Danone overhauls business to become a more sustainable company

The dairy giant has become the first listed company to adopt the shareholders-driven model introduced by French law in 2019

Danone has become the first listed company to adopt the ‘Entreprise à Mission’ model, a new type of corporation created in France by law in 2019. The French dairy announced the news following the company’s annual general meeting.

Under the ‘Entreprise à Mission’ model, Danone has committed to pursuing social, societal and environmental objectives that reflect its conviction that the health of people and the preservation of the planet are interdependent.

“Danone is taking a new step in the pursuit of a model of sustainable value creation for all its stakeholders,” the company said in a statement.

Progress towards these objectives will be overseen by an independent Mission Committee of ten members.

The Committee is comprised of eight highly qualified experts mainly from international organisations, including Sharan Burrow, Ngozi Okonjo-Iweala, Pascal Lamy, Rose Marcario, Hiromichi Mizuno, David Nabarro, Gabriela Ilian Ramos, and Rajiv Shah. Also in the committee is an independent director, Guido Barilla, and one employee, Emna Lahmer.

Emmanuel Faber, Danone chief executive, commented: “At a time where companies are undisputably showing every day their contribution to society as a whole, and with the imperative of collective action, I am thrilled that all our shareholders decided that Danone would become today the first listed Entreprise à Mission.”

Faber is convinced that the more Danone’s business demonstrates that it is working for all its stakeholders, the more it will create value and be recognised for that.

“Never before has this been attempted at the scale at which we are going to do this together,” Faber added.

Danone has already given signs of its renovated ethos. The company announced earlier this year the launch of a plant-based accelerator to play a part in the future of sustainably produced food and drink products.

Danone’s financial report

Commenting on the business, Danone said that in Europe and North America, sales are slowing down given the combined impact of the destocking of the pantry loading made at the end of the first quarter, notably in Danone’s Specialized Nutrition business unit.

For Danone, the full effect on the second quarter of the closure of out-of-home channels has led to a drop in sales of 50%, which has particularly exposed the Waters business. Waters sales at company level are therefore expected to decline by around -30% in the second quarter.

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The direct extra-costs incurred to ensure business continuity, estimated at around €100 million in the first semester (sanitary, industrial and logistics extra-costs directly linked with Covid-19 pandemic), will impact the recurring operating margin of the first semester.

Actions to preserve cash continue and the two €800 million bonds issued in the semester at attractive rates have allowed Danone to further strengthen the balance sheet and the liquidity position of the company.

More information will be provided when first-half year results are published on 30 July.

Danone said its medium and long-term outlook remains robust and that Covid-19 pandemic enhances the relevance of its health-focused categories, localised food supply chain and regenerative agriculture strategies.