 80%². 1. According to ADEME: Analyse du cycle de vie appliquée aux biocarburants de 1re génération consommés en France (Life Cycle Analysis of 1st generation biofuels used in France). 2. Euro 3, source: SAE International. 6 7 AVRIL — ANNUAL REPORT 2018 FROM OLIVES TO THE TABLE With the acquisition of the Italian family-held company Costa d'Oro, we have become the third largest group for branded olive oil in the world. The aim is to develop our positions in an international market with considerable potential for value creation, based on the integrated sectoral model from upstream agriculture to downstream industry that is our trademark in the oils and proteins sector. 8 9 AVRIL — ANNUAL REPORT 2018 JULIEN LAUNAY Breeder of free-range hens in Côtes-d’Armor. Producer of eggs for Matines and Ovoteam. FROM ANIMAL NUTRITION TO WELFARE As a leader in animal nutrition in France, we are involved in several livestock sectors. Aware of consumer demands regarding animal welfare, in 2016 we initiated a progress approach with our partner livestock farmers. We thus developed guidelines on livestock management that are now being implemented by more than 700 farms. We have also supported the conversion of dozens of laying hen units to alternative methods (barn, free range or organic conditions) and our Matines brand has undertaken to supply 100% of alternative eggs by 2025. 10 11 AVRIL — ANNUAL REPORT 2018 FROM SOFIPROTÉOL TO THE FRENCH FARM Our finance and development arm, Sofiprotéol, benefited from the €100 million increase in capital that was finalized in 2017 in order to improve its capacity to invest in French companies in the agricultural and agribusiness sectors. Its commitments have since included an important contribution to the structuring in France of a non-GM soybean sector by providing support for different actors. 12 13 AVRIL — ANNUAL REPORT 2018 WE REMAIN LOYAL TO OUR UNDERTAKINGS INTERVIEW WITH ARNAUD ROUSSEAU, CHAIRMAN OF AVRIL GESTION, AND JEAN-PHILIPPE PUIG, AVRIL’S CEO and of innovation and corporate dynamic, but we must remain cautious. responsibility. Quite apart from our We are subject to the external risks five-year strategic plan, these are inherent in agriculture and livestock the ideals we continue to defend. farming, sectors that continue to A. R.: As we did when discussing our experience problems that affect both values in 2013, we are formalizing our customers and suppliers. what were, and will always be, our A. R.: 2018 clearly marked the laying of guiding principles. This collective new foundations for the Group, and the approach creates an internal dynamic resilience of our model is a true reason in which farmers of the “filière” are for confidence. Recovery was less strongly involved. marked from an agricultural point of ARNAUD ROUSSEAU JEAN-PHILIPPE PUIG view. The situation remains complicated Chairman of Avril Gestion Avril's CEO What is your assessment of 2018? for both the arable and livestock sectors. We have contributed to the debate on A. R.: After a very difficult year in 2017, valorization and the need to upgrade our teams made extraordinary efforts French agricultural and food products. to redefine our goals and priorities But we need to go further. What do for the next five years, and to evaluate What is the idea behind this first traceability or greenhouse gas we want to do with our farming model? our model and our risks, strengths and “Integrated” Annual Report from Avril? emissions, etc. But that is what we have What about French and European food weaknesses. This was a major done since 2012 by determining sovereignty, notably in plant proteins? ARNAUD ROUSSEAU: Presenting Avril this achievement which gave rise to the our activities as a function of these Wherever we are active, development way is wholly in line with what we are: Avril 2023 plan that was validated criteria before even considering their of the French Farm and its local sectors, a company whose model for 35 years by the Board at the end of the year. financial aspects. which is one of the Group’s vocations, has been based on the ideas of growing J-P. P.: In business terms, the year was is central to these questions that require the French Farm, not paying dividends clearly one of two halves. During the Why did you launch a debate on the political responses. and creating value at all levels in the Group’s vision just four years after first half, the Group suffered and it was set up? chain. This is an extremely modern focused on its costs, with particular What were the most important events for Avril during 2018? model that encompasses the notions J-P. P.: We did this in response to emphasis on increased rigor throughout of corporate responsibility and business the organization. The second half was demands from our colleagues: beyond J-P. P.: I can think of at least five. excellence, as well as reflecting all the much more satisfactory. our overall mission, what are the ties The first that comes to mind is the values that drive our activities. These are that unite Avril employees that might acquisition of Costa D'Oro. At a difficult Could you qualify it as a year of recovery? values that are held in common by our also be relevant to all stakeholders in the time, we were nevertheless able to seize shareholders in the farming world, sector? These collaborative efforts have J-P. P.: Certain decisions clarified the this opportunity. As well as this our employees, partners and customers, not yet been completed, but they have horizon regarding strategic regulatory emblematic Italian brand, it is the entire and our consumers. already given rise to the slogan: issues, such as the future for biodiesel olive oil sector that we hope to continue JEAN-PHILIPPE PUIG: Few companies “Cultivate Tomorrow”. It is the idea in Europe between now and 2030 or developing. Terrial and its organic start developing their strategic plan behind these simple words that is support from the French government for fertilizers have become the French by analyzing their impact on criteria such important: a committed vision of our new fuel, Oleo100. These favorable leader within just five years, and now as creating jobs in rural areas, product agriculture, of growth in the sector outcomes have restored a positive offer an important dimension for Avril. 14 15 AVRIL — ANNUAL REPORT 2018 The innovation represented by Oleo100 What was the mind-set when developing shows that it is possible to produce a the new Avril 2023 strategic plan? fuel that is 100% renewable and 100% J-P. P.: We continued our foresight produced by French farmers. As for “This is a fundamental principle for our efforts based on criteria on the livestock sectors, the commitment of contribution of the oilseeds and proteins Matines to alternative eggs is an sector, and CSR criteria, and we Group: those who produce are equally important milestone in the confirmed the principal orientations that implementation of our animal welfare have guided the Group during the past as important as those who buy” policy.