INVESTING IN NEW BUSINESS MODELS TO BUILD A HEALTHIER, MORE SUSTAINABLE FUTURE IN LATIN AMERICA AND THE CARIBBEAN

Transcription

1 INVESTING IN NEW BUSINESS MODELS TO BUILD A HEALTHIER, MORE SUSTAINABLE FUTURE IN LATIN AMERICA AND THE CARIBBEAN

2 We are bringing the Alimentation Revolution to life by co-creating innovative business models that not only benefit Danone but also protect the planet and support healthier eating and drinking practices. Emmanuel Faber, CEO, Danone Sustainable development has been at the heart of Danone s DNA since the company s foundation. As early as 1972, Danone founder Antoine Riboud underscored the need for business to embrace social and environmental responsibility, saying the frontiers of the company do not stop at the factory gates. Sustainable development has been the cornerstone of Danone s business model ever since. In 2009, we launched the Danone Ecosystem Fund, which seeks to empower farmers, sub-contractors and other partners across the supply chain in Danone s ecosystem. The fund has contributed to 68 projects in 30 countries, empowering 41,000 people directly more than half of which are women. The Livelihoods Funds (the first of which was created in 2011, and the second in 2015) support the efforts of poor rural communities in developing countries in the restoration of their natural ecosystems, improving food security and increasing economic revenues. Over 615,000 people have benefited, 120 million trees planted and 25,000 hectares restored during the life of these funds. In 2017, Danone, the Danone Ecosystem Fund and the Livelihoods Funds reaffirmed their commitment to Latin America and the Caribbean by establishing a global partnership with the Inter-American Development Bank (IDB), the largest multilateral provider of development financing in the region. The four organisations signed a memorandum of understanding that will be in place until This partnership, the first of its kind for Danone, will aim to unlock growth opportunities for the Danone Latin America business while also supporting sustainable, inclusive development initiatives in Latin America and the Caribbean. The following pages give an overview of some of the most successful projects we have undertaken in the Latin American region to date, some of them alongside the IDB. With the IDB s help, we intend to expand this work to maximize our growth, as well as our social and environmental impact.

3 Margarita: Creating a co-op of sustainable milk farmers MEXICO WHY IT MATTERS Development of the Mexican dairy sector has not kept pace with growing demand from the agrifood industry and in particular from Danone Mexico. Productivity among small farmers is low, and they sell their milk to middlemen who offer no price security and do not always honor their volume commitments, placing the economic viability of these smallscale producers at risk. HOW IT WORKS Our Margarita project helps these farmers form cooperatives to share costs and limit the role of middlemen. Twelve agronomists train coop members in best practices and provide them with personalized advice. The project also lets farmers invest in quality equipment by helping them apply for loans and subsidies and increasing their eligibility through loan guarantees. Finally, the coops sell their milk directly to Danone, which pledges to buy a steady volume of milk at a guaranteed price. HOW DOES THIS PROJECT CREATE VALUE? 352 people professionally empowered 1,400 people supported The project helps farmers get the training and equipment they need to raise both the quantity and the quality of the milk they produce, creating cooperatives that enable them to sell directly to customers in guaranteed volumes at guaranteed prices. This strengthens their business model, and as their profitability and margins grow, the entire community benefits. Meanwhile, Danone Mexico can count on better milk quality and more stable supplies of this key ingredient. Project supported by

4 Kiteiras: Building a microdistribution network in Brazil BRAZIL WHY IT MATTERS Northeastern Brazil is a region of high inequality, and women in underprivileged communities especially single mothers are the worst affected, often forced to accept poorly paid jobs in the informal sector. Meanwhile, Danone Brazil aims to establish a new distribution channel, provide people in low-income neighborhoods with access to healthier products, and create jobs in the process. HOW IT WORKS Kiteiras is a program of distribution and directto-consumer sales, staffed exclusively by women from underprivileged neighborhoods. The goal is to build a micro-distribution network of door-to-door saleswomen managed by madrinhas ( godmothers ) who provide training and equipment. The project also empowers women by teaching them to manage a microbusiness day by day. HOW DOES THIS PROJECT CREATE VALUE? 2,000 people professionally empowered 4,200 people supported Kiteiras provides these informal workers with the training they need to build professional skills and become micro-entrepreneurs. It also improves living conditions for the women and their families, largely through better access to social benefits. The project also has a positive impact on our business, helping Danone Brazil secure a new direct-to-consumer distribution channel and build its brand. Project supported by

5 Strengthening inclusive recycling in Argentina Cartoneros: ARGENTINA WHY IT MATTERS With the 2001 crisis in Argentina, many people lost their jobs and became waste pickers to support their families. Most work individually and informally, in poor safety conditions, collecting mainly paper & cardboard, which have a higher resale price and volume than PET. Meanwhile, Aguas Danone de Argentina has an increasing need for a socially responsible source of recycled PET for its products. HOW IT WORKS Cartoneros is a key project that tackles social, economic and environmental issues. The project aims to professionalize waste pickers through the creation of waste management centers, setting up sale and resale cooperatives, and delivering management training to help them manage their own business independently. HOW DOES THIS PROJECT CREATE VALUE? 1,600 people professionally empowered 775,000 people supported Cartoneros empowers waste pickers through management, safety and skills for life trainings. It helps them secure a fair wage along with better living and working conditions. The project contributes to the organization and professionalization of Argentina s recycling industry, thus increasing recycling rates. It also secures Aguas Danone de Argentina s access to recycled PET, using socially sourced materials that make our brand more meaningful to consumers. Project supported by

6 Novo Ciclo: transforming waste management with catadores in Brazil BRAZIL WHY IT MATTERS Brazil faces significant waste management problems. Only 15% of total solid waste is retrieved, mostly by waste pickers who live and work in poor and unsafe conditions in the informal sector, with no recognition or social protection. In parallel, the rpet (recycled PET) production chain is neither structured nor efficient, and yet, Danone Brazil s need for rpet used in packaging is on the rise. HOW IT WORKS The Novo Ciclo project aims to improve the working and living conditions of waste pickers, while increasing the PET recycling rate and recycling of materials as a whole. To do so, the project supports cooperatives of waste pickers, along with a network of sale and resale cooperatives, while providing management training to make workers more professional. Advocacy for greater recognition and better working conditions of waste pickers is also a key part of the approach. HOW DOES THIS PROJECT CREATE VALUE? 900 people professionally empowered 300,000 people supported Novo Ciclo generates long-term value for waste pickers, the economy and the environment, and for Danone and society at large. The project shores up existing jobs, creates new ones, and provides waste pickers with a safer working environment and better living conditions. At the same time, it raises awareness of the importance of waste management, and increases the recycling rate of plastic. This, in turn, helps Danone Brazil secure its rpet supply. Project supported by

7 Cerro San Gil: Using agroforestry to preserve the Guatemalan rainforest WHY IT MATTERS Cerro San Gil is the largest, most biodiverse tropical rainforest on the Caribbean coast of Guatemala, home to many endemic species. But as of 2004, only 39% of the original forest was still standing. Vast tracts of it were cut down in the 1970s and 1980s to make space for livestock farming and agriculture. What s more, single-crop farming has led to soil erosion and loss of soil fertility, keeping small farmers in poverty and social exclusion. HOW IT WORKS This project has been set up in cooperation with the Guatemalan government, which is providing partial funding. Maya communities were given training in their own language on sustainable farming methods and marketing techniques. We actively sought their input to build agroforestry systems geared toward cash crop diversification and climate change mitigation. GUATEMALA HOW DOES THIS PROJECT CREATE VALUE? 12,000 people SUPPORTED By sustainably optimizing agricultural land use with soil as a carbon sink, the project reduces pressure on the rainforest. We have set up plant nurseries to provide local communities with free trees and seedlings. Farmers earn extra income by selling new cash crops such as rubber, coffee and patchouli. This, in turn, enables them to sustain their livelihoods and economic activity in the long term. Project supported by

8 Huancavelica and Ayacucho: Fighting deforestation and Improving the health of 30,000 families in the Andes PERU WHY IT MATTERS A very poor Indigenous population mostly inhabits Huancavelica and Ayacucho regions in Peru. In the Andes, temperature tends to be near zero during the night. Women get up at 4am to cook breakfast and warm the house with the cooking fire which is always located inside the house. But traditional cook stoves have disastrous effects on health, exposing people to toxic smokes affecting the lungs and eyes. Water is also not boiled before drinking, and deforestation is quickly gaining ground as trees are cut down for firewood. HOW IT WORKS Local NGO, Instituto Trabajo y Familia (ITYF), has been working with Andean communities since 2006 to promote efficient cook stoves with minimum smoke emissions and reduced wood consumption. At the same time, they encourage safer and healthier daily cooking, hygiene and consumption habits. Since 2016, Livelihoods Funds has been providing upfront financing to ITYF to extend this program to the Huancavelica and Ayacucho regions. The project promotes an efficient cooperation between public services, project staff and leaders inside the communities to embed behaviours that improve the health of the community. HOW DOES THIS PROJECT CREATE VALUE? 150,000 people SUPPORTED The efficient cook stoves have completely removed toxic smoke from 30,000 households, while cutting wood consumption by 60%, avoiding the emission of 10,000 tons of CO2 in the atmosphere over 14 years. The project has also improved the hygiene of children in these families, reducing their exposure to diseases such as early-age diarrhoea. We also provide extra support to the most vulnerable populations, including treatment to de-worm the youngest kids and parturition kits to improve mother and baby health. Project supported by

9 About Danone Dedicated to bringing health through food to as many people as possible, Danone is a leading global food company built on four business lines: Essential Dairy and Plant-Based Products, Early Life Nutrition, Waters and Medical Nutrition. Through its mission and dual commitment to business success and social progress, the company aims to build a healthier future, thanks to better health, better lives and a better world, for all its stakeholders its more than 100,000 employees, consumers, customers, suppliers, shareholders and all the communities with which it engages. With our products being present in over 130 markets, Danone generated sales of approximately 22 billion in Danone s brand portfolio includes both international brands (Activia, Actimel, Alpro, Danette, Danonino, Danio, evian, Volvic, Nutrilon/Aptamil, Nutricia) and local brands (Aqua, Blédina, Cow & Gate, Bonafont, Horizon Organic, Mizone, Oikos, Prostokvashino, Silk, Vega). Listed on Euronext Paris and on the OTCQX market via an ADR (American Depositary Receipt) program, Danone is a component stock of leading social responsibility indexes including the Dow Jones Sustainability Indexes, Vigeo, the Ethibel Sustainability Index, MSCI Global Sustainability, MSCI Global SRI Indexes and the FTSE4Good Index. Close to a quarter of Danone employees are based in Latin America and the Caribbean, a region that also represents a big market for the company: it totaled 3.2 billion of sales last year. Danone is the number one brand for fresh dairy products and waters in the Argentinian and Mexican markets, and number two for Early Life Nutrition and Advanced Medical Nutrition products in Argentinian and Brazilian markets. For more information

10 About the Danone Ecosystem Fund The Danone Ecosystem Fund was created in 2009, with the goal of building a more inclusive economy by strengthening and empowering the most fragile stakeholders in the Danone ecosystem. This endowment fund of 100 Million co-creates innovative business solutions with local partners that generate social, environmental & economic value for small local actors and competitive advantage for Danone. Organized into five areas covering each part of Danone s value chain (sourcing, local development, micro-distribution, caring services and recycling), the fund has supported 68 projects involving 47 subsidiaries and 57 non-profit organizations; generated 139 million in investment; created about 4,700 jobs; and led to the professional empowerment of more than 41,000 people. In the Latin American region, the Fund supports 11 projects, the most iconic ones in the field of sustainable milk sourcing (in Mexico), micro-distribution (in Mexico and Brazil) and inclusive recycling (Argentina, Mexico, Brazil) million was invested in those projects, which have the ambition to create 1,800 jobs, professionally empower 10,000 people and impact indirectly two million people. For more information

11 About the Livelihoods Funds The Livelihoods investment funds have been created by private companies to generate social, environmental and economic impact while making their businesses more sustainable. The funds join forces with civil society, public institutions and experts to create value for all: improved livelihoods for rural communities; public goods (nature and water conservation, CO 2 sequestration); sustainable sourcing and high quality carbon offsets for businesses. The Livelihoods funds provide upfront financing to best-in-class project developers for the implementation and monitoring of large-scale projects over up to 20 years. Returns to the funds are results-based to guarantee that projects are delivering tangible results. The Livelihoods Funds invest in projects in Africa, Asia and Latin America. In Latin America, the Livelihoods Funds have three ongoing programs in Brazil, Guatemala and Peru and new projects are being designed to provide companies with sustainable sourcing solutions (sugar cane, watershed conservation). There are currently two Livelihoods Funds: the Livelihoods Carbon Fund and the Livelihoods Funds for Family Farming. 12 companies have invested in these funds up to now: Danone, Mars, Veolia, Firmenich, Crédit Agricole SA, Schneider Electric, Michelin, Hermès, SAP, La Poste, Groupe Caisse des Dépôts & Voyageurs du Monde. Livelihoods Funds have two active projects in Latin America: Guatemala (agroforestry and sustainable agriculture) and Peru (rural energy). Together, these projects will improve the lives of more than 150,000 people and sequester/ avoid 2 million tons of C0 2. Three additional projects related to watershed preservation and sustainable sugarcane sourcing will be launched in 2017 and 2018, in Brazil & Mexico. The five projects represent a total investment of around 15 million euros. For more information

12 For more information DANONE Marion Cocherel LIVELIHOODS Nishal Ramdoo DANONE ECOSYSTEM FUND Jeanette Coombs-Lanot Image: Lionel Charrier/ Livelihoods Funds