Danone Looking to Make World Better One Cup of Yogurt at a Time
(Bloomberg) -- Danone SA, the world’s biggest yogurt maker, notched a win in its quest to remake itself into the world’s largest socially responsible food company.
The North American unit of the maker of Dannon yogurt, Silk soy milk and Horizon Organic milk won approval certifying it as a B-Corp, Paris-based Danone said Thursday. With more than $6 billion in annual sales, the unit will consider environmental and social goals in its decisions and submit to an audit every two years to gauge its progress.
The company now has eight units certified as B-Corps representing about 30 percent of sales and has a team of employees pushing 12 more units toward certification. It wants to get the whole firm certified in a move Chief Executive Officer Emmanuel Faber said is necessary to rebuild consumer trust in big food.
“The millennial generation has changed the entire food industry -- they have a different set of beliefs about what works and what does not work,” Faber said in an interview. While their parents may have trusted big brands to deliver affordable, safe food, younger consumers want to make sure companies are working for them and not just shareholders, he said.
To certify itself, Danone had to answer 1,500 questions to prove it met rigorous governance standards and is working with suppliers on environmental sustainability goals such as switching to non-genetically modified cattle feed, Faber said.
Trying to convert the entire company into a B-Corp has never been tried at this scale. There are more than 2,400 certified B-Corps in 60 countries, but most are closely held, like Patagonia Inc., or are units of bigger firms like Campbell Soup Co.’s Plum Organics, Unilever Plc’s Ben & Jerry’s and Seventh Generation, and Gap Inc.’s Athleta. Only for-profit college operator Laureate Education Inc. and online marketplace Etsy Inc. have operated as publicly traded B-Corps, though Etsy gave up the certification last year.
Certification helps attract talent, build customer loyalty and could have financial benefits as B-Corp firms command higher premiums in the market, Faber said. Danone’s certification stems from its $10 billion acquisition of WhiteWave Foods Co., the Colorado-based maker of Silk soy and almond milk.
Danone is also working to tie its finances to its socially responsible goals, Faber said. It issued a 300 million euro ($370 million) social-impact bond to support sustainable supply-chain efforts in March, and two months ago Danone signed a 2 billion euro syndicated loan with 12 banks. As part of the deal, the lenders agreed to reduce loan margins by as much as 20 percent if the company meets its B-Corp milestones and other sustainability goals.
“We can no longer say that investing in sustainability doesn’t have short-term gains,” Faber said. “It is actually paying off in this syndicated loan immediately."
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