Danone has integrated purpose since 1972, enabling the company to create both shareholder and societal value. We aim to inspire healthier and more sustainable eating and drinking practices and believe that the health of people and the health of the planet are interconnected. This is now pegged in our ‘One Planet One Health’ vision.
This purpose and vision is embedded across the business, and our treasury and finance divisions are empowered with the tools to match that purpose. This is particularly evident in our funding strategy.
We are a component stock of leading social responsibility indexes including the Dow Jones Sustainability Indices, Vigeo Eiris, MSCI ESG Ratings and the FTSE4Good Index. Inclusion in these indices involves a long assessment process and this transparency and credibility can drive our investment decisions.
Our goal is to contribute positively to all 17 Sustainable Development Goals, but we have prioritised three particularly: SDGs 2, 3, and 6 around Zero Hunger, Good Health and Wellbeing and Clean Water and Sanitation, respectively.
Two years ago, we partnered with our core 12 banks in a facility that lowered our cost of borrowing if we increased our positive impact, all verified by a third party. We raised US$2bn in a syndicated credit facility whereby our ESG performance directly impacts – upwards and downwards – the margin payable to the banks over the entire duration of the facility. So far, our external metrics have shown that we are improving our ESG performance.
We have also done a social bond in line with our purpose to create and share sustainable value with all our stakeholders. In 2018 we were the first multinational to sell a social bond in line with the new Social Bond Principles set out by the International Capital Market Association. We had really good results, and a strong reception from investors. I believe this is because we are credible; we were able to demonstrate to investors that this topic has been a long journey for us.
Proceeds from our social bond have gone towards research for specialised nutrition. Funds also support entrepreneurs and start-ups, communities, and healthcare in emerging markets. Proceeds from our social bond also finance mangrove planting in Senegal to create carbon credits, and we support farmers in our supply chain to guarantee stable income for farmers and long-term collaboration on sustainability issues.
When it comes to putting in place this kind of financing, we must partner with banks that really believe in our purpose. It involves a great deal of discussion and collaboration and involves working with banks that are well connected with ESG investors. We find that our purpose also attracts investors to our traditional, or classical debt. I believe investors like our paper also because of our purpose.