At Danone, we work to uphold and embed sustainable sourcing and responsible procurement standards across our value chain. When it comes to milk, our number one ingredient, we take a local-first approach and foster our suppliers’ resilience through long term contracts. For our remaining ingredients, materials, services and goods, we work to ensure our first-tier suppliers respect specific social, environmental, and ethical standards. For our upstream supply chain, our due-diligence aim at advancing on traceability, risk assessment and preventive actions through engagement with our main suppliers and collective action. In parallel, we develop and support projects aimed at on-the-ground transformation of sourcing for key ingredients.
RELATIONSHIP WITH SUPPLIERS EXCEPT MILK
Through its RESPECT program, Danone monitors non-milk suppliers targeting responsible supply and continuous improvement. We also work directly with some producers further up the supply chain, particularly through projects supported by the Danone Ecosystem Fund and the Livelihoods Fund for Family Farming (see Social Innovation).
The program covers all purchasing categories of first tier suppliers except for raw milk (see above).
Implemented since 2005, the RESPECT program relies on the Sustainability Principles for Business Partners built around three pillars: Fundamental Social Principles, Environmental Principles and Business Ethics Principles.
These Principles are included into supplier contracts as a ‘sustainability clause’ and compel them to pledge that Fundamental Social and Business Ethics Principles are already respected not only within their own organizations but by agents, suppliers and sub-contractors. They also commit to striving towards implementation of Environmental Principles.
Since 2017, Danone is upgrading RESPECT to evolve towards a due diligence approach and reinforcing its requirements on human rights (see Registration Document 2018 and section Human Rights below).
In 2017, Danone mapped major potential risks for the twenty most exposed categories of procurements. Risks were analyzed according to a grid based on ISO 26000, GRI G4 and SA 8000 standards, integrating potential impacts of purchased products in the areas of social and Human Rights, local communities, consumers, fair trade practices and the environment.
Following this analysis, 5 categories of procurement were prioritized in terms of Human Rights over the coming years: agency workers (see section Human Rights below), palm oil, cocoa, cane sugar and fruits. For the food categories, the potential risks brought to light are mainly situated in farms and plantations upstream in the supply chains. As for environment, this mapping confirmed the priorities already identified within the framework of Danone’s Forest Footprint Policy.
In 2018, Danone updated its risk mapping to include changes in its ingredients portfolio following WhiteWave acquisition.
Assessment of suppliers
Assessment of suppliers situated in the upstream part of the chain, at plantation level, is only possible when traceability is established, and places of production are identified. As of December 2018, Danone has achieved the following levels of traceability:
- Palm oil: Danone works with the The Forest Trust to ensure traceability of palm oil. In 2018, 58% of the palm oil bought by Danone was certified “RSPO segregated”, 96% excluding WhiteWave scope.
- Fruit: following changes in Danone’s approach to fruits sourcing, traceability was reassessed at 100% traceable back to the first level of industrial processing after harvest.
- Cocoa: 70% traceability back to country of origin.
- Cane sugar: initiated this year with ProForest, 43% traceability back to plantations and 41% to back to mills.
- Soy: Regarding soy in animal feed for dairy cows, Danone estimates that less than 5% of soy enter the feed ration of its dairy cows. After internal analysis, it appears that in North America and Brazil, soy purchased by dairy farmers is purchased locally in areas without risk of deforestation. Regarding soy imported into Europe, Danone worked with TRASE (Transparency for Sustainable Economies) to ensure the traceability of soy coming from Brazil: this import of soy presents a risk of coming from areas at risk of deforestation. As a remediation, Danone has implemented action plans in line with its soy policy and aims to promote local soy or local alternatives. For soy used in Danone North America plant-based products (coming from WhiteWave portfolio), it is cultivated entirely in the United States, while in Alpro products it comes mainly from European countries (France, the Netherlands, Belgium, Italy and Austria) and from Canada, considered as areas with very low risk of deforestation.
For more information, please refer to our vigilance plan available in our 2018 Registration Document.
For first-tier suppliers, assessment is based on CSR performance as self-declared on Sedex platform (Supplier Ethical Data Exchange). A risks analysis carried out by Sedex complements this self-declaration. Suppliers identified at risk by Sedex are audited by third-party organizations according to the SMETA (Sedex Members Ethical Trade Audit) protocol, which covers labor, health and safety, the environment and business ethics.
To reinforce its Human Rights approach, Danone conducted in 2018 an inhouse human rights risk assessment on the 4,000 sites registered on Sedex. As a result, the Company launched in 2018 a two-year Audit Plan for the 200 sites identified as high risk (see section Human Rights below).
Supplier registration on Sedex Platform