Over 50% of Danone's revenues are earned in Europe and fresh dairy products account for more than 50% of overall company revenues. This is of importance as the bovine growth hormone, rBGH, is not permissible in the European Union. Independent of whether countries regulate the use of the growth hormone rBGH and/or genetically modified organisms (GMOs), Danone supports the advancement of sustainable agriculture and the transition to organic by providing financial assistance to small farmers through its Ecosystem Fund. Danone also earns a portion of its revenues (less than 20%) from its packaged waters division. Although Portfolio 21 does not view this division as environmentally favorable, Danone recognizes that its products rely on healthy ecosystems. As a result, the company works with communities that also rely on the springs owned by Danone to ensure their protection and to collectively decide on future action plans.
Danone has implemented numerous initiatives to minimize the company's direct and indirect environmental impact. In 2010, Danone surpassed its reduction goals and is now establishing new long term goals. The company has also worked to minimize the emissions of its suppliers, which account for 85% of the company's total emissions. One initiative includes Danone establishing more than 65 "carbon pacts" with top suppliers, which include a greenhouse gas reduction commitment and a three year action plan. Danone also adopted a new mechanism for financing its environmentally directed investments. The goal is to support environmental projects with a lengthier return on investment than that required for standard investments. Danone notes about its capital expenditures program (CAPEX) that, "Green CAPEX makes it possible to invest in projects that would not be pursued if only traditional financial criteria were applied." Portfolio 21 has asked the company to expand its non-GMO position to all of the geographic areas in which it operates.
To the best of our knowledge the above information is accurate and was obtained from sources we believe to be reliable. Neither the information presented above nor any opinion expressed shall be construed as an offer to sell or a solicitation to buy the security. The views expressed are those of portfolio management as of 8/31/11 and may not reflect current opinions or subsequent events.