2021 MATERIALITY MATRIX REPORT - WHAT MATTERS TO OUR STAKEHOLDERS
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2021 MATERIALITY MATRIX REPORT WHAT MATTERS TO OUR STAKEHOLDERS Responsible and sustainable business involves engaging with our stakeholders to refine our strategy. This year, we have renewed our materiality matrix, a key tool to deliver on our One Planet. One Health frame of action, identifying our priorities according to their importance for external and internal stakeholders as well as their impact on Danone’s business success. An updated list of 35 key topics that have been identified in collaboration with our stakeholders are shown in our latest matrix below. Covering environmental, health, social, business and governance aspects, these issues have been evaluated to determine sustainability challenges and opportunities for Danone. MATERIALITY METHODOLOGY In order to refine our understanding of the key challenges and address them strategically, we followed a rigorous two-step process which built on the inaugural global materiality assessment in 2017: • Identification: Using the 2017 list of topics as a basis, we undertook a review of the most recent literature to identify any new or emerging issue to be included in 2021, and to understand the relevance of existing issues based on their evolution in recent years. This enabled us to set an exhaustive list of 35 topics that are directly or indirectly connected to Danone’s business and stakeholder interests. • Assessment and prioritisation: A quantitative survey was conducted worldwide, involving more than 150 Danone employees, 230 professional stakeholders and key customers. This survey allowed us to prioritise and assess material issues, and to identify the top tier topics that Danone must focus on. The topics were ranked based on their perceived impact on Danone’s business success according to Danone employees, and on their perceived importance for external stakeholders (i.e., representatives from NGOs, academia, business, government, as well as representatives from Danone’s business partners such as retailers). • Forecasting: Given the sustainability agenda is fast-moving, we added a new element to our materiality assessment this year whereby we invited survey respondents to tell us which material topics they forecast will become more important in the next five to ten years (on the next page, visualised through the size of topic bubbles).
UNDERSTANDING THE MATERIALITY RESULTS • Topic tiering: The topics’ distribution on the materiality matrix, across three distinct tiers, provides useful insights on how to understand and manage each topic in the short, medium, and long term: o The first tier is made up of the 12 priority topics that are the most material to both Danone’s external stakeholders and the company’s business success. These topics are intimately linked to Danone’s evolving business model. They are core to the activation and delivery of Danone’s One Planet. One Health. o The second tier is a cluster of major topics for creating medium- and long-term value. Many of these topics are already being addressed by Danone through policy development, target setting, local project management, etc. o The third tier of topics includes compliance-driven matters and emerging topics. These topics are to be addressed through compliance, monitoring and ongoing management. • Interdependence of topics: Material topics do not exist independently; they are linked to one another and their position on the matrix should be understood accordingly. For instance: o There is high level of interconnection between environmental issues, most of them being located in the first tier. While water stewardship is thus located lower within this first tier, it is closely linked to climate change – which is among Danone’s most material issues. Similarly, sustainable farming and land use, which remains at the very top of the matrix in 2021, also very much depends on rural/farmer development, located further down within the first tier. o This interdependency also applies to health issues. While product safety and quality and the nutritional value of Danone’s product portfolio are, similarly to 2017, considered as most important, they cannot be addressed in isolation. Indeed, they very much depend on new consumer-related issues (new consumption patterns, consumer behaviour change), which are what Danone’s business success will ultimately depend on. Exploring the interdependence of these topics helps us identify the necessary system-wide approaches to put in place in order to drive progress on our One Planet. One Health frame of action. • Materiality of single-axis topics: It is also important to highlight that some topics may be crucial only externally (to stakeholders) or only internally (to business success). As a consequence, Danone considers them as key, and they are addressed strategically even though they may not be located in the first tier of the matrix. ANALYSING THEMATERIALITY RESULTS • Our most material issues in 2021: Two major issue themes emerge from the top tier of the matrix: health and the planet. These are very much aligned with our One Planet.
One Health frame of action and stand as further evidence of our responsibility in addressing these as a priority. In addition to these key pillars, two other topics stand out in the first tier: integration of sustainability into the business, and responsible procurement and supply chain management. These topics are strategic enablers that prove to be essential in driving progress. Indeed, action on key planet and health issues calls for business transformation and, consequently, further integration of sustainability into the business, at product and category level. At the same time, acting on those topics requires deep sustainability integration at the procurement / supply chain management level. • What has changed since 2017: While a few planet issues (circular economy, sustainable farming and land use) were already highlighted as important in 2017, they have been joined by multiple other issues: climate change, water stewardship, and local sourcing and rural development have indeed jumped to the first tier since our last materiality assessment. Although located in the second tier, other planet issues have also gained importance – including biodiversity protection and regeneration. This reminds us of our ever-growing responsibility to set the bar high in our One Planet agenda. Meanwhile, our One Health agenda is proving more relevant than ever, with a new set of consumer- related issues (new consumption patterns, consumer behaviour change) joining our pre-existing health priorities (product safety and quality, nutritional quality of overall product portfolio, food and water access and affordability) in 2021. • What to expect in the next 5-10 years: Consistent with the evolution which has taken place since 2017, environmental issues are expected to gain the most traction in the next 5 to 10 years. While sustainable farming and land use, circular economy and climate change are thus expected to continue their rise to the top of the agenda, other environmental issues will also gain ground (water stewardship, biodiversity protection and regeneration, and food loss & waste).When it comes to health, consumer-related issues are expected to grow in importance in the next 5-10 years, with rising expectations for Danone to show the way through new offerings, consumer education and the promotion of healthier and more sustainable alternatives. LEVERAGING THE MATERIALITY RESULTS The materiality results are communicated and spread within Danone in order to activate the One Planet. One Health frame of action across our businesses. The core purpose of this materiality analysis is thus to provide guidance for us to better prioritize sustainable strategic topics, to better meet stakeholder expectations and to better implement commitments and policies towards a sustainable business and society. In addition to an overview of the global landscape, this year’s materiality assessment was taken to the next level to enable a deeper understanding of regional trends as well as expectations towards each of our business lines. This thorough process, beyond its highly strategic nature at corporate level, allows us to capture actionable insights and to formulate tailored recommendations at local and category level.
Action on public health issues Animal health and welfare Biodiversity protection and through specialised portfolio regeneration • Addressing malnutrition and • Animal health (e.g. use of antibiotics, • Plant and seeds biodiversity undernutrition etc.) • Species extinction • Addressing nutritional deficiencies • Animal welfare (e.g. adherence to • Soil & nutrient depletion • Supporting kids and infant health best practice standards) • Insect pollination in agricultural crops • Supporting ageing / fragile • Animal testing • Ecosystem regeneration populations, patients care and recovery, through immunity protection • Supporting specific medical conditions (allergies, epilepsy…) • Supporting maternal health • Addressing mental health Business ethics and integrity Brand activism Climate change • Anti-bribery, fraud and corruption • Brand activism / advocacy for • Air pollution • Anti-counterfeiting progressive causes • Climate partnerships & advocacy • Anti-trust / Anti-competitive • Brand engagement with consumers • GHG emissions from agricultural and behavior • Brand partnerships with NGOs and food production value chain • Compliance other civil society organisations • GHG emissions from transportation • Protection of intellectual property • Energy efficiency • Renewable energy • Carbon offsetting • Carbon capture and sequestration • Climate-friendly technologies (e.g. phasing-out HFC gas) • Climate-friendly science-driven ISSUES solutions (e.g., food complements to reduce methane emissions NAMES Circular economy, packaging and Consumer behaviour change Corporate advocacy on public policy, & waste stakeholder engagement and partnerships • Single-use plastic packaging waste • Consumer education on healthier • Responsibility and transparency on SUB- • Returnable, reusable, and lifestyles and diets public policy / advocacy activities refillable packaging (i.e. new • Partnerships with local authorities • Stakeholder listening and dialogue TOPICS business models like Loop) and groups (sports, etc.) to (incl. with critics) • Biodegradable/bio-based encourage healthier lifestyles • Multi-stakeholder coalitions (e.g. One packaging • Partnerships with retailers to offer Planet Business for Biodiversity • Recycled content in packaging better choices to consumers, [OP2B], Business for Inclusive Growth • Recyclability of packaging through promotion of healthier [B4IG], etc.) • Collection of packaging (e.g. options • Collaboration with the public sector deposit return schemes) (e.g. national governments, • Reduction of fossil fuel use in international organisations) packaging • Partnerships along value chain (e.g. suppliers, customers, business partners) Data security and privacy Deforestation Employee engagement in governance • Protection of data against • Zero deforestation (incl. palm oil • Inclusive governance (employee malicious attacks and improper sourcing) participation in company decisions) use, i.e. cybersecurity • Employee accessibility to financial • Responsible / compliant lifecycle ownership (e.g. company shares) management of data privacy • Employee engagement opportunities / • Rights of data subjects & programmes information self-determination
Employee security, health, safety Food and water access and Food loss and food waste and wellness affordability • Occupational health & safety (zero • Affordable price of nutritional • Food loss at agricultural level accidents) products • Food loss at manufacturing level • Employee mental health & • Availability of nutritional products • Food waste at retail level wellbeing (incl. work-life balance) (incl. in most disadvantaged • Food waste at consumer use level • Employee physical health and non- communities) communicable diseases (e.g. • Affordability of life-essential cancer, diabetes, obesity, etc.) products (e.g. water, infant formula) • Employee security (e.g. external) • Access to safe drinking water in communities Fair relationships and pricing with Fair working conditions and wages Human rights in supply chain farmers • Stable, long-lasting partnerships • Living wage • Child labour with farmers • Working hours • Forced labour / modern slavery • Fair remuneration / shared value • Working conditions • Informal labour in the value chain (e.g. with farmers • Access to basic services waste pickers) • Ongoing technical support / • Temporary workers knowledge transfer (esp. to • Indigenous people’s rights against land smallholder farmers) grabbing and to freedom of association • Migrant workers & trafficking • Sexual exploitation Integration of sustainability into Labour relations Local sourcing and rural / farmer the business (incl. B Corp and development Entreprise à Mission) ISSUES • Integrating sustainability priorities • Social dialogue • Sourcing of locally produced raw and principles in the company's • Grievance procedures and materials / local origins NAMES corporate governance (e.g. whistleblowing mechanisms • Respect to cultural / local farming Entreprise à Mission) • Management of layoffs practices & • Creating sustainable business • Freedom of association & collective • Making farming more attractive to models aligning profits with social bargaining young people / environmental goals (e.g. B Corp • Improving farm economics and SUB- certification) capacity among farmers • Measuring / rewarding sustainable TOPICS performance and impact New consumption patterns and Nutritional quality of overall product Product traceability and labelling planetary diet portfolio • Encouraging flexitarian diets vs • Reducing sugars, sodium, and fat • Product traceability (e.g. pure meat-based / dairy-based content provenance of ingredients, • Providing a diverse product • Reducing ultra-processed foods conditions of production) portfolio in line with local • Optimizing portion sizes • Transparency over ingredients in consumer diets and cultural • Encouraging healthy hydration products (e.g. GMOs, colorants preferences (water over other types of drinks) and flavourings, allergens, etc.) • Being suitable to consumers with • Creating plant-based alternatives to different religion-induced diets existing products • Nutritional labelling (e.g. Nutri- Score in Europe) • Environmental footprint / impact labelling Product safety and quality Responsible leadership and Responsible management of the governance Future of Work • Food safety risks management • Internal controls and auditing • Protecting gig economy workers (e.g. (accountability and governance) • Board composition, independence, temporary, flexible, freelance, and • Food safety standards and audits / and effectiveness Uber-like jobs) certifications • Executive compensation • Managing / anticipating the impact of • Product authenticity • Roles and responsibilities of automation on the company’s own • Additives, preservatives, artificial Chairman vs CEO operations ingredients • Succession planning • Managing / anticipating the impact of • Performance management automation across the supply chain
• Pesticides in consumer foods and • Transparency and accountability to beverages stakeholders • Chemical compounds in packaging Responsible marketing Responsible procurement and supply Sustainable farming and land use chain management • Marketing to children • Supply chain management and • Transition to organic farming • Marketing to other vulnerable procurement procedures • Adoption of agro-ecology practices groups • Supplier payment terms • Soil health protection, fertility ISSUES • Infant formula / breast milk • Supplier capacity building / training conservation and restoration substitutes (BMS) ethics and programmes • Support to farmers in their transition NAMES marketing • Collaboration / co-innovation with to more sustainable farming • Responsible use of nutritional and suppliers & health claims Talent attraction, retention and Tax and local economic development Water stewardship (incl. bottled SUB- growth water) • Employee remuneration • Fair and transparent tax contribution • Water quality TOPICS • Pension & social security • Local job creation • Water discharge / pollution reduction • Employee training & learning / • Payment, financial and in-kind • Water use in agriculture career development support to suppliers • Water abstracted for production of • Talent management & succession • New ventures / acquisitions bottled-water products planning • Contribution to and promotion of • Natural water resources protection, • Maternity & paternity protection local development, around through watershed conservation (e.g. parental leave policy) production sites • Conflict and competition over water resources Workplace diversity and inclusion Vulnerable communities’ empowerment in value chain • Gender diversity/inclusion • Supporting smallholder farmers by • Racial diversity/inclusion providing equipment and training in • Sexual orientation (LGBTQI+) sustainable and regenerative diversity/inclusion practices, or by providing stable • Disability diversity/inclusion contracts • Age diversity/inclusion • Helping vulnerable populations (e.g. • Other forms of diversity/inclusion women from underprivileged areas) become micro-distribution entrepreneurs • Helping waste pickers to improve their working conditions, wages, social protection • Supporting and empowering caregivers, through training, financial support, etc.
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