The beginnings of the danone.communities project : an observation…

Today, malnutrition affects nearly 3 billion men, women and children who live on less than 2 euros a day.
The fight against malnutrition plays a key role in the development of poor and emerging countries as it helps lower mortality, reduce academic failure and expand economic activity both in the upstream (agricultural production) and downstream (local commerce) sectors.

Donation policies contribute significantly to this, at times even in emergencies ; however, they do not address the source of the problem. Corporate investment, on the other hand, can have a strong impact on improving the situation of the populations and regions. Provided, however, that such critical issues as the place of business in human society and the place of man in the economy are explored in depth. This is what social entrepreneurship, also known as “social business”, is all about. It is what the danone.communities project is all about.

…and a meeting

It all began with the meeting in November 2005 between Franck Riboud, CEO of Groupe Danone, and Muhammad Yunus, founder of Grameen Bank and later winner of the 2006 Nobel Peace Prize.

The two men discussed at length their ideas and their respective convictions concerning the development of poor countries and discovered that their areas of expertise were complementary. They then decided to create a joint venture called “Grameen Danone Foods”.

This company took on an original project : to create a yogurt factory in Bangladesh whose mission was to contribute to local development.

Grameen Danone Foods, a company dedicated to the development of its environment

Grameen Danone Foods is guided by four objectives :

1. To develop a product that has high nutritional value and is affordable for the poorest individuals :

• “Shokti Doi” yogurt (“that which builds strength” in Bengali) was developed according to the nutritional needs of Bangladeshi children with the help of nutritionists from the “GAIN” NGO.
• It is fortified with nutrients (including vitamin A, zinc and iodine) to make up for the dietary deficiencies of the local populations.
• Shokti Doi is sold for 6 euro cents, a price that studies found to be affordable for the poorest families.

2. To improve the community’s living conditions by creating jobs that raise the living standard and enhance the social fabric and the region.

3. To protect the environment and conserve resources

4. To ensure a sustainable activity while seeking profitability

To achieve these objectives, Grameen Danone Foods has adopted a development model that runs counter to that of large western companies :

• Grameen Danone Foods’ primary aim is to have a positive social impact ; its pursuit of profitability is based solely on criteria such as improving public health, creating jobs, reducing poverty and protecting the environment.
• Profits earned by the company are re-invested in expanding and running the business.

The danone.communities fund was created to provide an “eco-system” that encourages the development of social businesses to be funded with other partners around the world.

The objectives of the danone.communities fund are as follows :

• In a first phase, to develop other factories in Bangladesh based on the Grameen Danone Foods model, and to finance long-term “social entrepreneurship” projects in various parts of the world.
• To develop partnerships with local players or NGOs based on this original business model by combining their expertise with that of Groupe Danone.
• To allow the projects to expand outside the scope of Groupe Danone with a view to protecting them from the constraints of a publicly-traded company and from the dominant effect of big business.
• Finally, to establish a broad community of investors : “danone.communities.”

Grameen Danone Foods : the first company supported by the danone.communities fund

In concrete terms, Grameen Danone Foods is today a joint venture between Groupe Danone and Grameen Bank.

The danone.communities fund will acquire an interest in the capital by the end of the year.

A tool for this fund : a mutual fund open to the largest number of investors

The danone.communities mutual fund was launched with the help of a 20 million euro investment by Groupe Danone and the support of institutional investors in the amount of 30 million euros.

This innovative financial product is managed and marketed by IDEAM, a subsidiary of Crédit Agricole Asset Management Group. The prospectus has been approved by the French Financial Markets Authority (AMF) and is available upon request from IDEAM or downloadable on the AMF website.

At least 90% of the mutual fund will be invested in SRI (socially responsible investment) interest-rate instruments (money-market and/or bond instruments), and the shares of the danone.communities venture capital fund (FCPR), which is designed to acquire interests in local structures such as Grameen Danone Foods, will make up a maximum of 10% of the fund’s assets.

The danone.communities mutual fund targets several groups of investors through different “sub-funds”:

• One sub-fund targets Groupe Danone employees, while another is aimed mainly at Groupe Danone shareholders.
• The other three sub-funds are geared specifically toward distribution networks and institutional investors.
• The minimum subscription amount of approximately €50 makes it possible for the largest number of people to subscribe.

A mutual fund that makes investing meaningful

Investing in the danone.communities mutual fund means investing in a financial product that creates value, particularly that of social utility, and reflects a desire to support the local development of poor countries in a tangible way.

An initiative that benefits all stakeholders

• Populations that have contact with the companies related to danone.communities see an improvement in their health and economic situation.
• Institutional and individual investors invest in a product that is both sound and “meaningful”.
• Social businesses (such as Grameen Danone Foods) can implement large-scale projects with the help of the fund and Danone’s know-how and reputation.
• These projects provide Danone employees with new sources of inspiration and innovation to enhance their skills.
• Groupe Danone’s image and influence are strengthened in countries where the fund’s projects are carried out.

Danone, a two-fold economic and social commitment around the world

Thirty years ago, Antoine Riboud (father of Franck) gave an historic speech in Marseille that is well known to Groupe Danone’s teams. He spoke of giving equal importance to the economic and social aspects of business undertakings so that they benefit mankind.

Danone’s mission (to bring health through food to as many people as possible) is a response to this two-fold economic and social commitment. It is a part of every employee’s day-to-day life.

Throughout the years, the company has grown considerably in emerging countries and has established itself in very diverse cultures and social realities ; in its own way, it has played a role in the development of their economy.

Today, with the creation of the danone.communities fund, this two-fold economic and social commitment is taking on new meaning, particularly as regards poor countries. The fund addresses the need to find new business development models that are more “social-minded” and more sustainable.

Large global companies, in particular, are now stakeholders in the planet’s future. Through this initiative – and many others – Groupe Danone is assuming its responsibilities and leading the way.