×

Danone's North America business hits key social, environmental milestone

  • DanoneWave has renamed itself and says it has been certified as a B Corporation promoting social and environmental performance.
  • While some stakeholders may worry that big changes to become more environmentally friendly will increase costs, Danone North America's larger suppliers have seen the opposite happen.

DanoneWave has renamed itself and says it has been certified as a B Corporation promoting social and environmental performance.

It is now called Danone North America.

"[Customers] want to understand who the people are behind the brand," CEO Emmanuel Faber said Thursday on CNBC's "Power Lunch."

"We decided that we needed to take our own part in embracing this revolution. We need to rebuild trust as companies, as an industry. I think the B Corp certification is a fantastic way of saying to everyone that this is the ethos of the people who are behind the brand."

To be designated a B Corp, a for-profit company must pass a set of standards regarding its social and environmental performance and change its legal structure to become a public benefit company.

Danone sought to achieve this certification by 2020, but it came out two years ahead of schedule. Part of this is due to earlier movements to turn the publicly traded company into a public benefit corporation during a merger with organic food producer WhiteWave last year. The rest came through big supply chain changes.

While some stakeholders may worry that big changes to become more environmentally friendly will increase costs, Danone North America's larger suppliers have seen the opposite happen.

Dairy is one the company's main ingredients and its production can be harmful to the environment due to water usage and waste. The company's largest manufacturing facility has cut its usage. While the initial research involved in reducing water usage was costly, one of the owners of the facility has already seen a huge reduction in costs. Faber said that up to 250,000 gallons of water can be saved per day due to the new technology.

Danone North America sustainable development manager Catherine Queen told CNBC at a New York event that there has been a movement to bring the sustainability effort to global suppliers and promote economic development as well. Global suppliers have been encouraged to move toward more plant-based packaging and pay their workers living wages. Sustainable manufacturing can lower costs significantly and create more room in budgets to increase wages without decreasing margins, she said.

Costs on the higher executive level have also been cut. Faber said the French-based parent company's interest rates on loans in Europe have been lowered as a result of the commitment to sustainable practices. While there is no evidence of the impact on share prices, Faber expects that it can help attract better investors and ultimately improve the company's financial performance.

Danone North America, with over 6,000 employees and over $6 billion in revenue, is the eighth and largest subsidiary to have achieved the certification and Faber has plans to take it further. He said the rigorous standards and legal requirements make it a difficult task, yet the company's success in achieving the North America certification two years ahead of schedule stands as a great example of what is possible for the entire company.

He said he hopes that Danone's success in B Corp certification will inspire other large corporate entities to make the necessary changes to become more environmentally friendly.