Danone and Nestlé are comparable, multinational food producing companies. Both companies have high ESG-ratings, and both are committed to becoming more sustainable in their products and business practices and have a strong reputation in this regard. We invest in Danone, not in Nestlé. In this case study, we explain why.

Positive impact

Danone is a French multi-national food producer that is on track to become the world’s largest B Corp. The company operates on the premise that health of the people and of the planet are closely interconnected. The company is best known for dairy products, but it is quickly expanding into the plant-based alternatives market. It has three main business lines: essential dairy and plant-based products, waters, and specialised nutrition. Danone products are sold in over 120 countries.

We selected the company for its strong fit with our Sustainable Food and Agriculture transition theme. Danone aims to continuously improve the nutritional quality of its products and constantly designs and promotes healthier alternatives, based on in-depth knowledge of local food cultures, food habits and public health challenges. The company is expanding into plant-based food, thus playing an important role in the transition from animal proteins to healthier plant-based proteins. An additional advantage of plant-based food production is its much small environmental footprint regarding water use and CO2 emissions, compared to meat and dairy production. Danone also stands out for its non-GMO offering and its efforts to reduce GMOs in its supply chain, including cow feed in its dairy farming activities.

Danone’s B-Corp certification proves its strong ESG-performance. Other positive aspects are Danone’s strong animal welfare programme, turning the company over the last five years from laggard to frontrunner in this regard. And in countering climate change, the company has set itself the target to be carbon neutral across its entire value chain by 2050.

Danone is part of the Triodos Global Equities Impact Fund portfolio and fits our Sustainable Food and Agriculture transition theme.

Danone contributes to the following UN Sustainable Development Goals:

Negatives outweigh the positives

Swiss multinational food and beverage company Nestlé in many respects also has a strong sustainability reputation. In the Dow Jones Sustainability Index/CSA Annual Review 2019 Nestlé got an overall score of 92 out of 100, receiving industry-best scores in all three dimensions Economic, Environmental and Social. This recognises the company’s commitment to ensuring that its products and processes are as environmentally and socially friendly as possible.

Despite its sustainability reputation, the company is associated with controversies more than any sector peer. These controversies range from child labour, price fixing and unethical behaviour to promoting unhealthy food and mislabelling. Another important reason for us to exclude Nestlé is the company’s position on genetically modified (GMO) ingredients in its products. Even if we do not exclude companies that use GMOs, we require them to take a precautionary stand and to try to diminish or avoid the use of GMOs and offer clients a well-diversified choice for non-GM products. Even though it offers alternative, GMO-free products, the company has a positive view on GMO, whereas Danone takes a far more precautionary approach.

We therefore concluded that the negative aspects around Nestlé are likely to outweigh its positive impact, making the company unsuitable for inclusion in our impact portfolios.

Download our whitepaper A call for radical transformation to learn more about our seven transition themes.

Explore our Impact Equities and Bonds impact report ‘Moving the needle’ to find out more about our role as impact investor. The report presents our 2019 results in a context of numbers and stories and showcases our mission to make money work for positive change.