Danone Ecosystem Fund: a look back at five years of working towards a more inclusive economy  

07Oct.
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On 8 and 9 October, the Danone Ecosystem Fund will celebrate five years of existence with 300 guests from around the world who have contributed to its success. This general interest fund has partnered with over 48 NGOs to co-create 60 projects which have particularly contributed to the socio-professional development of some 35,000 people and improved the living conditions of 2.2 million others. Now it is time to see what has been learned during these five years of using innovation to achieve a more inclusive economy.

Five years already. The Danone Ecosystem Fund will be celebrating this milestone on 8 and 9 October, surrounded by some 300 people who all contributed to its success. These guests represent the 44 local Danone business units that ran the projects and the 48 partner NGOs that trusted them and, with various establishments, invested over €40 million in the programs.

This two-day celebration will see Danone teams, NGOs, academics, government representatives and students create an initial review of the Fund’s first five years

Also invited are university academics and expert advisers who worked closely with the Fund to measure the social and financial impact of its approach. These partners (ESSEC, William Davidson Institute, CNRE and CIRAD) will have an opportunity to share the review and the methods used to determine ‘professional empowerment’, the main social impact expected from the programs.

In recognition of the Fund’s contributions and the wealth of lessons learned at all levels in Danone Group, Emmanuel Faber and Franck Riboud will take the mike and hold discussions with participants. Pascal Lamy, former WTO General Manager, and Valeria Budinich, Vice President of Ashoka (an NGO that focuses on social entrepreneurs), will join members of the Fund’s steering committee to share their views and highlight the importance of this type of initiative.

This two-day celebration will see Danone teams, NGOs, academics, government representatives and students create an initial review of the Fund’s first five years and share the lessons learned from this innovative experience laboratory for use in years to come. In this way, Franck Riboud will deliver on his promise of a five-year Fund review for the shareholders who approved its creation.

 Created in 2009

No living organism can grow and develop in a deprived environment or a desert. Franck Riboud

Before presenting the review, let’s go back in time… to 2009. In that year, the financial crisis became an economic one, with major negative social fallout (particularly in terms of unemployment). At that time, Franck Riboud was Chairman of the Group’s Board of Directors. He drew up a report about the company’s responsibility to its local ecosystem. « No living organism can grow and develop in a deprived environment or a desert, » he explained. « It is in a company’s own interests to take care of its social and economic environment, which by analogy is its ecosystem. » In light of this, he decided to create the Danone Ecosystem Fund. This general interest fund’s mission was to create jobs, and grow and strengthen the economic activity of the partners who comprised Danone’s local business units’ ecosystems. Franck Riboud asked shareholders to show their strong support by approving a €100 million grant to create the Fund, drawn exclusively from the company’s profits. The response was resounding, with the Fund’s creation receiving more than 98% approval.

Co-creation with local partners lies at the heart of our approach

the local economy is the key to development, both for the local area and for Danone.

Beyond new ambitions, the main innovation of recent years is in « the way we do things ». The idea is this: Danone and players in the local economy (farmers, livestock breeders, raw materials suppliers, packaging recyclers, microbusinesses, small-scale retailers, health professionals, etc.) depend on each other. Local players can be financially fragile, and consequently threatened by the economic crisis. However, they are the very people that keep the economy buoyant. Even those that do not directly do business with Danone’s subsidiaries play their part in keeping the local economy running, and the local economy is the key to development, both for the local area and for Danone.

In looking for the best way to reinforce the local economy, we made a decision not to go it alone, but to join forces with partners who have local expertise and knowledge of the social issues the Fund addresses. Most of these partners are NGOs. We work hand in hand with them on the ground, building lasting economic and social solutions together. We call this approach co-creation. It has been steering the Fund’s projects since 2009.

Often, corporations and NGOs are presented as the antithesis of one another.  Through everything that has been learned and the feedback we hear, the Ecosystem Fund approach demonstrates that new opportunities to work together are opening up, opportunities in keeping with the purpose of each organisation.

Stéphanie Schmidt, Director of Ashoka, one of Danone’s NGO partners, explained: « Today, we can say that co-creation is a success.  We rely on a shared objective and a large dose of communication and transparency to take us beyond our differences so that we can make the best use of expertise which is both complementary and unique. »

Day by day, together, local Danone subsidiaries and NFP partners have shared their knowledge and networks to build programmes providing solutions to local socio-economic issues. So, looking back now, have the projects been a success? Yes, definitely. Through their social, environmental and economic impacts, they contribute to the development of a more inclusive economy.

To give their work a stable future, all the projects develop community-based structures

Although projects need time to become established, we can already see return on investment, in terms of both competitive advantage for Danone and social impacts for the communities. Through the Ecosystem Fund, innovative business models have been created that succeed in combining long-term growth and development for both Danone and the small economic players with which it works. To give their work a stable future, all the projects develop community-based structures (cooperatives, institutes, schools, etc.) and create or grow the businesses of local people who lack economic security or are even socially excluded. This reinforced ecosystem is beneficial for the Danone subsidiaries, as it gives them a competitive advantage: new sources of supply for key raw materials (milk, fruit and rPET), new distribution channels for products or the development of complementary services, in the early-life nutrition or medical spheres for example. « This approach gives us a definite competitive advantage, » Dario Marchetti, General Manager of Danone Dairy Products in Brazil, confirms. Our competitors try to copy the door-to-door sales system we have set up (link to Kiteiras), but they still haven’t managed, because they’re looking at it from a purely business point of view and not from a social point of view. » It has to be said that the projects can be complex to run. They often call on new skills, capabilities and ways of working, in both the subsidiaries and the partner organisations. So, it is important to invest in the relationship, and recognise errors and setbacks in order to progress. To date, only three projects have been halted while they were running.

The impact of the Ecosystem Fund in figures:

The Ecosystem Fund has given rise to 60 co-created projects (in sourcing, distribution, local development, services for individuals and recycling) with 48 NGOs and 44 local Danone subsidiaries in 27 countries worldwide, generating 2,600 jobs, directly impacting 34,900 people including 13,600 women, and reaching 2.2 million people on a local level.

The experience has become a key part of Danone’s culture.

Today, the experience and learning acquired via the challenges and successes of the Danone Ecosystem Fund have built a body of knowledge that will support and fuel Danone’s long-term transformation. « Danone projects is both economic and social, » Emmanuel Faber, Danone’s CEO, reminds us. « the decision our shareholders is 2009 to create a fund that would work in developing jobs around Danone is a concrete activation of this project. We have mobilized about 40 Country Business Units locally and as many NGO that have worked on reinforcing the employment situation of the micro economic actors around Danone and the success on the initiative shows us that it should be at the core of the Danone 2020 initiative that we are starting and that will continue to transform Danone’s approach to the way we work with our supply cycles and the way Danone interacts on its mission about alimentation in the world. « 

« Danone projects is both economic and social, » Emmanuel Faber, Danone’s CEO

The event on the 8 and 9 October will be an opportunity to: record and recognise five successful years of co-creation and shared commitment to promoting the inclusive economy throughout Danone’s value chain; harness contributions from all participants to build solutions to make the projects autonomous, sustainable and replicable and, last but not least, start thinking about how we can use the experiences gained on the ground to transform Danone.

Photo © : Danone Ecosystem Fund