The Bank co-invested with Groupe Danone in its Russian dairy subsidiary, Danone Industria in 2001as part of a Multi-Project Facility (MPF) (see PSD: http://www.ebrd.com/english/pages/project/psd/2001/1968.shtml). In 2010 the Bank exchanged its shareholding in Danone Industria for a stake in Danone CIS, a holding company that consolidates the subsidiaries of Danone in Russia, Ukraine, Belarus, Kazakhstan and Azerbaijan to support the Danone operations in those countries.
The Bank’s investment is expected to have the following main impact on the transition in the Region:
a) Market expansion
The Bank is supporting the expansion of Danone’s dairy operations in Ukraine, Belarus and Kazakhstan in addition to Russia where the Bank already co-invested in Danone Industria. The Belarusian and Kazakh dairy markets are still in relatively early stages of their development, with no major local operator able to produce high quality dairy products. Danone’s product portfolio mix remains unique for the region, with a number of strong and affordable brands of children’s yoghurts, yogurt drinks, and desserts.
(b) Backward linkages
Further expansion of Danone’s operations in the region will have a positive impact on the local fresh milk suppliers (with most of them being small independent farms).
Danone CIS is a holding company that consolidates the subsidiaries of Groupe Danone in Russia, Ukraine, Belarus, Kazakhstan and Azerbaijan. Groupe Danone is the world’s leading producer of modern dairy products and mineral water.
Restructuring of equity co-investment with Danone in the region.
EUR 1 billion.
Environmental classification and rationale
The project is categorised B. The activities of Danone Unimilk (DU) may be associated with a number of environmental and social issues although it is anticipated that these will be specific to sites and readily mitigated through mitigation measures.
Key environmental issues and mitigation
Danone has a very clearly defined approach to the promotion of sustainable development within its own facilities and its supply chains. This approach incorporates consideration of social issues including labour management, consumer and product issues and environmental issues. For each of these the Danone has clear policies, defined priorities, internal procedures and practices and a series of key performance indicators against which it measures itself.
As part of the process of integrating DU facilities into the Danone brand, Danone has undertaken a review of all facilities owned and operated by DU. Through this review Danone has benchmarked DU facilities against its policies and practices in order to understand what further actions will be required and over what timeframe to bring those facilities into line with the Danone systems.
It should also be noted that the Bank undertook an environmental and social auditing programme when it was separately considering the provision of finance to DU. At that time a complete environmental and social action plan was developed to bring DU into compliance with the Bank's Performance Requirements. A copy of this report and the resulting action plan were provided to Danone to assist in the integration process.
Summary of Environmental and Social Action Plan
Danone have prepared an Integration Plan which has been provided to the Bank for review and agreement. The plan defines staffing, costs, and a timetable for the completion of the integration process. Topics covered include corporate governance, management, safety, industrial and environmental responsibility and human resource management. The agreement with the Bank requires that DU comply with the Bank's Performance Requirements and it is anticipated that through the completion of the Integration Plan this will be the case.
Monitoring and reporting
Danone will monitor the environmental impact of DU's operations in accordance with national law and regulations. The Bank will evaluate the project's compliance with the applicable environmental and social requirements during the lifetime of the project by reviewing annual environmental reports prepared for the project.
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