Corporate Social Responsibility: How You Can Profit--and Kick Poverty Out

BY FC Expert Blogger Pamela HawleyFri Mar 4, 2011 This blog is written by a member of our expert blogging community and expresses that expert's views alone.

Danone and Grameen Bank Joint Venture One of my favorite partnerships was formed in 2006 between Danone and Muhammed Yunus' Grameen Bank. For both of them, Bangladesh was a hot spot for their products: Danone for their fortified yogurt and Grameen for their microfinance. Grameen is known for their innovation, where they provide loans to impoverished clients who start their own businesses: They can earn a sustainable living rather than just receive a handout, thereby finding a skills-based way out of poverty. Danone has been operating in 45% of the developing world, providing its yogurt, water and baby food. Yet they had not been able to enter Bangladesh while remaining financially viable. So they partnered with Grameen, who had the important local relationships and footing on the ground for almost 25 years. The goal was that Grameen could help Danone create a unique communitybased business model. That's the critical first step. When we enter into a new territory in Corporate Social Responsibility, we need to partner. Partner, partner, partner... we can't do it alone. This is especially true if we are going global. Those of us who are involved in CSR know we need to have experts on the ground. It's important to establish local buy-in, which can take years of relationship building. And we need to have experience, or rely on those who do. It may sound bland, but these are the day-to-day lessons learned which help us hone our products, services and CSR programs in way that is relevant to the community. Here's where we can help each other create winning partnerships. It can be "for-profit/for-profit" partnerships, "nonprofit/nonprofit" partnerships, or in this case, "for-profit/nonprofit" partnerships. So to do this right, Danone and Grameen entered into a new venture, together. They didn't just pool their current resources or relationships. It was not just a press release. It was not the famed "collaboration" which sounds all too benevolent, but may lack substance. Danone and Grameen Venture into a Zone of 40% Poverty Forty percent of Bangladeshis live in poverty, with an annual income of $497 per year. Bangladesh has one of the highest child and maternal malnutrition rates in the world. One-third

of its people and 45% of its children under five suffer from moderate to severe malnutrition.* That makes the Bangladeshi community even more susceptible to sickness, poor eye conditions, and stunting, making them less able to work and study. Danone and Grameen's tack was to go big. Their mission was to reduce poverty by providing nutrition to the poor of Bangladesh through a unique community-based model. Their initial goal: to set up a yogurt producing company in a plant near Bogra, Bangladesh. That's the first point: The production space was locally based and relevant to the people they were serving. Next, they worked on a compelling, meaningful brand. The yogurt was branded under Grameen Danone Foods Ltd as "shokti," meaning "strength" in Bengali. One cup would provide 30% of a child's recommended daily nutrients, and it was marketed at a price even the poorest could afford. Thirdly, they funded it with equal commitment: Both provided funding. It wasn't the traditional 'corporation donates to a nonprofit.' In a similar vein, profits are reinvested in the company and the market prices are set to make the enterprise self-sustaining. It's the Global Thinking ... That Goes Beyond Here's where Grameen and Danone really took their partnership to the next level. They addressed all these complex global factors we've discussed. But then they took an even greater step to integrate themselves into the local community through more sensitive measures: job opportunities, green initiatives/solar energy and social investment. Grameen Danone Foods focused on a community model that maximizes job opportunities and offers competitive wages. It purchased its milk from nearby micro-farmers and distributed the yogurt door-to-door with the help of local, rural saleswomen. In the 30 km radius of its Bogra plant, Grameen Danone Foods provides 1600 jobs. Their partnership is also committed to environmentally sustainable practices, such as creating packaging which is biodegradable; the plant uses solar energy. A unique aspect is their social investment setup: Danone Communities is a fund offered by Credit Agricole. The fund is open to any investor. And instead of providing an immediate return, up to 20% of profits are invested in social businesses, such as the Danone plant in Bogra. Here's a great way for a company to think about funding a socially impactful idea, which also has the necessary bottom line impact. Danone and Grameen have partnered in a way we need to scale across the world. It can start small in one local community. Try out the partnership...and find out what works and what doesn't. Do your best to make it locally relevant. Refine, redo and launch your program again with lessons learned. Then you can scale profitability, and have a social impact across the world. Smart forprofit-nonprofit partnerships such as these pay off.

Danone and Grameen Bank: Partners In CSR And Marketing

Helen Coster, Forbes Staff

Emmanuel Faber, co-COO of French food company Danone, was in town this week talking social business with Mohammed Yunus, the 2006 Nobel Prize winner and founder of the Grameen Bank. Yunus is promoting his new book, Building Social Business: The New Capitalism That Serves Humanitys Most Pressing Needs. Three decades after creating the Grameen Bank, which makes small loans to poor people, Yunus is preaching the gospel of social business, which he defines as self-sustaining enterprises that tackle social problems. Faber is touting Danones own CSR efforts, which include a four-year-long partnership with Grameen. In 2006 Danone and Grameen Bank started a joint venture in Bangladesh, where Grameen had been operating for 23 years. At the time, Bangladesh was the only country in the world where Danone didnt sell its yogurt, water, baby food, and other products. Together, the companies started producing yogurt at a small plant near Bogra. They funded it 50/50, and now share a logo. Danone and Grameen funnel all profits back into the business. Danone also has a 70 million-euro money market fund, called Danone Communities, which it seeded with 20 million euros in 2006. Anyone can invest in the fund, which is administered by Credit Agricole. Instead of returning profits to its investors, Danone invests 5%-20% of the fund in social businesses, both its own, like the Bogra plant, and others. Danone calls it investment in social progress. Danones fund, as well as its partnership with Grameen, benefits Danone, too. Yunus and Grameen are well-known brands, especially in the developing world, where Danone does 45% of its business. The joint venture with Grameen helps Danone to expand in places like Bangladesh. We can take the mission into territories where we couldnt previously go, says Danones Farber. The Bangladesh business also function as a testing ground for product innovation. While developing the yogurt, Danone discovered an enzyme that preserves fresh milk, un-refrigerated, for up to four hours. Danone is only using the enzyme in its Bangladesh yogurt, but could eventually use it elsewhere. Danones CSR efforts are also a recruiting tool to attract new, idealistic hires. Yunus doesnt have a formal role within Danone, but his ad hoc function in the corporate world, it seems, is to ask questions that give CEOs headaches. After reviewing the prototype for Danone/Grameen yogurt, Yunus challenged Danone to create edible, nutritional packaging. The companys working on it, says Farber. Yunus says too many companies use CSR as a public relations tool, rather than getting serious about doing good in the world. Many businesses have a CSR fund that are mostly used for image-building, says Yunus. Lets take part of that and put it in a social business fund. Then use your younger professionals and challenge them. Give them a problem to solve.

Its not yet clear whether Danones primary mission is to help the people of Bangladesh, or to use the venture as a way to bolster its brand and make headway in a big, new market. Danone, along with many companies that promote CSR, is demonstrating social responsibility in some areas like helping to fuel the Bora, Bangladesh economy while overlooking other issues. Danone sells Evian bottled water in 100 countries, where its recyclable but not biodegradable plastic bottles are a staple of trash piles. Thats a little like the shopper who totes a canvas bag to Whole Foods, and then drives her Cadillac Escalade home from the mall.

Strategic Value of Corporate Social Responsibility

March 7th, 2011 Related Filed Under

The evolution of corporate social responsibility from charity to strategy is one of the great business stories of the past decade. The leaders in CSR are finding ways to enter new markets that seemed undesirable and impenetrable. It takes longer, the profit margins are smaller, and the challenges are greater, but the payoff, both for the company and its customers, is huge. Pamela Hawley describes these benefits in her article on Fast Company about Danone and Grameen Bank in Bangladesh (Corporate Social Responsibility: How You Can Profit and Kick Poverty Out, March 4, 2011). Grameen Bank pretty much invented microfinancing as a way of lending small amounts of money to those who had little, primarily women. Danone makes yogurt. Danone wanted to enter the Bangladesh market so it partnered with Grameen to create a unique, community-based model. Those of us who are involved in CSR know we need to have experts on the ground, Hawley writes. Its important to establish local buy-in, which can take years of relationship building. And we need to have experience, or rely on those who do. The annual income of a Bangladeshi is $497. The country has one of the highest child and maternal malnutrition rates in the world. One cup of Danone yogurt would provide 30% of a childs recommended daily nutrients. Grameen Danone Foods Ltd. built a production plant near Bogra, Bangladesh. It branded the yogurt as shokti, which means strength in Bengali. It marketed the yogurt at a price even the poorest could afford. It bought milk from nearby micro-farmers and distributed the yogurt doorto-door through local, rural saleswomen. In an 18-mile radius of its plant, the company provided 1600 jobs. Another characteristic of most CSR projects is the use of environmentally sustainable practices. Grameen Danone Foods created packaging that is biodegradable in a plant that uses solar energy. Danone also set up Danone Communities, a fund for investors who want their money to have a social impact. Up to 20% of profits in the fund are invested in social businesses. Danone is a for-profit company partnering with a nonprofit to expand its market while serving the nutritional and employment needs of a poor community. Its taken five years to make this a

viable enterprise, but the value to everyone involved, from Danone and Grameen to its employees to the people who eat the yogurt, is incalculable. Thats the future of CSR.

Danone Communities, a Model of Corporate Social Responsibility and Sustainability

April 3, 2008 by lamarguerite Last night, I had the privilege to sit down at a dinner with the leaders of Danone Water. Rarely have I met business people with such a passion for their work. The reason is very simple. As Danone employees, they are not just in the business of selling yogurt or mineral water. More importantly, they are in a social enterprise, involved in the global mission of sharing lifesustaining knowledge and resources with people in less fortunate countries. Specifically, I want to highlight the Danone Communities initiative, how it works, and why it is such a great sustainability model for other companies. Here, is a description, from the companys website: Combining the expertise of Danone in health foods and the experience of Grameen in microcredits for deprived populations, in November 2006, Grameen Danone Foods launched a yoghurt called Shoktidoi, designed to provide a response to the nutritional needs of Bangladeshi children at an affordable price. Produced in the first Grameen Danone Foods plant in Bogra, Shoktidoi is sold at a price of 5 BDT for each portion of 80g (ie 6 euro cents) and can be bought regularly by even the poorest families. At the same time, its composition has been specially designed to make up for the nutritional deficiencies that many Bangladeshi children suffer from. Reduced from cows milk produced locally and date molasses, Shoktidoi contains the natural calcium proteins needed for growth and bone solidity. Also enriched in micronutrients, an 80 gram pot is enough to cover 30% of daily needs for a child in vitamin A , iron, zinc and iodine.

In the Bogra plant, use of machinery is kept to a minimum in order to promote the use of labour which should mean that the plant will be able to employ 50 full-time workers within four years. Grameen Danone foods also relies on developing micro-farms which supply the raw materials (milk, sugar, date molasses) used to produce Shoktidoi. Local farmers also benefit from microcredits offered by the Grameen Bank to start up or expand their businesses, while DANONE provides its expertise to help farmers improve the quality of their production. Lastly, Grameen Danone Foods has created an original distribution system based on the so-called Grameen Ladies who, supplied by small wholesalers, make sales door-to-door. This activity should provide income to more than 1,600 persons within a radius of 30 km around the plant. Protection of the environment for local communities and use of renewable energy are part of the community business model developed by Grameen Danone Foods. The Bogra plant for example has a solar water heater which supplies hot water used in cleaning the installation and preheating water for the main boilers. To reduce the risk of depleting groundwater levels, the site has also been equipped with a rainwater recovery system. Both of these measures help mitigate the environmental impact of the project but also the energy bill for the company! In terms of recycling and packaging, Grameen Danone has also made firm commitments: Shoktidoi pots are produced with PLA (Poly Lactic Acid), a material made of cornstarch and entirely biodegradable. I was also told by the Danone people that all Danone employees get a chance to participate in the companys funding of the Grameen initiative. No wonder the Danone people feel so good about working there. Can you think of examples of other companies whose stories you find inspiring?