Each year, Danone Group has sought to make its social and environmental responsibility strategy clearer. It has sought to measure progress and difficulties along the way more accurately, and to respond more effectively to the questions of all its stakeholders.

Danone Group goes beyond the rhetoric of sustainability and turn our attention to practice, taking a realistic, straightforward approach and moving ahead effectively to make steady progress with due consideration for the diversity of local conditions.

The Danone Way program, now implemented in some 20 countries, takes a new approach to assessing standards of social and environmental responsibility in the practices of subsidiaries at local level, applying clear criteria in areas such as management quality, attention to consumers, and risk control. Danone Way defines 100 good practises recommended by the Group. For each, subsidiaries assess their own performance and set targets for improvement backed by appropriate action plans. It thus marks an important step towards the integration of social and environmental responsibility in the management processes and business decisions of each subsidiary.

The strength of a business such as Danone is its ability to rally people to projects with ambitious aims. Danone Way is far more than a method of evaluating performance. It is a shared undertaking that involves employees at all levels. Its impact is already beyond doubt, providing as it does an opportunity to share values and discuss issues openly to set priorities for action.

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HUMAN RIGHTS
Brief narrative of actions undertaken

Over the past 30 years, Danone Group has been guided by a dual commitment to business success and social progress, in turn built on the belief that there can be no lasting economic progress without the involvement of people and their personal development.

Underpinning continued social progress, Danone Group policies are adapted to local conditions and the status of business units, partners, sub-contractors or suppliers, with realistic targets defined through the Danone Way process. The Group is committed to ensuring respect for fundamental social principles in all parts of the world. Fundamental social principles must be respected in all cases, and this is required of not only Group companies but also of business partners and suppliers.

These rights are defined on the basis of principles adopted by the International Labour Organization. They include prohibition of child labor, forced labor and discriminatory practices; freedom of association and expression for employees; protection for the physical safety of employees at the workplace; and compliance with national law concerning working hours and minimum wages. These principles are included in the General Purchasing Conditions applicable to all suppliers and companies in which Groupe DANONE has 50% or more of equity or voting rights. Since 2002, they have been applied to purchasing contracts of all business units.

LABOR STANDARDS
Brief narrative of actions undertaken

Danone Way defines some 30 clearly defined labor-related practices, beginning with strict compliance with the law.. Health and other cover for employees are included, as is safety at work. As regards compensation, it calls for fair and competitive rates, the development of profit-sharing, clearly stated rules and due regard for skills. Groupe DANONE requires subsidiaries to be particularly attentive to these points. The Danone Way program also calls on the participation of staff members to favor continuing management progress adapted to local conditions throughout the Group.

Commitments to social progress are negotiated with partners associated with the Group through a shareholders'' agreement. Since 2002, acquisition contracts signed by Groupe DANONE have included a clause concerning relationships with unions and employee representatives, as well as assistance for employees and industrial redevelopment of sites in the event of restructuring, staff benefits, training, and working conditions.

Groupe DANONE upholds the freedom of association and the effective recognition of the right of collective bargaining. In 1985, Groupe DANONE has signed a first Common Viewpoint with the International Union of Food Workers. This Viewpoint has been followed by six conventions in areas including equality of men and women, access to economic and social information, skills training, trade union rights, changes in business activities affecting employment or working conditions, and restructuring of European biscuit business.

In 1996, the Group has set up a Consultation and Information Committee that reviews issues including the business performance of the Group, major industrial and technological projects, employment, working conditions and training.

ENVIRONMENT
Brief narrative of actions undertaken

As most of DANONE Group''s raw materials come directly from nature, environmental protection has always been part of its business. In 1996 a Charter for the Environment has been the reference for all its operations around the world.

Groupe DANONE meets or exceeds regulatory environmental standards in each country where it operates. In 2002, the Group spent about 2% of total group capital expenditures, on environmental work at production plants in 2002. An estimated $20 million in operating expenses are environment-related (water, energy and waste management, and taxes other than levies on packaging materials).

Groupe DANONE based its Environmental Management System (EMS) broadly on the ISO 14001 standard. The first step was a self-diagnostic of all plants, resulting in a set of indicators and training activities. The second step was an external audit program. Each business unit prepares an annual environmental report based on plant-specific assessments.

In line with reduction targets set by the Executive Committee in September 2001, Group-wide consumption ratios improved overall from 2000 to 2002. These indicators - total water consumption per ton of product, thermal energy consumption per ton of product, and total energy consumption per ton of product - were part of the 1995 Green Plants Initiative to reduce water and energy consumption (electricity and thermal) and waste generation.

Packaging is the second main focus of Groupe DANONE''s environmental strategy. Concerns span the entire product lifecycle - from reductions in packaging weight and consumption of raw materials to waste recovery through recycling, incineration with energy recovery, composting, biodegradable packaging and other options. Groupe DANONE began work on eco-design of packaging in 2002. Eco-design is an approach that factors the environment into each stage of the product/packaging lifecycle, from design onward.

Groupe DANONE processes raw agricultural products, it does not produce them. But we can play an indirect role by promoting integrated and sustainable agriculture, which seek to reconcile business and ecology through a transparent system that combines consideration for consumer expectations of food quality, food safety and environmental protection with the demands of running a viable farming business. Groupe DANONE has undertaken a european-wide action with Sustainable Agriculture Initiative involving Nestlé and Unilever to promote best practises in sustainable farming..

As a world leader in bottled water, Groupe DANONE considers safeguarding water resources a prime responsibility, and we are actively involved in water conservation initiatives and improving access to clean drinking water.