Laura Palmeiro is Vice-President Finance Nature at Danone. In other words, she is the financial director for the Nature division, which works on improving the Group’s environmental footprint. As she describes it, her job has two main functions. Firstly, financially assessing how environmental issues impact Danone’s accounts. Secondly – and this is what takes up most of her time – overlooking management control on environmental indicators. Here, instead of euros, she works with other currencies (litres of water, metric tons of CO2, etc.). When she took the job in 2009, it had just been created. Laura’s career is, in fact, a perfect example of how environmental questions are increasingly integrated into Danone’s strategy.
From finance to environmental accounting
Laura Palmeiro is Argentinian. After studying economy and finance in Buenos Aires, she started working for PricewaterhouseCoopers, where she was in charge of external audits. Danone Argentina was at the time a client of the company, and that is how she first got a foothold in the Group: she was offered a job in reporting, in the Waters division. Her regular contacts with the teams in France and her knowledge of French were strong assets a few years later, when Danone offered her a post in Paris. “Danone is always looking to help people develop ‘internationally’,” she says. That was ten years ago.
At Danone’s headquarters, Laura worked as a management controller for the Waters divisions, and then in the investor relations team. “I have a very financial background,” she says, which is why she finds her current job so innovative. Back when it was created by Myriam Cohen-Welgryn (the then Managing Director of the Nature division – Ed.),
I had no real opposite numbers in other companies. And usually, the people who were more or less in charge of that job came from sustainability backgrounds. It was unusual to have someone from the finance team taking on the reporting and consolidation of environmentally-related figures.
The implementation of Danone’s carbon reduction programme
As VP Finance Nature, Laura is a key element in the implementation of the CO2 reduction programme, which Danone introduced in 2008. The amount of work was enormous, because the aim was to assess CO2 emissions for the entire lifecycle of the products.
That was innovative too: until then, organisations worked on specific scopes, such as a factory for instance. It is far simpler and more accurate, but it gives no information on how each step of the chain impacts the global footprint of the product, and hence on where precisely we can work to reduce that footprint.
Danone thus worked on raw materials, packaging, logistics, etc. Many decisions were made, such as suppressing secondary packaging, lightweighting, using new materials, switching road transportation to train when possible, sometimes getting cleaner vehicles, optimising routes, etc. Laura says the major changes took place in the factories, mainly in energy terms: the amount of energy used was reduced, and the sources of energy were also re-thought. Many factories have switched from coal to gas, and now two (in Ireland and Brazil) have switched to biomass.
Gathering reliable information all along the chain was the first step towards engaging and empowering Danone employees: “each one of them now knows what they can do, at their own level, to improve our global footprint.” In fact, all four divisions (Waters, Dairy, Baby Nutrition and Medical Nutrition) endorsed the emissions reduction goal, in accordance with their own specificities and those of the countries they operate in. Throughout the Group, 140 Carbon Masters are in charge of reporting the results. Laura says the goal is inspiring people and fostering their good will… while awarding bonuses based on the environmental performance has also helped put it at the heart of the group’s strategy.
Disseminating best practices to society
Danone’s carbon reduction programme is now inspiring other initiatives. Laura explains that the European Commission for the Environment is willing to regulate the environmental information given by the companies. In the agribusiness sector, we might in years to come see environmental information on the production of the product printed on labels, next to nutritional information. But the first step is of course to know what we are talking about, i.e. to define how the environmental impacts of a product are measured. For two years, a work group studied the issue, and Danone participated in the work. A few weeks ago, the commission finally issued its methodology recommendation, which is “extremely close to the one Danone already uses.” This approach from the European Union is “very important because it is the first to have such a large scope.” Until now, people made use of privately defined methodologies to assess their activities. It is thus the first one to be endorsed by the public authorities and even more importantly, by a supra-national entity. What should become soon a European standard might be an international standard in the years to come, as the commission is already sharing its work with other countries. Laura is enthusiastic, but she points out that “reading this information is not that easy for the consumer. But it is becoming such an important matter in society that it will eventually make its way into education. Children need to learn about ecology at school!”
When asked about her future, Laura says she wishes to keep working in a field of ever-increasing importance:
working out how to measure things that are not financial indicators, and which used not to be measured at all. We have very accurate standards for financial accounting, but reporting on CSR is still mostly done on a voluntary basis.
As consumers and investors grow more demanding about environment-related information, Laura believes there is a huge opportunity for people like her – people who already know the methods – to evaluate the activity and draw up action plans. At Danone, she works on what is called “integrated reporting”, an approach that combines social, environmental and financial reporting on the company.
All three are closely linked. The challenge is to show all three create value together: social and environmental responsibility is not a burden. And this will be the area for future reporting.
Even though this approach is in its early stages, Laura takes pride in the fact that Danone has long been working to link business strategy with corporate social responsibility: “integrated reporting will enable us to communicate more effectively about a story that has been going on since the beginning of Danone. It will help us highlight something that already exists.”
Photo © Shutterstock / Nelson garrido Silva