Danone 2009 Sustainability Report Strategy 4 8 72 2009 OUR APPROACH TO 2009-2011 A PIVOTAL YEAR CORPORATE SOCIAL Reinventing the company . 72 Editorial by Franck Riboud . .5 RESPONSIBILITY Four strategic priorities underlying Danone’s strategy . .73 Historical evolution and key characteristics A new organisation tailored of our approach . .8 to this strategy . .75 Historical evolution and uniqueness of the Danone business model . .9 78 Key phases of the social initiative THE STRATEGY and reference texts . .14 IN ACTION: Key social topics . .18 2009 MAIN RESULTS Impacts and responsibilities upstream AND OUTLOOK and downstream of the activities . .24 Focus on the four Danone uniqueness strategic priorities . 78 in the implementation Health . .79 of the approach . 28 For all . .90 Governance . .29 Nature . .96 Stakeholders at the centre People . .104 of the dialogue process . .49 How symbiosis between Danone’s Dedicated management tools . .52 four strategic priorities adds value . .122 Danone Way: Leading and managing sustainable development across Danone and all country business units . 52 RESPECT: a joint initiative with suppliers . 61 Bonus system integrating social performance . .70 Th is translation is for information only. 2 - Danone Sustainability Report 2009 Performance 126 168 DASHBOARD: 2009 MANAGEMENT COMMITMENTS TO APPROACH AND STAKEHOLDERS AND PERFORMANCE OUTLOOK INDICATORS BASED The environment . .128 ON GLOBAL REPORTING INITIATIVE (GRI) Consumers . .130 Economic performance indicators . .168 Employees . .132 Environmental performance Suppliers . .136 indicators . .178 Communities . .138 Social performance indicators . .210 Human rights performance 140 indicators . .232 COMPANY PROFILE Society performance indicators . .242 AND REPORT Product responsibility PARAMETERS performance indicators . .250 Company profi le . .141 Report parameters . .143 GRI Index and content . .148 KPMG opinion report . .159 162 GOVERNANCE, COMMITMENTS AND DIALOGUE Governance . .163 External commitments . .164 Dialogue with stakeholders . .166 Danone Sustainability Report 2009 - 3 2009 A pivotal year 4 - Danone Sustainability Report 2009 Editorial - Franck Riboud Th e year 2009 marked a milestone in the long history of Danone’s economic and social agenda. Confronted as we were, like most companies, with the economic crisis Th e mission set and declining purchasing power that aff ected consumers worldwide, we could have made the choice to pull back, by deferring the implementation of the “dual project” by Danone, to to better times. Convinced that this crisis was not only fi nancial and economic but also social and environmental, we carried out a radically diff erent analysis. We’re not “bring health only facing a “crisis”, with the implication that once it has passed, things will return to their earlier state. We are facing a profound change, one which is signifi cantly through food to transforming our lifestyles, production processes and consumption habits, its impact extending from the distribution of wealth on our planet to the values that help shape as many people our societies. Th is is a transformation that has only just begun. Speaking only of the food industry, it is diffi cult to break down the issues between the billion people as possible” has who suff er from malnutrition or the growing problem of obesity, which aff ects other populations, or the need to increase food resources while using less water, energy structured our and land. whole approach Th e mission set by Danone, to “bring health through food to as many people as and driven the possible” has structured our whole approach and driven the decision in 2009 to integrate, even more deeply, economic and social considerations into our company’s decision in 2009 strategy. Four issues closely related to the mission have been defi ned: “Health” that is to say, the company’s contribution to public health through nutrition, “For All”, to integrate, even that is to say, the creation of products and economic models accessible to population groups with low purchasing power, “Nature” to drastically reduce the environmental more deeply, the impact of our activities throughout the lifecycle of our products, “People” by giving all of our employees the opportunity to develop, to anticipate the changes and to economic and give meaning to their work. Each of these focal points is acts as a “transformer” of the company and we are again only at the beginning: for example, “For All” requires social facets in us to strongly question our ways of thinking and our methods in order to invent new business and social responses. For each one of these issues, an organisation, our company’s goals and objectives and resources have been established in 2009 with the strong involvement of members of the Group Executive Committee. strategy. Danone Sustainability Report 2009 - 5 2009 A pivotal year Editorial - Franck Riboud 2009 was also the year of creation of the Danone Ecosystem Fund which aims to support projects that create sustainable jobs in the Danone ecosystem, that is to say all Starting of the activities and businesses that depend directly on those of the group: agricultural producers, suppliers, distributors, territorial regions around plants and facilities, etc. from some It is commonly said that a company cannot develop and grow in a desert and that a live and dynamic ecosystem is a guarantee of the company’s sustainability. It is also fundamental necessary to identify and deal with all the consequences and secure the means to act upon this ecosystem. Th e Fund project was approved by a very large majority of beliefs, a little votes by shareholders at the Annual General Meeting in 2009. Endowed with with 100 million euros, it began operating in late 2009 by funding the fi rst agricultural intuition and distribution projects. While we’re still in the learning phase, many Country Business Units are already working on projects. When the Fund reaches its cruising and a lot of speed, it will be very important to measure the economic and social impacts of these experimentation, programmes in order to replicate and deploy them more widely. we are striving Another factor in the acceleration and integration of sustainable development in business operations: after a fi rst pilot year in 2008, it was decided to formalise to follow a the structure of the variable pay system based on three tiers: one tier being economic and fi nancial, the levers of business transformation representing the second tier, business model and a social tier founded on environmental and social performance indicators. Th e system concerns the management committee members of all Danone Country where economic Business Units across the world and helps to move the entire organisation forward in a meaningful manner. Th e same spirit of enterprise transformation also characterises and social the widespread deployment in 2009 of the system for measuring the carbon impact of our activities and its integration into the decision making performance process. Th is is another interesting example which demonstrates that everything is inter-connected: in greatly reducing our energy consumption or packaging nourish and feed materials, we reduce our costs. By setting ambitious targets for reducing our environmental impact, we commit ourselves to thinking and working diff erently, each other. thereby anticipating what the constraints of the future will be for all enterprises. Danone’s approach has always been a mixture of vision and pragmatism. Starting from some fundamental beliefs, a little intuition and a lot of experimentation, we are striving to follow a business model where economic and social performance nourish and feed each other. I hope that 2010 will enable us to capitalise on the strong momentum generated in 2009. Franck Riboud, CEO. 6 - Danone Sustainability Report 2009 Danone Sustainability Report 2009 - 7 Our approach to Corporate Social Responsibility Historical evolution and key characteristics of our approach 9 HISTORICAL EVOLUTION AND UNIQUENESS OF THE DANONE BUSINESS MODEL 14 KEY PHASES OF THE SOCIAL INITIATIVE AND REFERENCE TEXTS 18 KEY SOCIAL TOPICS 24 IMPACTS AND RESPONSIBILITIES UPSTREAM AND DOWNSTREAM OF THE ACTIVITIES 8 - Danone Sustainability Report 2009 Historical evolution and uniqueness of the Danone business model An original business model fi rmly anchored in the group’s history and reaffi rmed in the current context As early as 1972, Antoine Riboud clearly stated that “corporate responsibility does not stop at the threshold of the company’s factories or offi ces. Th e enterprise creates and provides jobs that shape people’s entire lives. It consumes energy and raw materials, and in so doing alters the face of our planet. Th e public is charged with reminding us of our responsibilities in this industrial society”. Th is view was formalised in the economic and social dual project, which forms the basis of the Danone model. It is rooted in a simple principle: economic performance, attention to people and respect for the environment go hand in hand. Franck Riboud reiterated on December 5, 2008 at the launch of the Danone - HEC Chair in Enterprise and Poverty: “An enterprise exists and lasts only because it creates value for society as a whole ... Th e raison d’être of the enterprise lies in its social usefulness. It is to serve society and mankind, in the everyday lives of men and women, through the products, services, employment or even the dividends it provides”. In today’s economic context, this commitment is more relevant than ever in helping to realise the Danone mission: to bring health through food to as many people as possible. To this end, the group has developed a uniquely distinctive corporate culture emphasising responsiveness, adaptability and the ability to accelerate innovation through networking. Operational responsibilities are broadly decentralised. Th e Danone values of “humanism, enthusiasm, openness and proximity”, formalised in 1997 are widely communicated internally and the company strives to bring them to the fore in individual and collective behaviour. Th ese values have now become ingrained in managerial attitudes thereby bringing them to life in the leadership style of all Danone employees.