Raport de Responsabilitate Sociala Coporatista 2012

8/22/2019 Raport de Responsabilitate Sociala Coporatista 2012

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SUSTAINABILIT

Y

REPORT

DANONE20

12

StrategyandPerforman

ce

STRATEGIC

HIGHLIGHTS

Health,ForAll,

People,Nature

GRIpERfoRmAnCE

IndICAToRS


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SUSTAINABILITY REPORT 2012

2 Danone Sustainability Report 2012

4EDITORIALFRANCK RIBOUD

STRATEgY

14STRATEgY 2012HIgHLIgHTS

HEALTH 15

FOR ALL 22

PEOPLE 28

NATURE 34

56HISTORICALAPPROACH ANDHIgHLIgHTS

REFERENCE DOCUMENTS 57

HIGHLIGHTS AND

KEY DATES 1972-2012 58

40MEASURINg PROgRESSAND PERFORMANCETHROUgHOUTTHE VALUE CHAIN

DANONE WAY 41

RESPECT 46

DANONES EVALUATION

BY NON-FINANCIAL

RATING AGENCIES 50

6KEY SOCIALTOPICS

NUTRITION AND HEALTH ISSUES 7

SOCIAL ISSUES 10

ENVIRONMENTAL ISSUES 12


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Danone Sustainability Report 2012 3

62gRI INDEx

Self-evaluation of theapplication of GRIaccording to version3.0 guidelines for theGRI with approval byKPMG Audit.

72IMPACTS ANDRESPONSIBILITIESIN BUSINESS, FROMEND TO END

PERFORMANCE

74COMPANY PROFILE ANDREPORT PARAMETERS

COMPANY PROFILE 75

REPORT PARAMETERS 76

VALIDATION OF THE REPORTBY AN EXTERNAL THIRD PARTY 83

176CONTACTS

86PERFORMANCEINDICATORS

GOVERNANCE, COMMITMENTS

AND DIALOGUE 86ECONOMIC 94

ENVIRONMENTAL 102

SOCIAL 134

HUMAN RIGHTS 152

SOCIETY 158

PRODUCT RESPONSIBILITY 166


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he year 2012 conrmed in spectacular manner

the proound shit in the global economy that

is gathering pace. On the one hand, new

economic powers such as China, India and Brazil are

growing as other economies such as Indonesia and Nigeria

are emerging as uture powers. On the other, many

countries o the so-called developed world are marked by

stagnation, recession and a worrisome nancial situation.

Tis trend is also reected in Danones activity. Te groupcontinued to record strong, and in some cases very strong

growth in numerous countries, urther strengthening its

positions in the emerging economies. In Europe, however,

sales and margins in 2012 were aected in several o the

groups major historical countries such as Spain and France.

Given this situation, managements responsibility consists

in adjusting its strategies quickly and rethinking its

company organization in order to take advantage o the

growth momentum in the new economies while regaining

maneuvering room in Europe, which remains a major

region or the group. Signicant changes are under way toenable Danone to reinvent itsel in response to this new

global environment.

In this rapidly changing world, Danones actions are guided

by its dual economic and social project, which celebrated

its 40th anniversary in 2012. When visionary Antoine

Riboud conceived this dual project back in 1972, he elt

that economic and social (or societal) interests should not

be pitted against one another, but instead that a companys

duty was to nd a way to combine the two and to make the

necessary adjustments or a given context. Tis vision does

not lock the company into a straightjacket o rigid social or

environmental obligations, but enables it to adapt to localenvironments in order to come up with the right models

that create both economic value as well as social and

environmental value.

Te success o the Danone Ecosystem Fund provides a

useul illustration o this approach. In three years, this und

has invested in 43 projects, some o which have already

become sizeable in their own right. Tese projects are all

conceived and managed locally by Danone subsidiaries in

partnership with Non-Governmental Organizations.

Tey all have a direct relationship with Danones economicecosystem. Tey include, or example, the development o

a high-quality milk supply chain with small producers in

Ukraine, Egypt, Brazil and China, the recycling o plastic

bottles in Indonesia and Mexico, and local distribution in

several countries that creates numerous jobs and helps

market products to new customer bases.


SUSTAINABILITY REPORT 2012

EDITORIAL FRANCK RIBOUD


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Tese projects are breaking new ground. Tey are

sustainable because they are connected to Danones

economic activity and bring economic value to the

company which nances them (supplying milk or the raw

materials used to manuacture bottles, sales development).

Tey are also sustainable because they create considerable

social and environmental value (improving the income and

social condition o milk producers, waste-pickers and

salesmen, as well as their amilies while making a positive

environmental impact).

In the environmental area, Danone continued its eorts

despite a generally unavorable international context and in

2012 achieved the ambitious goals set in 2008, namely to

reduce the groups greenhouse gas emissions by 30%

worldwide. Certain Danone brands such as Evian have

achieved reductions that exceed 40% and are striving to

achieve carbon neutrality thanks to the innovative

measures o the Livelihoods Fund. Tis und was launched

by Danone at end-2011 and has now been joined by other

large corporations. Here again, this carbon reduction targetwas achieved by striving or the right combination o

productivity gains and environmental impact. Energy

efciency and innovation in logistics and packaging

materials must serve our two-old objective o being

competitive and transorming our production methods.

Upstream rom its processing activity, Danone is conscious

o the strategic role played by agriculture both now and in

the uture and o the challenges involved in securing its

agricultural raw materials. Te sustainable agriculture

project launched in 2012 will play an increasingly central

role in the groups strategy. Te idea is to promote

sustainable agricultural models based on their economic

viability and agricultural practices that ensure ood quality,

health and taste while respecting soil and plant quality, the

water cycle or animal well-being.

Here and in other areas, the compass o the dual economic

and social project will enable Danone to stay the course

pragmatically so as to continue making progress while

taking into account the diversity o situations.

Franck Riboud

Chairman and Chie Executive Ofcer



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STRATEGY

KEY

SOCIAL

TOPICS

NUTRITION AND

heAlTh IssUes 7

sOCIAl IssUes 10

eNVIRONMeNTAl IssUes 12


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At the start o the 21st century, two major health issues loom worldwide :

Te rst challenge is the Non-Communicable Diseases (NCDs) such

as cardiovascular diseases, cancers, diabetes and chronic lung diseases.

In a 2011 policy declaration, the UN highlighted the growing prevalence

o NCDs in developing countries and described these diseases as a major

obstacle to development.

oday 1.4 billion adults and more than 40 million children under

the age o fve are overweight, and 2.8 million people die o it each year. Fully 65% o the global population lives in countries where obesity kills more

people than malnutrition.

According to current projections, the proportion o deaths rom NCDs will

increase over the next 20 years (with 55 million expected in 2030), while

a parallel drop in annual atalities due to inectious diseases is expected.

Tis NCD epidemic has consequences not only on mortality rates, but also

on local economies. At low incomes, the high cost o treatment or a chronic

NCD can plunge a amily into poverty.

Te second challenge is the aging o the worlds population.

Te World Health Organization devoted its World Health Day, on April 7, 2012,to this topic, describing it as one o the most important transormations o the

society. Around the world, as countries develop, their inant mortality rates

drop, birth rates recede and lie expectancy rises, all o which leads to population

aging. Tis demographic transition rst occurred in the most developed

countries, and is now underway in mid- and low-income countries.

Within fve years, or the frst time in the history o humanity, there will be

more people over age 65 than under age fve. In 2050 they will outnumber

the population under age 14, and 80% o the elderly will live in mid- or low-

income countries.

However, although people are living longer, the length o their lives spent

in good health is not increasing in the same proportions. Te 2010 Global

Burden o Disease study o 187 countries shows that or one year o added lie

expectancy, only 0.8 years o lie in good health is gained. Te researchers

conclude that disability will become a growing burden or healthcare systems

around the world, as more and more people are living longer and being aected

by more diseases.

Healthcare systems in the most developed countries are already struggling,

with rising expenditures (medical progress, increased chronic disease, aging

population), and uncertain resources (recurring unemployment, uncertaintyregarding growth rates).


NuTRITION ANd hEALTh ISSuES


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In the emerging countries, and in particular the BRICS (Brazil, Russia, India,

China and South Arica), social welare protection is expanding rapidly. Te rate

o healthcare coverage o the Chinese population rose rom 24% to 94% rom

2005 to 2010. However, while everyone needs healthcare coverage, healthcare

systems based on a curative approach are not sustainable in the long term.

Prevention is therefore a crucial issue, including prevention o Non-

Communicable Diseases on the one hand, and creation and maintenance

o a lielong health approach on the other, to support successul aging.

Te quality o daily diet is key to addressing these two challenges o preventingNCDs and ensuring successul aging.

All the science conrmsthat a varied and balanced diet and regular physical

exercise are actors that contribute to good health and preventing chronic

diseases. On the other hand, poor diet along with a sedentary liestyle can

contribute to an increased risk o certain conditions including diabetes,

osteoporosis, hypertension, etc. Scientic progress continues to conrm that

individual dietary needs are very specic and vary by age (babies, children,

teenagers, adults, elderly), gender, and physical condition (pregnancy, metabolic

deciency, chronic disease, aging, etc.). Paying close attention to nutrition can

help ensure optimal growth and health, prevent diseases, and even improve theecacy o certain therapeutic treatments. In particular, there is more and more

evidence to show that early nutritional input (the rst 1,000 days o lie

including pregnancy and the rst two years) is a major determinant o uture

health, and that breasteeding exclusively or the rst six months o a babys lie

provides optimal nutritional benet.

With the urbanization that accompanies economic development, people no

longer have direct access to the basic oodstufs that they once produced or

themselves. For ood, they must rely on others to process these commodities or

them and make them available. oday the ood industry is oten accused o

being part o the problem. Te goal or ood companies is thereore to ofer

solutions, and be recognized or this positive role. Tey will need to mobilize

their Research and Development resources to develop appropriate solutions

addressing national health issues while respecting local preerences, and

devote a large share o their communication and advertising eforts to shiting

consumer preerences towards healthier products. I they are not responsible,

sel-disciplined and proactive in this area, they risk being subject to restrictive

regulatory measures dictated by healthcare authorities.


KEY SOCIAL TOPICS

NutritioN aNd health issues


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Te ability o the major ood industry players to apply a responsible

approach and address the dual concerns o malnutrition and diet-related

obesity/chronic diseasewas assessed in detail or the rst time in 2012 with

the publication o a new rating index, ANI (Access to Nutrition Index)

designed by the NGOs GAIN (Global Alliance or Improved Nutrition) and

Wellcome rust, with the nancial support o the Bill & Melinda Gates

Foundation.

Food companies long-term perormance will depend to a large extent on how

well they use their resources, and their ability to demonstrate to stakeholdersthat their actions are consistent overall with public health priorities.

Sources

UnitedNations(UN):PolicydeclarationoftheHighLevelMeetingoftheGeneralAssemblyonthePreventionandControlofNon-communicableDiseasesSeptember2011

WorldHealthOrganization(WHO)

- WorldHealthStatistics2012

http://apps.who.int/iris/bitstream/10665/44844/1/9789241564441_eng.pdf/

- Chronicdiseases:Primaryreferences:Obesityandoverweight,documentofMay2012:http://www.who.int/mediacentre/factsheets/fs311/en/index.html

- WorldHealthDay2012Agingandhealth http://www.who.int/world-health-day/2012/en/index.html

http://whqlibdoc.who.int/hq/2012/WHO_DCO_WHD_2012.1_eng.pdf

- 2008-2013Actionplanfortheglobalstrategyforthepreventionandcontrolofnon-communicablediseases,WHO,2009:

http://whqlibdoc.who.int/publications/2009/9789241597418_eng.pdf

GlobalBurdenofDiseaseStudy2010:http://www.thelancet.com/themed/global-burden-of-disease

CentredAnalyseStratgique,MemofromThechallengesofsocialprotectionintheBRICSandbeyond,November2012:http://www.strategie.gouv.fr



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For a group such as Danone, the coexistence o two very dierent

macroeconomic environments in the countries where it operates mature

and emerging countries constitutes a real challenge.

In the so-called mature countries, demographic change is resulting in an aging

population and a shrinking labor orce (which has dropped to 68% o total

population in Europe, according to INSEE data), and in the cohabitation

o two or even three generations at work or the rst time ever. In the emerging

countries, the need or skills development, in particular in countries where the

education system is not able to produce the necessary talents, and competitionbetween Western companies to attract potentials, requires policies to attract

and develop skills.

Major international groups must thereore address challenges in three areas:

ensure a properly unctioning working community in which several

generations work side by side : refect on developing and properly utilizing

senior workers skills, on organizational approaches that promote discussion

and cooperation;

attract and develop talents in high growth countries by partnering with

local stakeholders (universities, training institutions), acquiring appropriate

internal systems and developing their employer brand; oster continuous development or all in an evolving environment:

one study reerenced by the OECD(1), or example, indicates a shortage

o some 1.5 million managers in the United States who are able to seize

investment opportunities related to digital data. Tinking about new ways

to learn and share knowledge and inormation is a key issue.

Te lasting recessionary economic environment in Europe also has consequences

or inequality and households standard o living. In the OECD countries, more

than one in three job seekers had been unemployed or at least twelve months in

2012. Te OECDs composite leading indicators, designed to anticipate turning

points in economic activity relative to trend, continue to show weak growth

prospects or several major economies (Japan, Germany, France, India, Russia,

etc.), while signs o stabilization are emerging in Canada, China and the United

States.

Te employment situation is leading to growing socio-economic inequality:

over the past ve years, income inequality has been on the rise in two-thirds o

OECD countries. Tis correlates largely to changes in wages, which account or

75% o working households income.

(1)OrganisationforEconomicCo-operationandDevelopment


KEY SOCIAL TOPICS

SOCIAL ISSuES


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Beyond their immediate impact in terms o households available income, rising

inequalities can have major consequences or living conditions, in particular in a

context where government intervention in the area o social protection (access to

healthcare and co-payments, welare, pensions, etc.) and wealth redistribution

are subject to considerable budgetary constraints.

Tis raises the question o companies role in providing social welare

insurance or their employees and, more generally, redistributing created

wealth. Tese issues must be addressed rom an international angle, at a time

when demands in the area o labor law and working conditions are more andmore insistent in certain emerging countries (such as China).

For companies, these changes are all challenges that require them to redene

certain acets o their relationships with their employees and their ecosystem

(including skills development and transer, relations between generations at

work, redistribution o wealth, and protection rom lies hazards).



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By 2050, the worlds population will have reached 9 billion people,

with consumption patterns that are evolving signicantly. Food needs and

increasing pressure on natural resources will increase. Tis trend is already

having multiple eects : pollution and loss o soils, pollution o streams and

groundwater, greenhouse gas emissions, rising waste production and loss o

biodiversity.

While agriculture is a vital necessity or people, it is responsible or nearly

25% o greenhouse gases, 70% o water consumption and 40% o groundwater

pollution. Loss o biodiversity could itsel lead to reduced agriculturalproduction (estimated 25% impact by 2050), threatening the planets ood

security.Agriculture needs to reinvent itsel to rise to these challenges.

One will have to produce more with ewer inputs on a smaller cultivated area,

while also signicantly improving the impacts o agricultural practices on water

and soil. Livestock arming is particularly criticized as being responsible or 18%

o greenhouse gas emissions and 37% o soil degradation alone. Tis creates two

risks : a risk o increased tax pressure, and a risk o reduced demand or animal-

based product categories.

Agri-ood companies are acing the dilemma o how to meet the needs

o an ever greater number o consumers, on the one hand, and limit theenvironmental impact o their activities on the other.

Teir stakeholders expectations, or now, are mainly ocused on reducing the

impact o industrial production and precisely measuring these reductions

(ISO certication, carbon ootprint measurements, reduced water and energy

consumption, contributions to eliminating waste). Managing the impacts

arising rom packagingrequires reduced use o materials upstream, improved

collection and recycling, and transitioning to packaging made o renewable

biomass (not in competition with ood), rather than ossil materials.

Pressures on agricultural raw materials supply are strong (increased price

volatility, new competitors or land such as biouels, climate impact, biodiversity

loss). Tis supply context is transorming society to push or improvements in

strategy even urther upstream. Te global economy is transitioning rom a

period o abundance to a period o resource scarcity, which will ultimately

weight down on costs.


KEY SOCIAL TOPICS

ENvIRONmENTAL ISSuES


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For their part, consumers are voicing higher expectations o agriculture that

combines security, nutrition and health along with environmental protection

and respect or natural cycles, and this will become a actor o brand

competitiveness in the uture. o meet these expectations, regulatory changes

and progress in research are pushing towards better awareness o the

environment and health concerns (precision agriculture, pesticides eective at

low doses, alternative methods or ghting o pests and disease, more ecient

use o water and soil, etc.).

Lastly, some major players in global distribution are gradually beginning topromote sustainable development and will progressively choose to work with

suppliers who respect the environment (Sustainability Consortium Index).

Tese major environmental and ood security challenges are core concerns or

Danone. Preserving our resources and sustainably managing strategic raw

materials (in particular water and milk) are the oundation o the companys

sustainable model within its ecosystem and alongside key stakeholders.



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STRATEGY

STRATEGY 2012

HEALTH 15

FOR ALL 22

PEOPLE 28

NATURE 34

HIGHLIGHTS


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Given the global public health environment and stakeholders high expectations

rom the ood industry(see Issues chapter, page 7), the Danones mission is more

relevant than ever: Bring health through ood to as many people as

possible. Tis mission is a strong commitment that is expressed in concrete

actions, described in the Food, Nutrition and Health Charter, and implemented

every day by Danone teams around the world.

In 2012, Danone consolidated its strategy around our key aims:

aportfolioofproductsinwholesomecategories;

developingpertinentsolutionsbasedondetailedunderstandingoflocalsituations;

positioningitsproductsashealthieralternativesforbetternutrition;

assessingtheimpactofitsproductsondietandonconsumerhealth.

Danone ocuses on products in wholesome categories

Over the years, Danone has redesigned the contours o its product portolio

to concentrate on:

rstly,freshdairyproductsandmineralwatersthatarepartofadailydiet,

asdenedbypublichealthrecommendations;

secondly,babynutritionandmedicalnutritionproductswithhighnutritional

valuethataddressspecicneeds.

Not only does Danone contribute in this way to consumer health rom birth

tothenaldaysoflife,buttheuniquenatureofthisproductportfoliogives

Danone apositioning that marks a dierence among ood industry players.

Danone thus contributes to promoting healthy eating through its product

categories.

In 2012, 84% o Danones sales correspond to essential products (resh dairy

products containing at least 50% o milk, water, baby nutrition, medical

nutrition). 66% o the sales concern products or daily consumption resh

dairy products and baby nutrition products compliant with Danone nutrition

standards, waters and sugar-ree drinks, medical nutrition (1).

(1) Figures from the 2012 Scorecard for a scope of 46 subsidiaries in the four divisions.


HEALTH

of Danone sales

=essential products

84%


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Danone develops pertinent solutions based

on detailed understanding o local situations

Danone also cultivates strong connections with local market ecosystems and

seeks to thoroughly understand the health and nutrition situation and public

health issues o the countries in which it operates, so as to propose products that

are appropriate to these contexts.

In 2012, Danone continued and expanded the program launched in Algeria in

2011 to study ood styles. Tree studies were completed in France, India and

Indonesia in 2012. Te studies conclusions enable Danone to propose productoers consistent with these countries ood culture and heritage.

Danone positions its products as healthier alternatives

Superiorgustatoryqualitywillalwaysbeaprimaryelementinproduct

development. Nutritional superiority is another key eature o Danones strategy:

i the Danone product replaces another daily consumption product, it is

important to ensure that the resulting change is positive or the consumer.

Tereore, in 2012, the groups Research and Development department

developedthenotionofnutritionalsuperiorityintwoways:bydeningan

innovative approach to identiying what ood(s) a Danone product might be

replacing or consumers, and by developing a comparison method based onnutrient density. Tis program will be rolled out in pilot subsidiaries in the Fresh

dairy products and Waters divisions in 2013.

Danone also continues to pursue its nutrition continuous improvement program.

Overall in 2012, 26% o sales corresponded to products that underwent

nutritional improvements rom 2010 to 2012(2).

Danone seeks to have a positive impact on diet by promoting

categories o products that are recognized as wholesome

Tis approach gained speed in 2012 in the Fresh dairy products division with:

thecreationofaknowledgebaseonyogurtanditsnutritionproperties;

thedenitionofscienticmethodologiesforthesubsidiariestoidentify

yogurts specifc contribution to nutritional needs and balanced diet

ineachcountry;

theorganizationof22strategicmeetingsinthemainsubsidiariestodenea

research and stakeholder communication plan.

(2) Figures from the 2012 Scorecard for a scope of 46 subsidiaries in the four divisions.


HIGHLIGHTS STRATEGY 2012

HEALTH


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School-based education programs or children were rolled out in the Waters

division in Latin America in 2012, based on the successul experience in Poland

the previous year (see the 2011 Sustainable Development Report, page 17);such

programs were introduced in Argentina, Mexico and Uruguay.

Upstream o these achievements, at the research level, a large number

o nutri-economics initiatives were implemented in 2012. Following the

pioneering role o Danones Research and Development in launching this

new discipline, which seeks to assess the impact o ood on public health,

afoundationalarticleontheeldsdeningcharacteristicswaspublished

(3)

.

Under the aegis o the Danone International Institute, an in-depth analysis

o the literature was completed in partnership with the University o Manitoba(4)

and the conclusions o a symposium titled Nutrition economics ood as an

ally o public health were reported(5).

Te results o several research projects were also published in prestigious

internationalscienticjournals.Tese studies show that nutrition, by helping

to prevent certain diseases, can reduce healthcare spending:

usinginfantformulacontainingprobiotics(Immunofortis)reducescertain

allergiesandtheirlong-termconsequences(6); adequatehydrationcontributestopreventingtheformationofkidney

stones (7,8);

regularconsumptionofdairyproductscansignicantlyreducebonefractures

due to osteoporosis and the related costs (9).

In addition, a conerence and three major events were held in various countries

in 2012. With its products, and thanks to nutrition economics expertise as yet

unparalleled in the ood industry, Danone contributes to better health or all.

(3) I. Lenoir-Wijnkoop, M. J. C. Nuijten, I. Gutirrez-Ibarluzea, et al. Workshop Report: concepts and methods in the economics of nutrition

gateways to better economic evaluation of nutrition interventions. British Journal of Nutrition 2012; 108:17141720

(4) C.L. Gyles, I. Lenoir-Wijnkoop, J.G. Carlberg, et al. Health economics and nutrition: a review of published evidence. Nutrition Reviews 2012; 70:693-708

(5) I. Lenoir-Wijnkoop, P. J. Jones, R. Uauy, et al. Nutrition economics food as an ally of public health. British Journal of Nutrit ion; doi:10.1017/S0007114512005107(6) I.Lenoir-Wijnkoop,W.M.C.vanAalderen,G.Boehm,etal.Cost-eect ivenessmodelforaspecicmixtureofprebioticsinTheNetherlands.EurJHealthEconomics2012;13:101-10

(7) Y.Lotan,I.BuendiaJimnez,I.Lenoir-Wijnkoop,etal.Primarypreventionofnephrol ithiasisiscost-eectiveforanationalhealthcaresystem.BJUInternational2012;110:E1060-7.

(8) Y.Lotan,I.BuendiaJimnez,I.Lenoir-Wijnkoop,etal.IncreasedWaterIntakeasaPreventionStrategyforRecurrentUrolithiasis:MajorImpactofComplianceonCost-Eectiveness.

TheJournalofUrology2013;Volume189:935939

(9) F.J.B.Ltters,I.Lenoir-Wijnkoop,P.Fardellone,etal.Dairyfoodsandosteoporosis:anexampleofassessingthehealth-economicimpactoffoodproducts.

Osteoporosis International 2013; 24:139-150



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Among the other highlights o 2012, continued eorts made by Danone in

support o responsible communication should be mentioned.

IntheBabynutritiondivision,Danonesignicantlysteppedupitseorts

regardingtherequirementsofWHO Code(10), in particular via the creation o

internal management documents implementing the Codes principles, and by

extending the practice o regular audits by independent auditors to all subsidiaries.

Danone also participated with the other European Pledge member companies

indeningsharednutritioncriteria(11) to identiy products compatible with

advertising to children. Tese criteria will replace those previously individually

denedbyeachcompany,startingin2015.

Lastly, in continuation o its approach o working closely

with its stakeholders, Danone launched two major scientifc

partnerships in 2012

In the ramework o its Research and Development activity, Danone:

takespartwithelevenotherindustrialandacademicpartnersintheEuropean

Metacardis consortium, a large-scale project that began in November 2012

with the goal o improving understanding and treatment o conditions such as

obesity, diabetes and cardiovascular diseases.eprojectwillrunforve

yearsatatotalcostof12millioneuros,nancedinpartbythe7thEuropean

Unionframeworkprogram; initiatedanewpartnershipwiththe European Association or the Study o

Obesity (EASO), which is active in 30 countries. Tis partnership includes,

amongotherthings,thecreationofajointDanone-EASOworkgroupon

healthyhydration,andarecurringjointpresenceattheEuropeanCongress

on Obesity on the topic o hydration and the prevention o obesity.

At the same time, the partnership with the International Society o Nephrology

(ISN) continues, with support once again in 2012 or World Kidney Day(12),

devoted to the prevention o kidney diseases, as well as the co-production o an

educationallmonthegoldenrulesforgoodkidneyhealth.

Last key act in 2012, Danone was ranked leader o the frst ANI index

(Access o Nutrition Index), created jointly by GAIN (Global Alliance

or Improved Nutrition), the Bill and Melinda Gates Foundation and

the Wellcome rust. Tis index aims to assess every two years the major

ood companies on their policies, practices and perormance on nutrition.

Tis recognition shows the relevance o the Danones strategy to the health

and nutrition issues.

(10) www.who.int/nutrition/publications/infantfeeding/9241541601/en/

(11) www.eu-pledge.eu/sites/eu-pledge.eu/les/releases/EU_Pledge_Nutrition_White_Paper_Nov_2012.pdf

(12) www.worldkidneyday.org



HEALTH

N1of the

Access To

Nutrition

Index


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A quality system that places the consumerat the heart of Danones concerns

Food saety is a undamental Public Health concern. It is also crucial or

maintainingtheprotabilityofagroupbasedonconsumercondence

and sustainable development.

Danonehascreatedaspecicproductgovernancesystemtoensure

thequalityandsafetyofitsproducts.issystemwasdesignedtoplace

consumers at the center o considerations and to contribute sustainably

to the perormance o the group.

In 2012, Danone continued to implement its Quality vision in our key areas:

Food saety and risk assessment

Te group must ensure that all operations worldwide are aligned to acommon

ood saety standard that is recognized by authorities, consumers and

retailers. Danone has chosen FSSC 22000 as the international standard aligned

withitsfoodsafetyrequirements.

Over the past two years, the group has consolidated and improved its risk

assessmentprocedures.AchecklistcalledIGEAhasbeendraftedthatincludes

allISO/TS22002-1(PAS220)requirementsaswellasDanonesspecic

requirements.ischecklistcanbeusedforthePre-RequisitePrograms(PRP)

thatarepartofcerticationaudits,andalsotoassesscompliancewithDanone-

specicbesthygienepracticesandscorethelevelofcompliancewiththeDanone

global PRP standard.

Fivecerticationbodieshavebeenselectedandtheirauditorstrainedtoalign

foodsafetycerticationsworldwide(includingassessmentofcompliancewith

Danonesspecicrequirements),byensuringthattheyusetheIGEAchecklist

and perorm the assessment and scoring according to Danones expectations.



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In addition, to guarantee healthy and sae products or its consumers, Danone

evaluates and manages potential and actual risks via the Danone Food Saety

Center (DFSC) (for more detail, see page 167 of this report, indicator PR1).

Food saety is a shared responsibility. It requires the cooperation o all

stakeholders involved in the ood chain. Food saety reaches beyond the strict

frameworkofthegroup;itisaresponsibilitysharedbygovernments,regulatory

bodies and ood-related companies as well as the media, NGOs and consumers.

In this ramework, Danone has been an active member in recent years osuchinternationalorganizationsastheGlobal Food Saety Initiative (GFSI).

Te GFSIwhosemissioncouldbesummarizedassafefoodforconsumers

everywhereisoneofthemajororganizationsassociatingallplayersinthe

international agri-ood industry to support ongoing improvement o ood saety

andstrengthenconsumercondencethroughouttheworld.eGFSIhas

succeeded in building bridges between the public and private sectors, and works

withgovernmentsandotherorganizationsaroundtheworldtomanagefood

safetythreatsmoreeectivelywithaviewtoimprovingPublicHealth.

Robust Quality system throughout the product liecycle

esystemisbasedonasetofqualitycriteria(DanoneOperatingModels,orDOMs)thatdenewhatmustbedonetoensuresafeproductsthatcomplywith

Danonespecicationsateverystageofthedistributionchain,fromproduct

design to consumption, everywhere in the world and all the time.

esequalitycriteriawererevisedin2012,withinparticulartheredenitionof

4 levels o compliance.A risk and opportunity assessment was carried out or

this purpose, to prioritize resources, support business growth and ensure

product saety, compliance and superior quality.

Food saety indicators are described in the section on the PR1 indicator (page

167 of this report), concerning the liecycle stages in which the impact o products

and services on health and saety are assessed with a view to their improvement.



HEALTH


21/176

Consumer confdence

Consumerloyaltyissupportedbyeectivemarketfeedbackmanagement.

Quality systems direct attention to inormation and process them at each phase

o the product liecycle, to provide an appropriate response and deliver consumer

satisaction.

Te development and expansion o two projects in this area continued in 2012:

theinformationsystemforimproved consumer eedbackmanagement

continuedtobeexpandedgeographically;itisnowusedinmorethan90subsidiariesaroundtheworld,enablingharmonizationandthusdiscussion

andbenchmarkbetweencountries;

theprojectforauditing on-shel products, ollowing its pilot phase, was

integrated into daily activities and is implemented in more than 60% o

subsidiaries in the Fresh dairy products and Waters divisions. Te projects

importance lies in the analysis o consumer experience at the time they make

the decision to buy, when the totality o their expectations are met (product

compliance, as well as availability, presentation and position on the shel

relative to the competition).

Development o Danone employeesDanoneemphasizesthekeyroleplayedbyemployeesineectively

implementingtheQualityPolicy;the group ensures that employees have

exemplary business expertise, culture and behavior. Te Quality Road

Book, a reerence document containing advice on career management in the

qualityfunctionandbeyond,withabusinessorientation,wasdistributedtothe

Quality community in 2012. A hal-day dedicated to human resources was

includedinqualitytrainingsessionstohelpemployeesunderstandand

implement this advice.

In response to Danones geographic expansion, the group has begun

decentralizingitstrainingsessionstoreachasmanypeopleaspossible,tocreate

closerconnectionswithintheQualitycommunitybystrengtheningthequality

culture and employee empowerment.



22/176

Danones strategy to improve access to its products continued in 2012. New

consumers were gained, both in countries where the group was already present

andinnewregions,asDanonecontinuedtoadaptitsoerandbusinessmodels

to accomplish its mission o bringing health through ood to as many people as

possible.

Continuing the groups geographic expansion and reaching

new consumers

Since 2008, the number o Danone consumers has risen by 50%,

rom 600 million to 845 million estimated consumers in 2012.

Danone continued its geographic expansion begun 15 years earlier, into

additionalnewregions;emerging countries accounted or 53% o net sales

in 2012 (compared with 17% in 1996).

Tis growth was driven by geographic expansion in the six key countries known

as MICRUBs(Mexico,Indonesia,China,Russia,USA,Brazil),which

accounted or more than 40% o Danones total sales in 2012 and generated

around two thirds o net sales growth.

Danone also began developing in new countries. In particular, the groupstrengtheneditspresenceinIndiawiththeacquisitionoftheWockhardtgroups

baby nutrition and medical nutrition activities.

o build its growth potential over the long term, Danone is experimenting with

small-scale models in new markets in certain Asian countries and in Arica, in

response to recent economic and socio-demographic development, including the

appearanceofamiddleclassandofmid-sizedcities(withpopulationsofmore

than one million). In Arica, relying on experience gained in recent years in the

Maghreb region in particular, the group is developing positions in new markets

(IvoryCoast,Cameroon,Kenya,etc)throughnutritionaloersadaptedtolocal

conditionsandincompliancewiththeWorldHealthOrganizationCode.

Consumer access to products is a major issue or Danone, or which it seeks

to identiy the most innovative distribution circuits. As a result, 25 subsidiaries

deployed the Route o Market methodology in 2012 (see page 28 of the 2011

Sustainability Report) to consolidate physical availability o products in certain

regions, including through innovative distribution models (micro-distribution,

door-to-door, etc.).

Danone

consumers

845mILLIon



FOR ALL


23/176

Some examples are:

inChina,theWatersdivisionsubsidiaryincreasedcoverageoflargecities

rom 20 in 2009 to nearly 200 in 2012. Tis strong expansion o the Route

o Market project is one key actor or successul growth, bringing the

Mizonebrandtomillionsofnewconsumersanddoublingmarketshare

comparedwith2010;

inBrazil,theRouteToMarketprojectintheNordesteregionthecountrys

second most populous region, but with the weakest consumption

o resh dairy products enabled Danone to gain 25 penetration points

(% o consumers reached) in households thanks to the addition o 24,000new stores in 5 years. New distribution models, such as door-to-door,

very relevant to this region, have also been implemented. Te Danone

brandbecamethemarketshareleaderinthisregionin2012forthersttime

initshistory;

inEgypt,aninnovativeRouteToMarketprojectinruralregionsledtothe

addition o 500,000 new consumers or the Fresh Dairy Products category in

two years. Tis positive model combines development o the groups business

andtheeconomicandsocialdevelopmentoftheinvolvedregions;

inTurkey,theBabynutritiondivisionalsointroducedanewRouteTo

Market project or more extensive coverage o the territory by its sales agents,

along with more intensive cooperation with its distributors, resulting in salesgrowth o 40%.

Creating new and continuously evolving business models

Forthepast5years,Danonehasbeentestingbusinessmodelsinaneortto

truly change the way it generates growth to better address the For all

dimension o its mission.

Amongthesedierentexperiments,Danonewasapioneerinsocialbusiness

with the 2007 creation o the danone.communities und (see the 2011

Sustainability Report, pages 32-35), spearheaded by the Grameen Danone Food

Ltd project in Bangladesh. In 2012, the group began a phase o consolidation o

the 10 existing danone.communities projects (see details in the following pages).



24/176

Danone has carried out other experiments, notably the BOP (Base o the

Pyramid) business creation project in India. Launched in 2011, this project was

basedonthree-prongedinnovationinvolvingthecreationofaproductoer

adapted to local tastes, industrial processes and investments, and distribution

circuits. In 2012, Danone determined that two elements o the model needed

improvement: managing the capillarity o distribution networks, and succeeding

in introducing new products in terms o consumer habits and consumption

times. Tese two parameters, crucial to the success o the project, were entirely

reworkedtobetteralignwithlocalculturalspecicities.eoerwas

repositioned in 2012, with the Fundoozbrand recentered around a narrowercategory o consumers and a smaller territory.

It is this type o experiments involving complex local issues that allow Danone

to continue to gain expertise in new countries where the groups ambition is to

develop in order to ensure its long-term growth and the success o its mission.

Danone has inventoried the key learnings to be drawn rom the BOP

project in India, namely: the importance o thoroughly understanding local

ood culture and eating habits to better integrate these into the development

process;thecorrecttargetpopulationsize(cities,ruralareas)inanemerging

country;controllingdistributioncircuitsandcostsandthevarious

intermediariestoreachthetargeteconomically;andtheimportanceofthe

management and education model or enhancing the products image and use.

Tese lessons have been shared and are already used in other projects, in

particular the micro-distribution projects conducted as part o the Danone

EcosystemFund.

Te Research and Development center opened in Indiain 2012 also

concentrates expertise used or all new Danone projects in this country.

Te centers very close connection to the local communities, consumers and/or

non-governmentalorganizationsallowsthesegroupsinputtobeintegratedintoproductdenitionandrecipesatanearlierphase,andmultipliesinteractions

and opportunities in a co-development approach. In the end, results are

achieved more rapidly and solutions are more relevant than with a traditional

approach.



FOR ALL


25/176

danone.communities: rom consolidation to shared

knowledge

danone.communities is a social business incubator with the mission o

promoting, supporting and fnancing social businesses that seek to respond

to issues o malnutrition, access to drinking water and poverty.

Today,danone.communitiesprovidestechnicalandnancialsupportto

10 projects, including 8 in which the FCPR (venture capital und) has already

invested, and 2 in the incubation stage. From Mexico to India, via Senegal,

danone.communitiesiscreatingchangethathasalreadybenettedmorethana million people. Te ten projects can be divided into two categories:

historical projectswhich have been developed or more than 3 years,

whether or not they were created with the support o danone.communities.

Tese are Grameen Danone Foods Ltd(Bangladesh), La Laiterie du

Berger (Senegal), Naandi Community Water Services (India), 1001

Fountains (Cambodia) andJIA Bangladesh (Bangladesh), created by

the NGO Care Bangladesh in 2004, and the last project to have received

an investment rom the und.

start-up projects, recently created (within the past 3 years), or still in

incubation phase. Tese danone.communities projects include El Alberto

(Mexico), Nutrigo (China), Isomir (France), Malin (France) and Lemateki(Senegal), the last two still being in incubation.

Te group decided to invest in three projects in 2012 alongside the

danone.communities und (Grameen Danone Foods Limited in Bangladesh,

Laiterie du Berger in Senegal and NutriGo in China) to ensure these projects

viability and longevity.

10 projects between consolidation and incubation

In2012danone.communitiesfocusedalargeportionofitseortson

consolidating its 5 historical projects around 3 priorities:

socialimpact;

modelseconomicsustainability;

organization.



26/176

eseeortsproducedpositivesignsofdevelopmentalignedwiththe

consolidation strategy.

For example:

Grameen Danone Foods Ltd(Bangladesh) is on a growth path again,

withan18%increaseinvolumescomparedtothepreviousyear;

inSenegal,theresultsofLa Laiterie du Berger project demonstrate a

nancialbalance(breakeven)duringthreeconsecutivemonths(september,

october,november) ;

forthe1001 Fountains project (Cambodia), the threshold o 60 water

puricationstationsinstalledinthesameregionwascrossed,andtheprojectteam is planning to launch the approach in another region o the country.

1001FontainesaimstobreakevenbyMay2013;

lastly,JIA Bangladesh, the 8th project in which the und invested, is making

itsrstforaysasasocialbusinessafterseveralyearsofincubationwithinthe

NGO Care. Financial break-even is planned or the end o 2014.

Nevertheless, the projects long-term survival is not yet assured. According to

danone.communities,sustainablesuccesswillrequiregreaterautonomyonthe

partoflocalprojectteams,whichplaceslearning,skillsacquisitionand

empowerment at the heart o priorities.

While consolidating its historical projects, danone.communities is also supporting

veadditionalprojects,twoofwhicharestillincubating(LematekiinSenegaland

the Malin program in France). Tese recent projects, which operate as start-ups,

havemadesignicantprogress.Forexample,El Alberto (Mexico), launched at the

endof2011,alreadybrokeevennanciallyforitsrstyearofoperation.Nutrigoin

China,alsolaunchedattheendof2011inseveralvillagesintheEnshiregion,

plans to extend its sites to a second region o the country, in Fuyang. Tese rapid

and positive results refect a learning curve that began with the historical projects

and can now be applied by those just starting out.

Learnings shared with the community

o leverage this learning curve and its strong network o partners,

danone.communities began a process o learnings sharing in 2012.

Te Global Communities Meetingworkshops held during the day o the

Annual Meeting on May 15, 2012 are the key eature o this new phase. More

than 250 international experts (researchers, entrepreneurs, project managers, etc)

took part in the workshops to examine social business in more depth, through

topics including micro-distribution, nutrition, access to water, social impact

measurementandnancing.



FOR ALL


27/176

Newavenuestoexploreandpursueweredenedintheworkshops,opening

up resh areas or cooperation and co-development in support o social business,

to increase its impact in emerging and developed countries.

Te workshop reports are available to all at the danone.communities website

(www.danonecommunities.com/node/1199#node-1199).

Additionally, no ewer than 21 events dedicated to promoting social business

wereorganizedin2012,mostbydanone.communitiespartnersunderthe

Global Communities Meeting label.

Strengthened commitment by Danoners (employees)

Te commitment o Danones employees to support the development o

social businesses is at the heart o the danone.communities project. More than

280employeeshavetakenpartdirectlyinthoseprojects,mostfrequently

through part-time support missions in areas as varied as research and

development,marketingandcommunication,humanresources,nance,

sales and distribution, and production.

Te proportion o Danoners who have invested in the und continued to rise

in 2012, to 15.5% o total investments, representing a total o 10.5 million euros

since 2007.

2013-2014: Autonomous projects

Basedonthelessonslearnedfromtheseveyearsofdevelopment,

danone.communitiesplanstointroduceanorganizationalchangein2013

towardsamoredecentralizedformofbothprojectmanagementand

community support. Tis initiative aims to oster the projects autonomy

to strengthen them urther.

Community involvement is also being revised rom this perspective, and in the

next ew months, the ocus will be on providing both the legacy projects and the

start-ups the tools or managing their local communities to involve agents at a

more local level. In a word, 2013 will be the year o increased local

empowerment.

Find the latest danone.communities news at :www.danonecommunities.com



28/176

Employee and team developmentas a foundation for rowth

Investing in the teams development worldwide

Danone views skills development as a necessary condition or growth. Te aim is

both to transmit knowledge and expertise, and or all Danones employees to

share a common culture. Skills development and leadership are also actors

or which the group stands out,andawayofattractinganddevelopingquality

resources on a large scale in ast growing countries.

Access to training has been expanding or several years, and continued to

increase in 2012: 100% o employees received training in 2012 (compared

with 98.8% in 2011 on a like-or-like basis). From 2008 to 2012, the average

number o training hours per employee rose rom 24 hours per year to 31 hours

per year, a nearly 30% increase. In China or example, ollowing the 2011

creation o Danone China University, 2,185 people received training in 2012

rom 110 internal trainers.

Te Danone Leadership College program was introduced in 2008 to

promoteaspecicDanoneleadershipcultureanddeeplytransformattitudes.

As o December 31, 2012, 50,000 Danone employees, including 15,000 eam

Leaders, had been supported in this transormation process, thanks to

460 internal trainers. Fully 81% o employees elt that training and thinking

about their individual and shared attitudes had a positive impact on the

way they work.

Ater 4 years in place, the goal is or this leadership culture to become an even

more prevalent daily benchmark or all Danone employees, and a means o

achieving outstanding operational perormances. 15 pilot plants (o which 3

inAsia)wereidentiedtotest14modulesaimedatestablishingtheseattitudes

among operators in their daily work situations. Te development o this Danoneleadership culture is also an integral part o Human Resources management

processes.

A new Learning strategy was defned in 2012 to provide a long-term

oundation or Danones training ambitions. It aims to create the right

conditions or developing resources in high-growth regions, and or employees

tolearnevenmore,moreeciently,acrossmanydierentsituations.



PEOPLE

of employees

recognize the positiveaspect of Danone

Leadership College

81%


29/176

Te Campus 2.0 project initiated at the end o 2012 supports learning

communities and e-learning (where the best experts on a given topic make their

knowledge available to others). Te Danone Campus, an original corporate

university ormat that combines training, networking and exploration o general

interest topics such as social innovation and social business continued in 2012:

13campuswereorganizedinEurope(France,CzechRepublic,Russia),Asia

(China, Malaysia, Indonesia, Japan) and the Americas (Mexico, Argentina),

with the participation o 3,300 people.

Te development o the potentials is also made through short term missions.In South America, the Jaguar program, launched in 2009 in the Fresh dairy

products division, aims to accelerate the development o the potential o young

people and to reinorce sharing between South American subsidiaries.

It is based on six months to a year missions, allowing a subsidiarys employee to

take part in an another subsidiarys project. 12 missions have been implemented

in2012,in6countries(Argentina,Brazil,Mexico,Chili,Uruguayand

Colombia).

More than the impact on the turnover, this program allowed to 80% o the

youngemployeeswhoparticipatedtobenetfromachangeofpositionatthe

end o their international mission.

Diversity as a source o well-being and perormance at work

Danone views diversity as a source o innovation and strength or the

group.Amongthepriorityactionareasaregenderequality,diversityof

generations, cultures and nationalities, and diversity o academic backgrounds.

Toimprovegenderequality,Danoneaddressesissuesofworkinglife(internal

promotion, wages, working conditions, etc.), career and individual mindsets.

Asaresultofthispolicy,theitemmysubsidiaryoersequalopportunities

regardlessofgenderintheDanonePeopleSurveygainedvepointsin2011

among both emale and male respondents.

Key highlights in 2012 include:

an increased percentage o women at the director and executive levels,

from28%to31%comparedwith2011,andastabilizationatthemanager

levelat46%.Systematicanalysisofequitybetweenmenandwomenin

annualsalaryreviewsatallclassicationlevelsconrmsthatthereisno

signicantgapbetweenmensandwomenswagesoverallamongmanagers

anddirectors;

the introduction o measures to support work-lie balance, which oster

better gender diversity at work. In particular, several subsidiaries introducedpilotprogramsin2012,suchastelecommutingforalllevelsofresponsibility;



30/176

work on individual mindsets and emale leadership. Te 3rdEVEseminar,

created in 2009 by Danone to develop emale leadership, addressed the theme

Daretobeyourselftoactfor320participantsand15companies;

asanextensionoftheEVEseminar,DanonelaunchedtheOctaveevent

ollowing the same model, with a view to oster intergenerational

connections. Tis seminar is based on the notion that when generations rub

shouldersitcontributestotheoverallperformanceofthecompany.erst

Octave seminar took place in April 2012, and was attended by 120 people o

allages,fromvecompanies;

lastly,96youngDanonemanagersagedbelow30,from21countries,werebroughttogetherinEvianfortheGen D program, with the goals o

transmitting the Danone culture, increasing their motivation and bringing

them closer to the groups executives.

Committing to HR fundamentals

Developing a saety culture

eWISEprogramlaunchedin2004hasbeenstrengtheningDanones

commitment to employees saety at workor nearly a decade. Ater eight

yearsofcontinuousprogress(thefrequencyrateofaccidentsgeneratingworkabsencesdroppedbynearly60%between2009and2011),thefrequencyrate

stagnatedforthersttimein2012at2.2.eseresultsillustratethatsafetyisa

constantchallenge,andthateortsmustbepursuedincertaincountriesinthe

Fresh dairy products division and in French subsidiaries.

Te results also show that the development o a true saety culture is essential

to maintaining the progress achieved. In this context, Danone has decided to

implement initiatives that bring a saety approach to bear at multiple levels:

employees commitment: 70% o the groups sites have now undergone

WISEaudits,withnewguidelinesfortheindustrialsitesandstricter

requirements;

operational excellence: by developing a disciplined approach to saety

standards,Danonecontributestodevelopingdisciplineinotherareas:quality,

operationaleciency,customerservice,environment,etc.;



PEOPLE


31/176

improved health and working conditions: repetitive musculoskeletal

disorders represent a growing share o accidents at all types o Danone sites.

Initiatives launched in 2012 in the areas o training (movement and posture,

ergonomics training or technical and engineering teams), workstation

adaptations and design upstream new projects (dedicated investments,

participatory proposals) aim to improve both saety and working conditions.

Improving health and working conditions through

eective social dialogue

SocialdialogueatDanoneisorganizedaroundaworldwidelabourrelationsbody (Inormation and Consultation Committee, CIC), negotiation and

monitoring o international ramework agreements with the IUF (International

Union o Food workers), and dynamic labour relations with trade union

representativesandstarepresentativesinthegroupssubsidiaries.

As o December 31, 2012, Danone had entered into 9 agreements with the

IUF, relating mainly to diversity, labour relations, health, saety, working

conditions and stress.

Action plans designed and implemented by the groups subsidiaries translated

themintorealityintheeld.Forexample,inapplicationofthe2007agreementon diversity between Danone and the IUF, subsidiaries in Poland began

launching initiatives starting in 2008 to improve womens ability to reconcile

their proessional and personal lives. Tese measures include an additional

monthofmaternityleave,six-hourworkingdaysduringthersttwomonths

ater returning to work, and rooms or nursing at the workplace. As a result,

Danone Fresh dairy products Poland was awarded with the Mother at work

prizein2011and2012.

Regarding working conditions, the rollout o the ramework agreement signed

in September 2011 with the IUF on health, saety, working conditions and

stress, and implemented country by country, has in particular led to greater

emphasisbeingplacedonthehumanconsequencesofchange.In2012Danone

designed a methodology or deployment o human easibility study (HFS),

which is an integral part o agreements signed in France on stress prevention and

qualityoflifeatwork,andaimstofacilitaterecognitionofthehumanimpactof

change projects. As a concrete expression o this approach, to provide real

support or change, pilot projects were carried out in the French subsidiaries,

with around sixty employees trained to implement an HFS previous to more

than 20 projects.



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Danone and the IUF jointly monitor their agreements, notably with joint

visits on the ground o 42 group subsidiaries between 2009 and 2012,

which led to a summary report in 2012. A particular advantage o these joint

visits by IUF and Danone representatives is to better explain the impact o their

collaborativeeortsatthelocallevel,andtoraisesubsidiariesawarenessofthe

issues involved in implementing their agreements.

Providing quality social welare and medical coverage or all

employees: the DanCares program

Te DanCares program was introduced to achieve Danones dual economic andsocialproject.Itreectsthegroupsdesireforeveryemployeetobenetfrom

qualityhealthcarecoverage,inparticularforbasicmedicalcare:hospitalization,

maternity and outpatient care.

eprogramstartedin2010withanauditin15countriesand56subsidiaries;

it now covers 98% o Danones employees (except Unimilk group companies)

in 41 countries, making it possible to assess existing coverage in each o the

countries and identiy needed improvements.

Te groups objective was to achieve coverage or 30,000 additional employees

by2013.isgoalisalreadyreached.Eightcountries(China,Spain,Indonesia,Mexico,Brazil,Poland,RussiaandSaudiArabia)startedimplementing

DanCares in 2011. At the end o 2012, 27,700 employees received coverage

under DanCares, and coverage was improved or 8,000 others. By the end o

2013 the program aims to cover at least 13,000 additional employees.

Supporting new business models The Danone Ecosystem Fund

o bring health through ood to as many people as possible, Danone must

continuouslyinnovateandadaptitsbusinessmodels.eDanoneEcosystem

Fund was created in 2009 with a view to strengthen the economic and social

situations o local players in Danones ecosystem (small armers, suppliers and

subcontractors, transport operators, distributors, regions, etc.) throughout its

value chain (for more information, see indicator EC9, page 101). Structured

aroundveactionareas(1), the und comprised 43 projects in 2012 (including

twelve new projects created in 2012) involving35 subsidiaries;theyrepresenta

total investment o34 million euros and aim to create or consolidate over

51,000 jobs.

(1)TheDanoneEcosystemFundisstructuredaroundvepriorityactionareas:

supply, micro-distribution, recycling, personal services and local development.



PEOPLE

jobs created or

consolidated within the

Danone Ecosystem Fund

51,000

employees covered

by DanCares

27,700


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Te projects have impacts at multiple levels o the value chain:

securing supply o raw materials by supporting the dairy and ruit sectors

(notablybyhelpingsmallfarmersand/orproducers);

enhancing consumer perceptions o the value o the raw materials,

throughsustainablefarmingpartnerships;

recycling(supportforwastepickersworkingingarbagedumps);

researching services the group can oer its consumers in the areas o

health through ood: nutrition and health education, services to support

autonomyfortheelderlyorchilddevelopment,developedwithspecialized

agents; micro-distribution, by testing models adapted to new geographic

circumstancesandpopulationstoaddressspecicissuesofaccessibilityand

employability.

Fostering the emergence o new business practices was a priority goal or the

und in 2012. Tese practices include, or example, local micro-distribution

networksandthedecisiontoassesskeyDanoneEcosystemFundprojectsusing

recognizedsocialimpactmeasurementmethods.Twoprojectswereidentiedas

test cases or social impact measurement, which should be implemented in 2013.

Te methodology or measuring economic impacts or the group is currently

beingdened,andwillalsobetestedin2013(for more information, see indicatorSO1, page 159).

In 2012, to consolidate existing projects and best support the launch o new

projects(twelvenewprojectsthissameyear),theDanoneEcosystemFund

worked to ensure that projects are anchored into subsidiaries strategies,

to reproduce earlier successul experiences to the extent possible, and to

oster sharing and communication o best practices between teams.

Te development o new skills through social innovation project management is

a source o wealth or Danone. wo key developments took place in 2012 with

regardtothegoalofincreasingteamprofessionalism:apilottrainingspecically

designed or the unds project teams was tested, and an integration program

nowallowsnewprojectmanagerstobenetfromexperienceacquiredbyothers

in previous projects. All project management support tools are made available on

the unds web platorm. Te co-creation guide in particular serves to support

and develop the teams working on these projects by helping them create

operating rameworks with their partners that are adapted to the projects and

the goals.



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Danone exceeds its groundbreaking carbonfootprint reduction goals announced in 2008

espreadofbestpracticesandambitiousresultsachievedconrmthatNature

preservation and business development do not confict, but can operate in

synergy.DanonecontinueditsworkontheprioritiesdenedinitsNature

strategy or the past 5 years:

Combat climate change and reduce dependency

on ossil uels

Reduce the carbon footprint

Danone had set the ambitious goal in 2008 o reducing its carbon ootprint by

30% over the 2008-2012 period, wherever the group holds direct responsibility

(production sites, packaging and end o lie, transport and storage excluding

upstream agriculture). Areduction o 35.2% was achieved between 2008 and

2012. Tis groundbreaking goal was largely exceeded thanks to the ongoing

commitment o Danones teams and o the groups partners participating in this

policy. Te groups total emissions in 2012 (including upstream agriculture) are

estimatedat17millionmetrictonsequivalentCO2

.

Since 2007 the groups sales volumes have experienced strong growth o more

than 35%, while its carbon emissions remained stable overall during this same

period (scope o direct responsibility).



NATURE

12

10

8

6

4

2

0

30

28

26

24

22

20

18

16

14

12

102007 2008 2009 2010 2011 2012

Volume of products sold Absolute volume of CO2

CO2

(Millionsoftonnes)

Volumesold(Millionsoft

onnes)

-35.2%

Reduction in CO2

emissions between

2008 and 2012

-35.2%


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Reduce energy intensity and experiment with renewable energies

Danone reduced its energy intensity by 3.6% in 2012, representing a cumulative

change o -46.5% since 2000.

AfterthePoosdeCaldasplantinBrazilin2011,theBabynutritionsitein

Wexord, Ireland invested 3.8 million euros in a biomass boiler, or an annual

savings o 9,500 metric tons o CO2 and an annual ossil uel bill reduced by

750,000 euros. Tis project should also enable the development o a local FSC

(ForestStewardshipCouncil)certiedwoodindustryandthecreationof65

indirect jobs in the upstream segment. It was supported by the DanoneEcosystemFundandwontheawardin2012forbestNatureproject,which

recognizesthemostinnovativeprojectsoftheyearwithinthegroup.

The Evian brand and the Livelihoods Fund

Based on its successul experience since 2008, partnering with the IUCN and

theRamsarconventiononwetlandsintheframeworkofcarbonosetprojects,

Danone wished to involve other companies in this approach by creating the

Livelihoods Fund in 2011. Tis und, which today includes seven large

companies in addition to Danone, invests in major natural ecosystem

restoration projects. Tese projects contribute to combating climate change by

xinglargevolumesofcarbon.egoalistostoresevenmillionmetrictonsofcarbon over 20 years, or a minimum investment o 30 million euros.

Livelihoods has already invested in six projects in Arica and Asia, and

contributed to the planting o more than 100 millions o trees.

Consistent with its commitment, and ater reducing its carbon ootprint by 40%

overthe20082012period,theEvianbrandosetitsremainingemissionsin

2012bysupportingseveralqualityprojectsrecognizedbystandardsincluding

VeriedCarbonStandardandGoldStandard.

Startingin2013,followingconsultationwithitsstakeholders,Evianhasdecided

torefocusitseortsontheLivelihoodsFund,whoseprojectsaresupportedby

the brand since 2008, by strengthening its participation over the long term. Te

expansionoftheseprojectswillprogressivelyosettheEvianbrandsemissions,

toachievefullemissionsosetby2020.



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Water: Protect water resources, particularly when

scarce, and use them in harmony with local ecosystems

and communities

Reduce water consumption

In 2012 Danone reduced its water consumption in industrial processes

by 3.1%, bringing the overall reduction since 2000 to 43.1%.

Protect the springs and the water supply

Danone also continues to promote the protection o springs through its

Ground Water Policy, which is based on holistic management o theresource in cooperation with local players: respect or natural cycles (not

removing more water than can be replenished by nature) and protection o

rainwater catchment areas and o their ecosystems. In 2012, the Danone Waters

China subsidiary enhanced its protection initiatives at the Longmen site, relying

ontheexpertiseoftheIUCNandwiththesupportoftheDanoneEcosystem

Fund. In 2012, the Ramsar Convention (United Nations international

convention or wetland protection), the IUCN (International Union or

Conservation o Nature) and Danone launched a recognition process or

SPRING (Sustainable Protection and Resources managING), an internal tool

or managing water resources that includes physical, regulatory and community

management o springs and their drainage basins, deployed since 2008 at 100%o Waters division sites.

Measures to go even further

Danone continued its water ootprint measurement research in 2012, notably

with its partner Quantis, as well as by contributing to the development o

international(ISO)andEuropean(Envifoodprotocol)standards.isapproach

has enabled the development o awater ootprint evaluation methodology

that takes water stress actors into account, the Water Scarcity Footprint. Tis

toolwillservetoidentifyat-riskzonesandmethodsforreducingthegroups

impacts across its entire value chain.



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Packaging: use sustainable materials

The groups position on "Forest Footprint" and on "Forest" for

paper and board packaging

Consciousofthecriticalimportanceofpreservingforestsfortheequilibrium

o our planet (in particular the tropical orests in Indonesia and the Congo

andAmazonbasins),Danoneiscommittedtoastrategyofeliminatingthe

deorestation impacts o its supply chain, and to a reorestation program,

between now and 2020. Danone has published its position on "Forest Footprint"

which aimed at transparently evaluating the deorestation risks associated with

commodities used directly or indirectly by the groups businesses, and proposingspecicpoliciesbyrankingitsactionsaccordingtoassociatedrisksandimpact

priorities.

http://danonestaging.danweb.danet/nos-politiques/positions/nos-politiques-

positions.html

Tis ambition notably includes all paper and board packaging that might have a

negative impact on orests. Te commitment targets three concrete objectives:

actively reduce the weight o paper and board packaging or each product, preer

theuseofrecycledbersand,wherethisisnotpossible,preferFSCcertied

virginbers.

Experiment with renewable materials

Tree year o experimentation with plant-based plastics (sugar cane, sugar cane

wasteandcorn)forfourbrands(Volvic,Actimel,ActiviaandStonyeld)have

allowed Danone to develop an understanding o the environmental implications

(liecycle analysis), compliance with sustainability criteria (competition with

ood, end o lie, etc.), associated business issues and consumer perceptions.

Te group continues its extensive cooperation initiatives with experts and

partners to improve impact measurement and contribute to the emergence o

third-generation renewable materials that are not in direct competition with

foodstus.Forexample,DanonecontributestotheBio-PlasticsFeedstocks

Alliance platorm with the World Wildlie Fund to develop a sustainability

standard or bio based packaging materials.



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Agriculture: support competitive agriculture that

creates social, environmental and nutritional value

Commit to joining with others to promote agriculture

that is more respectful of the environment

In 2012 Danone launched aSustainable Agriculture taskorce to redefne

its strategy.Internalandexternalstakeholders(DanoneEcosystemFund,

expertspanel,etc.)wereinvolvedfromthestart,rsttoselectatoolfor

assessingfarmsustainability(basedonRISEapproachdevelopedbyBern

University), reerencing a complete benchmark (100 tools assessed) that

addresses all our dimensions: health, economy, nature and social. Te taskorcethen implemented the vision operationally through concrete projects in six pilot

countries in 2013 (in Europe, Americas and Asia) covering all models o

dairy production. Te goal is to create momentum or developing sustainable

agricultural practices, in close cooperation with producers and stakeholders in

the dairy sector.

In 2012 the Fresh dairy products division launched itsAnimal Well-Being

program comprising a number o practices to be applied at the arm level, to

ensure not only animal well-being but also ood saety, plan or regulatory

changes and ensure that the armer continues to earn revenues over the medium

and long term.

Tis program, developed in cooperation with scientists, livestock armers and

animalprotectionorganizations,isbasedonthreepriorities:

strengthenfarmersawarenessofanimalwell-beingbyprovidingthemwith

thenecessaryinformationandtools;

rewardgoodanimalwell-beingpractices.Farmerswhomakeprogressinthe

areaofanimalwell-beingwillberecognizedbyDanoneinavarietyofways

(alabel,aprize,etc.);

ensureahighlevelofanimalwell-beingwhileimprovingmilkproduction.

Danone intends to drat action plans, in collaboration with livestock

specialists, dedicated to improving animal well-being and arm perormance.



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Biodiversity: protect the ecosystems connected

to agriculture and forests

Te impact o Danones business on biodiversity is primarily related to upstream

agriculture (soil and water). A pilot liecycle analysis study was launched in 2012

bytheDanoneBrazilsubsidiarywithIPE(alocalNonGovernmental

Organization)andtheIUCNtodevelopamethodologyforevaluating issues

relating to biodiversity in Danones value chain.

In 2012, theVillavicenciobrandbegan an innovative partnership with the

NGOBancodeBosques,andimplementedtheDj tu Huella (Leave yourmark) operation, which invited consumers to participate in creating a new

nature reserve. For every bottle purchased during a two-month period,

Villavicenciocommittedtoprotectingonesquaremeterofparkland.

einitiativeincludedeortstoraisepublicawarenessofthedangers

o deorestation and the importance o biodiversity or the local ecosystem,

andhadasignicantimpact:nearly2,200hectareswereprotected,

the public participated actively in the project, and consumer preerence

fortheVillavicenciobrandincreased.

Since 2010, Danone has included a panel o experts and external stakeholders in

itsstrategicthinkingaboutitslong-termdirection.eseeortshaverevolvedinparticular around the ollowing themes: ull scope carbon ootprint including

upstream agriculture, transorming packaging waste into resources and bio-

sourced materials, water ootprint, sustainable agriculture and biodiversity.



40/176


throughoutthe valuechain

Danone Way 41

Respect 46Danones evaluation

by non-Financial

Rating agencies 50

Measuringprogress andperorMance

StrategY


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D Wy: ky ps Dsbsds f ssb bsss dpm

Launched in 2001, the Danone Way program helps to disseminate the

sustainable development culture and undamentals within the group, by

measuring the subsidiaries social and environmental responsibility perormance.

Every year, the groups subsidiaries assess the maturity o their policies and their

corresponding perormance levels or 16 key practices in ve areas: human

rights, human relations, environment, consumers and governance.

Tis program meets stakeholders expectations in terms o measuring Danones

non-nancial perormance and is also a driver o ongoing improvement or all

the subsidiaries. Danone Way enables:

toprovideguidancetosubsidiariesoperatingasstartups,particularlyin

emerging countries;

tointegrateDanone'ssustainabledevelopmentstrategicprioritiesandculture

into newly acquired, but already structured, subsidiaries;

eachsubsidiarytocompareitsperformancetothatofitsfellowsandseekfor

areas o improvement.

Change in methods in 2012

Since the new version o Danone Way was introduced in 2007, the group has

sought to dene guidelines that meet two needs:

theneedforsucientlyconsistentguidelinestoensureaclearunderstanding

o the subsidiaries progress over a period o several years;

theneedtorespondtostakeholdersincreasingrequirements,changesto

Danones strategy in these areas, and the specic eatures o the various

subsidiaries (size, maturity and type o business).

In 2012, and as announced in the 2011 Sustainability Report, signicant

changes were made to the program that raised standards compared with 2011.Tese changes involved:

adaptingtheguidelinestochangesinsustainabledevelopmentissuesthat

have become an increasingly integral part o Danones business:

- give greater priority to the nutritional quality o products or consumers

by establishing two separate practices instead o only one: product

composition as well as responsible communications related to product

promotion, while taking account o specic aspects relating to the

divisions activities;

- expand eorts to develop the groups human capital by also transitioning

rom one to two practices: rst, increase employment options or all

Danoners with appropriate training programs throughout their careers,and second, support individual development by matching employees

personal and proessional ambitions with the companys needs;


Danone WaY


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- health at work is incorporated into the saety at work issue to create an

expanded undamental encompassing health, saety and working

conditions. Tis issue now includes stress management-related programs

to comply with the agreement signed between Danone and IUF in 2011;

- the undamental concerning compensation or all Danone employees has

been removed rom Danone Way scope o responsibility and is now

monitoredaspartofDango,Danone'sinternalcontrolprogram.

Te subsidiaries received more extensive support as a result o these changes,

to acilitate their adoption: dynamicmaterialswerecreatedforgreaterunderstandingoftheaddedvalue

and content o the Danone Way program and how it works;

collaborativetrainingandinformationsessionsaboutthevariouskey

practices were organized and attended by some 250 participants in total;

allofthematerialsthusgeneratedweremadeavailableonaplatform

accessible to all the subsidiaries.

External audits to certify the program

o demonstrate the objectivity o the Danone Way ramework and the

reliability o the approach results to all group stakeholders, the program has been

audited by an independent rm since 2002 (KPMG since 2007).

Assessments o 14 subsidiaries representing 20.5% o the groups net sales were

audited by KPMG between October 2012 and January 2013. aking these

audits together with the review o the consolidation method applied to all the

subsidiaries results, KPMG certies the Danone Way programs 2012 results

(limited assurance level).

Te resulting opinion is published onpages 83 to 85 of this report.


Measuring progress and perorMance throughout the value chain

Danone WaY

th t l tt

b vf

by xtlth t

20.5%


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2012 ss

Scope of assessment

146 subsidiaries took part in Danone Way in 2012 (vs. 142 in 2011), representing

89% o the groups net sales (vs. 92% in 2011), the subsidiaries not involved

correspond to Unimilk group companies. Out o the 146 subsidiaries involved

in the program, 28 ollow the Danone Way Light guidelines or small subsidiaries.

It should also be noted that some subsidiaries do not conduct sel-assessments on all

Danone Way program undamentals, as the group and/or the subsidiaries consider

that certain evaluation criteria do not apply to them.

Detailed results

Methodology note: All o the results presented below show the trend rom 2011

to 2012. Tey are calculated on a like-or-like basis or easier comparison o

results.

Overall scores

According to the Danone Way methodology, the subsidiaries are awarded

a certain number o stars or their perormance based on the scale below:

0 stars Little or no awareness of sustainable development objectives -

no proactive program1 stars

2 starsAware of certain sustainable development objectives -

occasional steps are taken

3 starsAware of sustainable development objectives -

the most important practices are implemented

4 starsBest sustainable development practices are implemented,

in some cases using an innovative and/or distinctive approach

5 starsInnovative and/or distinctive practices are implemented

for all sustainable development objectives

Te 2012 results are as ollows, or all the subsidiaries:


ll

No stars

36%

35%

17%

3%3%

7%

38%

35%

14%

1%

4%

7%

2011 2012

Breakdown of subsidiaries by number of stars obtained:

Star Challenge

bl-

thhd Wy

146


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Distinguishing between subsidiaries applying the ull Danone Way

guidelines and those applying the light version, the results are as ollows:

O

Raport de Responsabilitate Sociala Coporatista 2012

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