Smurfit Kappa has partnered with the Financial Times to conduct a piece of research to answer some of the most pressing sustainability questions. In a world where sustainability is increasingly business critical, find out how businesses are using the power of transparency to accelerate true sustainability.
From cow to consumer, localised action is helping the multinational food company to meet its ambitious sustainability targets
Four million tonnes is a big number: it is more than the weight of 10 Empire State Buildings. It is also the amount of methane produced by the cows whose milk goes into Danone’s products. The company made headlines in January 2022 when it pledged to cut these methane emissions by 30 per cent, becoming the first food company to set a methane reduction target in line with the Global Methane Pledge launched at COP26.
This alone is an impressive promise. But what really sets Danone — which operates in 57 countries — apart is its ability to harness large-scale, global commitments to deliver change on a local level. In Latin America, for instance, that means all conversations around sustainability must also encompass economic and social growth.
“The socioeconomic reality of our geographies asks for a more comprehensive approach to environmental and social problems.”
“The socioeconomic reality of our geographies asks for a more comprehensive approach to environmental and social problems,” explains Silvia Dávila, regional president of Danone Latin America. “We need to understand where we can contribute specific industry-based solutions that can then be escalated by other actors.”
Global commitments create local opportunities
This holistic approach is bearing fruit in Mexico, where more than 900 dairy farmers are adopting climate-friendly practices thanks to Danone’s Margarita Project. This social program supports smallholder farmers, who account for almost half of Mexico’s milk production. Many low-income farmers lack training and resources, often struggling with poor production practices, rising input prices, environmental unsustainability and a lack of reliable buyers.
To counter these challenges, the Margarita Project offers training, tools and financial backing that farmers need to engage in sustainable systems. Danone guarantees farmers a fair price for their milk and offers low interest loans for technology such as milking machines, which drastically increase productivity. Farmers also receive training in regenerative practices such as reforestation, soil preservation, efficient water management and cattle feed that reduces methane emissions.
“With the Margarita project, Danone Mexico is not just seeking to protect its production value chain,” says Dávila. “It is also empowering the local farmers on which it relies by making them more competitive and adapted to their own markets.”
“Danone Mexico is not just seeking to protect its production value chain, it is also empowering the local farmers on which it relies.”
With Danone’s help, some smallholders have been able to access technologies used on cutting-edge farms in the US and the Netherlands, including “Fitbits for cows” — collars that track cattle movement and health to improve farmers’ knowledge of their herd’s welfare. And some farmers have seen their revenue triple.
The economic stability this brings allows smallholders to take a much more active role in mitigating climate change. Today, a decade after the Margarita Project began, more than half of its farmers are implementing some form of carbon sequestration-capturing and storing CO2 emissions.
Local action makes business sense
Research commissioned by Smurfit Kappa and conducted by FT Longitude reveals that 59 per cent of businesses will only change their approach to sourcing and procurement when greater regulatory intervention makes them, so Danone’s proactivity makes it an outlier.
But it shouldn’t be. Programs like the Margarita Project bring clear business benefits alongside social and environmental ones. Danone now has full traceability of its dairy supply chain in Mexico, which paints a much clearer picture of regional conditions and assures the social and environmental credentials of its milk supply.
Waste infrastructure is another area businesses can bring meaningful change. This was a key focus for Danone as its sustainability strategy includes a commitment to 100% recyclable, reusable or compostable packaging by 2025. The company is working towards a “circular economy of packaging” — but this is hard to achieve in Latin America, where limited waste collection systems make recycling a challenge.
“The recycling value chain in Latin America is quite dependent on the informal sector,” explains Dávila. “It is important to integrate and support these organisations into cooperatives and structure their activities to strengthen the collection of recyclables.”
Danone’s Novo Ciclo project, created with the Inter-American Development Bank and the Inclusive Recycling Initiative, aims to facilitate the organisation of a more productive system through the professionalization of waste pickers. The project has invested in new waste management centres, training and technology to help waste pickers structure their businesses with the help of regional cooperative networks. It has helped more than 1,300 waste pickers to increase or secure their revenue and has led to the collection of 30 thousand tons of recyclables each year.
“It's a dual project. Global commitments translate into local opportunities.”
Danone’s strategy recognises that sustainability initiatives are only successful when stakeholders are supported to do things differently. Everyone along the product lifecycle, from cow to consumer, plays a part in sustainability objectives. “It's a dual project,” says Dávila. “Global commitments translate into local opportunities.”
