DANONE Responsible Sourcing Program RESPECT Improving Knowledge & Capabilities AIM Progress Meeting Amadeo ADELL,Global SSD Indirect Spend Director October 19 th, Morristown 1
AGENDA Company Presentation Our dual Economic & Social Business Approach RESPECT Program Process Organizational structure Building Internal & External Awareness & Knowledge 2
DANONE unique Mission Health For All Nature People 3
Portfolio focusing on food categories that are good for health Consuming yoghurts is at the heart of nutritional recommendations and contributes to a balanced diet Infant nutrition provides specialized products to meet the specific nutritional needs of babies from 0-3 Water is the only drink essential to human life Medical Nutrition products provide solutions to fight against malnutrition in the elderly 4
A global presence with strong market positions 101,885 employees worldwide - 186 plants 5
SALES by BUSINESS LINE 3.7 Billion +10.7%* growth in 2011 No. 2 worldwide Baby Nutrition 11.2 Billion +4.6%* growth in 2011 No. 1 worldwide Fresh Dairy Products 19% 17% 19,3 bln 58% 6% 3.2 Billion +15.7%* growth in 2011 No. 2 worldwide (by volume) Waters 1.2 Billion +9.4%* growth in 2011 No. 1 in Europe Medical Nutrition *Like-for-like sales growth by division 6
Economic & Social Dual Business Approach Corporate responsibility does not end at the factory gate or at the office door. The jobs we create are essential to people s lives. The energy and raw materials we consume change the shape of our planet. Public opinion is there to remind us of our responsibility in the industrial world of today. Antoine Riboud, 1972 Marseille Speech Danone Former CEO Corporate programm Leading and managing sustainable development across Danone and all country business units 7
Dual Economic and Social Project Franck Riboud, CEO: This "dual project" was born of a simple fact that remains just as true today: a company cannot succeed in the long run if it turns its back on the society it is a part of, if it only looks to its short-term economic gain. 2001 2002 Global Supplier Risk Identification policy Launch of DANONE Way Definition of the Fundamental Social Principles 2003 RESPONSIBLE SOURCING MILESTONES DANONE joins UN Global Compact Sustainable Agriculture Initiative 2005 Pilot phase of RESPECT Program 2005 2007 : 2006 Operational launch of RESPECT Program DANONE Dairy & Waters 2007 DANONE co-created AIM-Progress * Total of 250 suppliers on Supplier Risk Mapping Scope for DANONE Dairy & Waters *50 external social audits 2008 DIALERT available to DANONE suppliers 40 external social audits First suppliers registered on the SEDEX platform 2009 Deployment of RESPECT Program by Baby & Medical 2010 Introduction of : - New Environmental component (Fundamental Environmental Principles) - New Ethical component (Principles of Business Ethics) 95 suppliers registered on Sedex 57 external social audits Common cross-divisional scope criteria (Dairy, Waters, Baby&Medical) 1317 suppliers on Sedex scope 90 external audits 2011 2850 suppliers on Sedex scope 95 external social audits Child &Forced Labor audit NCs become critical for DANONE Participation in AIM Progress Mutual Recognition 2012 3500 suppliers to be evaluated on Sedex 115 external social audits Business Integrity Benchmark within AIM-Progress 8
DANONE WAY: 16 fundamentals for a SUSTAINABLE BUSINESS Pre-requisite: minimum working age and no forced labor Equal Opportunity & Diversity Safety, Health & Working Conditions Human Rights Employees Involvement & Social Dialogue Working Time & Organisation Learning Suppliers Human Relations Individual & Business Development Partners CSR Business Ethics Suppliers & Business Partners CSR Shared Value Creation through Community Involvement Governance Responsible Sourcing Program Environmental Footprint Environmental Risks Raw Material Production/Supply Environment Packaging Impact Quality Management Nutrition & Health Standards for products Standards on Nutrition & Health Marketing & Communication Consumers 9
Dedicated Management Tools: Internal Audits for CBUs Danone Way is audited every year in CBUs by the Internal audit service and action plan is required at GM s level to upgrade the level Level and points level 1 0 points level 2 10 points Level Definition The CBU EXCO is aware of RESPECT approach The CBU identifies the suppliers that are at risk regarding CSR issues Description The EXCO knows about RESPECT approach : principles, risks associated to suppliers CSR issues, added value and overall process (EXCO presentation, toolkit) All suppliers contracts signed before January 2010 include the Fundamental Social Principles and all suppliers contracts signed from January 2010 include the Fundamental Sustainability Principles (Social + Environmental + Business Ethics). SSD manager in charge of coordinating and reporting RESPECT approach among SSD team is identified (CBU RESPECT coordinator) The suppliers to be registered on Sedex Risk Assessment platform, following SSD WWBU scope rules, are identified and their registration/evaluation is on going. level 3 20 points The CBU leads necessary actions to put suppliers CSR related risks under control Risks of Child Labor or Forced Labor, when suspected by Sedex Risk Assessment, are put under control The risk mapping of all scoped suppliers is done via Sedex Risk Assessment platform. It is provided by the CBU RESPECT coordinator, previously trained to Sedex Risk Assessment through dedicated Sedex training session. For suppliers that are part of the "watch list" as agreed with WWBU RESPECT coordinator, external SMETA audits (including follow-up audits) are done and necessary action plans are implemented within the timing agreed with the supplier. level 4 30 points The CBU continuously manages RESPECT approach and builds common initiatives with its Dan'affiliates to leverage CSR principles All new suppliers, matching scope rules, are evaluated through the Sedex Risk Assessment platform before signature of contract. The CBU continuously manages all steps of previous levels. Sedex Risk Assessment, audits planning and actions plans are managed on-going. The CBU manages its Dan'affiliates (raw milk, wall to wall, exclusive or dependant suppliers) through dedicated projects to continuoulsy improve their safety, working conditions, employability and economical durability. 10
Among Sustainable Leaders in Food & Beverage sector Danone has been part of the DJSI since the index creation in 1999 86 83 Confirmation of strong increase since 2 years despite a more demanding referential 11
DANONE DJSI scores by Economic criteria 2012 120 100 80 60 90 92 86 76 79 76 100 90 90 90 62 50 97 100 98100 97 97 77 71 74 40 20 Lowest score 0 Danone's score Best score 2012 Best Improvements vs 2011: Best in class for Supply Chain management (RESPECT Responsible Sourcing Program) Health and Nutrition (2 nd year in a row) Innovation Management (2 nd year in a row) Emerging markets 2013 Challenge : Codes of Conduct/Corruption/Bribery /Compliance 12
RESPECT PROCESS & Scope RISKY SUPPLIERS: 1. Overall High Risk Rating on Sedex 2. High risk rating in the Labor Section of SAQ 3. Buyer perception (based on internal criteria) Category Scope Criteria Raws & Packs (excluding Raw milk) TO > 50 k CAPEX, Logistics Suppliers TO > 500 K OR a multi-annual contract Promotional Items All Suppliers operating in Danone s buildings All Suppliers with high identification with Danone All Other Indirect Materials suppliers TO > 500 K AND a multi-annual contract 13
SSD Board Strong Involvement in RESPECT Program SSD Dairy Mision : Around the world, we are a team of business developers trusted for creating distinctive and sustainable sourcing models by connecting suppliers, Danone & our consumers to maximize value. Sourcing & Supplier Development (SSD) Board is strongly committed to Responsible Sourcing RESPECT Program is the first point of the agenda of every SSD Board Meeting done every 6 weeks, to follow the progress 14
Results driven by TOP Management Involvement and networking animation Quarterly RESPECT Committee VP SSD Divisions VP HR Fruits Capex Logistics 3 Divisional Coordinators Functional Ing. Packaging Services Milk ingredients Sugar & Texturing 11 Respect Champions Categories 35 Respect Champions CBUs 15
Improving Knowledge & Capabilities: Animation of RESPECT Knowledge & Capabilities for our WW structure: Buyer onboarding: Respect Introductory training Sedex trainings, including: Site Administrator Training Risk Assessment Training Reporting Training Regular custom made internal trainings (ex.smeta audits) Attendance of Maplecroft webinars for building overall awareness on non-financial risks (Human rights, Industry risks, etc.) Monthly reports driving attention to results Risk monitoring status Audit status/issues/action plans Best Practices in CBU/Categories/WW Category/CBU Respect Champion of the Month Monthly Confcalls, allowing issue discussion RESPECT Community on Danone Social Network The place where we share ideas 16
RESPECT VIDEO: to empower and motivate Danoners 17
Improving Knowledge & Capabilities: Animation of RESPECT Knowledge & Capabilities for our Suppliers: Building supplier awareness before contracting Fundamental Sustainable Principles Respect Program presentation Sedex registration for all new suppliers Regular invitations to participate in events organized by Sedex & AIM Progress Supplier Confcalls dedicated to RESPECT Program Special RESPECT Days organized locally by CBUs 18
Improving Knowledge & Capabilities: Supplier DAYS Supplier Empowerment Events organized WW: RESPECT Program Supplier Confcalls in USA & Canada Dedicated SEDEX Days in Japan RESPECT days in Mexico : strong Supplier involvement leading to sustainable relationships SMETA Audit Days : building awareness, negotiating audit prices, encouraging suppliers to directly book their audits Supplier Days organized in Indonesia: RESPECT+WISE : building awareness by our own example 19
OUR AMBITIONS Strenghten the 3 pillars together with our suppliers And stay on the podium! Social Environmental Economic Economic 20
Key learning / Sucess factors Embed Responsible Sourcing in a company initiative First invest in your Buyers population they are the ambassadors in front of suppliers! Carefully frame the approach taking into account business risk & ressources you will put behind (otherwise don t start!) Follow the programm at high level in your Purchasing organisation Communicate frequenly (Newsletters,Webinar,Reward ) Make it funny!!! 21
Danone is far to be perfect can you help us?? Who is already in DJSI? How do you managed the new questionnaire concerning Supply Chain Management part? Does your Program for Sustainable sourcing cover all of your suppliers, or you limit risk monitoring by certain scope criteria? How do you manage audit process? What is your procedure for deciding on which suppliers to be audited? How do you manage supplier capability building through audit results (ex. encouraging suppliers to implement action plans, verifying noncompliances,remediation, etc.) 22
THANK YOU FOR YOUR ATTENTION! Q & A 23